The quiet overnight session was started by comments from Buba's Weidmann, whose statement, among others, that the ECB will not cut interest rates just to weaken the EUR together with the assertion that the EUR is not seriously overvalued, sent the EURUSD briefly higher in pre-European open trading. Of secondary importance was his "hope" that the ECB will not have to buy bonds (it will once the market gets tired of Draghi open-ended verbal intervention), something he himself admitted when he said the ECB "may be forced to show its hand on OMT." The stronger EUR did not last long, and in a peculiar reversal from prior weeks when the European open led to a spike in the cross, saw the EURUSD dip to three week lows, touching on 1.3310, before modestly rebounding. This validity of the drop was confirmed two hours later when in the first key economic datapoint, it was revealed the Euroearea exports fell 1.8% in December, the most in five months. As SocGen said "the monthly trade data rounded off what has undoubtedly been a pretty dismal quarter for the euro area. Overall euro area exports fell by 1.8% m/m in December although this was offset by a even bigger 3% decline in imports - which itself reflects the weakness of domestic demand in some euro area countries. Maybe of more interest is the latest data on the destination of euro exports. These continue to show a pronounced weakness in global demand (albeit for November). This indicates that weakness in Q4 is not solely a domestic affair but also reflects a wider slowdown in the global economy."
And so the BLS and DOL are back to "seasonal adjustments." Because in a week in which the Sandy effect was supposed to fade, at least on a seasonally adjusted basis, nothing could spoil the party. And sure enough, the headline number dropped from an upward revised (how else) 395,000 to 370,000, well below the expected 380,000. The real story, however, is how the DOL is doing all it can to smooth the noise, because in the week ended December 1, Not Seasonally Adjusted Initial Claims soared by 139,678 - the highest since January, to a whopping 498,619. Compare this to the SA number of 370,000, and one can see why in the aftermath of Sandy, it is quite clear that between hurricane distortions and seasonal adjustments, the headline number is completely meaningless. Confirming this was the surge in Continuing Claims, which ripped from 2,835,671 to 3,301,200, an increase in continuing claims of 465,529, or nearly half a million, in one week! But at least the pre-election boost of those collecting extended claims is over, with those on EUCs down by 110K in one week, thereby ending the extended Uncle Sam handout for over a hundred thousand Americans, who will now be forced to seek solace in disability benefits.
Yesterday's home sales data, which came far better than expected, apparently had nothing to do with Hurricane Sandy (had it been a disappointment the narrative would have been far different). What Hurricane Sandy did have an impact on for the second week in a row, is today's Initial Unemployment Claims, supposedly, which for the second week in a row printed well above 400K, and just as expected, at 410K, "down" from last week's upward (naturally) revised 451K (previously 439K). NSA claims declined from 478.5K to 397.7K, while Continuing Claims were just below expectations at 3,337K on a consensus print of 3,345K, and down from an upward revised 3,367K. Notable is that the dropping trend in those on extended claims, which recently dropped to a multi year low of around 2 million, had reverse, and 60.8K applied for EUCs.
A new week begins. Here are the major global market-moving events to look forward to for both the next week, and for the remainder of October and November.
Market Unhappy With Initial Claims Miss As 1.3 Million People Fall Off Extended Benefits In Past YearSubmitted by Tyler Durden on 08/23/2012 07:50 -0500
One month of positive economic surprises since the last FOMC may be all we get, now that a "majority" of FOMC members suddenly need a rapid deterioration in economic data to usher in the NEWER, MORE OPEN-ENDED QE. Initial claims was happy to comply: after posting several weeks in a row of "beats", claims has finally resumed "missing", as well as rising, posting an increase from last week's upward revised 368K print to 372K this week, worse than the expected improvement to 365K, and to a one month high. And with continuing claims missing too, the real story continues to be the steep fall off in those on extended benefits and EUC, which declined by a total of 48K in the past week, and down by about half a million in the last few months, and lower by 1.3 million in the past year. This is 1.3 million fewer consumers who can recycle Uncle Sam's dole back into the economy and iGadgets. The question is whether this minimal miss is enough to justify the FOMC doves' fears the much more QE is needed. Judging by the futures reaction to Bullard and claims, the answer is so far no, and in fact points to something very ominous: the closer the Fed (and ECB) come to actually doing something instead of talking about it, the more negative the market reaction seems to be. Woe to Bernanke or Draghi the second they finally have to do something instead of telling listeners to "believe them."
As has now become the norm, last week's initial claims was revised higher (because no algos care about what the real number was with a one week delay) from 361K to 366K (see chart below of cumulative impact when incorporating the next week revision), even as this week saw a modest miss at 366K on expectations of 365K. This "modest" 1K miss will be revised to a 4K miss next week. And while continuing claims also missed expectations by 5K, printing at 3,305K, it was the cliff of extended benefits that continues to bite, with another 64K people no longer collecting Uncle Sam's 99 week free dole in the week ended July 28. This brings the last two weeks' total to nearly 200K: unless this handout was replaced by disability payments, the hit to GDP will be material.
