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Thursday, August 25, 2011

Busy, But

Initial Claims: According to DOL, the last two weeks have been dominated by a strike effect. These two weeks can basically be thrown out. I am questioning DOL's numbers, because they seem too large, but in any case the strike (Verizon) ended Monday, so this effect will fall out. I'd totally disregard the last two weeks.

Raw claims in August have run at the 340-350K level. For some comparison, in August of 2003 the high week of claims was 348K, the next highest was 333K, and the other three weeks were all below 320K. In August of 2002 claims ran from 310K to 332K. So I am not thrilled, and indeed claims at these levels don't promise much for employment gains in total. Unemployment now would be much higher if it weren't for retirements.

In August of 2004 claims were at the 260-290K level, centering on 270K. In August 2005 raw initial claims were at the 250-270K level. We can only dream....

Durables yesterday were good, mostly on autos and airplanes. These were for July. Orders for primary metals were encouraging also at 10.3%. Orders for fabricated metals were down after having been up the last two months; we may have cleared one round and be going back for another.

Crude inventories: They confuse me. Gas down, diesel supplied way up (4 wk MA). We'll have to see but this was a better report. 2008 comparable week for comparison. MBA apps are just totally depressing; it is hard to believe that home sales for August and September can be anything but bad. Apps can be up and sales can be down, if more buyers/appraisals aren't approved, but it is hard to imagine a scenario in which purchase apps can be down this much and sales would even be okay.

Tomorrow we get the next GDP estimate; hopefully no surprises. This is the first take on corporate profits, which are important. If, by chance, GDP is revised down and Ben disappoints, it could be a wild Friday on the markets. Stocks and bonds have a disagreement, and this usually indicates that stocks are a bit precarious, if you know what I mean.

Early take on Treasury receipts is somewhat equivocal. August 22nd, 2011. August 23rd, 2010. Corporate taxes a bit better, unemployment a bit better, the Monday take this year was down from the Monday take last year.... August wasn't good last year and I think we will pull off an increase, but admittedly the tension is building. There could be some strike effect, and because WIET this year is down by the 2% FICA cut these tax receipts are misleading in the raw. Excise taxes aren't encouraging.

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