Firstly, it's too early to lean on job numbers in the 2011 calender. The US Economic recovery is stair stepping higher and thats not a secret. The larger issue is the solvency of Europe and what happens with the Yuan. The Trade to watch is Gold, the sectors to watch are Technology and the speed which you recieve broadcasting to your handset/tablet, and Social Networking actually monetizing which will become evident to the Goldman Partners in the Private FaceBook (unregulated) transaction at $2million a pop. Lastly, Tim Geithner says our creditcard expires March 15th 2011, and has no security code on the back to save us.In Europe, the FTSE 100 index of leading British shares was down 29.83 points, or 0.5 percent, at 5,989.68 while Germany's DAX fell 18.81 points, or 0.3 percent, to 6,962.58. The CAC-40 in France was 23.41 points, or 0.6 percent, lower at 3,881.01.
Wall Street was heading for a lower opening, too -- Dow futures were down 15 points at 11,631 while the broader Standard & Poor's 500 futures fell 2.7 to 1,267.50. How the U.S. actually opens and how markets in general end the first trading week of the year will likely hinge on how the monthly nonfarm payrolls data look. The figures, which often set the tone in markets for a week or two, have taken on greater significance following a survey on Wednesday by the ADP agency showing U.S. employers added a massive 297,000 private sector jobs in December. That was way up on November's 92,000 and significantly ahead of market expectations for a 100,000 increase.
Analysts have been quick to raise their predictions for Friday's government report, despite fairly disappointing weekly jobless claims figures Thursday, and the expectation now is that around 180,000 jobs, both private and public, were added over the month, up from predictions of 140,000 before the ADP's survey. Some investment houses are predicting double that.
The scale of the upward revisions have been so great that there's now plenty of room for disappointment, especially as December figures are often distorted by seasonal factors to do with the Christmas shopping season and the weather, analysts said. "We are mindful of the ADP possibly overestimating the true extent of improvement at this stage," said Derek Halpenny, an analyst at the Bank of Tokyo-Mitsubishi UFJ. "Some of the largest overestimates have come in December." More jobs in the U.S. is good news for stocks because it signifies that the world's largest economy is growing faster than before.
However, faster jobs growth could also prompt the Federal Reserve to start withdrawing its monetary stimulus sooner than previously expected. As well as cutting its key interest rate to near zero percent, the Fed has authorized two massive money injections into the U.S. economy and is currently in the middle of a $600 billion effort. Tentative concerns that the Fed may soon alter course seemed to weigh on stocks in the immediate aftermath of the upbeat ADP jobs survey but the optimists soon took charge -- after all, higher growth means bigger profits and earnings. The dollar rallied on the back of a sharp spike in Treasury yields. That means that holding dollars is more attractive because the returns are potentially greater. By late morning London time, the euro was down 0.2 percent at $1.2979 while the dollar was up 0.2 percent at 83.51 yen.
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