Archive - Dec 26, 2013

Despite the BLS claiming no states estimated their data and the previous week's apparently errant (but significantly not revised lower), the claims data this week saw its biggest week-over-week percentage drop since January 2006 (which ironically almost perfectly bottom-ticked the previous 'recovery' claims improvements). Continuing claims, however, rose for the 3rd week in a row - the largest 3-week rise in since March 2009! Of course, the more critical part of the labor department's report is the end of the Emergency Unemployment Compensation (EUC) program which will pay one more claim this week and then 1,333,332 will begin to lose their benefits. EUC benefits cannot be paid for any week of unemployment after Dec 28th (which, of course, is great news for the unemployment rate). 

As the holiday spending season draws to a close, there has been a huge schism between hope and reality once again as captured by these two numbers: 3.9% and -3.5%. The first, aka hope, is how much the national retail federation predicted holiday sales would rise by at the start of the holiday season; the second, aka reality, is how much in-store retail sales declined by in the week before Christmas. So what is a despondent retail industry - which unlike the stock market can't put off delivering results forever - to do? Why bet it all on a huge after-Christmas surge of course. 

• Late Surge in Web Buying Blindsides UPS, Retailers, Some Christmas Packages Aren't Delivered (WSJ)
• Yen Slides as Turkish Stocks Drop, U.S. Futures Rise (BBG)
• Turkish lira drops to record low against dollar, as Turkey’s Erdogan replaces 10 ministers (FT)
• Egypt designates Muslim Brotherhood as terrorist group (Reuters)
• Thai elections in doubt after political violence (AFP)
• Batista Cedes Oil Unit Control in $5.8 Billion Debt Deal (BBG)
• China celebrates Mao's birthday, but events scaled back (Reuters)
• First-class stamps to cost 49 cents as of Jan. 26 (AP)
• Obamacare Hits Snag in States as U.S. Site Finds Footing (BBG)
• NSA Struggles to Make Sense of Flood of Surveillance Data (WSJ)

The latest overnight meltup which has pushed the DJIA and S&P to new implied record opens has been driven by, what else, the falling Yen, which after tumbling to fresh new 5 year lows following the release of the BOJ minutes (which said nothing new), has sent both the Nikkei higher by 1%, to post-2008 highs of 16,174, while the S&P, up about 5 points just shy of 1840, and has only three trading days in which it should close the gap to the central banks' price target of 1900 as we first showed in April. In the absence of any actual newsflow (we now live in a world in which both good and bad news are P/E multiple beneficial, just continue keeping an eye on the EURJPY and the USDJPY - these are the only two signals tht matter for the market.