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Job Creation Was Actually 787,000

Weekly hours for current employees increased so much that the equivalent jobs created would have produced an additional 356,000 jobs.

The jobs number, while it shouldn't be interpreted as long-termterrible news, is definitely a downer for today's market because ofthe high expectations. Once again, economists got ahead of themselvesin thinking that the economy is ready to surge. Instead, the economycontinues its steady rise off the bottom, which should be interpretedas good news.

Realistically, even with the census jobs, how can youever expect to have the best jobs growth number since 1983? I'm notgoing to run for the hills just because expectations got out of whack. We added 431,000 jobs for the month, a year ago we were losing500,000 jobs. This is now the fifth month in a row showing modestgains.

Although the private sector only contributed 41,000 jobs, itdid increase wages and hours worked per worker. It looks like thelack of hiring is a result of uncertainty surrounding health carereform. Employers want to maximize current capacity to avoid havingto pay the higher fixed health care costs.

Weekly hours for currentemployees increased so much that the equivalent jobs created wouldhave produced 356,000. How would the market react to headline jobcreation of 787,000?

This health care issue may continue to hurt thejob market more than anybody anticipates. The takeaway from thisreport is that hiring is being replaced by an increase in hours;this still produces excellent economic growth but the market will taketime adjusting to this reality.

Wages are up at a 5.33% annual rate, which drives economic growth as well. Also remember that civilianemployment, which includes self employed and start-up businesses, is up1.9 million in 2010.

Although today's market action is disappointing, the last two weeks ofmarket action have been very positive. Two weeks ago, Apple was at$240, today it's at $260. The QQQQ was at $44.80, today it's at $46.Baidu was at $71, today it's at $75. The EUO was at $23.80, todayit's at $26.

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At the time of publication, Schwarz was long AAPL.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.