The surprising economic beats, even as Europe and now China slide, continues, following better than expected initial claims, which were released early as someone broke the news embargo, and trade deficit data. In the week ended August 4, 361K people filed initial jobless claims, lower than the upward revised 367K, and below expectations of 370K. This is the 5th week out of 6 in which claims have beat expectations, and heading into the September FOMC meeting, especially in the aftermath of the "blistering" August NFP report, any hope that the Fed will do anything forceful can now be taken off the table. Continuing claims rose by 53K from 3,279K to 3,332K. Adding to the economic tailwind was the June trade deficit, which narrowed by 11% in June, down to $42.9 billion from $48.7 billion, and well below the expected print of $47.5 billion, down on sliding energy prices (back in June - as a reminder crude has soared 20% since then). The reason was a 0.9% rise in exports and 1.5% drop in imports. As Bloomberg observes, "this is likely the last report that shows the narrowing of the deficit this quarter." Finally, perhaps the most notable move that will pass largely unobserved is that in the week ended July 21, a whopping 127K dropped off extended claims, which means no more free $400 weekly checks, and a corresponding hit to iGadget purchases and retail sales.
Still the divergent world views between equity and rates as during the last days.
EGBs better supported. Equities, too…
Spain held so so today, did overshoot 7%, but closed back below. The level itself is just symbolic; we all know…Fact is, Spanish funding is a costly thing.
Credit feeling slightly heavier than equities.
Initial Claims In Holiday Shortened Week Drop To 350K From Upward Revised 376K Due To "One-Time Factors"Submitted by Tyler Durden on 07/12/2012 07:34 -0500
First the expected: last week's 374K in initial claims was revised upward to 376K as is now the norm. Then the unexpected: this week's initial claims dropped to 350K, well below expectations of 372K, and purely an artifact of the holiday shortened week as this was the biggest miss to expectations since November 2008. Of course, the Not Seasonally Adjusted claims number rising by 70K is very much irrelevant: it is all about statistical smoothing as those who have leaked access to early release BLS data will tell us. Finally, here is what the BLS actually said: "onetime factors such as fewer auto-sector layoffs than normal likely caused the sharp decline." Continuing claims did miss expectations of 3300K printing at 3304K, and down from a revised 3318K. The market reaction is typical schizophrenia: first risk is up on "better than expected" news, then right back down as the meme spreads that this makes the NEW QE even less realistic. Our condolences to all whose job it is to trade this newsflow. Finally, in the all important cliff category, another 13K fell off extended claims programs, and no longer are eligible for Uncle Sam funded X-Box 360 playtime compensation.
Initial Claims Miss Big, People Falling Off Extended Claims Soar To 135K, CPI Plunges Most Since December 2008Submitted by Tyler Durden on 06/14/2012 07:46 -0500
Another economic data point, another preview of the coming NEW QE (and if Goldman is right, the perpetual NEW "Flowing" QE). Initial claims print at 386K, a number which will be revised to 390K next week, a swing and a miss to expectations of 375K, and not even the mainstream media will be able to come up with tits token idiotic headline that claims decline because they did not, even relative to last week's revised 380K from 377K. This is the 22nd expectations miss in the last 25 reports. Continuing claims also miss expectations of 3270K, printing at 3278K. But the biggest surprise to some (not ZH readers who were warned that 700,000 Are About To Lose Their Extended Jobless Claims Benefits), a massive 135K people fell off the Extended and EUC claims as the 99 week cliff hits more and more. Recall that last week 105K dropped of extended claims. This means that in the past two weeks alone 240,000 people no longer collect the last possible form government unemployment benefits, the most in a two week period since December 2010!. We can only hope they are fat enough to collect the new normal stimulus check: disability.
Initial Claims Beat Expectations, With Prior Revised Higher, As Whopping 105 Thousand Lose Extended BenefitsSubmitted by Tyler Durden on 06/07/2012 07:49 -0500
While it is a number which nobody will care about today, especially if it is better than expected, initial claims printed at 377K on expectations of 378K, the first beat of expectations in 5 weeks. Of course, the claims number next week will be revised to over 380K. Why? Because, as now happens every single week, last week's initial claims number was revised higher from 383K to 389K. As a reminder, last week this number was expected to print at 370K. So only a 19K miss when all is said and done. But at least the mainstream media has its bullish for general consumption headline: "Initial Claims drop by 12,000" even as market participants realize this is still QE-promoting. Continuing claims printed at 3,293K, missing expectations of 3,250K, and down from an upward, of course, revised 3,259K. But the most disturbing observation is that in one week alone, a whopping 104,600 people hit the 99-week cliff, and stopped collecting extended unemployment benefits, the most since December 2011, as those on EUCs dropped by -45,808 while those on Extended benefits dropped by a astounding -58,829. As a reminder, Zero Hedge first noted that shortly 700,000 people will no longer be collecting any unemployment benefits. Here is to hoping those off the dole, are at least collecting disability in the USSA as otherwise these are tens of billions in lost purchasing power.
