Stock Market Opening Report - 01/04/2013

(By Rich Bieglmeier) Stocks started slowly on Thursday despite a much better than expected jobs created number from ADP. The street expected 150,000 and saw a print of 215,000 instead. The indexes tried to build on Wednesday's swerve away from the fiscal cliff rally, but ran out of gas after the Federal Reserve's minutes were made public. It seems some on the board are starting to worry about the consequences of QE4ever (crafty name credit goes to ZeroHedge).

Odd, coincidence, or perfect metaphor that MAD's Alfred E. Neuman is credited with the saying, "What, me worry?" It seems to iStock that both are equally funny.

How in the world does the FED expect to unwind a bloated balance sheet of government bonds and not send interest rates higher? With $16 trillion in debt on the books, at least another $4 trillion coming in the next four years, plus estimates of $100 trillion in unfunded liabilities for Social Security and Medicare, any 5^th grader can tell you the math of higher interest rates adds up to U-G-L-Y. A, B, C or All of the Above doesn't apply.

Do calculators even go to 100 trillion? Probably, but there is serious debate as to whether that much money actually exists? Unless the USA's economy starts to grow at above average rates, in the neighborhood of 4-5% a year, we don't think the Fed has much of a choice. That's sort of growth? Unlikely, with the history of GDP growth for countries that breach the 90% debt-to-GDP ratio; the U.S. just topped 100%.  

In any case, we don't see the Fed walking away from a policy they adopted less than a month ago. In fact, last month's QE4ever announcement came with language that plagiarizes Chicago Fed President's talk of targeting rates to employment or inflation. He's a voting member, that's all you need to know.

Any trepidation as to whether Ben Bernanke and company will stop pumping stocks will fade fast into the memory hole. Wall Street will get back to business as early as today if the Employment Situation Report mirrors yesterday's ADP. The street thinks 155,000 new jobs were created in December. Another 200,000+ and stocks could resume celebrating cliff-miss.

And then Q4 earnings season will get started next week with Alcoa's earnings. Expectations have been tempered by a rash or downward revisions. Don't be fooled, executives who run publicly traded companies are well schooled in the art of managing EPS expectations. Earnings growth will likely slow, but it "won't be as bad as we thought," giving stocks room to rally off of bullish, low bar beats.

Speaking of earning – here are next week's iEstimates. For your enjoyment, we added potential bearish misses.

And, last week's results: