On this morning's jobs number, and what the market is really rallying on ahead of Powell's comments...

My initial thought when I saw this morning's blowout jobs number (312k vs 176k expected) was, frankly, not positive with regard to the stock market. My thought being that it was too good, given that the market is currently begging for the Fed to back off. A crazy strong labor market, with, by the way, wages rising at the fastest clip in 10 years (read inflation), is exactly what the Fed's talking about when they talk about raising interest rates next year. Fed Chairman Powell's commentary this morning (7:30 pt) could be hugely consequential to the short-term direction of the market. 

On second thought, it could actually be okay. When I stop and think a little deeper, I'm thinking that Powell has already prepared his commentary, and if he echoes the latest sentiment from a number of his team members he'll effectively counter the commentary he delivered at the last Fed meeting press conference -- where his words literally roiled the market. Of course he could stray and say (words to the effect) "see I told you so" after this morning's employment report. If he goes there, the market's going down.

Thing is, we're looking at December's jobs report. Virtually all of the key sentiment surveys confirm that the present state of the jobs market is strong, and virtually all of them warn that if present trends continue (read overall deterioration of conditions), the employment picture will sour markedly in the months to come. That's where the Fed's focus should lie, and we should expect that Powell will express just that this morning.

If my second thought is the correct thought, then the great jobs number is great for the market. I.e., the economy is okay (I can only say "okay" given the signals from other key indicators) and the Fed will back off into wait-and-see mode; which is appropriate in my view.

The headlines are crediting the Dow future contract's 300-pt gain this morning on the jobs number. Fact is it was up over 300 hours before the number was released. In fact, on the report the Dow dipped a bit; I'm sure traders were sharing my initial thinking. The overnight rally tracked with China, where confirmation of next week's trade talks and a much better than expected services sector survey (countering the miserable manufacturing survey from earlier in the week) had stocks screaming higher.