Trader Talk

The Jobless Surprise

S&P 500 futures jump 13 points on nonfarm payrolls. This was a real outlier: 11,000 jobs lost was far better than the loss of 125,000 expected, positive revisions in September and October were also a positive.

Average workweek also improved to 33.2 hours.

Stocks are up, and so is the dollar! Gold is down $30 (nearly 3 percent). Treasury yields up.

Warning: traders will now have to at least consider THE BIG QUESTION for 2010: when will the Fed begin to soak up the tidal wave of liquidity they have let loose on the markets?

We have a reasonable shot at 52-week intraday highs for the S&P 500 and the Dow Jones Industrial Average today.


1) Repaying TARP: Bank of America successfully sold 1.3 billion common equivalent securities at $15 apiece ($19.3 billion), a 5 percent discount to the stock's close and a dilution of about 13 percent for existing shareholders. They will use that money, along with $26 billion in cash, to repay the $45 billion they owe under the TARP.

The securities will convert to common shares, after investors approve an increase in the number of authorized outstanding shares.

This was a key overhang on the stock. RBC Capital, in a note to clients this morning, noted that it allows "BofA to free itself of certain government restrictions including those over compensation, which will likely make it easier to bring in a new CEO and retain talent at Merrill."

2) Discounters: Big Lots, which sells excessive inventory from companies, up 12 percent pre-open. While November retail sales were soft for discounters like Costco and BJ's, Big Lots reported Q3 earnings above expectations ($0.27 vs. $0.18 consensus) and guided significantly above consensus for the fourth quarter ($1.09-$1.14 on continuing operations vs. $1.04 consensus). Those Q3 earnings include November.



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