And so the preparation for a disappointing NFP print continues. While the first revision to Q1 GDP came precisely in line with expectations of a 1.9% print, below the first GDP print of 2.2% (which was expected to print at 2.5% on April 27), it is largely irrelevant as it is backward looking. Instead, what matters is today's ADP miss, and the just released initial claims number which as we explained minutes ago has to come in bad to prepare us for a horrible NFP number tomorrow which in turn unleashed the NEW QE, $130 gas, and all those other things which made Einstein define insanity. Sure enough, initial claims printed at 383K, up from the upward revised 373K (370K before), which is a 13K miss of expectations. Continuing claims came at 3242K on expectations of 3250K, and down from an upward revised 3278K. What is odd is that in the week ended May 12 we did not see another weekly plunge in the 60-70K ballpark of those dropping off from EUCs and Extended claims, and instead the number was a tiny positive. Expect the sell-side brigade to cut its NFP forecasts in advance of tomorrow's number even more.
Despite closed US stock markets today, FaceBook stock still managed to decline, while Europe dipped yet once again on all the same fears: Greece, Spain, bank runs, contagion, etc. Shortly Europe will reopen, this time to be followed by the US stock market as well. While in turn will direct market participants' attention to a shortened week full of economic data, which as Goldman says, will likely shape the direction of markets for the near future. US payrolls and global PMI/ISM numbers are expected to show a mixed picture with some additional weakness already fully anticipated outside the US. On the other hand, consensus does expect a moderate improvement in most US numbers in the upcoming week, including labour market data and business surveys. As a reminder, should the Fed wish to ease policy at its regular June meeting, this Friday's NFP print will be the last chance for an aggressive data-driven push for more QE. As such to Zero Hedge it is far more likely that we will see a big disappointment in this week's consensus NFP print of +150,000. Otherwise the Fed and other central banks will have to scramble with an impromptu multi-trillion coordinated intervention a la November 30, 2011 as things in Europe spiral out of control over the next several weeks. Either way, risk volatility is most likely to spike in the coming days.
In a absolutely shocking development, initial claims for the week ended May 5 printed in line with expectations of 370K, but to make the Mainstream Media's life easy and unleash all those "Initial Claims Decline by 2,000" headlines, last week's number was increased from 370K to 372K (ignore that NSA number increased by 2,515). Continuing claims missed expectations of 3250K printing at 3260K, but down from an upward revised 3289K. Needs to say this week's 370K adjusted print will be revised higher to 372-373K and the MSM will fall for it all over again. More importantly, the ongoing collapse in those collecting extended benefits now that legislation has halted extensions is becoming more acute: 40K dropped off Extended Claims and EUCs. More importantly, Durable Goods rose by 0.2% in April to $215.5 billion, as expected. However, when removing the traditionally volatile transportation component, Durable goods slid by 0.6% on expectation of a 0.8% increase; compared to -0.8% in March; Cutting out Capital Goods and Non-Defense Aircraft, the collapse was even worse, printing at -1.9% on expectations of a 0.8% print. And the March number was slashed from -0.8% to -2.2%. The is now the second in a row (see below). Cue downward revisions to Q2 GDP any second.
Same Trick Different Week: "Initial Claims Decline Following Revision"; Deficit Surge Pushes Q1 GDP To 1.5%Submitted by Tyler Durden on 05/10/2012 07:44 -0500
Stop us when this sounds familiar. Last week's 365K number has been revised to 368K, which is where the expectations for this week's print were. Instead, we got 367K claims this week, a 1K beat to expectations, which will be a 2K miss next week of course, but at least the pre-election propaganda media has their headline: "Initial Claims improve by 1,000." And scene. Naturally, the same thing happened for continuing claims, which beat expectations of 3275K, printing at 3229K, with the last week's print revised to 3290K from 3276K. The more disturbing form an end demand standpoint data, is that yet another 40K dropped off extended claims and EUCs. Finally in what is the best new for the market, and worst for the Economy, is that the March trade deficit soared to $51.8 billion, on expectations of -$50 billion, which was the biggest trade balance drop in 10 months. What this means is that Q1 GDP which already is tracking at 1.9%, just got lobbed to 1.5%. Yes: the Q1 GDP first revision will likely show the 2.2% number is now in the low to mid 1% range.