First Time Jobless Claims

Reviewing the news for the week of 3/12, seasonally-adjusted first time jobless claims came in at 385,000, right in line with expectations, and the unadjusted number of initial claims was 372,370. The seasonally-adjusted level for state program insured unemployment was 3,706,000, and the unadjusted level was 4,276,916. And finally,a s of 2/26, the total number of persons claiming unemployment benefits in all programs was 8,953,610.

Looking at the week ending 3/19, the Econoday-surveyed analysts are expecting another week of 385,000 new first time claims.

As always, we turn to the US Department of Labor for the actual results. First off, the seasonally-adjusted first time claims was revised upwards to 387,000 (so, things were a little bit worse than anticipated). Now, for the week ending 3/19, the advance figure for seasonally adjusted initial claims came in at 382,000, down 5000 from last week's revised numbers and beating expectations by 3000. The unadjusted advance number of initial claims is reported at 351,204, down 21,166.

The seasonally-adjusted level for state program insured unemployment was revised upwards for 3/12 to a level of 3,723,000 (an increase of 17,000). For the week ending 3/19, the seasonally adjusted state program insured unemployment level is being reported at 3,721,000 (down 2000 from the revised level). The unadjusted level comes in at 4,260,519 (down 16,397[1]).

As of 3/5, the total number of people claiming benefits in all programs was 8,766,062 (down 187,548[2]).

[1] Hopefully down due to an increase in employment levels. But, since the Employment Situation report isn't due out until the inauspicious date of April 1, we won't know for another week.

[2] See [1], above.

First Time Jobless Claims

First off, let's review the week ending 3/5. We had a seasonally adjusted 397,000 new initial claims (missing expectations by 12,000). In unadjusted numbers, 406,096 people filed initial claims for unemployment insurance (up 52,147 from the previous week). The state program insured unemployment level (which functions on a two week delay) came in at a seasonally-adjusted 3,771,000 (down 20,000), but the unadjusted numbers saw a level of 4,442,438 (up 97,576). Finally, as of 2/19, the total number of people claiming unemployment benefits under any program (not just state programs) was 8,772,818.

Looking to the week ending 3/12, the Econoday-surveyed analysts are looking for seasonally-adjusted first-time claims to fall to 385,000.

We now turn to the US Department of Labor's Unemployment Insurance Weekly Claims Report. The 3/5 initial claims were adjusted upwards to 401,000 (a 4000 increase to last week's already disappointing results), but the 3/12 advance seasonally-adjusted figure for initial claims came in at 385,000 (right in line with expectations). Also, the unadjusted number of initial claims was 372,370.

The state program insured unemployment level for 2/28 was adjusted upwards to 3,786,000. For 3/5, the seasonally-adjusted level is being reported at 3,706,000. The unadjusted level for state program insured unemployment claims comes in at 4,276,916 (down 165,522).

As of 2/26, the total number of persons claiming benefits in all programs was 8,953,610.

CPI and Jobless Claims

We've got a few major indicators coming out today. Right now we have CPI and First Time Jobless Claims, and then we'll be getting the Philadelphia Fed Survey at 10 AM.

CPI for December was ever so mildly disappointing. For the month it was up 0.5% (missing expectations by 10 bps), and core CPI was up 0.1% (missing expectations by 10 bps as well). The analysts - or, at least, the analysts surveyed by Econoday - are feeling optimistic about January. They're looking for growth in CPI to slow to only 0.3%, and for growth in core CPI to remain steady at 0.1%.

Turning to first time jobless claims, we had pretty good results for the week ending 2/5. Analysts were looking for 412,000 new claims and we actually came in at 383,000 claims. Even looking at the unadjusted numbers for first time claims (438,548), and at the insured unemployment level (3,888,000 seasonally adjusted, 4,579,513 unadjusted), things were pretty good. For the week ending 2/12 the Econoday-surveyed analysts aren't as optimistic. They're anticipating an upswing in seasonally-adjusted claims, rising to 410,000.

Are they right? Let's have a look.

As always, we turn to the US Bureau of Labor Statistics for Consumer Price Index data. The report shows the CPI-U (the Consumer Price Index for All Urban Consumers, aka the CPI everyone talks about) rising a seasonally-adjusted 0.4% in January. Stripping away food and energy, and just looking at the core CPI-U, we're still up 0.2%. So both missed expectations. Not by a huge amount in absolute numbers (10 bps in both cases), but enough that the Street might not be happy. A few other interesting points:

• Energy was up 2.1% in January, less than December but still pretty noticeable. Most of that was driven by fuel oil, which was up 6.8% on the month.
• On the other hand, energy services prices as a whole were down 0.6%. Just speculating, it may be that people are trying to conserve more because of increased energy costs. But the report doesn't really say one way or the other.
• Clothing costs were up 1.0%.

