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When jobless claims were released this morning, the typical fire engine chasing futures trader sold the lows to someone who gets it. Having CNBC give you their “up to the second” view on these macro releases has a more obvious implication than the fact that unemployment in this country is bad – they don’t have a real player taking more than “seconds” to take a breath, think, and give you a legitimate synthesis on how this jobless number fits within the game of expectations.

While it’s sad that people manage other people’s money by keying off of TV entertainers, it is what it is … and should be taken advantage of. That’s what real American Capitalists do. This morning’s jobless data was bad – we know this. After a peak to trough decline in the SP500 of -52%, the market knew this was coming too!

On both a one week and 4 week moving average basis (see chart) jobless claims hit new cycle highs. Stock markets are discounting mechanisms of the future, however, not the past. The best question you can ask yourself about this chart is what happens when it hooks down again? This is called mean reversion, and I wouldn’t be surprised to see a weekly number, within the next few weeks, coming in better on the margin.

What happens on the margin is what matters most to our macro models. We are more bullish on US Equities right now, not because the entire free world knows unemployment is bad – but because sentiment in this country is going from toxic to bad – directionally, that’s good.
KM