The Economy Is Tanking, So BUY STOCKS!

Dow was up nearly 300 points today! It's a good thing stocks were higher, or I would have thought that the economy was tanking! Just look at the real news in this headline on Marketwatch!

Blizzard Blame

New jobless claims are lower this week, and the weather is apparently a factor:

"Jobless claims for Connecticut and Illinois were estimated by the Labor Department, a spokesman said as the figures were being released."

Unemployment Shows Signs of Rising Again

from Zero Hedge:

Following 4 weeks of supposed improvements in the labor picture courtesy of declining initial jobless claims, even as we all know too well that Wall Street has been firing thousands and thousands of highly paid bankers and CNBC talking heads left and right (are bankers too good for that $400/week paycheck from Uncle Sam?) today initial claims for the week ended December 24 once again resumed their drift higher, printing at 381k, up 15k from the perpetually upward revised prior week total of 366K (previously 364K). And as usual, the Seasonal Adjustment process smoothed out a whooping jump in actual terminations of 69k, which rose from 421K to 490K. Continuing claims also rose by 34K, from 3567K (upwardly revised, duh) to 3601K. Finally, those on EUCs and Extended Benefits once again saw a net drop off from the 99 week cliff as more and more people fall out out of the workforce in perpetuity following 2 years of being unable to find a job. The total amount of jobless on extended claims is now down by 1 million from a year ago, down from 4.5 million to 3.5 million, and dropping. We for one, can't wait to hear what the media spin will be next month when employers put the pinkslipmobile on turbo boost next month and fire all those temp workers they has been stockpiling to help with the EOY inventory liquidations, and we get another 400K claims print.

Stocks Plunge Following Euro-Zone Disappointments

Terrible Jobless Claims Sends Stocks Tumbling

WASHINGTON (Reuters) - New U.S. jobless claims rose unexpectedly last week, further evidence of a weak labor market just hours before President Barack Obama delivers a major address to Congress on the issue.
Applications for unemployment benefits rose to 414,000 in the week ending September 3 from an upwardly revised 412,000 the prior week, the Labor Department said on Thursday. Wall Street analysts had been looking for a dip to 405,000.
Excluding one week in early August, claims have held above 400,000 since early April. The Labor Department said there was no discernible effect from recent hurricanes and storms on the national figures this week.
The four-week moving average of claims, which smooths out volatility, rose to 414,750 from 411,000 the prior week.

Productivity Drops, Jobless Claims Remain Elevated

from Wall St Journal:
Stock futures are rallying for some strange reason, though the morning’s plate of economic data was sort of ugly.
Jobless claims came in at 409,000, just a little higher than the 407,000 economists expected. The prior week’s claims were revised up, as they always are, to 421,000 from 417,000. This level of claims is really too high.
Second quarter productivity was revised down to a decline of 0.7%, the biggest drop since the fourth quarter of 2008, from a first reading of -0.3%. It has fallen for three quarters in a row, for the first time since 1979.

from Yahoo Finance:

WASHINGTON (AP) — Worker productivity in the United States fell this spring more quickly than previously estimated while labor costs were rising at a faster clip. Both developments could pose threats to a fragile economic recovery.
The U.S. Labor Department reported Thursday that productivity declined at an annual rate of 0.7 percent in the April-June period, a bigger drop than the 0.3 percent decline reported a month ago. Labor costs rose at an annual rate of 3.3 percent, faster than the 2.4 percent increase originally reported.
The changes reflected downward revisions made last week to overall economic growth which showed the economy's output barely growing in the spring. Declining productivity, if it persists for a prolonged period, would represent a serious economic threat while rising labor costs would cut into corporate profits.

Classic Head Fake

Unemployment claims surged, but stocks attempted to surge also, in a classic head fake. It would be difficult to make a case for buying in that situation, but they will. I would be surprised if the buying doesn't continue today.

Correlation Between Philly Fed and Jobs

source: Zero Hedge

If this correlation holds, we could see a 700-1000 point down day on the Dow.

