Jobless claims just hit, and they were essentially in line with expectations. Initial claims dipped from a revised 625,000 to 621,000 in the most recent week. Forecasts called for a reading of 620,000. However, the upward trend in continuing claims actually moderated for a change. They declined from 6.75 million to 6.735 million, the first time we haven’t set a fresh record in several weeks. That was also below the forecast of 6.855 million.
Meanwhile, yesterday was a day of revenge for the dollar bulls. The dollar took off and gold fell after Fed Chairman Ben Bernanke said all the right things in an appearance before Congress. He talked a lot about the risk of rising deficits, and the need for fiscal and monetary restraint at some point. But if you believe that this “Helicopter Ben” Fed, the administration, and Congress will actually DO anything (rather than just TALK about these risks), you — dear reader — are far more optimistic and trusting than I am.
Or as Pimco Chief Investment Officer Bill Gross put it in his most recent monthly outlook this week:
“While policymakers, including the President and Treasury Secretary Geithner, assure voters and financial markets alike that such a path is unsustainable and that a return to fiscal conservatism is just around the recovery’s corner, it is hard to comprehend exactly how that more balanced rabbit can be pulled out of Washington’s hat.”
Related posts:
- All you do to me is “Talk, Talk!” Remember that catchy 80s song “Talk, Talk“? That’s what I think of when I read stories like this. Treasury Secretary...
- Continuing jobless claims pop again, S&P fires a warning shot over the U.K.’s bow We just got the latest look at jobless claims and once again, the numbers weren’t pretty. Initial claims came in...
- Jobless claims hit record high, durable goods orders tank The latest economic news continues to disappoint, which shouldn’t come as any surprise. Durable goods orders for December dropped...
{ 9 comments… read them below or add one }
620,000 people is still alot of bodies not working.
Another green shoot. THis green shoot metaphor will eventually have the correct meaning. THe correction this market is facing is going to be vicious. I believe the higher the market goes the lower the eventual bottom will be when the reversal takes place. THe valuations on many stocks are priced for a robust rebound which just about anyone with common sense know that will not be the case.the market is dragging the mutual and hedge funds grudgingly back in to the market out of fear that they will lose their client base for missing this bear market rally.
I just read an article on how the FDIC has cancelled the PPIP program to buy troubled assest from the banks, cause the banks are getting healthly on their own. Is it possible that in the coming months a) bond yields rise due the absence of China buying, causing interest rates to rise b) another wave of foreclosures hits as forecast by Credit Suisse? I wonder if the stress tests accounted for this?
and c) the banks continue to hold the old toxic assets ??
I highly call the jobless numbers today positive. 4,000 reduced initial claims. Big deal!!!! That week was the week of Memorial Day which could explain it. Continuing claims dropped (in my opinion, insignificantly). Another big deal. People I’m talking to have either taken some crappy part time job, a temporary job, a job that pays half of what they were earning a year ago, others have become discouraged and are not filing, and some have already exhausted their extended benefits. The weekly reporting, in my opinion, is too much reporting. It becomes meaningless after awhile. Especially when the reporters spin the report to fit their agenda. I know in Arizona it’s bad. You might get a temporary job at a call center making a whopping $11/hr, but try being educated and see where you get. Not many jobs for the educated, and the educated are too over qualified for call center jobs. I see nothing good in the numbers. It just infuriates me when they spin the negative as being positive. They are still terrible numbers and have a long way to go. Oh, I forgot, Obama’s stimulus plan must have added or “saved” a few jobs. How grateful we should be to have a census job that lasts an entire two weeks before they tell you your job has ended. That ought to get the stores moving
Mike, If Dow 5000 accurs, what do you think will happen with the Dollar? Will it be a momentary flight back to the reserve currency like last time (November) or will other safe havens be used? Just asking for your opinion.
Matt
Why does the market keep going up? It must be time to get out of all inverse ETFs to the market. The fact is, Mike, the FED has a printing press and it is more powerful than anyone.
Perhaps Martin and you in your next column should concede that this is true even though you both have the best reasons for stocks to drop. As Jimmy Rogers said recently, “They can just keep printing this market up to 20000 or 30000.
Thanks,
Tony
Mike, I read your’s and Martin’s pieces regularly and there is a recurring theme of criticising the Obama Administration (and before that the Paulson team) for the monumental policy mistakes that these administrations have been making to solve this crisis. I.E. that both Paulson, Geitnern and have been pumping trillions of dollars into the banks to solve their problems. That the US government is wrong to be pumping billions into the Auto industry. And no doubt you and Martin are right about the are enormous risks. And no doubt the Chinese are right to be concerned about the vast oceans of money that are being spent and that threaten their investments in dollar holdings. But my question is: what else can they (the Obama Administration - or for that matter could have the Paulson team) have done? Just 6 to 8 months ago after the Lehman Brother’s fiasco the entire international banking system was just a hairs breath away from total and complete collapse and chaos.
And if the Obama/Paulson team did not take the steps they took, would we not, right now, BE IN A DPRESSION far worse than the 30s?
It seems that no matter what political/economic philosophy you subscribe to there few alternatives to solve this crisis.
It seems to me (in spite of my limited understanding or knowledge of economics) that America has found itself between a rock and a hard place. That it has no other choice but to reflate the banking system and the international economy with borrowed money. And that eventually America will be forced to declare bankruptcy to the rest of the world by monetizing the debt.
It seems to me that these are the reasons why the US Dollar is collapsing, that gold is soaring and the stock market is rallying. It seems to me that the current stock market rally that investors are taking flight to hard assets with intrinsic value rather than hold worthless dollars or treasuries.
You will probably post something after the treasury auctions are done, but regarding Russia and Brazil buying IMF bonds isn’t that like buying junk bonds since the IMF loans money to un-developed countries? Of course with what is going on in the USA…. US Treasuries are like junk now?