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MV Weather Report: Unemployment Numbers Not So Sunny?


Rain or shine, we review the day's biggest stock stories.


Last night, we got the much-anticipated stress test-results. I'm not going to spend too much time going through them, as others have on this site - and Mr.Practical has already offered his opinion.

I will say that the results met with a positive reaction on the Street. A quick check of the banks finds them rallying: JPMorgan (JPM), PNC Financial (PNC), Capital One (COF), and Wells Fargo (WFC) all had nice up days.

Technology was weaker again today, which signals to me that the run may be coming to an end. The 4 horsemen -- Apple (AAPL), Research in Motion (RIMM), Baidu (BIDU) and Amazon (AMZN) -- were all weak. I would expect the pullback buyers to step up and buy some of these names soon. There could be a quick upside trade here into next week.

The story of today's trading session -- other then the stress tests -- was the jobs numbers. The non-farm payrolls came in at -539,000 compared to an estimate of -600,000; the unemployment rate came in as expected, at 8.9%. Minyanville's Professor Jack Lavery filled Minyans in on his take.

Below, Professor Tom Fant gave his take to Buzz & Banter readers:

"Two things jumped out at me in the employment number. First, the only real area of expansion was, predictably, government hiring - but even that number was inflated due to a one-time bump (63,000) for hiring census workers.

"Also, hiring of temporary workers was down again (-63,000). Firms will usually hire temporary workers before committing to full time employees in uncertain economic environments like this one. Look for that number to turn before we see the bottom in employment."

I find Fant's take very interesting, especially since the report was viewed as "better then expected" on the Street. It's now starting to look like analysts were just too bearish with regards to forecasting EPS and economic data.

Yesterday, we spoke about the poor bond auction and its effects on the market. Today on the Buzz, Professor Fil Zucchi has a follow up piece.

"Fast-rising long-term Treasury rates in the current environment can reasonably be explained by a combination of the unwinding of the fear trade and benign lights at the end of the economic dark tunnel. That would be unequivocally good for equities.

"On the other hand, a rapid steepening of long-term rates, together with a rapid fall in the dollar, can mean a general loss of confidence in our currency and economy.

"Here's a chart of the 30-year Treasury yield (TYX) and the dollar index (DXY). My sense is that the drop in the dollar -- while sharp -- is not of the "freaky" type... yet. But it bears watching very closely."

All right, Minyans - I'm off to rest my back.

Have a great weekend!

No positions in stocks mentioned.

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