Jobless Claims Up - Break 400,000
The US is a consumer driven economy. Anything disrupting spending will reduce GDP and corporate earnings.
http://biz.yahoo.com/ap/080403/economy.html
The Labor Department reported that jobless claims rose 38,000 to hit 407,000. That's a powerful indicator, or, as one analyst put it: "This report supports the view that the jobs market is deteriorating toward recessionary conditions." Also significant is that the 400,000 mark is a psychological figure that traditionally means recession is going to happen. It is a 30% increase year-over-year in unemployment.
Economists are 'shocked': they expected a drop to 365,000. In fact, yesterday ADP (a US accounting company responsible for processing 1 out of 6 non-farm paychecks) reported an uptick in employment of 8,000.
This just shows that the experts don't grasp the extent to which the economy is heading to hell in a hand basket. And that means investment opportunities for us.
After all, if the experts are predicting unemployment rates of 5.5 by year end, we can pretty much assume that it will be much higher: 6.3%.
We are short consumer goods and consumer services, among other things.
http://biz.yahoo.com/ap/080403/economy.html
The Labor Department reported that jobless claims rose 38,000 to hit 407,000. That's a powerful indicator, or, as one analyst put it: "This report supports the view that the jobs market is deteriorating toward recessionary conditions." Also significant is that the 400,000 mark is a psychological figure that traditionally means recession is going to happen. It is a 30% increase year-over-year in unemployment.
Economists are 'shocked': they expected a drop to 365,000. In fact, yesterday ADP (a US accounting company responsible for processing 1 out of 6 non-farm paychecks) reported an uptick in employment of 8,000.
This just shows that the experts don't grasp the extent to which the economy is heading to hell in a hand basket. And that means investment opportunities for us.
After all, if the experts are predicting unemployment rates of 5.5 by year end, we can pretty much assume that it will be much higher: 6.3%.
We are short consumer goods and consumer services, among other things.
posted by Andrew at
7:02 AM
3 Comments:
Andrew, I agree there were so many bad news today and yesterday. But, the market doesnt want to look at it for some weird reason. I was thinking it should've been down atleast 100pts or more. Its resisiting at 30 pts drop. Is the sentiment too high that the bull market is already in? Are we playing against sentiments?
First it was Boeing Tanker deal ..Now news that Toshiba Japan was awarded contract to build 4 nuclear reactors worth $14Billion in US.. so the jobs are leaving! What about GE,SGR etc are they useless?
I do think that we are battling sentiment, at least for a few weeks. That's why we have long-term short positions and are riding the bull moves with some quick calls.
As for the nuclear construction, don't be so concerned. The US no longer builds them - the company was bought by the Japanese years ago. But they will use the US manufacturers and construction (and possible uranium).
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