Thursday, February 11, 2010

Initial Jobless Claims/Retail Sales Preview- 2/11/10

Via Bloomberg:

The administrative backlog from the New Year holidays was supposed to have already cleared up. But not so fast! The Labor Department attributes a stunning 43,000 drop in initial claims to 440,000 for the Feb. 6 week -- not to economic improvement -- but to the final end of the backlog, a backlog that inflated levels in prior weeks. In only a very partial offset, the prior week was revised 3,000 higher to 483,000. Given the haze of the backlog effect, the four-week average offers the best handle on the data, falling for the first time in four weeks, though only by 1,000 to 468,500 and little changed from mid-December before the backlogs started to build.

The number filing continuing claims continues to come down, falling 79,000 in data for the Jan. 30 week to 4.538 million. The improvement here masks, to a degree, those falling out of the insured workforce where the unemployment rate remains steady at 3.5 percent. In unadjusted data for the Jan. 23 week, those filing emergency claims fell nearly 185,000 to an total of 5.45 million. Those filing for extended benefits rose more than 13,000 to about 236,000.

Financial markets showed very little reaction and no clear direction from today's report with the dollar easing slightly, in what could be a sign of demand for risk, though equities and commodities fell slightly, in what could be a sign of risk aversion. Snow-storms will begin clouding the claims report this time next week, likely producing fewer claims but pointing to another backlog as the unemployed, once the streets are clear, make their way to the claims office.

Not great Data. However, I am encouraged to see a 40,000 job improvement from last week, especially since economists missed the target handily. It will be critical to test the strength of this weeks claims decrease against the future reports to come. Headline unemployment remains at 9.7% currently. I will look to the February unemployment report on Friday March 5th, for verification and/or support of these numbers.

Tomorrow morning at 8:30 EST Retail sales will be released for the Month of January. Economists surveyed by Bloomberg expect an increase of 50 basis points from last month. Retail sales declined slightly in December by 30 basis points. If The report beats estimates I expect to see a rally in U.S. equities and a sell-off in Treasuries. Though, these fundamentals may be displaced pending new developments in the European Sovereign Debt Crisis.

P.S. I am continuing my break from trading and indulging in research and Philosophy. I am reading LAO-TZU today. I'll leave you with this:

"When the government is muddled and confused, the people are genuine and sincere. When the government is discriminate and clear, the state is crafty and cunning."

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC


  1. Very nice reporting as usual. That lao tzu picture is epic btw... !!!!

  2. haha. I thought it would give the post a bit more color.


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