First time jobless claims data comes from the US Department of Labor. Their press release tells us first that 2/5's initial jobless claims were revised upwards to 385,000, an increase of 2000. Not great - it really isn't good any time this number goes up - but that's a drop in the bucket sort of increase. For 2/12, the advance seasonally adjusted claims are 410,000. That's right in line with expectations, so that's not bad at all. The insured unemployment rate remained level at 3.1%, with the seasonally adjusted insured unemployment level rising from last week's revised 3,910,000[1] to a new level of 3,911,000.

Looking at the unadjusted numbers, first time claims came in at 421,713, while the insured unemployment level came in at 4,544,310. That looks pretty good, although we'll need to see the Employment Situation report (due out later this month) before we can tell if that decline is from people getting back to work, or if it is due to people running out of benefits.[2]

So there you go. I'll be back at ten with the Philadelphia Fed Survey.

[1] Yes. That was revised upwards as well.

[2] Here's hoping it's due to people getting back to work.

First Time Jobless Claims, Exchange Mergers, Night Dragons, and Cranky Dictators

First Time Jobless Claims are first on the agenda, and we may be hard pressed to beat last week's note of optimism. As you hopefully recall, we had seasonally adjusted initial jobless claims of 415,000 (which beat expectations by 10,000), with the unadjusted numbers coming in at 459,683 (down 26,633 from the previous week) but an increase in the unadjusted insured employment level to 4,619,319. The analysts are feeling optimistic, though, and are calling for a 412,000 new claims for the week ending 2/5.

Checking the report from the Department of Labor, it seems that once again the analysts were not optimistic enough. The week ending 1/29 had its seasonally adjusted claims revised upwards to 419,000 (not great, but it still beat last week's expectations by 3000). For the week ending 2/5, seasonally adjusted new claims were 383,000, beating expectations by 29,000. The unadjusted first time claims were 438.548, down 21,000 from last week (not bad at all). The seasonally adjusted insured employment level came in at 3,888,000 (down from last week's revised level of 3,935,250), while the unadjusted level came in at 4,579,513 (also down)[1]. Ten states saw initial claims decline by more than 1000, while only 3 saw new claims increase by more than 1000. So that's not bad at all, and the markets should be fairly happy.

Unless there are a lot of disappointing earnings reports, of course.

Meanwhile, there is an exchange arms race going on, with the status of "biggest in the world" going to the victor. It started with the Australian Stock Exchange looking to get approval to be taken over by the Singapore Exchange, a deal that faces substantial political and regulatory hurdles. Now the London Stock Exchange is looking to buy Canada's TMX, Deutsche Boerse is in talks with the NYSE about a merger, and now other exchanges are jumping on the bandwagon. There is no specific word about what a merger of the NYSE with Deutsche Boerse would mean in terms of regulatory impact on listed US securities (or US member firms, since the NYSE is a SRO), but that will be on the list of things that will have to be resolved before any merger can take place.

According to McAfee Inc, Chinese hackers accessed the computer systems of between five and twelve multinational oil and gas companies to steal bidding plans and other proprietary information. The company declined to identify the five companies they have identified as being compromised by the "Night Dragon" attacks, which depended on exploiting public websites and also on infected emails sent to company executives. McAfee states that they have no evidence that the attacks were sponsored by the Chinese government, but they also do not particularly expect the Chinese government to do anything about the hackers.

The Egyptian government, rather cranky about the United States' amazing political face-heel turn, has expressed concern about the US demands for political change in the nation. "When you speak about prompt, immediate, now - as if you are imposing on a great country like Egypt, a great friend that has always maintained the best of relationship with the United States - you are imposing your will on him," said Egyptian Foreign Minister Ahmed About Gheit. And, from the Egyptian perspective, he has a point. After all, we've spent billions of dollars in foreign aid in helping to prop up Mubarak's military dictatorship for thirty years now, so the sudden demands of the US government to allow actual democracy seem rather... disingenuous.

We now have the official rationale behind the North Korean Crazy[2] walkout on the peace talks yesterday. From the Korean Central News Agency of DPRK;s website, "The south Korean side persists in its nuclear and "human rights" rackets against the DPRK, sticking to its anti-reunification 'policy towards the North' and taking a passive approach towards dialogue.... Groundless accusations against compatriots under the pretext of 'human rights issue' and the like are little short of chilling the atmosphere of dialogue." Yes, that's right. According to Kim "Furry Hat of Power" Jong-un, the failure of the conference is due entirely to the South's unreasonable insistence on talking about human rights [3] and their unreasonable refusal to reunite as a single nation under the Furry Hat of Power[4].

