Payroll figures will be out today, but we should expect stock market bulls to run with them no matter what they show. Wall Street is expecting a Commerce Department report due out this morning to say that 125,000 jobs were added to the economy in September, slightly more than in August. But if stocks continue to climb today as they’ve been doing on most days since mid-July, expect the jobs data to be spun as the best of all possible worlds regardless of the actual number. If the figure comes in at 125,000 as expected, it will be bullishly interpreted as confirming that the economy is holding steady. If the number turns out to be somewhat higher than expected – say, 150,000 new jobs – it will be seen as evidence that the economy is stronger than some may have thought, though not quite so strong that the Fed will need to initiate another round of tightening. And if the number is below estimates shorts are going to be scrambling for cover, since any such sign of weakness will prompt speculation that perhaps more easing is needed.

Whatever the news, it is the tail that will continue to wag the dog, since the cyclical forces that have been driving stocks higher for more than three months seem far too strong to admit any doubts. The best evidence of this is investors’ apparent ability to shrug off the Amaranth trading disaster as though it were no big deal. In fact, the dollar amount that the firm lost making bullish bets on natural gas dwarfs the Long Term Capital Management debacle, which, you may recall, threatened to take down the entire financial system in 1998. More to the point, Amaranth’s demise may be catalyzing the rally in stocks and bonds by freeing up capital that had been tied to the energy sector. This point is developed at some length by my colleague Larry Amernick in the latest edition of his newsletter. You can receive a free copy of this timely report by clicking here.

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