Our Pal Friday

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Tomorrow the Labor Department will issue its monthly employment report with September's numbers. If ADP's private assessment is any indication, the U.S. will be adding around 190,000 to 220,000 jobs. Additionally, first-time unemployment claims plunged to a fourteen-year low. (However, that just about makes up for the unexpected rise in the previous week.)

European equities were dramatically lower across the eurospace as investors reacted negatively to the regular monthly statement made by Mario Draghi, head of the European Central Bank. The sell-off began after the ECB decided to keep interest rates unchanged. It continued when, in the follow-up news conference, Draghi focused on the central bank's asset-purchase program, but disappointed markets by not detailing the size of the program and failing to hint at the introduction of a U.S.-style quantitative easing (asset purchases of distressed paper).

U.S. equities turned slightly higher as the day wore on after the S&P 500 dipped drastically early in the day. There were investors ready to rush into smaller companies and component companies of the S&P that have been judged as being under-performers.

While one could safely assume that this was the perfect risk-off atmosphere in which gold thrives, one would assume incorrectly. Dollar weakness is offsetting selling sentiment in regular trading - at 4PM in New York, gold is up about $1.00.

The dollar has been gaining strength all year in anticipation of a weaker euro that analysts are still saying must come if Europe is to revive fully from the recession. However, with the evaporating of that possibility, at least for the nonce, the dollar sank. But it will be back.

The Europeans are certainly dragging their feet on jump starting their economy.

Odd that an amalgamation of countries with such liberal governments are basically conservative as human beings. The flip side is the U.S., where it seems individuals are always running around at breakneck speed almost unhinged but not quite and what does the U.S. get? A very conservative government. There's a Phd. thesis lurking in there somewhere.

A lot of restraint was shown in many U.S. markets today as everyone awaits the employment news tomorrow.

As always, wishing you good trading,

Gary S. Wagner - Executive Producer