JOBLESS CLAIMS SURGE, SEARS DISAPPOINTS
The market continues to fly higher in the face of bad news. This morning’s jobless claims surged unexpectedly higher to 576K – a truly remarkable figure this far into a “recovery”. Econoday reports:
Jobless claims data are a disappointment, showing increases in both initial claims and continuing claims. Initial claims for the Aug. 15 week rose 15,000 to 576,000 with the Aug. 8 week revised 3,000 higher. The result is well above expectations for 550,000. Continuing claims for the Aug. 8 week rose 2,000 to 6.241 million for a second increase in three weeks. There are no special factors skewing the data. The four-week average for initial claims rose for a third straight week and is now trailing the latest week at 570,000. The four-week average for continuing claims offers some good news, at 6.266 million for a 3,000 improvement in the week and well down from 6.548 million a month ago. The unemployment rate for insured workers, unchanged at 4.7 percent, also offers some good news. But the headline rise in initial claims is a disappointment pointing to no improvement for August payroll data. Stocks and commodities dipped in immediate reaction to the news.
In other news, Sears reported an absolutely horrible quarter. Shares are down 13% on the news. Despite $1B in cost cutting, the company still missed estimates. Revenues were down 10% year over year while same store sales at KMart and Sears both fell double digits. The consumer continues to struggle.
Naturally, the S&P 500 is tacking on 0.5% this morning….
So yahoo is claiming that the rally today is due to higher energy prices. Can someone please explain this to me? Last time I checked higher energy costs were bad for the economy. Of course I thought an unexpected jump in jobless claims would be bad as well…
Is it unNaturally, the S&P 500 is tacking on 0.5% this morning? Strong dip buying for some reason. Bulls in control.
I think you guys don’t read the news and from the independent news channels. Why don’t you try this one http://www.cnbc.com/id/32490635 (Recession Shows More Signs Of Easing Over the Summer)!!!
The markets ignore what it wants and focus on what is wants. Trust me…if these initial jobless claims fell, the S&P would be up over 2% today. Why…? Because initial jobless claims is less than expected. Why did the markets go up yesterday…? Because retail did better than expected (through Home Depot and the like).
Now? Well initial claims is WORSE than expected. Retail did WORSE than expected. Yet we rally because of a manufacturing report.
Just like natural gas today (which I am looking to get into but have not yet). The build of natural gas increased by +52bcf as opposed to the +60bcf that was expected. What happened to natural gas? It is currently down. The spot price is down like 2%. And the price is already down about 40% this year. And the ratio of oil to natural gas is now like 24, which is historically incredibly high.
There isn’t a real explanation. The madness will continue as long as people chase the rally, stupid retailers believe the government and investment banks/funds spread lies, disinfo and push their weight around. Everything else (like the economy) is petty.
There is still some heavy weakness and resistance in the background: 38.2 Fib, jobs, credit problems, mortgage delinquencies, consumer spending, monday’s sell-off.
It’s only going up today because i took a small short position after the job’s data.
Agreed 100%. This market is going to end very very badly one of these days.
End of story.
We as a country are royally screwed…
These moves make me wonder whether it is psychologically driven or liquidity driven. In other words, is the move simply irrational or is all that cash on bank balance sheets making its way into the stock market….
TPC, from the earning of the banks, the majority of their profits come from trading arms. What get me mad is that GS which is a bank holding and does NO lending get free interest money from the FED…If the program was intended to help American businesses then it’s not working because less lending are taking place. If the banks passed the stressed tests, then get off the food stamps program. With retail horrible, initial claims up..foreclosures up, the market should go down but it goes up…Day to day is the best idea in this environment to me.
Speedy, when you talk about CNBC…please consider their track records of being WRONG.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX8uql8tRH2g
U.S. Economy: Philadelphia Factory Gauge, Leading Index Rise
Mortgage Delinquencies
Figures today on mortgage loans showed how continuing job losses are hurting consumers and the economy. The share of loans with one or more payments overdue rose to 9.24 percent of all mortgages, an all-time high, the Mortgage Bankers Association said. The inventory of homes in foreclosure increased to 4.3 percent, the most in three decades of data.
TPC as Henry said. All you have to do is look where the banks profits have come from. Banks/financials from Bank of America to Goldman Sachs are making their money in TRADING. There is a problem when a commercial bank is making its profits from trading and its losses is on loans and the markets rally because that signifies that the economy is doing better. Banks will not begin lending until they begin making profits on loaning, until then, they will just trade. And thanks to the Federal Reserve they have a hell of a lot of cash to play around. And with Goldman Sachs representing almost 25% of the volume on the NYSE…well…I just don’t know anymore.
Yeah, it must be nice to have a few billion of other people’s money to toss around in the equity markets. It’s almost like they have a free shot at a ponzi scheme. Just keep propping up stocks with the Fed dollars and you can continually increase your profits and effectively create a self reinforcing positive information stream….As long as the economy doesn’t collapse they can do this for years.
TPC, as to your earlier point, when mortgage delinquencies are spiking 8.8% I do not think banks are sending their reserves into this market. Why should they when they can steal from us by having the Fed. pay interest on their reserves.
This is such absolute bullshit.
Well, we can tell from the recent trading figures that they are injecting huge amounts of their own capital into the markets. The problem in such an environment is that if we experience a double dip that cash will come out much faster than it went in.
Like pulling a rug out from under your feet….
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