It All Comes Down To This


Next week’s Fed decisions hinges on Friday’s jobs report. Find out what an industry leader expects ahead of the number, and what it could mean for the market.

Mike Darda, chief economist for MKM Partners, has a bullish view of the jobs number and its implications. While Wall Street expects non-farm payrolls to rise by 70,000, Darda thinks the increase will be more like 136,000. The market is not staring at a recession, he said, and consensus job estimates are too low by his calcualations.

But how will a number that high affect the hopes for a rate cut from the Fed next week? This stock market is so worried about recession that, according to Darda, the Fed will be forced to cut because of the credit problems, not the labor numbers.

A 50 basis-point rate cut is less likely, though. Darda said he wouldn’t expect that unless the jobs data was “something close to zero,” indicating a “total wipeout.” It would, however, be possible to see aggressive cutting in the discount rate to bring it into line with the Fed Funds rate, he said.

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Trader disclosure: On Dec. 6, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC), Macke Owns (YHOO); Najarian Owns (AAPL) Options, Najarian Owns (GOOG) Options, Najarian Owns (YHOO) Options; Seymour Owns (AAPL), Seymour Owns (CFC), Seygem Asset Management Owns (CX), Seymour Owns (F), Seymour Owns (INTC), Seymour Owns (MBI), Seymour Owns (TMA), Seygem Asset Management Owns (VIP), Seymour Owns (XOM)

Michael Darda Owns (EEM), (EFA), (EWJ), (IYM), (IYT), (IWY), (IYZ), (PBW), (PPA), (QQQQ), (SPY), (XLE), (XHB), (RRPIX)