Thursday, July 19, 2012

Initial Jobless Claims Disappoint

Last week's initial jobless claims print was 386K; 21K above the 365K consensus.  It appears that things are not as rosy as the holiday shortened week numbers supposedly indicated, which we touched on last week.  And claims for that holiday week were revised up by 2K.  We are still amazed that the economists' estimates were so low.  We are assuming they thought a 15K increase would account for the prior holiday week.  We guess the lower seasonal factor applied to the latest week data, which is available for every week in 2012 on the DOL website, was overlooked.

  • Seasonally adjusted (SA) initial claims of 386K versus the 365K consensus for last week; up 34K from prior week.
  • Non-seasonally adjusted (NSA) claims also up from the prior week.
  • Continuing claims (both SA and NSA) up from the prior week.

With continuing bad numbers regarding the state of employment, the market futures remain higher; S&P 500 futures are up 5.0.  Drivers behind the latest optimism, as the market has already increased another 1.4% this week, are the better than expected earnings and continuing hope for the Fed to announce QE3 next month.  We note that many of the good earnings numbers were also accommodated by disappointing forward guidance, especially on the topline.  But that doesn't really matter in today's central-bank-centrally-controlled market, does it?

Existing home sales and the Philadelphia Fed's business survey will be released later this morning at 10am (ET).  Estimates call for 4.65MM and -10.0, respectively.  In addition, the Conference Board's leading economic indicators (LEI) will be posted.  The consensus is for a decline of 0.2% in June, following the 0.3% increase we saw in May.  The June LEI was likely helped by the stock market's gain in that month.  S&P 500 went up by approx. 4% in June.  Then again we keep wondering that given the central bank's role in the equity market and overall asset inflation, and the not so encouraging economic numbers, can the equity market still be considered an economic leading indicator?  Of course, that's a question for the experts to answer. 

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