Thursday, July 7, 2011

Morning Update/ Market Thread 7/7

Good Morning,

Equity futures rose sharply on the ADP Employment Report this morning, yet the dollar is up, bonds are down, oil is up and looking to retest $100 from below, gold & silver are higher, and food commodities are mixed.

Again today the dollar is testing the upper limit of the descending wedge, and it is moving in the oppostie direction expected for a rising equity and commodity market today. When it breaks this triangle and the boundary of that descending wedge then we'll have a good clue as to the medium term direction for stocks:

The ADP Report came in at 157,000, a sizable jump in private payroll data for June over May’s 38,000. While the ADP report does have a positive correlation with the Employment Situation Report that comes out tomorrow, it also has large misses yet is used to set expectations for Friday’s report.

The consensus for tomorrow’s report is for 110,000 nonfarm jobs, and 125,000 private payroll jobs. Each month in the past year has produced larger “Birth/ Death Model” additions, and in June of last year that model added 131,000 phantom jobs, so it’s certainly possible to create enough fictional digits to claim job creation when in fact there is none, and has been none for the past decade.

Weekly Jobless claims came in at 418,000 for the past week, this is down from the prior 428K (revised higher of course), but obviously still well above the psychological 400k mark yet again… and again… and again. Month after month, year after year of job shedding in the real world, yet here’s Econohope:
Incremental improvement is the conclusion for weekly claims data, headlined by a 14,000 decline for initial claims in the July 2 week to 418,000. The improvement is offset slightly by an upward revision of 4,000 in the prior week to 432,000. Results for an unusually large number of six states had to be estimated due to the July 4 holiday while Minnesota shows a 2,500 rise related to the state's government shutdown. The four-week average is down 3,000 to 424,750 yet, over the last several weeks, shows little change from levels in June.

Continuing claims for the June 25 week fell 43,000 to 3.681 million. Continuing claims have been slowly trending lower with the four-week average of 3.705 million down about 20,000 from the month-ago comparison. The unemployment rate for insured workers is down one tenth to 2.9 percent.

Initial claims have been steady at a stubbornly high level above 400,000 which doesn't point to robust results for tomorrow's employment report. Yet this report is a slight positive for the economic outlook and also helps to confirm strength in today's ADP report.

Amazing how long they can keep the positive façade on employment, here’s a reality check:

Please. We’ll know the true bottom is in when Econoday stops calling the bottom. Also, again I read in the Puget Sound Business Journal an article today calling a(nother) bottom in the real estate market – this comes only two days after another one of their articles describes how quickly price is still falling. Again, it’s hard to believe the fantasy created by the media that surrounds the captured commerce in this country. Obviously everything revolves around the corporation and the health thereof, not around the people and their economic or other wellbeing. This capture is definitely a huge part of the problem, most people’s reality is being spun by media whose interest is their own profit.