More on Initial Unemployment Claims

A.) From the late Spring to the end of last winter, we've seen initial unemployment claims drop from 650,000 to 450,000. The drop was consistent.

B.) Since that time, we've seen initial unemployment claims bounce between 450,000 and 500,000.

Since the beginning of the year we've seen two periods when there were distortions in the data. The first was about a month ago. The second was this report, which Bloomberg noted:

The number of jobless filing for initial unemployment claims increased in February, pointing to trouble for the February employment report and sending equities and commodities lower in immediate reaction. Initial claims jumped to 496,000 in the Feb. 20 week, the highest level since November. The four-week average, up 6,000 to 473,750, is also the highest since November and is more than 15,000 higher than January levels. In an ominous note for the monthly jobs report, claims offices said heavy weather increased the number of claims in the week. Continuing claims, where data lags by a week, were slightly higher at 4.617 million and are little changed from January levels. The unemployment rate for insured workers is unchanged at 3.5 percent.

Initial jobless claims unexpected jumped a sizeable 31,000 to 473,000 in the week ended February 13 week after dropping 41,000 the prior week. There are important special factors possibly affecting the data but the Labor Department offered no explanation. An obvious probable factor was extremely heavy weather through most of the nation in the reporting week, and results from four states had to be estimated including the key states of Texas and California with holiday backlog in the latter having skewed prior reports. Count on lots of speculation on how snow storms over the past two weeks affected the numbers.

I'm not sure how much credence I give to that statement regarding weather. For example, I live in Houston, Texas, where the winter has been really cold by Texas standards. We've even had snowfall in Northern Texas cities like Dallas. For a city that is not equipped to deal with this (no snow removal, inability to deal with driving on ice etc...) it can be a big problem. But I'm just not sure I buy the argument that the weather is the reason for the skewed data. I'm not saying it's impossible, but not possible.

I think there are some fundamental factors at work here which, if they continue for more than a few (say, through March), will have some negative implications for the recovery.

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Forex Fridays

A.) Prices are at a top, have broken an uptrend but have not moved lower.

B.) The EMA picture is strong. The shorter EMAs are above the longer EMAs, all the shorter EMAs are moving higher and prices are above the EMAs.

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Today's Market

The same analysis applies to the SPYs and the QQQQs


A.) Note that prices are floating around the EMAs. Also note that prices are in a pennant formation. Finally, the EMA picture is fairly bullish -- all the EMAs are rising and the shorter EMAs are about to move over the longer EMAs.

B.) Momentum is increasing and

C.) Money is flowing into the market


A.) The transports printed a strong bar yesterday on the news of increased transportation sales in the durable goods report. Also note the bullish EMA picture -- the shorter EMAs are moving higher and the shorter EMAs have moved through the longer EMAs.

B.) Momentum is increasing and

C.) Money is flowing into the security.
B.)

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Today's Market ... Will Be Up Tomorrow AM

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Welcome to Campaign for American's Future Readers

The bloggers over at Campaign for America's future have asked to use the manufacturing post from a few days who. So, welcome and I hope you enjoy the site.

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New Home Sales Drop

From Reuters:

The Commerce Department said on Wednesday sales of newly built single-family homes dropped 11.2 percent to an annual rate of 309,000 units, the lowest level since records started in 1963, from 348,000 units in December.

It was the third straight monthly drop and the largest percentage decline in a year. Analysts, who had expected a 360,000 unit pace, said bad weather was partly to blame and warned of more of the same for February.

"There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that does not take away from the fact that the housing sector has taken another big step back, even with government aid," said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

Let's go to the data:

This look more like a continuation of the bottom forming in New Homes sales. I described the situation like this a few weeks ago:

The pace of new home sales is still at the bottom. It rebounded a bit, but in reality the best way to describe the current pace of new home sales is "bumping along the bottom."

This is in line with new home construction whose chart is similar.

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Jobless claims, Durable goods show worrying bifurcation

- by New Deal democrat

This morning Initial Jobless claims were reported at 496,000, the highest in nearly 3 months. The 4 week moving average increased to 473,750.

Up until now, the jobless claims data had not broken the downward trendline since March 2009. They have now done so. Add this to the surprise strong drop in the Conference Board's consumer confidence number (not confirmed at this point by the similar, older U of Michigan survey), and you have a worrying setback on the jobs and consumer front.

On the other hand, durable goods orders were reported up 3% this month, and last month's report was revised up to +1.9%. While ex-transportation there was a -0.6% decline, last month's data ex-transportation was also revised up to +2.0%. Nondefense capital goods were up 4.7%. This completely turned around YoY Capital goods readings to a positive reading over 10%!

Besides the durable goods data, all of the regional Fed reports - New York, Philadelphia, and Chicago - have also come in strong. Industrial production came in good. The American Trucking Association's report for January showed a very strong increase -- to the point where trucking is back about 2/3 of the way from its recession bottom to its pre-recession top. All of these show a very strong manufacturing rebound that is continuing.

Bonddad and I have both suggested that exports and manufacturing may lead the way in this recovery, and both of us have noted that the US consumer, formerly the locomotive of the world economy, is now the caboose.

We are seeing - at least in one month's data - an amplification of that bifurcated pattern. The economy ex-people is having a V-shaped recovery, while the consumer - especially those in the bottom half of the income distribution - may not be seeing any improvement at all.

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Reading Comprehension 101

Welcome a a new class at the Bonddad Blog. It's called reading comprehension -- a skill shortly lacking in the blogsphere. Consider the argument advanced by many that US economic statistics are horribly off -- it's proof I tell you of a massive conspiracy to quell the masses! The proof is supposedly contained in a NY Times article from November 9:

A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.

The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture.

This is proof -- IMHO -- of how rigged the data is.

Except for one point -- also contained in the article and usually not quoted:

The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.

The very worst that would happen with the data is a .2% alteration in the GDP number -- and that is assuming the worst possible outcome.

This is the Ann Coulter school of footnotes -- the article sort of says what I want it to say, so I'll cite it as a source and hope no one notices.

People notice. This argument is an epic fail. Try again.

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Thursday Oil Market Round-Up

In general, the oil market is still in a channel, between lines A and B.




A.) Prices are consolidating above the 61.8% Fibonacci level. In addition,

B.) Note the EMA picture. The 10 and 20 day EMA are rising. The 10 day EMA has moved through the 50 day EMA and the 20 is about to do so. All three shorter EMAs are rising.

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Today's Market

A.) Prices are consolidating between the 50% and 61.8% Fibonacci level.




A.) Also note the price/EMA picture. Prices are consolidating on top of the EMAs. The shorter EMAs are moving higher, although at a smaller angle. However,


Notice the overall position of the microcaps. Instead of falling to the EMA for technical support, they are holding steady, as are


The Transports.

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