INITIAL CLAIMS: AUTOPILOT ENGAGED

Claims Improvement Begets Further Claims Improvement ....


The headline initial claims number fell 9k last week to 358k (falling 15k after the upward revision to the prior week). Rolling claims fell by 11k WoW to 366k this week. On a non-seasonally-adjusted basis, reported claims fell 24k WoW to 398k.

 

Claims remain on autopilot, for now. While some of the strength here is the byproduct of a seasonal distortion that will roll from tailwind to headwind around the end of February, the underlying trends are still very positive. Our hypothesis has been that falling claims become self-reinforcing once they break through the 375-400k level because that is the rate below which the unemployment rate can decline sustainably. This, in turn, fosters greater confidence among hiring managers and consumers, which begets further reductions in claims. The treadmill has become virtuous. This remains a key theme supporting our bullish stance on the large-cap financials. We expect this trend to continue over the intermediate term. To be clear, we're not suggesting that claims must fall week-in and week-out going forward. That would be ridiculous. Rather, we're suggesting that the general trend lower in the rolling claims series is likely to persist going forward.

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart1

 

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart2

 

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart3

 

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart4

 

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart5

 

 

2-10 Spread


The 2-10 spread widened 12 bps versus last week to 172 bps as of yesterday.  The ten-year bond yield increased 16 bps to 199 bps.

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart6

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart7

 

 

Financial Subsector Performance


The table below shows the stock performance of each Financial subsector over four durations. 

 

INITIAL CLAIMS: AUTOPILOT ENGAGED  - chart8

 

 

 

Joshua Steiner, CFA

 

Allison Kaptur

 

Robert Belsky

 

 

 


7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more