Market comments for Sept. 1st. 2011 (UPDATE)

IInitial Jobless claims data released this morning showed that for the the period of 8/27 the number was 409K new claims, The previous week's number was revised from 417K to 421K. Expectations for the week of 8/27 were for 405K, so that the 409K was more than expected. These numbers have stubbornly held over 400K now for quite a long time and it shows how difficult it is to go and stay below 400K. Unless we do, the unemployed will remain unemployed, causing continued hardship for these families and our economy.

Also reported this morning was Q2 Productivity. It was revised downward from a previous reading of -0.3% to -0.7% and Unit Labor costs for Q2 was revised from 2.2% to 3.2%. Putting this data together with the Productivity data, U.S. Corporations might have run out of easy ways to make money as the costs of labor has gone up at the same time their workers productivity has gone down. This may require corporations to hire more people, which is good for the unemployed, but bad for future earnings and profitability. This should be a negative for the U.S. stock market, but we shall see. The market has not been following what I think should happen and has ignored economic data the past 6 months.

Later this morning the all important ISM Index will be reported. Expectations are for the data to come in at 48.5. Any number lower than 50.0 shows negative growth if it does. I will UPDATE this blog post when the data is released, so come back after 10:00am EST.

August Unemployment data will be released tomorrow.

The stock market chart for the Dow and S&P and other indexes has shown a rise above those resistance lines I drew on previous posted charts. Is this a true breakout or a Bear trap seems to be the question on many minds these past few trading days. I think it is another Bear trap but we won't know until after it takes palce and is evident. Sorry, I am not a crystal ball reader.

UPDATE: 7:05am PST

The ISM Manufacturing data came in at 50.6%, not below 50 which would have signified we are in a recession, but we managed to survive. Now the ISM number is lower than the previous month which came in at 50.9%. So clearly while above the magic number of 50, it is going in the wrong direction and whether we go lower next month or the following month, it is not a good number to show demand in the economy.

Market comments for March 3rd, 2011

Europe has been up in their markets this morning in advance of our Initial Jobless Claims numbers which were released at 5:30am PST. Expectations were for 400K and the Prior period data from last week was 391K. Today's number cam in at 368K Continuous Claims, which under-reports those who remain without work but not those who have either given up hope or are under-employed using part time work to survive, came in at 3.77 Million Claims. Q4 Productivity came in at 2.6%. This shows workers continuing to be extremely productive and thus removing the necessity for employers to have to hire more workers. Unit Labor costs were down 0.6% for Q4, which could mean that companies made more profits at the expense of workers.

I have attached 2 charts this morning of the Dow. One is the latest 3 month chart which shows we are forming a short Head and Shoulders pattern. The pattern would indicate a leg up is due today. On the 1 year chart I have drawn 3 red lines showing the various bands of support visible. If we penetrate the lower red line, it will mean we are on our way down in the market and the downtrend is convincing. My guess, based upon a Dow Gold ratio of 8.5 would mean that the Dow would rise today to 12,104, about a 38-50 point gain today, because Gold is down today to $1424/ounce. We shall see.

Market comments for Dec. 2nd.

My goodness, yesterday's market move of 250 points on the Dow based upon the following news:
1. Ireland still afloat, but concerns over Portugal and Spain's debt lingers.
2. The Chicago PMI came in at 62.5 versus and expectation of 59.6
3. Consumer Confidence for Nov. came in at 54.1 versus an expectation of 52.0
4. Challenger job cuts down -3.3% y/y
5. Construction spending was 0.7% for October versus expectations of -0.5%, but was exactly the same as last month.
6. Unit Labor Costs were down -0.1% versus an expectation of -0.4%, even though last reading was -0.1%
7. The ISM index came in for Nov. at 56.6 versus an expectation of 56.5 and a prior reading of 56.9
8. Crude Inventories came in at 1.07 M versus a prior reading of 1.03

Now I ask you, does this news warrant that much of a market movement? I am waiting to see Initial jobless Claims numbers in a few minutes. Last week the number was 407K. The expectation is for the number to be 422K. So think about this for a moment, if last week was 407K and the trend has been coming down, why would the "expectations" be for 422K? I'll tell you, so that the market can have beat the expectation and the jobless number will come in under 422K. You just watch. So any number between 407 and 422 will be cheered and the market shall rise as "things are improving out there". Please shop!! I will add the actual data in 10 minutes but wanted to post this first.

UPDATE: 5:35am PST

Well it's going to be interesting to see the spin today because the actual Initial Jobless Claims came in at 437K, higher than the estimate. That's an increase of 26K they are saying over last reading. Continuing Claims are at 4.27 Million jobs, not counting all those not included of course, which comes to about another 13 Million people. Have a great day because you should know that they are not going to extend Unemployment benefits for the people who have been out of work for several years. I call it the Bah Humbug Christmas spirit this season.

And here is the headline after the data came out, fresh of the wires, so to speak:

Futures Up Despite Jobless Claims Rise
By Melinda Peer 12/02/10 - 08:48 AM EST

NEW YORK (TheStreet) -- Stock futures were looking to extend the previous session's rally on Thursday even as initial jobless claims climbed to 436,000 as markets anticipated the European Central Bank would enact measures to contain eurozone weakness.

Market comments for Aug. 11th: Reality is about to catch up!

The Futures market shows the Dow down 126 in pre-market and the European markets down 1.5% or more. The reality of the recent economic data appears to be catching up to the reality of the hefty prices in the stock market and company valuations. The warning bell has been rung many times over th past 3 months and the rings are getting louder. Oil has broken below $80/barrel for the first time in a while. Then Yen is now down to under 85 to the dollar. Top line Revenue growth has not been the fuel of this past quarters earnings achievement. It has been cost cutting. But that too may be near its end as well as Unit Labor Costs are starting to rise, reported yesterday at +0.2%, and Productivity is starting to wane, reported yesterday at -0.9%. The Trade Balance for June has come in at -$49.9 Billion while it was expected to come in at -$43.0 Billion. The prior month it came in at $42.3 Billion. So this is definitely not going in a good direction. Gold is up over $10/ounce this morning. Exports were down -1.3% and Imports were up 3.0%.

We also expect Initial Jobless Claims to rise again this week. The number expected tomorrow is 465,000 compared to the previous week's expectation of 460,000 but actually came in at 479,000. And on Friday CPI and Core CPI numbers are reported, as well as Retail Sales and the Michigan Sentiment index. So much more news to come this week.

S&P Futures down -16 in premarket and the Nasdaq Futures are down -30. It looks like we may be finally merging reality with the value of the stock market. We are going lower.

Market comments for Aug. 10th (Update)

Economic data released this morning showed Q2 Productivity was the lowest since Q4 of 2008. It came in at -0.9%. Expectations were for +0.1%. Unit Labor Costs rose slightly +0.2%. Expectations were for them to rise 1.3%. Later this morning, data for Wholesale prices will be released. Expectations are Wholesale prices will be at 0.0% gain. I expect it to go negative, showing deflation but 0% is still amazing when you think about it.

Then the big item today is the FOMC will be releasing its rate decision and comments at 2:00pm EST or 11:00am PST., which is being anticipated with some anxiety. People want to know how the Fed will react to deflation and whether there will be more easing of Interest rates. Will the Printing Presses roar printing new money faster than it can be used. The worry had been Inflation but there appears that is not what the Fed is now concerned about. It's Deflation, just like in the 1930's.

Futures are down 105 points on the Dow.

UPDATE: 9:15AM PST

Above is the chart from Haver Analytics of Unit Labor Costs. Trend is pretty bad indeed. Looks like another piece of data showing deflationary times ahead to me