[1] Unfortunately, we have no data on how many people are not counted in insured unemployment through returning to work, versus how many are not counted in insured unemployment through losing benefits. It is probably safe to say that all 39,806 people that fell off the count did not get back to work.

[2] "Don't Hate the Artillery, Hate the South" is yet another disappointing single.

[3] "How dare you claim to judge me for starving my people! My Furry Hat of Power needs food!"

[4] "How dare you not want me to starve your own people as well! Look at my Furry Hat of Power and obey me!"

Productivity And Costs And First Time Jobless Claims

This is looking to be a morning full of economic measures. Coming out at 8:30 AM EST we have the big boys on the Street, First Time Jobless Claims and Productivity and Costs. Then, at 10 AM EST, we have the ISM Non-Manufacturing Index and Factory Orders.

As far as First-Time Jobless Claims are concerned, we had a miserable week last week. Initial jobless claims hit a seasonally adjusted 454,000 for the week ending 1/22. For the week ending 1/29, there does seem to be a little optimism (possibly driven, in part at least, by yesterday's pretty good jobs reports from ADP and Challenger), and we're looking at a consensus expectation of 425,000.

So, was the optimism of the analysts justified? According to the US Department of Labor, their only failing was that they were not optimistic enough. On the down side, the initial jobless claims figures were revised upwards to 457,000 (not so good). But then, the seasonally adjusted initial claims for the week ending 1/29 came in at 415,000 - beating expectations by 10,000. Meanwhile, the seasonally adjusted insured unemployment level fell to 3,925,000 - a nice decline from the previous week's revised level of 4,009,000.

The unadjusted figures are 459,683 new jobless claims (still down 26,633 from last week) and an insured unemployment level that increased 5,274 to a level of 4,619,319. 25 states saw first-time claims fall by more than 1000, and only 4 states saw claims increase by more than 1000.

In a word: not bad[1]. The markets should be happy about this.

Then, looking at Productivity and Costs, Q3 2010 saw a 2.3% increase in nonfarm productivity, and a 0.1% decrease in unit labor costs. For Q4 2010 the analysts are expecting the exact same thing - a 2.3% increase in nonfarm productivity and a 0.1% decrease in unit labor costs.

Much as was the case with First-Time Jobless Claims, the Bureau of Labor Statistics is telling us that the analysts weren't optimistic enough. Nonfarm labor productivity increased 2.6% in Q4 2010, driven by a 4.5% increase in output and a 1.8% increase in hours worked. meanwhile, unit labor costs decreased by 0.6%, driven by the fact that the increase in productivity (up 2.6% as we just saw) outpaced the increase in average hourly compensation over the same time (up 1.9%).

So we're off to a good start. Now, if the Middle East can keep from descending into anarchy and bloodshed, maybe the markets will be up today.

[1] Yeah, I know. "Not bad" is two words. Here's another word: "so what'?

Durable Goods Orders! Jobless Claims!

We've got two major sets of data points out now, so let's see if there will be more joy in the US than in Japan this morning.

First off, Durable Goods Orders. We're about to look at the December 2010 figures, and analysts are looking for substantial improvement. November saw a revised decline of 0.1% in orders, or a revised increase of 4.5% in ex-transportation orders. For December, the analysts are burning incense to Plutos Catachthonios and hoping for a 1.5% increase in new orders. And does the US Census Bureau disappoint us? Yes. Yes it does. Durable goods orders declined 2.5% for the month (ex-transportation, they were up a tepid 0.5%). The transportation sector was the biggest loser (new orders down 12.8%), with nondefense aircraft the biggest loser in the sector (down 99.5%[1]).

So, what about First Time Jobless Claims? Will that make the markets happy? We did really well last week - even after revising the figures, we had a better than expected seasonally adjusted 403,000 new claims. Unfortunately, there is no joy to be found in the news from the US Department of Labor, either. Seasonally adjusted, the week ending January 22 saw 454,000 initial jobless claims[2]. The seasonally adjusted insured unemployment level[3] is 3,991,000 (up 94,000) as of the week ending January 15, with the insured unemployment rate at 3.2%.

In domestic news, does anyone remember me talking about the Iraqi Dinar? Good. There is related news, with the US Commodity Futures Trading Commission using provisions in the Dodd-Frank Wall Street reform law and the 2008 Farm Bill[4] to file suit against 14 foreign exchange dealers. The suits allege that the firms named illegally solicited members of the public to engage in foreign currency transactions, and that they operated without being registered with the CFTC. The CFTC is looking for civil monetary policies, as well as trading and registration bans. DinarTrade is not one of the companies named.

