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Futures Pop on Payrolls. Now What?

S&P futures popped 13 points prior revisions also better than expected, but then fell back. Average hourly earnings up 0.4 percent much higher than expectations of 0.2 percent gain.

President Barack Obama will speak at 11 a.m. ET on the jobs report.

The cynics will now play a game of chicken with the markets: We will open up and shorts will immediately press the rally. We are so oversold there is a substantial minority who believe we will end on the upside, with several arguing for a big rally.

One major problem is that there are simply fewer traders around. It's not just that it's August and many are on vacation: I mean there are fewer traders around, period. Many proprietary trading desks have closed or downsized. We have seen lower volume all year, not just from high frequency traders , but also from institutions and semi-professional traders who have reduced trading because the macro environment is impossible to decipher.

Long-short equity hedge fund traders in particular have been hit. These typically work in sectors and go long and short a book of stocks. They can give you every reason, for example, why Lowe's will outperform Home Depot in the next six months.

But none of these bets have mattered, because stock picking has not been that important.

Elsewhere:

1. European officials are talking but the fact that there is a monetary union with no fiscal union is again obvious. Several EU officials have indicated they want to widen the scope of the European Financial Stability Fund (EFSF), but there is substantial resistance.

The problem, of course, is that: a) European banks are undercapitalized; b) sovereign debt and bank debt needs a haircut; and c) the EFSF is too small: maybe it can bail out Ireland and Greece, but not Italy. Italy cannot refinance its debts.

2. My email is full of suggestions on what the Federal Reserve , the Congress and the president should do. Most think that the second round of quantitative easing did help lower credit costs, but it did nothing to help jobs, in fact $4 a gallon oil was almost certainly was a job killer. Many want efforts to encourage lending to small businesses, make home loans easier to get, and encourage repatriation of foreign corporate profits at lower tax rates in exchange for job creation. ?

3. Procter & Gamble beats estimates (84 cents a share vs. 82 cents a share consensus) as sales grew more than expected. The consumer goods maker’s organic sales grew 5 percent amid a 3 percent rise in volumes. Price increases boosted sales by 3 percentage points, but that still wasn’t enough to fully offset its higher commodity costs.

However, guidance for the current quarter disappoints ($1 a share to $1.04 a share vs. $1.14 a share consensus), and organic sales are seen up just 2 percent to 4 percent.

4. In its first report since its IPO, LinkedIn jumps 7 percent after surprising the Street with a profit (4 cents a share vs. loss of 3 cents a share consensus). The social network’s revenue more than doubled, exceeding expectations, while its subscriber base soared 61 percent from a year ago. Sales in its recruiting and advertising offerings remained very strong in the quarter. Also encouraging is its stronger-than-expected revenue outlook for the current quarter and the year.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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