Non-Farm Friday – Is America Working?

Wages.

That's what it's all about today as we get the Non-Farm Payroll Report at 8:30 this morning.  Average Hourly Wages have been on a 2.7% growth path for the year and it would be surprising then, if we are below 0.2% or above 0.3%, which is the Fed's sweet spot.  The closer we are to 0.3%, the more likely the Fed is to hit the brakes before rising wages push inflation out of control (and eat into Corporate Profits – which we really can't have in this country!).  The Dollar has been flirting with the 95 line and more wages means more demand for Dollars to pay people with but the Dollar over 95 can put downward pressure on the indexes, as well as commodities.

The best short on a strong Dollar this morning would be oil (/CL) at $69, with tight stops above and we don't want to be greedy into the weekend but every 0.25 drop pays $250 so we can make some quick Egg McMuffin money on Dollar strenght.  If there are more than 250,000 jobs created (doubtful), that would be a plus for oil as more jobs, in theory, means more people driving and more factories using oil for whatever (trucks too) – so watch out for that.

On a stronger Dollar, Silver (/SI) makes a good short as it tests the $15.50 line.  We have been long on /SI but it popped nicely so now we take that profit off the table as we expect a pullback – even if it is on a run above the line (where we stop the shorts out over). 

These are simple, mechanical moves you can make on events where the Dollar is in play and no event is bigger than Non-Farm Payrolls – other than a Fed meeting and this week's was a big nothing – so we have to have a little fun before the week is out!

Despite rising wages, Consumer Credit has been rising at an alarming rate and that's something we'll pay attention to in next week's report as, last month, Consumer Credit jumped $24.5Bn, which is a pace to put Americans $300Bn more in debt for the year, a…
continue reading