Thursday, July 9, 2009

Morning Update/ Market Thread 7/9

Good Morning,

Equity futures are up this morning following a stronger than expected weekly unemployment report:

The weekly number of new claims fell to 565,000, the first time below 600K since early this year. Here’s Econoday:
Initial jobless claims in the July 4 week fell a very steep 52,000 to a much lower-than-expected level of 565,000 -- the lowest level since the beginning of the year and extending a trend of improvement that is certain to give a boost to green-shoot talk (prior week revised slightly to 617,000).

Citing a Labor Department analyst, Market News International says the latest week benefited from a shift in the timing of auto layoffs and other layoffs in the manufacturing sector, layoffs that have already happened. Note that seasonal adjustments are fixed at the beginning of the year and are not adjusted to reflect current events, here of course the bankruptcies of General Motors and Chrysler.

But a negative in the report is continuing claims which jumped 159,000 to a new high of 6.883 million in data for the June 27 week. The four-week average is also a new high, at 6.769 million.

The most important factor, though, is that new claims are coming down, pointing to eventual easing in continuing claims. The markets got an immediate lift out of this report with stocks and commodities rising.

LOL, NO, the most important factor is not that new claims are coming down, heck, people are exhausting their benefits because no one is hiring. Continuing claims remain extremely elevated.

Today is launch day for the PPIP! Woo hoo! This highly touted program was supposed to be the end all, remember? Five hundred point rally day on the announcement, Bill Gross of Pimco calling it “win-win-win!” Remember? Today Pimco announced they are not participating – thwack! And the program has been sliced down to nothing in terms of dollars, only a few tens of billions being thrown at a few of the club members like Blackrock. Love it. Of course it will accomplish nothing for the economy… no new real jobs, nothing for the people in America who really need it. What a waste.

And just to fuel you Goldman conspiracy people (of which I have definitely become one – hey sometimes the truth is just staring you in the face) read the last half of ZeroHedge’s Mid day Update. That may just be how certain “problems” are taken care of? Call me suspicious because of the timing.

And now the /ES is back up into the 880 range, it is likely going to retest the neckline of the head & shoulders pattern that is now confirmed and valid (target 810ish) until and unless the highs of the head (956) are taken out.

And with stocks rising overnight, look at what happened to the dollar (left side of chart). On the right side of the following chart is the long bond futures. Note that I’ve been watching a rising wedge form… we overthrew the top of it yesterday and today are back inside it. I’m watching for a break of the lower trendline:

Again, the 888 area should offer resistance, but don’t be surprised if we run back above the neckline. That’s common with H&S patterns, it does not invalidate them.

Hey, let’s do the Yield Curve Mambo!

Yield Curve Mambo