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Will Jobs Report Stem The Selling?

The Dow tanked on Thursday, as more signs of weakness in the labor market heightened concerns about the economic outlook.

The market hobbled out of the opening gate after weekly government data showed an unexpected jump in the number of filings for jobless benefits, while a report by ADP Employer Services showed private employers cut 33,000 jobs in August.

The data fueled investor nervousness ahead of the government's key August non-farm payrolls report, and losses

Will the jobs report due out Friday at 8:30am stem the selling?

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"People are anticipating a bad jobs number on Friday,” says TJM Services trader Jim Iuorio. “But I think financials will be a buy in the morning.


Here’s his thesis: The dollar is strong which keeps the lid on commodity prices. That prevents the Fed from tightening. If the jobs number is horrible, then rate hike talk is passé. And if the jobs number is good the dollar continues to rally because compared to Europe we’re better off.

Either way the dollar should continue to rally which allows the Fed to allow the yield curve steepen. That will allow banks to earn their way out of their problems.

"I wouldn’t pick one bank,” he says. “You don’t know what they’re holding on their books,“ however getting long a basket of financials might be a smart play.

The Bottom Line: If the Fed doesn’t need rate increase rhetoric the problems in the financials could begin to solve themselves. The trade ahead of the jobs report is to buy the financials.



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Trader disclosure: On Sept 4, 2008, 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 (WMT), (UUP), (ATVI), (MSFT), (CY), (EMC): Adami Owns (C), (GS), (INTC), (AGU), (BTU), (MSFT), (NUE): Finerman Owns (GS): Finerman's Firm Owns (AAPL) Call: Finerman's Firm Owns (AEO), (MSFT), (NOK), (SUN), (TSO), (VLO), (JCP), (JNJ), (RIG), (PDE); Finerman's Firm And Finerman Own (C) Leaps; Finerman's Firm Is Short (BAC), (XLF), (IYR), (IJR), (MDY), (SPY), (IWM), (COF), (WFC), (BBT), (WB); Finerman's Firm Owns (JCG) Calls. (IRF) Calls: Pete Najarian Owns (AAPL) And (AAPL) Collar; Pete Najarian Owns (LEH) Call Spread, (LEH) Put Spread; Pete Najarian Owns (LMT) Put Spread; Pete Najarian Owns (MS) And Is Short (MS) Calls; Pete Najarian Owns (NOK) And Is Short (NOK) Calls; Pete Najarian Owns (XLF) And (XLF) Collar; Iuorio Owns (C)

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