This week’s jobless claims number was horrific (see chart). Coming in at 667,000 claims, this number was 36,000 higher than last week’s peak (and last week’s high was revised up!). This takes the 4 week moving average up, considerably, to 639,000.
What are the market implications?
1. It’s bad for the US Dollar (US$ is down -0.27%) today…
2. What’s bad for the buck is good for stocks (perverse, but factual)
3. It’s really bad for this concept of a “stress test” (because the test is based on estimates that readings like this crush)
If the US Government thinks we can trust “stress tests” of US Banks that are based on their reactive and revisionary economic predictions, we may as well throw in the Japanese towel here and call us the largest socialized economy of the world.
I’m selling US stocks into today’s strength because in the end these jobless claims numbers, as horrifying as they are, aren’t enough to break the buck by enough that will matter. The only way to break the US$ down is to publicly call for a devaluation of it. If the US Government wants us to wait and trust the “stress test” of their economic forecasts, I am sure I speak for most Americans who have a pulse in saying that I’d rather hoard my cash (savings up = US$ strong) and save it than invest alongside that plan.
Keith R. McCullough
CEO / Chief Investment Officer