MARKET WRAP – JOB LOSSES A POSITIVE

Stocks overcame some headwinds to finish solidly in the green on the day.  The S&P finished higher by 0.3% on the day and gained 2.6% on the week.  The labor department said the U.S. economy lost 85,000 jobs this month and consumer credit absolutely crumbled according to the Fed.   Total consumer credit declined $17.5B.  The jobs report was seen as a sign that the Fed will keep rates low and the government will continue to pile money into the economy.

The most important news of the day, in our opinion, was out of UPS.   As we mentioned last month, FedEx was a prelude to the upcoming earnings season when they raised guidance well above estimates.  We saw the same thing yesterday out of several retailers and then UPS this morning.   The economically sensitive company raised the low end of their guidance 14% above estimates and raised the high end 17% above estimates.  As we have been saying for several quarters now, the analysts are astonishingly slow to catch-up with the reality of the corporate profits picture.  Short this market into earnings season with the expectation of losing money.

Daily Futures has all the action from every market:

U.S. Economy
The U.S. Labor Department said that the unemployment rate remained at 10.0% in December with a net loss of 85,000 jobs, a bigger loss than expected. The March 2011 eurodollars jumped up .095 to 98.375.

In November, the change in non-farm payrolls was revised from down 11,000 to up 4,000. In October, the number of jobs lost was increased from -111,000 to -127,000.

The U.S. Census Bureau said that wholesale sales were up 3.3% in November, much stronger than expected. Inventories were up 1.5% in November.

Grains and Cotton
March wheat closed up 10.75 cents at $5.685, the highest close in five weeks with ongoing concerns about possible cold damage to the winter wheat crop.

March cotton fell .45 to 72.44, the lowest close in seven weeks.

Livestock
The interior of the U.S. is getting hit with a big blast of arctic air, sending temperatures well below zero in several north-central states. February cattle ended down .10 at 85.82.

After the close, the USDA estimated this week’s beef production at 494.7 million pounds, up 4.7% from a year ago. Pork production was estimated at 419.1 million pounds, down 14.5% from a year ago. February hogs closed up .15 at 67.25.

Coffee
Brazil’s Conab said late yesterday that they expect the 2010-2011 coffee crop to total 47.3 million bags, up from their 39.5 million bag estimate for this year. March coffee closed up 3.45 cents at $1.4535.

Orange juice
According to Weather.com, temperatures in central Florida will dip below freezing again on Saturday and possibly Sunday morning, but then turn safely warmer for the next week. March orange juice finished up its $10 daily limit at $1.5115, the highest close in over five months.

Metals
February gold closed up $5.20 at $1,138.90 after today’s weak U.S. employment report. A weak jobs picture will continue to support a low interest rate policy from the Fed.

Energies
March natural gas ended down 4.4 cents at $5.712 with warmer U.S. temperatures on the way after this weekend.

Currencies
Statistics Canada said that the unemployment rate remained at 8.5% in November with a net loss of 2,600 jobs. Analysts had been hoping for a net gain of 20,000 jobs. The March Canadian dollar was up .20 at 96.91.

Eurostat said that the unemployment rate in the Euro area increased from 9.8% to 10.0%, the highest since the currency began in 1999. Eurostat also confirmed that real GDP in the EU-27 was up .3% in the third quarter, but down 4.3% from a year ago, the same as their estimate a month ago. The March euro closed up .0090 at 1.4415.