Thursday, July 22, 2010

Morning Update/ Market Thread 7/22

Good Morning,

Equity futures are up substantially this morning with the dollar down, bonds down, oil and gold up. The media, who must always find a reason, are touting CAT and Ebay earnings, but neither stock is actually higher by any significant degree, in fact CAT was substantially lower on the report.

New Jobless Claims jumped from 429,000 all the way back to 464,000. The consensus, which has been very much behind the latest downturn, was estimating 450k. Here’s Econoday:
The Labor Department confesses: it was holiday distortions tied to July 4 that held down initial claims in the prior week. Claims for the July 10 week jumped 37,000 to 464,000 (prior week revised 2,000 lower to 427,000). Despite the jump, the four-week average, at 456,000, is slightly lower than this time last month which does hold out hope for improvement in monthly payroll data.

Continuing claims fell 223,000 in data for the July 10 week. The four-week average for this reading shows only marginal improvement from a month ago: at 4.567 million vs 4.573 million in the June 19 week. The unemployment rate for insured workers fell two tenths in the week to 3.5 percent.

Weekly initial claims data will be distorted through the month of July, beginning with the opening holiday and in following weeks on calendar shifts for retooling in the manufacturing sector. Nevertheless, today's report isn't very good.

The four week average is down due to their seasonal manipulations. Continuing claims are down as people fall off the rolls and due to the end of emergency benefits which are in process of being restored.

Existing Home Sales and Leading Indicators come out at 10 Eastern this morning.

Want to get angry? General Motors, who we all just bailed out and who completely sunk GMAC, is now buying subprime lender AmeriCredit (ACF) for $3.5 billion so that they can recreate their terrific financing activity! On your nickel, I might add. This bailout was the worst of the worst. The media and meatheads blaming the unions, but the truth is that GM could have paid NO wages, no benefits, and no retirements and they would have still lost Billions due to their incomprehensible finance arm. They financed subprime mortgage loans, and they were responsible for blowing a price bubble in automobiles! Cars became so expensive due to their financing anyone with a heartbeat, that they went from three year financing with 10% down, to seven year financing with zero down. This is what created a bubble in car prices, a bubble that still exists. And just look at the industry now. Zero down, zero interest. Where is the financing cost? It’s in the price of every car! Way overvalued, and we can thank our government’s meddling for that. GM and Chrysler continue to block out real and meaningful competition, it’s the de-evolution of our entire manufacturing base.

Looking at the wave count, it appears that the down move on Bernanke’s concerns yesterday was a wave (b) of wave c of wave 2. By that favored count, this should be the final wave higher and it may take us into the weekend to be proportional with wave (a), as that wave lasted approximately two days. That said, the final wave can easily truncate at any point, so we’ll see what kind of data we get this morning. Patience, it will soon be time:

Chambers Brothers - Time Has Come Today