[1] Not a typo.

[2] Interestingly enough, the unadjusted numbers came in at 482,399 for the week ending January 22. That's down from the week ending January 15, and also down from the 502,710 initial claims for the comparable week in 2010. Go figure.

[3] I haven't really discussed this figure before. The insured unemployment level is the number of persons who are currently receiving state unemployment insurance payments. It is not used in any way as a measure of actual unemployment, because not everyone who is unemployed receives unemployment insurance benefits.

[4] No, I'm not sure what farming has to do with it either.

Europe Is Happy, And Jobless Claims Are Better Than Expected

In Europe, Swiss CPI fell 20 bps to a level of 0.0% for December - good news, but still missing expectations by 20 bps (and bringing the annual CPI increase to a 0.5%, which also misses expectations by 20 bps). German Manufacturer's Orders climbed 360 bps in November to finish at a 5.2% increase for the month.

The European Union released a couple of average figures as well. Across the member states, retail sales fell 130 bps to a level of -0.8% for November (missing expectations by 90 bps). Economic sentiment is positive though, improving 110 bps in December to a level of 106.2, with industrial sentiment up 310 bps to 4, but consumer sentiment falling 160 bps to -11. Obviously, European manufacturers and retailers are more positive than consumers at this moment.

And is Europe up on this overall good news? Let's see... As of 8:36 AM, the FTSE 100 is up 0.59%, the DAX is up 1.26%, and the CAC 40 is up 0.86%. So yes, yes they are.

Leaving Europe behind, we travel north and then south to the United States, where First Time Jobless Claims are due out any moment now. If you remember from last week, we had unexpectedly good news with only 388k new claims. For the week ending January 1, analysts are expecting to see that climb back up (possibly on seasonal employment coming to an end) to 412k new claims. The actual figures - 409,000 new claims - are mildly better than expected. Six states (Florida, Texas, Georgia, Oklahoma, Illinois, and Arizona) saw their first time jobless claims improve, but seventeen states saw things get worse (with California almost single-handedly counteracting the improvement in the six positive states)[1]

Later today, we get the US Chain Stores Sales report[2], the EIA Natural Gas Report (at 10:30 AM EST), and the Fed Balance Sheet and the Money Supply Report (both at 4:30 PM EST).

[1] If that's not clear, try this: Combined, Florida, Texas, Georgia, Oklahoma, Illinois, and Arizona saw jobless claims decline by 17,209. California saw it's first time jobless claims increase by 15,972.

[2] Target, Wal-Mart, K-Mart, and so on and so forth. This is not a huge market mover, but these chain stores do represent about 10% of domestic retail sales. So they are considered to indicate the direction of general retail sales and of consumer spending trends. It comes out when it comes out.

China In The News (Again), New Vatican Bank Rules, And First Time Jobless Claims

Looking to the global picture first, China is in the news[1]. They've released their Purchasing Managers Index, which dropped from 55.3% in November to 54.4% in December. Even though that's still considered to be an expansion in the marketing sector[2], this does indicate that manufacturing growth is slowing.

In further Chinese news, Jiang Yu has reiterated China's position that they are fully entitled to regulate the mining and exporting of their own nation's rare earth resources. "In the future, China will continue to supply rare earths to the international market and will take effective management steps over their export in accordance with WTO rules." Translated, this says "It's our stuff. It's in our nation. You don't like it? Wah."

Spinning round the globe to Europe, Italy reported a 0.4% increase in the PPI for November (putting it up 60 bps, and at 4.1% for the rolling year). That's not great news for one of the PIIGS, since it's a pretty good indicator that CPI will be going up over the next month or so.

European share trading in general is down a little right now, mostly on declining energy stocks and concerns about the "euro zone debt crisis". Copper prices have hit a new high ($9550 per ton) on expectations of rising emerging nations demand, and US crude oil prices are still near a two-year high. The dollar, on the other hand, is dropping like a stone - everybody expects the Fed's quantitative easing program to churn out more US currency in 2011 - bringing it to a 20-year low against the Australian dollar, a seven-week low against the yen, and a six-month low against the yuan.

Also in European news, Pope Benedict XVI has signed off on new rules to bring the Vatican's banking regulations in line with EU banking regulations. Why? Because Rome prosecutors have put the director of the Vatican Bank[3] and his deputy under criminal investigation for possible money laundering, and have seized 23 million euros worth of Vatican deposits at an Italian commercial bank (which were allegedly deposited without proper identification of the depositor or the recipient). Also, they have until tomorrow to bring themselves into compliance with EU banking regulations[4].

