Jobless Claims Inspire Stocks

Better Than Turkey!

Wall Street Greek readers today enjoyed the punch line of an inside joke we've shared amongst ourselves. A couple months back, we scribbled on these ethereal pages that a nice new catalyst for stocks would be weekly jobless claims nearing 400K or falling under that mark. Today's Labor Department report noted claims at 407K, and stocks rallied sharply (Dow +1.4%), recovering from a bad outing Tuesday.

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Jobless Claims Inspire Stocks

When Jobless Claims dropped under 450K over recent weeks, we noted the market's special enthusiasm expressed through stock buying activity. The action was right in line with our own expectations and calls for a bullish catalyst near the 400K level.

Having witnessed the stale state of labor affairs over the last year, we came to understand that investors were coming to grips with a new reality. Folks were learning to live with a lumbering economy, and they were not buying stocks anymore.

Heading into the November elections, and once it became clear in late August that the Tea Party Republicans were going to bring back balance to Congress and leave tax breaks in place, stocks trended higher. But since the elections, the market has lacked reason to rise. QE2 was supposed to provide a new catalyst, but equalizing currency drivers in Europe (Ireland) and Asia (Korea) sort of offset hopes for export opportunities. The race to the bottom for fiat currency has begun, but that is another tragedy we will discuss later. I realize there are still other benefits to reap from quantitative easing, but I just find the Fed's arsenal weak and see QE2 as the wrong gear for the war we are waging (look for our pending article on this as well).

What Had Happened...

For the week ended November 20, Initial Unemployment Insurance Claims tallied 407K, down 34K from the prior week's revised count of 441K. Many states commented that a shorter workweek may have aided the count, but Veterans' Day fell on November 11, which is outside of the measured period. The only other holiday was the Islamic Eid al-Adha, which is known to Christians and Jews as the day Abraham trusted in God and was willing to sacrifice his son Isaac. The Muslim Hajj also began during the week, and perhaps played some role.

So are Muslims such an important minority in the US now that Islamic holidays influence economic data? There is no accurate count of the number of Muslims in America, but it is estimated by reputable sources to be between 5 to 7 million (by US News & World Report and the Council on American-Islamic Relations).

That said, the recent data trail has offered us enough insight to determine that the cut in jobless claims has more to do with decreasing layoff activity than seasonal factors. After all, the four-week moving average declined another 7,500 in this latest period, to 436K.

The insured unemployment rate declined again, by another tenth of a point, to 3.3% in the November 13 period. 142,000 people fell out of the insured unemployed pool, leaving 4.182 million through November 13. The four-week moving average also fell here, to 4.309 million. The news is indisputably good, and so stocks had solid basis to react to it Wednesday. Continued improvement in this labor data point, should it occur, should prove a lasting catalyst for stocks as well. Perhaps we really do have something to be thankful for this Thanksgiving after all.

FYI

Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin, during the week ending Nov. 6.

The highest insured unemployment rates in the week ending Nov. 6 were in Puerto Rico (5.8 percent), Alaska (5.7), Oregon (4.3), Pennsylvania (4.0), California (3.9), Nevada (3.9), New Jersey (3.9), Arkansas (3.6), Connecticut (3.6), South Carolina (3.5), and Wisconsin (3.5).



Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM). The day’s earnings included Deere (NYSE: DE), Tiffany (NYSE: TIF), China Cord Blood (NYSE: CO) and Frontline (NYSE: FRO).

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