Great day in the markets

The S&P 500 roared 1.46% on an incredible jobs report.  Consensus called for 135,000 jobs added. Actual number: 243,000!  Unemployment dropped to 8.3% and it looks like the recovery is moving ahead full steam.  The prior number of 200,000 was also revised up to 203,000, a number which most people thought would be revised down.  Total November and December revisions totaled a whopping 60,000, another surprise from the back end.  On top of this, the ISM non manufacturing index roared with a reading of 56.8 from a consensus of 53.3.  December was also revised up .4 points following the employment survey.  Factory orders also rose 1.1% with inventories rising only .1%, and a .7% rise factory orders and a 1.4% rise in backlog order.

Rates on 30 year bonds sold off 11.6 bp to rise to 3.12% and the 10 year rates rose 10.1 bp to 1.92% causing a slight steepening of the curve.  If employment continues to heat up, the fed may have to rethink policy of not raising rates until the end of 2014 if inflation picks up.  Generally, the best predictor of inflation is caused from wage inflation, which is directly correlated with the unemployment rate. Next week should be interesting as the Greek situation winds down.  The EUR/USD should strengthen and I recommend picking up the micro futures contract as a play on this.  I would sell into the rumor as once a deal is done as Portugal may be the next player to have issues and potentially need a deal similar to Greece.  The real question is how well the financial system and levered banks can manage such a shock as a haircut on two sovereigns.  I still think the system is unsustainable in the long run and this will be an issue we revisit sooner rather than later. 

Stock's picked up and on the radar:

MITK - Company allows you take a picture of a check and deposit it instantly.  Think checks are gone? How do you pay your rent? How about your mortgage?

LIFE: Life is a play off the recent bid from Roche for Illumina.  Life, a more diversified biotech, should be priced fairly at $60 on a takeover given the premium that was placed on Illumina.