Moving westward across the Atlantic, the United States is braced for the First Time Jobless Claims for the week of Christmas with baited breath. For the week ending 12/18, we had 420k claims. Analysts are expecting a mild Christmas miracle (possibly driven by a last-minute surge in seasonal employment) which will hopefully bring Christmas cheer and a drop in first time claims to "only" 415k. Looking at the report, we see that the actual claims were only 388k - far, far better than expected.

So why are the futures flat? A couple of reasons, really. Everyone is still waiting to see the Chicago PMI (analysts are expecting a mild contraction in the growth rate to 62%) and the Pending Home Sales Index (no consensus yet).

[1] Isn't it always, these days?

[2] Any result over 50% is considered to be a sign of an expanding sector.

[3] Officially known as the Institute for Works of Religion.

[4] The EU, applying the "if it walks like a duck and quacks like a duck" rule, is no longer accepting the Vatican's position that the Institute for Works of Religion is not technically a bank.

Metrics? Yeah, We've Got Them

From all over the world, we have them. The majority are from the United States today, but we have an international coalition of economic activity to review.

Right off the bat, New Zealand has had some bad economic performance. Their Q2 GDP was revised downward to 0.1% growth. Analysts were looking for 0.2% growth for Q3, and were rather surprised to instead see a 0.2% decline. This puts their GDP up 1.4% for the rolling year, missing the expectation of 1.9% by 50 bps. The decline is largely blamed on the manufacturing sector (particularly petroleum, chemicals, plastics, rubber, and machinery and equipment manufacturing), although construction and real estate took a dive as well.

French Consumer Manufactured Good Consumption and PPI are out as well. October was a bad month for French manufacturers. Their PPI was up 0.8% (making production more expensive), and simultaneously consumption of manufactured goods was down a revised 0.6% (down 0.3% year over year). Greater costs plus less actual sales equals a manufacturing sector rocking back and forth in the corner muttering "Redrum, redrum, redrum"[1] over and over again. Did things get better in November, or do all work and no play make Jacque a dull boy?

Well, French manufactured good consumption was up 2.8% in November, beating expectations by 180 bps and bringing the rolling year figures up to 1.5% growth - most of it driven by a 15% increase in automobile sales. The PPI, meanwhile, was up 0.4% (exactly in line with expectations). After that, you'd think the CAC 40 would be doing better than it is today.

Leapfrogging across the Atlantic we arrive in Canada, where GDP (which was down 0.1% in September) is anticipated to be up 0.3% for October. Hope springs eternal, but has been dashed by a dose of cold reality - there was growth, but only 0.2%. This has also pulled their rolling year GDP down to only 3.3%. Weep for the Loonie, my friends. Weep for the Loonie.

And now, the United States! Right now we've got Durable Goods Orders, Personal Income and Outlays, and Jobless Claims. Later, we add Consumer Sentiment and New Home Sales to the mix.

Durable Goods Orders were down 3.3% in October, with analysts predicting a less pessimistic (but still not confident) increase to only down 1.0% for November. The actual Census Bureau report shows that we missed expectations, coming in at a 1.3% decline in durable goods orders. This was largely driven by a 11.9% decline in transportation equipment orders, mostly from nondefense aircraft and parts.

October Personal Income was up 0.5%, with consumer spending up 0.4% and the core PCE price index unchanged. For November, analysts are looking for 0.2% growth in personal income, 0.5% growth in consumer spending, and 0.1% growth in the price index. The Bureau of Economic analysis has not yet seen fit to make the official press release available, so we turn to Econoday to find Personal Income up 0.3% (beating expectations), consumer spending up .4% (missing expectations) and the core PCE price index up 0.1% (right in line with expectations).

First time jobless claims were revised upwards to 423k (up from the original report of only 420k) for the week ending 12/11, and analysts are expecting that same number to happen again for the week ending 12/18. Turning to the US Department of Labor, we see that the advance figure for the week ending 12/18 is 420k new claims - exactly in line with expectations. No single state really stood out with significant increases in first time jobless claims, while New York and North Carolina led the pack in reductions in new claims.

Consumer Sentiment, due at 9:55 AM EST, is expected to climb 80 bps to 75.0%. New Home Sales, due at 10 AM EST, are expected to climb 17k to 300k new units.

[1] Maybe that should be "Ertruem, ertruem, ertruem"?

