We are not afraid and, in fact, welcome a shake out of the market that makes great investments cheaper. I'm beginning to think this is going to be 1994 where the market traded sideways for a while as the Fed radically adjusted policy. Remember if the Fed could take away the punch bowl it means the domestic economy no longer is a risk to the fundamental part of the stock market rally.

That said, it will be critical to be able to zero in on specific ideas rather than toss darts. Let's wait for the morning and those jobs numbers. My gut tells me a good number (vis-a-vis the estimates and not historic standards) could spark a rebound in stocks.

All Focus on Jobs
By Carlos Guillen

Stocks are continuing to slide for the third consecutive day, and given investors' negative reaction to the overall weak economic data posted yesterday, it now appears that negative macroeconomic data is no longer lifting markets on the reassurance that the Fed will continue to pump cash into the system.

On the Jobs front, according to the Department of Labor, initial claims during the week ended June 1 totaled 346,000, decreasing from the 357,000 revised figure reported for the prior week and landing above the Street's estimate of 348,000. The initial claims' four-week moving average was 352,500, increasing from the prior week's average of 348,000, below the 350,000 level which economists say is consistent with moderate labor market growth of about 150,000 net new jobs a month.

At the moment all the focus is on labor markets as investors look for any indication as to when the Fed may begin to scale back its $85-billion-a-month bond-buying program, which has supported equity prices for some time now. Perhaps ironically, if the jobs number tomorrow is too good, stocks could weaken on worries the Fed will taper its bond buys, and at the same time a figure that is too low also would weigh on stocks. So the jobs data cannot be too hot or too cold, because if it is we will see the fourth day of stocks losing ground. As it stands economists expect a rise of 164,000 in nonfarm payrolls and an unchanged jobless rate of 7.5 percent, but if yesterday's ADP report said anything about Friday's job's numbers, things are not looking very encouraging.

Currency Chaos
By David Urani

In the middle of the day today we got a decisive turn lower in the markets, and while no one piece of news seemed to set if off there were a couple of technical things going on that may have contributed. For one the S&P crossed below its 50-day moving average at 1,605.

But the really interesting movement was in currencies, particularly the dollar and yen. There's widespread fretting about the yen, which all of a sudden spiked up more than 3%, and continues a stretch of haywire trading activity in the Japanese markets; subsequently the Nikkei index futures, which had been cheap-yen driven up until the middle of last month, are also down more than 3%.

But the thing is, I'm seeing all other currencies also rising including the Aussie dollar +1%, the Swiss franc +1.5%, British pound +1.5% and euro +1.4%. That is, except for the dollar which is down 1.5%.

This may be a dollar drop rather than a yen spike.

Dollar to Yen

Normally a falling dollar would mean more QE expectations, but then again you would think the market would go up in that case. Otherwise, we are hearing faint speculation of another US credit downgrade, which would match the situation of both the market and dollar dropping. However, no real news has been substantiated yet. Clearly the market is very on edge however, and especially so heading into tomorrow's job numbers.

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