On CNBC's Kudlow Report Tonight

Tonight at 7pm ET on CNBC:

THE IMPACT OF THE JOBS NUMBER; IS IT A BOGUS NUMBER? JOBS; TAXES, DEBT COMMISSION & QE2





- Robert Reich, Fmr. Labor Secretary; "Aftershock" author; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
- Steve Moore, Senior Economics Writer for WSJ Editorial Board; "Return to Prosperity" co-author

WHY DID MARKETS IGNORE THE JOBS NUMBER? WHAT'S DRIVING STOCKS?
COMMODITIES RALLY BOOSTS EARLY DAY STOCK SLUMP

- Todd Schoenberger, Managing Director LandColt Trading, LLC
- David Tice, Portofilio Manager, The Prudent Bear Fund
- Marc Pado, Cantor Fitzgerald U.S. Market Strategist

OIL CREEPING UP - HOW HIGH WILL IT GO? ANOTHER TAX ON THE CONSUMER?

- Daniel Dicker, Independent Oil Trader, TheStreet.com Senior Contributor
- Peter Beutel, Cameron Hanover President and Author

THE GREAT ESTATE TAX DEBATE

- Keith Boykin, Former Clinton White House Aide; Editor of The Daily Voice online news site; CNBC contributor
- James Pethokoukis, Reuters Money & Politics Columnist; CNBC Contributor

STOCK PICKERS

- Michael Cuggino, Permanent Portfolio Funds; President & Portfolio Manager
- Michael Farr, Farr, Miller & Washington President; CNBC Contributor

Please join us. The Kudlow Report. 7pm ET. CNBC.

Jobs Report Much Softer Than Expected

The November payrolls report was much weaker than expected, with just 39,000 payrolls added last month vs. expectations for 130,000. Also, the unemployment rate saw a surprising climb from 9.6% to 9.8%.

But one of the ways you know investors are in a forgiving mood lately is the reaction in the stock market. Normally, a disappointing jobs report could knock the market down 100 points at the open. But as I write this, the Dow is only down approx. 10 points, and the Nasdaq 100 is flat. That is pretty benign action, especially given that it follows 2 big up days in the market.

The dollar is lower on the jobs report, and also due to further strength in the euro amid diminished stress over sovereign debt and narrowing yield spreads on eurozone bond offerings. The lower dollar is helping commodities, with gold bouncing above the $1400 level and oil hovering at $88.00.

Among the sector ETFs, materials (+0.54%) are bucking the overall weakness and leading the action, while financials (-0.93%) are the big laggards so far.

The 10-year yield is lower to 2.96% currently, after briefly topping the 3.00% level earlier; and the volatility index (VIX) is down another -6% today, falling to 18.19.

Trading comment: The market leaders just don't quit here. Semis continue to act well also. I think performance anxiety could be a factor, as fund managers see the clock ticking on the year and are eager to add some performance wherever they can get it. So this means adding to your winners, and letting them run. Today's positive reaction to the jobs report supports the notion that the buy the dip mentality is in full force right now.

For those who are curious what some of the market leading names are, here is a partial list:

• Apple (AAPL)
• F5 Networks (FFIV)
• VMWare (VMW)
• Salesforce.com (CRM)
• Coinstar (CSTR)
• Illumina (ILMN)
• Rovi Corp (ROVI)
• OpenTable (OPEN)
• Akamai (AKAM)
• Acme Packet (APKT)
• Riverbed Tech (RVBD)
• Panera Bread (PNRA)
• Chipolte Mexican Grill (CMG)
• SXC Health (SXCI)
• Freeport McMoran (FCX)
• Priceline.com (PCLN)
• Alexion Pharma (ALXN)
• Netflix (NFLX)
• Deckers (DECK)

long aapl, ffiv, vmw, crm, cstr, ilmn, rovi, open, apkt, pnra, sxci, alxn

Trichet Doesn't Bite At "QE2" in Europe

The market is adding to yesterday's outsized gains, which is a bit surprising but likely speaks to the underlying strength of this rally. The Dow gained a whopping 250 points yesterday, with the S&P 500 up a similar amount on a percentage basis. The SPX rose further to 1217 this morning, and is now just 10 points away from its recent 52-week high (1227).

Asian markets were higher overnight, with Europe higher this morning. The ECB left rates at 1.00%, but Trichet made no mention nor hinted at any plans to extend bond purchases. Nonetheless, the euro is bouncing for a second day at the expense of the dollar.

The lower dollar is helping boost commodities. Oil has risen further to $87.33, while gold has rallied above $1390.

In economic news, pending home sales for October came in much better than expected, spiking +10.4%, which is the best move in 10 years for this datapoint. Also, many retailers have reported same-store sales for November, which have been mostly solid.

The 10-yr yield is higher again today, and touched the 3.0% level earlier. As for the volatility index (VIX), it's down another -8% today below the 20 level to 19.66.