Housing Gets Started, Unemployment Insurance Gets Claimed, And Spain's Pains Stay On The Plains

We've got some stuff happening today. About an hour ago, Housing Starts and Jobless Claims came out. Then, at 10 AM, we get the Philadelphia Fed Survey. Busy, busy day. And that's not even considering President Obama's tax cut "compromise" going to the House today[1], or FedEx (FDX) second-quarter profits missing expectations.

Last month, we had a heartily disappointing 519k new Housing Starts in October (we were expecting 590k). For this month, the Street is looking for 550k new starts. Meanwhile, last week, we saw 421k new jobless claims for the week ending 12/4 (marginally better than the 425k that had been predicted), and the Street is going conservative and predicting a mild improvement to only 420k new claims,

The reality is slightly better than expected. Housing starts for November hit 555k, beating the revised October figure of 534k (yes, the final number was revised upwards) by 3.9%. 465k of those were single-family homes, while only 72k were buildings with five units or more. 513k privately-owned housing units were completed in November (up 14.1% from October) and 530k new building permits were issued (up 4%). the bulk of these were in the region the Census Bureau describes as "South", so I guess that makes sense.

Turning to the First Time Jobless Claims, we came in at 420k new claims for the week ending 12/11, down 3k from the previous week's revised figure of 423k. Yes, that's right. The 12/4 421,000 new claims were revised upwards, meaning more people lost their jobs than was originally reported. Iowa and Idaho came out the best (they had a decrease in the number of claims), while 30 states had more than 1000 new claims (New York was worst off at +16,863, with North Carolina, Pennsylvania, and Georgia hot on it's heels with over 15k new claims each).

Combine all of this with the fact that Spain hasn't taken Europe's economy down in flames yet, and it shapes up to pretty good news for the morning.

[1] I'd expect it to be DOA. But I expected that when it hit the Senate as well, so now it's a wait-and-see game.

Anonymous, National Debt, And British Tuition Hooligans

The markets ended on a mixed note - Dow down 0.02%, NASDAQ up 0.29%, S&P 500 up 0.38%. The day's better than expected jobless claims data helped prop things up, but the (comparatively) strong dollar ratcheted up commodities prices and served as an anchor on any company that actually makes things. Of course, that's not the only reason the markets were flat. What else happened?

First, the Bush tax cut "compromise" deal appears to be dead in the water. The House Democrats approved a resolution of opposition to it, and Speaker Pelosi will "honor the resolution".

Speaking of budget deficits and the problems on Capitol Hill, Erskine Bowles and Alan SImpson, co-chairs of the National Commission on Fiscal Responsibility and Reform, released a statement in which they sate that there needs to be a bipartisan agreement to reduce the $14 trillion[1] US national debt before any long-term increase in the debt limit is approved. "Our businesses will not be able to grow and create jobs and our workers will not be able to compete without a strategy to get this crushing debt burden off our backs." They have proposed an austerity program of sorts, relying on cuts in spending and streamlining of the tax code, but the panel's own members didn't support it.

Douglas Shulman, Commissioner of the Internal Revenue Service, announced that information from it's lawsuit against UBS AG "...has proved invaluable in supplementing and corroborating prior leads, as well as developing new leads, involving numerous banks." This is, of course, in reference to the IRS pursuit of US taxpayers who shelter assets in overseas banks and then do not declare those assets. The IRS is also considering another amnesty program for tax evaders, since the one last year got around 15,000 individuals to declare their offshore assets.

By popular demand[2], we now turn to the Cyberwar. Operation Payback crippled Visa, MasterCard, and PayPal with a 30,000-node DDoS attack. www.paypal.com was down for several hours, rendering it unable to process payments, MasterCard's SecureCode service was also disrupted, although service has been restored, and both MasterCard's and Visa's websites went down for a while. Amazon.com has been declared the next target, not only for refusing to host Wikileaks but for then offering for sale a Kindle version of the Wikileaks documents[3].

What does all of this have to do with the market? Imagine the damage to Visa (symbol V), MasterCard (symbol MA), PayPal (a subsidiary of eBay, ticker EBAY), and Amazon.com (symbol AMZN) if Anonymous manages to keep them going down over the Christmas shopping season. Yeah. That got your attention.

In the "What Were They Thinking" department, the TSA pulled Meera Shankar out of line at the Jackson-Evers International Airport and frisked her. Because she was wearing a sari. Despite the presentation of her diplomatic credentials, establishing her identity as the Indian Ambassador to the United States. The Indian government is not happy about this...incident.

Finally, we have anarchy in the UK. Students protesting an increase in tuition fees in England[4] attacked the car containing Prince Charles and the Duchess of Cornwall. 37 people were hurt during the riot, and police made 22 arrests.

