November Jobs Report In A Word: WOW!

Okay then... In a word, the November Employment Report should be labeled "wow!" In every category, the November report was stronger than expected, in some cases, much stronger. Payrolls came in +266,000 vs. 185,000 expected, the Unemployment Rate ticked down to 3.5% from 3.6%, and Average Hourly Earnings gained 0.3% for the month, and +3.1% year-over-year. That's impressive stuff

OMG, Larry Kudlow is going to be beating his chest like King Kong! Can't say he and POTUS don't deserve a victory lap or two, which they will undoubtedly take at a slow pace all through today's session.

As for the markets, did you notice that 20 seconds before CNBC announced the Jobs Data, ES spiked up from 3120.50 to 3129.25? Oh well, so someone had the numbers before the public got them. No big deal (LOL!!!!). In any case, my attached 15 minute chart shows that if the overnight headline about China waiving tariffs on their companies buying US soybeans was not the bullish catalyst the bulls were hoping for, well, the Jobs Report certainly provided new ammunition for the algos to trigger buy programs based on strong fundamentals.

ES has climbed to a pre-open high at 3139.25 so far, and has pierced above the Weekly Pivot at 3138.50 for the first time since Monday's pre-market session. As we speak, ES is right at the high, up 21 points, and is less than 20 points (0.6%) from a new all time high.

Only a sudden downside reversal that presses and sustains beneath 3127.00 will suggest ES is tired atop its 70 point, 2.3% advance off of Tuesday low at 3069.50.

What might cause a bout of weakness? Back in the old days, very strong data like these, years (10 in this case) into an expansion would certainly energize bond market vigilantes, who would be anticipating a less friendly Fed posture, and as such, would be propelling YIELD higher.  As a matter of fact, 10 year YIELD is up about 8 bps now at 1.85% since yesterday afternoon, and up 16 bps since Tuesday AM's equity index low (see my attached YIELD chart).

One wonders if bond traders and investors have arrived at the conclusion that the Fed is "too easy?" If POTUS continues to jawbone about a forthcoming Phase I US-China trade deal, and actually signs one that rolls back some tariffs before the December 15th deadline, I can't imagine what Jay Powell will be thinking and doing? Certainly, he will be thinking twice about continuing to expand the Fed's balance sheet or otherwise hint in any way, shape, or form that the Fed is prepared to lower rates based on "data dependency?" Right now, based on data dependency, Powell should be doing just the opposite.

In any case, let's see how the bond and stock markets play together in the same sandbox today...

12 06 19 ES 930 GIF
12 06 19 ES 930 GIF
12 06 19 YEIDL 930 GIF
12 06 19 YEIDL 930 GIF

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