CPI Inflation, Jobless Claims Both Surge

from Zero Hedge:
Following yesterday's upside surprise in the PPI, it was only logical that CPI would come higher than expected. However, printing at a 0.7% swing M/M, or the highest in years, was not expected. Broad CPI came at 0.5% in July after dropping -0.2% in June, or 3.6% Y/Y. This was far more than consensus which expected 0.2%. Core CPI however was in line with expectations at 0.2%. The reason for the surge? Gas, food and clothes. "The gasoline index rebounded from previous declines and rose sharply in July, accounting for about half of the seasonally adjusted increase in the all items index. The food at home index accelerated in July and also contributed to the increase, as dairy and fruit indexes posted notable increases and five of the six major grocery store food groups rose...The apparel index continued to rise sharply, increasing 1.2 percent in July; it has increased 3.9 percent over the past three months....The index for nonalcoholic beverages increased 0.9 percent in July as the coffee index continued to rise sharply." Elsewhere confirming that as expected the unemployment situation is deterorating, with 408K initial claims printing, on expectations of 400K, and making sure we dont have a revised 19 out of19 week of consecutive 400K+ prints was last week's revised 395K claims to, hold on to your seats, 399K.  That's right: a 1K in jobs breaks the trend, huzzah! Just as importantly, those on EUCs and Extended benefits continued to plunge, dropping by 43K in the last week. And most frightening, the one year change in Americans receiving Emergency Compensation (EUC) has plunged from 4.7 Million to 3.1 Million. That's 1.6 million Americans who no longer even collect any benefits from the government.

Terrible Turmoil

Jobless claims spiked above the 400,00 threshold again, with last week's sub-400k figure revised upward so that it was also 400,000. That's 18 consecutive weeks! But Wall Street is ignoring the ugly news, and is determined to rally into positive territory again for a second day. Choppy charts! I'll wait until the charts look more friendly.

Stocks Blast Off! Only Question Is, Why?

Jobless claims this morning were bad again, with the 16th consecutive week above 400,000. But stocks are up about 150 points in the early part of the session. Another divergence between reality and Wall Street!

Correlated: GDP and Job Losses

Stocks Rise, Then Fall on Modest Dip in Jobless Claims

from Zero Hedge:
Another week, another 400+ jobless print, another prior upward revision: the DOL does it like clockwork. In the week ended May 14, initial jobless claims were filed by 409,000 people (to be revised to at least 412,000 next week), which while is a drop from last week's upward revised 438,000 (originally 434,000), better than consensus, yet with the number being well above 400,000, it means that the economy continues to be a net loser of jobs. Lastly, while irrelevant, the 4 week moving average printed at 439,000, highest since November, due to that outsized print from two weeks ago. This number will rise over the next week as well. Continuing claims dropped slightly from an upward (of course) revised 3,792K (first 3,756K) to 3,711K, beating expectations of 3,278K. Looking at the 99 week cliff, it appears an equilibrium has been reached as 49K lost Extended Benefits in the week ended April 30, offset by 53K people added to EUCs.

Tripple Whammy of Bad News

Not to worry. Wall Street still has its Pollyanna complex.That moving average is not headed in the right direction (see below).

Jobless Claims Spike to 8-Month Highs

Double Whammy - Jobless Claims Rise, PPI Rises to Eye-Brow-Raising Levels

Wrong direction! It's no wonder stocks are down again.

Strike 1: Unemployment Claims Surge 51,000

Fox Business:

New U.S. claims for unemployment benefits rose more than expected last week as harsh weather conditions in some parts of the country kept workers at home and caused a backlog in the rocessing of claims, a government report showed on Thursday.

Initial claims for state unemployment benefits jumped 51,000 to a seasonally adjusted 454,000, the highest since late October, the Labor Department said. That was the largest weekly increase since September 2005.

Economists polled by Reuters had expected claims to be little changed at 405,000.
The prior week's figure was revised slightly down to 403,000 from the previously reported 404,000.

A Labor Department official said four states had reported an increase in claims that was due to snow. In addition, he said, seasonal volatility also affected the data.

Still, the four-week moving average of unemployment claims -- a better measure of underlying trends, rose 15,750 to 428,750 last week, implying a gradual labor market recovery that could compel the Federal Reserve to complete its $600 billion bond buying program aimed at bolstering the economy.

+52,500

That's the REAL, unadjusted jobless claims figure for last week! It's just the opposite of the headline that has sent the stock market 130 points higher.

Jobless Claims Rise, Disappoint

from Zero Hedge:

Just like in mutual fund outflows, the initial claims prior upward revision is spot on as expected: prior week's 434K was revised to 437K, continuing the statistically improbable streak by the Ministry of Truth. Otherwise, the current number, which will also be revised higher next week, came at 457K, 15K worse than expectations of 442K. And continuing claims, which came at 4,378K, was, presto, a decline from the now revised number of 4,382K, which initially came at 4,356K. Net, net: this is the 15th in a row upward revision for initial claims, 14th for continuing: propaganda uberalles.

Stock Futures Higher, Shrug Off Bad News

Jobless claims are higher, the trade gap worsens, and inflation is rising! Ignore the news and buy stocks! Sounds very bubbly!