[1] Yes, trillion. With a "t".
[2] That is, one reader asked.
[3] Go figure.
[4] As much as 9000 Pounds sterling per year.

Jobless Claims! Also, News!

Last week, we had some depressingly bad results for first time jobless claims - 425,000 were anticipated, and we actually had 436,000. Well, it's new jobless claims day again, and the Street is going for optimism. The consensus is that for the week ending 12/4, we will only see 425,000 new claims.

While we wait for the results, let's check the news.

Futures are up, partly on optimism about the jobless claims expectations and partly on general excitement that 2010 is almost over. No, that doesn't (just) mean that traders are looking to the future and wishing away the last few months of lackluster performance. No, it's also driven by the fact that with only 16 trading days left in the year, underperforming fund managers will be under pressure to snap up stocks with solid fundamentals and good performance. When (if) this happens, the sudden spike in demand will lift market prices.

Debate on the Bush income tax "compromise" deal should hit the Senate by Friday. Senate Majority Leader Harry Reid thinks it's pretty much a done deal, and Republicans believe that the Democrats should "...get together and look at the overall bill and realize this is the presentation on the table." In preliminary statements, the rank and file Democrats do not seem impressed. If it passes, look for the equity markets to have a little party (yay! lower taxes!) and the bond markets to sell off more Treasuries (aiee! increasing Federal debt!).

Looking to Europe, the Bank of England (in a move that surprised no one) voted to keep in place the 0.5% interest rate and 200 billion pounds of quantitative easing they've had in place since February. The response from the European markets was to shrug, watch Fitch Rating downgrade Ireland's sovereign debt (BBB+, down from A+), and then go ahead and hit a 26-month high on optimism about the US economy.

China and North Korea reached a consensus on North Korea Crazy's Yeongpyeong Island Tour. What was that consensus? That they "agree on the need to resolve the situation." The world can now breathe a sigh of relief.

Now, back to the first time jobless claims results. On the up side, the week ending 12/4 saw only 421,000 new claims - better than expected and better than the previous week. On the down side, the prior week figures were revised upwards to 438,000 new claims - which is not so good.

Morning Metrics

We're looking for one big one (Pending Home Sales) and one moderate one (first time jobless claims).

If you recall, last week we had surprisingly good first time jobless claims: only 407,000 people filed for unemployment insurance for the first time that week. This week, the analysts aren't so optimistic. Analysts are looking for a consensus average of 425,000 new claims (with a range of anywhere from 412k to 440k). That's not great, but it won't push the markets around the way tomorrow's employment situation report will.

Pending Home Sales? That's the big dog for the day. It's a measure of how many houses are due to be purchased, but have not yet been closed on. It's huge, for all the same reasons that existing home sales and new home sales are huge: trickle-down impact on the economy. Econoday doesn't have the consensus up yet, so I'm flying blind here, but September's index was down 1.8% to a level of 80.9.

I won't be back with timely commentary on the metrics today, due to a family emergency.

Korea? PIIGS? Bah! We Have Data!

The futures are up this morning (S&P +3.60/+0.31%, NASDAQ +4.00/+0.19%, Dow +29.00/+0.26% as of 7:59 AM ET). And why are they up? North Korea Crazy [1] is still crazy, and now we're sending the USS George Washington to "join exercises" in the Yellow Sea. (That's an aircraft carrier, if you're wondering.) The Irish government is still on the brink of collapse over whether or not to borrow all the euros [2]; they're getting ready to announce an austerity plan that will save some 15 billion euros over four years [3]. Everybody in Ireland seems to hate this plan.

Now, since we know nothing has changed substantially from yesterday, why are the futures up?

Because, silly, that was yesterday and today is another day. A day filled with economic measures to distract the domestic economy from the possibility that the Korean War (and we are still at war with North Korea) will heat back up, and from the possibility that Ireland could set off a cascading economic Götterdämmerung.

Right now we've got Durable Goods Orders, Personal Income and Outlays, and Jobless Claims to contend with.

Durable Goods Orders are huge. They are new orders placed with domestic manufacturers for delivery of factory hard goods. They represent production and economic growth, because they represent our nation's industrial capacity at work. Positive numbers make people happy. Negative numbers make The Bernank print more money [4]. And the projections aren't that good right now. In September, we saw a 3.3% growth in new orders. Right now, the Street is looking for a 0.1% decrease in new orders. That's not great, but it isn't terrible.

Personal Income and Outlays is, well, a series of measures looking at personal income. And personal outlays. (Whaddya want? It's self-defining!) Did the average wage earner make more or less money? Did that average wage earner spend more or less money? Oh, and did inflation (in the form of core personal consumption expenditures, aka PCE, which has been the Fed's measure of inflation since 2000[5]) go up or down? It's huge because, as I've said before, consumer spending drives GDP. And this measure? This measure is consumer spending.

