Archive - Jan 2, 2014 - Story

The now ubiquitous prior upward revision helped headlines crow of 'another' decline in initial jobless claims this week. Initial claims beat expectation of 344k with a 339k print, whis is now a drop from a previously reported 338k that is now revised up to 341k... all makes sense, right? It seems claims have stabilized somewhat after the few weeks of glitches and shutdown SNAFUs and the downtrend appears to have stalled as these levels of claims are at the same level as 5 months ago. Bear in mind this is the last print for 2013 (not first print of 2014 data) and with 1,391,297 people on Emergency benefits due to start 'tapering' this week, we can only imagine the 'glitches' that will occur going forward.

A few days ago Goldman pointed out an interesting observation: "if you were an index investor and weren’t long Jan 1st, you underperformed this year." To be sure, index investors have been well aware of this self-fulfilling prophecy. As it turns out, one can extend this pattern not only to 2013 but virtually every year in the Fed's centrally-planned "abnormal", as can be seen on the chart below: adding up the performance of just the first trading day of the year in the S&P shows a total outperformance of 10% across the past five years.

• Threatening snowstorm may be early test for N.Y. Mayor de Blasio (Reuters), U.S. Northeast Threatened With Blizzard, Travel Delays (BBG)
• Scarred U.S. consumers a hard sell for traditional retail (Reuters)
• Edward Snowden, Whistle-Blower (NYT)
• A Few Brave Investors Scored Huge, Market-Beating Wins (WSJ)
• Fiat gets full control of Chrysler for $4.35 billion (Reuters)
• Billions Vanish in Kazakh Banking Scandal (WSJ)
• SAC’s Cohen Focus of Trial as Martoma Rebuffs U.S. (BBG)
• World's first state-licensed marijuana retailers open doors in Colorado (Reuters)
• Hyundai, Kia face fading growth as currency tides buoy Japan rivals (Reuters)
• Bond investors braced for new year shock (FT)
• Putin vows total destruction of 'terrorists' after bombings (AFP)

The first trading session of previous years has always been a whopper for those betting on central planning and capital flows. In fact, if one adds up the S&P performance on the first trading day of each year going back to 2009 (i.e., 1/2/13: + 2.54%, 1/3/12: + 1.55%, 1/3/11: + 1.13%, 1/4/10: + 1.60%, and 1/2/09: + 3.16%), one gets a whopping 10% return just on that one trading session. Which is why the fact that futures are glowing read, if only for the moment, may be disturbing for index investors and all those others who put all their faith, not to mention money, in St. Janet. Today's red open is hardly being helped by the 10 Year which continues to drift lower with the yield now at 3.04%, even as the Spanish 10 Year yield just got a 3 handle as well. At this rate the two streams should cross some time in the next two months. Just what a higher yield in the US vs Spain would imply for fair and efficient markets, we leave up to readers to decide.