Jobless Claims and the Market

Initial Jobless Claims rose by 554,000, essentially in-line with expectations of 557,000, but still a high number. Continuing Claims fell to 6.22 million down from 6.31 million the prior week. On the surface, this looks to be a positive, as a reduction in individuals who are receiving unemployment benefits sounds good. But remember, unemployment benefits don't last forever. And individuals who are unable to find work may see their unemployment beneits expire, and still not have a job...but are now not being counted in the Continuing Claims number. I feel that is a more likely scenario than the headline being touted by the media. And the Fed's revised unemployment forecast (which granted, hasn't been something you can take to the bank), also shows high unemplyment through 2011. It will be hard for consumer spending to regain traction and for the economy to turn higher with momentum if the labor market continues to struggle.

Mortgage Bonds are down a bit this week, but remain above a triple-decker floor of support provided by the 25, 50, and 200 day Moving Averages. While thisis somewhat comforting, I'm concerned about Treasury Auctions that will be hitting next week, as an additional $110B of supply will need to be absorbed by the markets.

One may ask the question why doesn't the administration look to the past to help repair the economy. Remember Jimmy Carter? Remember 18% interest rates, and close to 11% unemployment? Remember we even had a "Misery Index?" Ronald Reagan fixed all of this in less than two years by stimulating the economy with tax cuts and freeing up the private sector to put people to work. It worked then and it would work now. Why oh Why doesn't President Oboma see this?