September saw a 0.1% decrease in personal income, and a 0.2% increase in consumer spending. For October, the Street is looking for a 0.4% increase in personal income, and a 0.5% increase in consumer spending. Yes, they are expecting to see the rate you spend money at increase faster than the amount you earn.

Finally, for the moment, we have New Jobless Claims. For the week ending 11/13, we had 439k new claims. Now, for the week ending 11/20, we're looking for 435k new claims.

And how did the numbers shape up?

Well, the durable goods orders report can be read at http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf, the personal income and outlays report at http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm, and new jobless claims at http://www.dol.gov/opa/media/press/eta/ui/current.htm.

The durable goods orders were, in a word, bad. They were down, as expected. What wasn't expected was for them to be down 33 times more than expected (that's a 3.3% decrease, in other words). There was no joy in Mudville, as the poem goes. Mighty Casey has struck out.

Personal income and outlays came in simultaneously slightly better and slightly worse than expected. Personal income was up 0.5%, marginally beating expectations. consumer spending came in at 0.4%, marginally missing expectations. PCE was up 0.4% as well but, since the Street never attempts to predict that figure, it neither exceeded nor missed expectations.

New jobless claims came in better than expected. Rather than the anticipated 435k new claims, we're only looking at 407k. Good news there, as it continues a trend of decreasing jobless claims.

So, that's where we are as of right now. I'll be back in an hour with Consumer Sentiment and New Home Sales.

[1] Their new release "U Lookin' We Shootin'" is all over the international charts, with Pyongyang blaming the South for driving the peninsula to the brink of war through "reckless military action".
[2] Or, at least, 65 billion of them. Although no final figure has been agreed to.
[3] That's about 10 billion in spending cuts - mostly from unemployment benefits and state payrolls. Another 5 billion will come from property taxes and a dramatic increase in personal income tax. But not corporate income tax. That would be foolish.
[4] http://www.youtube.com/watch?v=PTUY16CkS-k
[5] Possibly since it has been lagging behind CPI by about 1/3 since 1992, so it makes inflation measures look better. But I'm cynical.

Jobless Claims, the Philadelphia Fed's Business Outlook Survey, And An Addendum To Yesterday

First, the addendum.

One of my readers, pointed out to me that I may have been a little... one-sided, or perhaps unfair, about core CPI. I'll let him speak for himself, because he put it very well: "As a long term statistical measure of inflation, including statistical outliers does not make sense. The core prices are not as heavily influenced by outside factors such as currency fluctuation, natural disasters, or political pressures as food and fuel. So from the standpoint of helping [the casual reader] understand the significance of changes in CPI, I understand why you'd reference the buying power of someone's paycheck. We can all understand how the price of a tank of gas changes wildly over a 6 month period, this is a given. But from a long term perspective, volatile food/energy prices can lead to a misleading measure of inflation."

I'll go on record as saying that I think the inclusion of the volatile food and energy prices gives a more accurate measure of inflation, but I will also go on record as saying that's one of those things that real economists have been arguing about for decades. So don't feel like you have to accept my opinion. And thanks to the reader for pointing all of this out.

Now. On to the metrics.

First out of the gate are first time jobless claims. These aren't a really huge market mover, not like the Employment Situation report, because all it shows is how many people filed for unemployment insurance for the first time. It doesn't really say anything about how many people left the unemployment rolls (due to finding employment or running out of benefits) or what the unemployment rate is. It's still interesting, because a rising trend is still bad, but it's not an earthshaker.

For the week ending 11/06, we saw 435,000 new jobless claims. Analysts are looking for 445,000 claims for the week ending 11/13 - an upward trend if accurate, but not terrible. The actual results will be near the bottom of the article.

The other metric is the Philadelphia Fed's Business Outlook Survey, also known as the Philadelphia Fed Index. It's a survey of manufacturers in the Philadelphia, New Jersey, and Delaware about general business conditions. The results use zero as a centerline, with anything greater than zero indicating growth and anything below zero indicating contraction. For October we saw a tepid result of 1.0, and for November the analysts are expecting a 5.6 - still weak, but improving. Investors like this because it's considered an indicator of manufacturing sector trends. And growth in the manufacturing sector helps drive growth across the economy.

Look for the Philly Fed Index at 10 AM.

How did we actually do with first time jobless claims? 439,000. That's up from the prior week, but it beat expectations by about 6000 claims. You can see the details in the Department of Labor's official report.