Trading comment: Although volume didn't rise enough yesterday to qualify as an accumulation day, breadth was impressive. New highs expanded nicely, and up volume on the NYSE totaled 93% of total volume.

The leaders continue to distance themselves from the pack, so no reason to shift away from that strategy. I will continue to buy the dips.

Good News Lifts Stocks

Stocks hit the jackpot today, with the Dow up almost 250 points.

There was better economic news from ADP private jobs and ISM manufacturing. Revised productivity came in stronger with falling unit labor costs that point to strong profits. Europe’s debt problem looks a little easier on hopes the ECB will be buying bonds. (Maybe QE2 for Europe.) There were rumors that the U.S. would contribute more money to a bigger IMF/Euro bailout fund, although the Treasury denies any commitment. China’s manufacturing survey came in stronger. And hopes are growing for an across-the-board extension of the Bush tax rates.

So all of this added up to a big stock rally.

And one final thought: The improving U.S. economy again suggests to Ben Bernanke that he should back off QE2. A tax-rate freeze is a much better idea for growth.

However, if Europe pumps in more money — as I increasingly think it should — we could be headed for a global mini-boom. Surprise, surprise.

On CNBC's Kudlow Report Tonight

Tonight at 7pm ET on CNBC:

ECONOMIC AWAKENING!....ANOTHER BANNER DAY FOR STOCKS!





- Russ Koesterich, BlackRock's iShares Group; Global Chief Investment Strategist
- Joe Battipaglia , Stifel Nicolaus Market Strategist
- Don Luskin, CNBC Contributor; Trend Macro Chief Investment Officer
- Zach Karabell, River Twice Research President Economist; CNBC Fast Money Contributor
- CNBC’s Bob Pisani


TAX TALKS // AUSTAN GOOLSBEE INTERVIEW
- CNBC chief Washington correspondent John Harwood reports.

GOOLSBEE TAX, ETC. DEBATE
- Matt Miller, Washington Post Online Columnist; Public Radio's "Left, Right and Center" Host
- Brian Darling, Heritage Foundation Dir. Government Relations

GOLDMAN LIFTS SECTOR VIEW TO OVERWEIGHT....ARE BANKS BACK? DO YOU PLAY IT LIKE GOLDMAN?
- Scott Valentin, FBR managing director
- Peter Cohan, Peter S. Cohan & Associates

TOMORROW'S JOBS REPORT....PLUS, SHOULD UNEMPLOYMENT BENEFITS BE EXTENDED (AGAIN)?

- Robert Reich, Fmr. Labor Secretary; "Aftershock" author; CNBC Contributor; Univ. of CA., Berkeley, Prof.
- Dan Mitchell, CATO Institute Senior Fellow

Please join us. The Kudlow Report. 7pm ET. CNBC.

Chart of the Day: S&P 500 Struggles Withing Trading Zone

I have mentioned recently that the S&P 500 was stuck trading within this zone marked by its 50-day average as support, and its overhead 20-day average acting as resistance. You can see these two lines in the chart below.

Its 20-day average has also coincided with the 1200 level, a big round number analysts like to watch. This morning, the SPX has briefly pierced that 1200 level to the upside, but we need to recapture it on a closing basis for it to really count. It would also be nice to see volume levels exceed yesterday's tally, so we shall see.

There have been several distribution days (read: high-volume selling) in recent weeks, so we need to see this trend reverse. For that, we need to see rallies start coming on higher volume, and pullback come on decreasing volume.

The recent pullback in the market is roughly 4 weeks old, so that is certainly enough time for a market pause to have run its course. If the positive action continues from here, it will be a textbook shallow pause in the market, which lasted approx. 4 weeks and saw the S&P pullback about -4.5% from its highs.

If you look at the action of many of the leading growth stocks, they have continued to power higher in recent weeks. I like to think of them as leading indicators, which would lend itself to the notion that the overall market will play catch-up and enjoy a year-end rally from here. Of course, we need the flare-ups out of Europe to subside, but there are always thorns in the thesis, so that's not new.

ADP Posts Strongest Reading In Three Years

The market was set to open higher this morning after Asian markets bounced overnight and Europe was trading higher before our markets even opened. There were comments from ECB President Trichet that helped calm markets in Europe, and even hints of increased bond purchases by the ECB. There were also several positive PMI manufacturing readings from abroad.

But the news that really juiced our markets was the ADP Employment report, which showed that payrolls expanded by 93,000 in November. Not only is that much stronger than the 58,000 consensus expectations, but it marks the best reading in three years. This has investors optimistic that Friday's jobs report could come in strong as well. (current consensus for Friday is 130,000)

The dollar is lower, on big gains by the euro. But the euro has already started to fade a bit from its early highs. Commodities are mostly higher, with oil up to $85.75 and gold up slightly to $1388.

The 10-year yield is bouncing sharply to 2.92% today; and the volatility index (VIX) has fully reversed its huge bounce yesterday. So far it is down -12% back to the 20.80 level.