The January job market surpassed expectations as the private sector gained a net  243,000 jobs.  Experts had projected a gain of 150,000 jobs. The unemployment rate fell to 8.3 percent and was at its lowest level since February 2009.  The January results mark the 23^rd consecutive month of increased private sector jobs demand.

The distribution of these jobs was spread across the country and touched every sector of the economy.  The “diffusion index” tracks job creation by sector.  The index rose to 64.1 in January from the 62.4 in December. 

Pound sterling gains were halted in the overnight following the release of the Markit/CIPS UK construction PMI survey.  Although still relatively positive, survey results were worse than had been anticipated by analysts, leaving some still skeptical of any short term UK economic recovery.  As a result, the British pound traded slightly lower to yesterday’s high at 1.5841 against the US dollar.  The exchange rate hit as high as 1.5869 in midday trading yesterday.

Regardless of how the Euro Zone finance members really think about the economic and financial matters of its 17 members, the word from the finance ministers assembled in Davos was inordinately optimistic.  The cause for that optimism is difficult to understand and might lead one to wonder if this is simply another effort to stabilize the economies whose demise has now spread to the heart of Europe.

The Euro Zone’s well-orchestrated damage control went in to a full court press, including a two-part interview with CNBC by former ECB President Jean-Claude Trichet.  In the first leg of the interview, Trichet touched upon general observations saying the Euro Zone Crisis is a serious and global problem.  Trichet added that Euro Zone finance ministers were operating on a round the clock crisis mode. 

As Greece struggles to reach an agreement about future bailout funds, the private investor and public investors are distancing themselves from a viable solution that would enable the country to meet a critical short-term payment deadline.  More discouraging is the unwillingness of the two parties to pull together.

In a scene that resembles the gridlock in Washington, the likelihood of Greece continuing as a Euro Zone member looks dismal.  Rumors circulated today about the country’s dismal trajectory and the strong probability that regardless of what happens with these talks, Greece may not be a Euro Zone member 12 months from now.

Creditors unexpectedly walked away from the bargaining table after late Friday night negotiations came to a halt.  The news is likely to reshape the Monday meeting of finance ministers from the euro zone.  At stake is the fate of billions of euro Greek bonds and very possibly the future of the euro alliance.

The plan on the table would require investors to accept a 65 – 70- percent loss on current Greek obligations.  Greece would take the remaining balance and convert the balances to 30-year bonds that would yield an average of 4 percent.  The plan also calls for a 15 percent cash sweetener from  

Despite the Obama Administration’s resistance to contributing funds to the IMF in support of the euro zone, the euro has gained some traction.  The currency has climbed well above the $1.26 trough and is flirting to move past the current the $1.2867 level.  Traders suggested that the euro remains volatile and the currency may not have bottomed yet.

In October, the euro rose to $1.3145 against the dollar.  Analysts believe that until the currency crosses that threshold the bottom has not been found. 

Standard and Poor’s downgrade of nine euro zone members on Friday is sure to create political and financial upheaval in the euro zone. However the fate of Greece remained center stage in the region’s once proud economic theater.

The struggling country is in its fifth recession but has few sympathizers for a nation that rigged the books to gain admittance into the euro zone. Although most private investors have agreed to a structured default and have agreed to accept as much as a 50 percent loss in credit default swaps, the banking sector is not on board.

 Last month when S&P posted a warning that the credit ratings of the 17-member nations of the euro zone were under review, global markets quivered.  As of mid-afternoon Friday, the downgrade rumors were rampant and world markets showed the stress.  After hours confirmation by S&P confirmed the market’s fears.

According to S&P, Ireland avoided a downgrade.  Likewise, Finland and the Netherlands survived the rating’s scrutiny and will retain their AAA ratings. The news was not so good for France, which fell one notch from AAA to AA+.  Not to be lost in the rubble, Austria lost its AAA rating and fell one notch.  Portugal and Spain fell two notches. Italy collapsed from A to BBB.  There was no news from several other Euro Zone members who are awaiting the axe. 

Following a robust manufacturing on Thursday, global markets enjoyed a surprisingly good non-farm payroll report for December.  Private sector jobs rose to 212,000 from 110,000 in November. The manufacturing index increased to its highest level in three year.  On top of that, the unemployment rate lowered to 8.5 percent, also the lowest rate in three years.  In a separate report, Household Employment also posted strong gains.

What was particularly interesting was that Washington received the news very quietly.  For once, Congress was not rushing to then podium to score some divisive political points.  By all accounts this job report was better than expected.  That does not mean there are some inflated seasonal jobs, but the economy is plowing ahead.

If it seems too good to be true, it usually is just that.  Tuesday’s strong U.S. and global marketplaces chilled a bit in early Wednesday trading.  The strength of Tuesday’s trading is attributed to some encouraging economic data from the US and some relief from the euro zone crisis.

But, when Europe is involved, sweet news can turn sour in an instant.  Damaged by Friday’s report of Spain’s larger than expected deficit, the country’s new government immediately announced tax increases and frozen ages for government employees.  Spain was thought to be in a better place now that their bind auction has been fairly stable and as the yields have steadily decreased.