Job Report Exceeds expectations

Financials: Dec. Bonds are currently 6 lower at 152’04, 10 Yr. Notes 2.5 lower at 125’31 and 5 Yr. Notes 2.2 lower at 118’20.5. The June 2016/June 2017 Eurodollar spread is currently at 70 points premium the June 2016 contract. Friday’s monthly Employment Report showed an increase in non-farm payrolls of 271,000 well above the average guestimate of 180,000 causing a sell off in interest rate vehicles which are3 now in support and aqppear to have priced in several (3) minor rate hikes over the next year or soi of 25 basis points each. We habve taken profits on long 5 Yr./short 0 10 Yr. spreads and recommend taking profits on lone June 2016/short June 2017 Eurodollar spreads. For the moment I( am actually going to fade the market and go the other way on these spreads for the next few sessions anticipating a bounce.

Grains: Dec. Corn is currently fractionally higher at 373’4, Jan. Beans 2’6 higher at 870’0 and Dec. Wheat 5’6 lower at 517’4. I will be a buyer in Dec. Corn below 365’0. Of interest: A few of mycolleagues have been recommending the long March K.C. Wheat/short March Chicago Wheat spread. Not being an expert on this kind of spread fundamentally, I will say that technically this spread does look interesting and is running counter-seasonally abnd appears to be forming a bottom. I will give updates in the next several “Reports”.

Cattle: Live and Feeder Cattle prices have broken sharply over the last few sessions as the cash market in Feeders has broken 10 dollars over the last week and the public has shown concern over published reports of a cancer risk with the consumption of processed meats. Also of note is the continued competition for protien by lower cost chicken and pork. That being said, I feel the market is nearing support in the 128.00-132.00 area for Dec. LC. And also expect a seasonal upturn over the next 5-6 weeks. I must also note that we tried the long side briefly in Dec. LC just below the 138.00 level and took a small loss.

Silver: Dec. Silver is currently 7 cents lower at 14.62 and Dec. Gold 2.50 higher at 1090.00. We remain long and recommend replacing any longs that were sold in the 1620.00 area in Silver or 1190 area in Gold.

S&P's: Dec. S&P’s are currently 6.00 lower at 2087.75. We have only been looking for short term trades in this market for the past couple of weeks. I now Want to make note of something I have been watching over the years. Without trying to sound effete, I have taken interest in the Fall Contemporary Art auctions. It appears that, through some news reports I have read, that prices are backing off and several well known paintings have not met their minimum estimates or have even attracted bids. What does this have to do with the S&P’s? I feel that this may be an indication that high end investors may be starting to show caution. Let me be frank: I’m not recommendeing that you act on this, only that it may be somethin to watch.

Currencies: I am still on the sidelines but am interested in the long side of the Euro below 1.0650 (currently at 1.0747).