**US FUTURES ARE GETTING CREAMED IN EARLY TRADING - CURRETNLY DOWN 22 PTS AT 7 AM*** (This is a developing story - read on)

So it appears that February may be a repeat of January…Friday was another tough day for stocks - and only got worse as the day progressed. The mkt gave back most of the gains from the last two weeks…. Tech stocks got walloped as concerns over growth are now infecting one of the 'best performing' sectors to date. And I say that a bit sarcastically because prior to Friday - the Tech sector as a group was ONLY down about 6% ytd - this compared to the beating in Financials -9% ytd, , Healthcare -11% ytd, , Consumer Discretionary -10.5% ytd & Energy -9% ytd - the only sector in positive territory is Utilities - currently up 7% ytd - and this makes perfect sense.

Michael Hewson - Chief Mkt Analyst at CMC Markets - laid it out this way:

"It appears that softening economic data and disappointing earnings reports are contributing to a negative feedback loop" - Do you THINK?

The XLK – (Spider Technology Sector ETF) dropped 2.5% and is now down 9% ytd. The FANG stocks got getting beaten up like nobody’s business – FB -2.5% (ytd -8.5%), AMZN –5% (ytd – 25%), NFLX –6% (ytd -27%) & GOOGL -2.8% (ytd – 11%) , which put pressure on the sector sending the Nasdaq lower by 3%. All the action clearly reflective of investor caution - as the economy slips into what can best be described as 'murky' at best..... And the NFP (Non Farm Payroll) report – Well, not what it is all cracked up to be….

The report showed a gain of 151k jobs – well below the estimate of +200k but right on the low end of the range -vs. the downwardly revised December number of +262k jobs. The kicker is that the gov’t then told us that the Unemployment rate dropped to 4.9%....Hello? How does that even make sense? This is one stat that makes me nuts....……it ignores those people who have given up, and fall off the radar – thus are no longer counted. (That number today is close to 100 mil people). The stat that investors should be focuses on is the U6 – or the UNDEREMPLOYMENT RATE – and that is and has been stuck at 10% for months now.

[The underemployment rate is a measure of people that are unemployed as well as ‘not fully employed’ –part time that want and need to be full time].

Now while the gov’t recognizes this fact, it doesn’t do them any good to report a 10% number after all the time and accommodation that they FED has done – so it is easier to report the lower number – as it makes them all feel good and they can pat themselves on the back - especially during the Presidential Election Season - because while it may not be completely reflective of the environment – it is surely a much better indicator than the widely accepted U3 rate of 4.9%.

And wages? Oh yeah- they inched higher as well – climbing 0.5% in average hourly earnings to $25.39 – marking the second best ONE month gain since 2010 – but before you run out and celebrate – remember that first - January marks the new year and the increase most often reflects that ‘cost of living’ adjustment. Second that the ‘minimum wage’ rose in 14 states – most now hover at or above $8/hr.... (NY is now $9/hr while California and Massachusetts are at $10/hr and DC - well they are the highest at $11.50/hr - I mean how could they not be? ). Third – the declining unemployment rate appears to be causing some employers to pay more to attract the ‘declining availability’ of qualified workers…And this set off the alarm bells once again about what the FED will do now….I mean with all of this ‘robust’ job and wage data surely the FED will have to raise rates sometime soon! So - the declining broader macro data means nothing to the overall health of the economy?

The year of the Monkey -

China and other parts of Asia are welcoming in the 'Year of the Monkey' - and how appropriate - considering all of the Monkey Business that is taking place. Misleading macro data, currency devaluations, mkt regulation changes on the fly, Growth rates that can't be verified etc..... Japan and Australia were the only two mkts that were open overnight - and while there was no significant news - Japan did manage to rally 1% as that mkt center also thrashes around looking for stability. Expect volumes to be below average until all of the regional mkts come back online as the week progresses. Mkts in China and Taiwan are closed all week - while Hong Kong, South Korea, Singapore and Vietnam will re-open on Tuesday.

In Europe - Stocks again are under pressure....hitting lows not seen since October 2014! All mkts down 2+% as many assume that Friday's NFP reports suggests an imminent rate hike....it is that 4.9% unemployment rate and the wage growth that has everyone's panties in a bunch....again - it's all in the presentation.....if that is all you focus on - then yeah....you can't come to any other conclusion - but if you look at the broader picture - it makes no sense at all......add in the technology beating and it is hard to see how you can possibly spin a positive story - right now. FTSE -1.6%, CAC 40 -2.14%, DAX - 2.3%, EUROSTOXX -1.94%, SPAIN -2.3% AND ITALY -1.3%.

US futures are getting CLOBBERED - Currently down 22 pts at 1853.....My sense is that no one really believes Friday's report - but it is what it is- which now puts rates right back in focus for some.....(I am not in that camp at all) .....and while it did NOT 'blow the roof off the house'.....it does have the ability to 'blow the foundation out from under'.......and that is what it feels like right now......If futures remain under pressure until the 9:30 am bell- then look for the mkt to immediately test the Aug/Sept lows of 1850 and if that fails - then a re-test of the October 2014 & January 2016 lows of 1820 is in clear sight......The failure of 1820 - could then see a swift move to 1750 - as the SELL algo's kick in and the BUYERS retreat.....But even here we will not be in BEAR mkt territory for the broader mkt - as that would represent a 17% decline off the 2015 highs - the BEAR breaks down the door at 1700.

This week we are focused on Janet Yellen and her Humphrey Hawkins bi-annual testimony to Congress. [The Full Employment and Balanced Growth Act - now known as Humphrey Hawkins Full Employment Act - was instituted in 1946] This act encourages the Federal Gov't to pursue 'maximum employment, production and purchasing power' and it uses the power of Keynesian theory to achieve the goal. Keynesians - assert that the gov't can minimize the effects of economic shock by compulsory spending - which tend to create temporary jobs and maintain and inflate investments due to this gov't spending.......HELLO???? Can you say DISASTER? Keynesian is clearly NOT working...How about we start cutting taxes across the board and create incentives for companies and small businesses to grow?

Anyway - Janet will appear before the Senate on Tuesday and then the House on Wednesday....to bring the country up to date on the health and strength of our economy and the economic recovery....You can bet that everyone will be trying to read between the lines as she speaks...looking for any hint on the direction or thinking of the FED. Beyond that - look for Retail Sales to be the big macro driver on Friday... as it speaks directly to the consumer.....

Turkey Meatloaf

Turkey Meatloaf......easy, healthy and good for you. But you know Turkey meatloaf can be boring.....well - try this one....You can make this with beef or chicken also...but try the Turkey - it's good for you.

For this you need: 2 lbs of ground turkey, 2 eggs, fresh grated Romano cheese, minced garlic, chopped Vidalia onion, grated carrot and celery, tsp of basil pesto, splash of white wine, slice of Italian bread soaked in milk, chunks of provolone, s&p.

Preheat the oven to 375.

Combine all the ingredients and place in a greased loaf pan or casserole dish. Place in the oven and cook for about 75 mins...

**While this is cooking - take some jarred roasted red peppers in garlic and oil and blend in the food processor. Top the turkey loaf with the red peppers and continue to cook long enough to heat....maybe an add'l 5 mins or so.

Remove - and serve with a mixed green salad.



Buon Appetito.

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