From Bloomberg:
The outlook for the August employment report is off to a bad start in what can't be good for today's stock market. Initial jobless claims for the August 7 week came in at 484,000, far above expectations for 460,000 and the highest level since February. The four-week average, up a steep 14,250 to 473,500, is also the highest since February. There are no unusual factors affecting the results.
In a partial offset, continuing claims fell 118,000 in data for the July 31 week. The four-week average fell 64,000 to 4.519 million. The unemployment rate for insured workers came down one tenth to 3.5 percent. These numbers do look good but do reflect, to a degree, the expiration of benefits as the unemployed simply fall out of the insured labor pool.
Here is the accompanying chart:
This report is terrible. Looking at the chart, initial claims are moving sideways and are now at the high end of their range.
6 comments:
Not good. Could these be census layoffs? How many more census layoffs are there left, I wonder.
I don't know if they are census layoffs or not -- but it is something I'm wondering about.
That's really really good. It confirms ECRI's WLI power and the first NDD interpretation of leading indicators. What I don't get is why he doesn't want to see the writing on the wall even though he is clearly seeing that the leading indicators have been going lower for a while (housing starts, ecri, etc).
And now that the private sector failed to restart the economy, the fiscal stimulus and the governement are going to weigth down the GDP growth starting this quarter. It looks a lot like game over for bulls and a perfect time to go short. I am just waiting for the next retracement.
Constant Learner:
I'll be addressing the jobless claims issue tomorrow.
In the last couple of days I have taken a fresh look at the LEI. My back of the envelope calculation is they are likely to increase ever so slightly for July (a few items, like housing permits and durable goods, haven't been reported yet). That puts their 3-4 month average at almost exactly zero, which is what I have been suggesting is about where Q3 GDP is going to come in.
Too many people seem to mean that if there is a "double-dip", it's 2008-09 all over again. Well, we had a total credit freeze-up and $147 Oil then. and an inverted yield curve the year before. There is nothing like that on the horizon at this point.
Given your interest in the LEI, please read this Frisco Fed paper :
http://www.frbsf.org/publications/economics/letter/2010/el2010-24.html
The figure 3 is quite telling and implies that because of the ZIRP policy, interest rate spread shouldn't be taken in account anymore.
Well, we had the inverted yield curve right before the last recession but that's not relevant anymore thanks to ZIRP. We had oil up more than 80% YoY and that's also the case today. We have the corporate credit market creeping higher which is a mild credit freeze.
What's new is the European crisis that's developing in waves. We had a first wave in april/may and it looks like the second wave has just started. We also have a negative stimulus effect on the GDP starting Q3.
The 2008 crisis was american centric and the next one seems to be euro centric.
We shouldn't discount China's bubble but that's a wild card. In any case, their stock market seems to be a leading indicator and has been declining. That's also the case for the sensitive sectors of our economy like ^KBW (banks).
I'm going to sleep. Have a good day/afternoon !
Well its not 2008 again, but it is very possible GDP could dip negative quarter 3 or 4. Wheat is getting expensive. Housing, according to Schiller, is likely to fall further. Unemployment sucks. And still the structural deficit hangs over America's head like the sword of Damocles.
What's to like?
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