The Jobs-Report Black Box: It's Game OnThe report may have been in a sweet spot: positive enough to justify a more bullish call, but not hot enough to stop QE3.A small secret worth sharing: I operate in the financial Twilight Zone as a rogue agent who must do battle with many formidable, ever-changing foes. Time is a foe: You pen an opinion at 8 a.m. EDT and it stands to be utter rubbish by the session open. You make a stock call on Feb. 6, 2012, and it's sucked into a Google ( GOOG) loop, never to disappear. You miss a sliver of daily trading action, and the ensuing few weeks could make you appear dumb. Luckily I am mentally tough as nails -- 'cause, lemme tell ya, it's fierce out there. One of the most difficult things for me has always emerged on jobs-report Fridays. On Thursday night XYZ seems valid -- yet, after the employment figures, the view has become completely off-base, or far enough from the mark to prompt one to head back to the drawing board. So, henceforth, on each jobs-report Friday there will be a "Black Box" column -- a chronicled collection of before and after thoughts on the market and its direction. Before: Negative on the market, but finding encouraging indicators. Date: Thursday, Nov. 1, 2012 11 p.m.
- The feeling in the market is that, once we are beyond the U.S. presidential election, stocks will enjoy expansion in their price-to-earnings multiples, to be followed by upgraded earnings estimates. Those very weak corporate new-order rates will no longer be an issue. Arkansas Best (ABFS) said it has slashed tractor replacements by 8% due to economic conditions? This decision will be reversed inside a day. Hold those horses. Nowhere is it written that any of this "uncertainty" will be wiped clean with a run to the ballot boxes, nor that enough "uncertainty" is deemed positive certainty to the extent the market wants it to be. After all, Europe, pending a solar-system upheaval, is still with us in present form.
- The market loved the Institute for Supply Management manufacturing index. It was a supposed euphoric read on the economy and a potential recovery. Instead, I say it showed weakness in machinery, transportation equipment and electrical equipment -- the goods required to build a fallen economic pyramid. I think the ISM report actually supported the negative tone of earnings season, from results to guidance.
- Steel stocks reacted positively to China news, reversing course starkly from the sympathy decline Wednesday due to U.S. Steel's (X) earnings -- the China purchasing managers index joins forces with U.S. Steel's shift in tone on pricing dynamics near the end of the quarter.
- Cummins (CMI) built on Wednesday's session, though the company's earnings were not gangbusters by any stretch of the imagination.
- There are perceived earnings season winners in Eaton (ETN) and DineEquity (DIN), shares of which have exhibited follow-through.
- Wal-Mart (WMT) ceded ground on an outside chance that consumers will visit more discretionary retailers for the holiday. I do caution, however, that the stock could have been smacked around from Target's (TGT) merely adequate month of sales.