The Future's So Bright I Gotta Wear Shades

The DOW closed up 91 points, ever so slightly below my call yesterday for a 100+ point close. Through the Force I can see the future, but its always in motion and hard to see final exact numbers, HA!

The jobs report came in pretty good looking, and the whopper (want cheese?) is that the "terrible" jobs report from August that prompted all the hand wringing was revised upward, wiping out all those job losses (4000 jobs lost is a big deal anyway?).
Thoughts on the jobs number baloney:

• The number probably finishes the rate cut hopes going forward, or at least it should temper expectations. One of the MAJOR bullish arguments out there is that the FED will be cutting rates aggressively into the end of the year. If that argument took a kidney punch today, then shouldn't some kind of downward pressure shown up on stocks? Heck No! Goldilocks had her heart jump started by paddles at the last minute and now we have the perfecto economy we were enjoying before all this nonsense, bullish once again.
• If the FED felt the credit crunch was severe, and that the poor August jobs number was reason to do something, they certainly look a bit misinformed as of now. If the so called genius at the FED cannot foresee the total evaporation of the credit issues and that the jobs were actually not lost, do you really have confidence in them going forward?

The second point of hilarity come from the unending earnings reports form the big financials. Today we get the scoop that Merril will lose 50 cents a share this quarter based on losses from the mortgage morass. Key data from Yahoo business: "The $5 billion writedown essentially erases more than half of Merrill Lynch's net income during the prior 12 months." WOWZA! Of course the stock rallied strongly on the info, because you know, those losses are the only losses Merril will have going forward, and the market is a forward looking indicator!

But wait, theres more! Next up was Washington Mutual. Key data from Yahoo business: "Washington Mutual Inc. said Friday that the weak housing market and the recent mortgage crunch will lead to a 75 percent drop in its third-quarter net income, making it the latest financial institution to warn investors it took a major hit over the summer." Holy toledo! The stock was up as we would expect as the losses were only for the summer, and going forward.... you get the idea. A few thoughts:

• The current accepted wisdom is that the losses at the banks are both less than expected and over with. When its apparent that the losses are going to continue the market is going to need some kind of story to spin it positively.
• If having massive losses causes a stock to go up, I would advise the banks to say they lost somewhere in the area of 2 TRILLION dollars, as this should rocket the stocks up by at least 200%.

The Economic Disconnect is growing at a good clip, and this week was another good one. We can have at the same time an economy that is close to collapse that needs immediate intervention from the FED and an economy that is solidly growing with wonderful job and wage growth. Any way you slice it, its a nice pie. Sadly, the wheels are going to come off pretty soon and the pie is just whip cream topping on a base of doggy poo and it wont taste good!