Good morning. On the heels of a really positive Labor Department Employment Situation Report U.S. equities rallied big on Friday with the Dow climbing 209 points, 1.24% to 17,010, the S&P 500 added 22, 1.12%, closing at 1,968 and the Nasdaq ended up 46 points higher, 1.03%, at 4,476. Not to be Debbie Downer but all three indexes finished lower on the week with the Dow down 0.6% and the S&P and Nasdaq both off 0.8%. But we’ll take what we can get, right?! The jobs report couldn’t have come at a better time being the S&P was testing an important support line dating back to Q4 2013. By the way, and this is from years of trading, don’t be surprised if this support gets tested again. Markets rarely test important trend lines just once. Delving into the details of the report, payrolls in September climbed 248,000 which was way over expectations with the unemployment rate falling to 5.9%. Yes, one of the reasons the unemployment rate fell was that the labor participation rate fell (people quit looking for jobs) but if you look at a chart dating back to the year 2,000 the labor participation rate has continued to fall perhaps due to changes in demographics as “baby boomers” age and retire. Very important to me, the revision to August’s job report (and you regular readers know how important I believe revisions are) was materially higher from 142,000 to 180,000, and this from an already higher revised number. The all-important private payroll number rose a stunning 236,000 which was 20,000 higher than expectations and August’s number was revised markedly higher. Drilling down deeper into the report, the average hours worked rose to 34.6 per week from 34.5. Now this may look like a very marginal gain but what it’s telling you is businesses across the country were working their labor forces longer rather than adding new employees to their payrolls. This is effectively adding an additional several tens of thousands of non-farm jobs.

Investors outside of the U.S. are riding the coattails of our markets with all the Asian markets closing higher (the Nikkei 225 and Hang Seng materially so) and the European markets all currently trading nicely up, especially Germany’s DAX up 1.12%. Europe’s performance is a bit surprising considering a report on eurozone investor confidence fell to -13.7 form -9.8 with a -11.5 expected and German factory orders down 5.7% in August vs. a prior +4.9% and an expectation of -2.5%. Locally, the Dow is up 70 this morning which is a very nice start but folks today’s close is going to be much more important than the open testing the big rise we saw Friday on the jobs report. Putting it another way, will investors and traders use this strength to sell into?

Oil got pummeled again on Friday with WTI falling $1.27 closing at $89.74 and Brent down $1.11 settling at $92.31. Oil is going to remain under pressure unless demand picks up somewhere (China? Europe?) or we get a reduction in supply from somewhere either voluntarily, Saudi Arabia, or involuntarily though conflict. This morning WTI is literally flat to Friday’s close. Here’s one for you. WTI prices have fallen 13% to a 27 month low since late June, about 3 ½ months ago. Over this same period Exxon Mobil’s stock price has dropped $8.65 per share, or nearly 9%. This equates to a drop in Exxon Mobils’ market capitalization of $36.85 billion.  Now this figure may be hard for you to get your hands around so I’ll put it in other terms. In just 112 days Exxon Mobil’s market cap fell more than the entire value of Tesla! Poof!

After falling 9.1¢ on Thursday on a bearish storage report, natural gas jumped 10.7¢ on Friday closing at $4.039. Friday’s weather forecast for the Midwest turned cooler pushing utilities into the cash market driving prices higher. There is no doubt short term traders take their queues from the cash market. And the opposite is happening this morning. The cash market is weaker today and natty prices are down 13.9¢ and guess what? We’re back at that magic $3.90 level. That being said, whereas the low $3.70 level was support in July and August, the $3.90ish level looks to be support now.

Things are bad and getting worse for Mr. Putin. Russia’s three biggest exports are metals, wheat and oil, with the last by far the largest and most important. As mentioned previously, oil prices are down 13% over the last few months but so are metal and wheat prices. If that’s not bad enough, the west has ratched up the sanctions on the country over about the same time frame. The evidence of the damage can be seen in the foreign exchange market. Whereas the Ruble/US$ rate this past July was 36.5, it is now over 40. That is a decline of 9.6% in 3 months. That’s a huge change! Mr. Putin does have some time for it takes many months for the effect of the sanctions and the decline in the Ruble to be felt by the average Russian citizen but Mr. Putin is on borrowed time. And he knows it. Have a good day.