Yesterday, if you watched the market closely, you probably went to bed with a stiff neck.  The Dow Jones Industrial Average was all over the place:  +101, -193, +195

To close the session +183 points higher after travelling more than 500 points from the opening to the closing bell.  Technically, DJIA 16,000 had to hold and it did; it could make a major breakout through 16,400.

Crude Awakening

The wild ride in the stock market arrived, courtesy of reactions to several news releases and developments, including a rebound in crude oil.  However, crude oil had less influence than the harsh revelations that the U.S. service economy is slowing considerably.  Nonetheless, crude soared into the closing bell once again- tickling the top of the down channel.

There was scuttlebutt about some OPEC and non-OPEC countries gathering soon as well as more rumors about Russia and Saudi Arabia calling a cease-fire.

Doves Flex

The ISM non-manufacturing index came in at its lowest level in 23 months, paced by a sharp deceleration of employment, new orders, and a major contraction in prices paid.   The action seems more akin to what we would see at the end of a business cycle, not the beginning.  That’s bad news for Fed hawks and the so-called duel mandate of jobs and inflation.

Still, hawks on the Fed are adamant about hiking rates, and doves seem set on proving that they have muscles and will flex them.

The news might have played a role in a big move in the U.S. dollar versus other currencies; it magically triggered a 300-point move higher in the Dow Jones Industrial Average, which gets more than half its revenue from outside the United States.

The strong dollar sounds great and patriotic.  In fact, U.S. companies make so much money outside of America (see table).

Financial Cry

The S&P 500 Financial index (ETF) found support yesterday, but make no mistake; the damage has been frightening.   Some of the reasons include exposure to oil industry loans, exposure to overseas markets, and perhaps a reversal in the Fed rate-hike roadmap.

It was a good session for materials and energy; on a year-to-date basis, only utilities are higher.

Today’s Session

Lots of earnings and economic data out this morning and none of it is good.   Productivity for the fourth quarter is another number that puts the Fed in a pickle.  Overall productivity declined 3.0% on annual basis from the third quarter, pressured by a 1.3% spike in hourly compensation and other labor cost.

This is sure to pressure bottom lines, and higher wages could embolden the Fed to stay the course that otherwise appears misguided.

Annual Productivity & Cost	2015	2014	2013	2012	2011
Labor Productivity	0.6	0.7	0.0	0.9	0.2
Hourly Comp	2.4	2.0	1.1	1.7	2.1
Unit Labor Costs	3.0	2.7	1.1	2.2	2.0

The US dollar and crude oil have been whipping around along with equities in the pre-open, so let’s hold off for a moment.

Comments

It is a sad commentary on US society that, when polls show 80% of the people say she's "untrustworthy" AND the top words used to describe her are "liar" and "dishonest", she's the Dem frontrunner for the most powerful job in the world kev on 2/4/2016 10:07:08 AM

It's beyond sad, its a disgusting commentary on half of our country that doesn't have a moral compass. kenny on 2/4/2016 10:21:25 AM

Need to get yo-yos. Buy stocks when yo-yo is down and sell when yo-yo comes back up. Rodman Johnson on 2/4/2016 10:40:51 AM

having been a top secret control officer for the g-2 all documents were carefully conntrolled and who requested of signed one out and if not returned i would hunt it down by the one dwho checked it out among other things there are no excuses and no private servers for any top secret items and this was for a corp in germany john sherman on 2/4/2016 11:01:15 AM

I missed the sidebar question earlier. What's amazing is the ammount of chutzpah the Clintons have and that she is still running for the nomination. I suspect that when Obama has a favored candidate that Hillary will be indicted before the convention. Rodman Johnson on 2/4/2016 11:53:48 AM

I am sure Biden has been instructed to wait to enter as a white knight until Clinton is indicted soon. E.V. Wagoner on 2/4/2016 1:30:58 PM

When you have the MSM, East Coast/West Coast uber Wealthy, Rich and Famous in your corner and pitching for you it's easy to confuse most of the population who get their information and base their opinions on talking heads who have journalism degrees at best! That majority of the1% Mitt talked about was who funds the Progressive Democratic Front in America. Want to understand our economic plight just look at the IRS and Census data then the Federal balance sheet. Reality is not an issue for HRC, Bernie or 95% of the Politicians in Federal offices. Garro on 2/4/2016 2:33:39 PM

Of course this question is a joke...Someone should ask her publically if she did so little that her emails would not contain any confidential information???? How would that be possible if you are sec. of state interacting with the highest levels of the US government? I worked on security with the NSA/encryption 40 years ago and the definitions must have changed over the years. Frank on 2/5/2016 6:51:19 PM

How could anyone believe that one person has time to generate 300k Emails, on an overwhelming travel schedule with expected responses from recipients? mike on 2/7/2016 11:32:53 AM

6 flips of a coin she has a real problem with truth all of the time...I would never vote for someone who tells the Bengazi victims family that it was a video when she told her family and a politician the truth that night! Frank on 2/8/2016 4:29:24 PM

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