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Takeaway: Comparing Hurricanes Sandy and Katrina, their impact was similar on jobless claims. We'll know more once the State-level data is released.

This note was originally published November 15, 2012 at 09:48 in Financials

Hurricane Comparisons

Remain calm. In the chart below we profile the trend in initial jobless claims following hurricanes Katrina and Sandy. If, in fact, this week's enormous surge in initial claims is attributable to Sandy, then we can reasonably expect to see it mean revert along a similar path that we saw following Katrina. That said, it took 8 weeks for Katrina to fully renormalize. 

There is in fact a way in which we can test the government claim that the rise in claims is attributable to Sandy. The government releases state-level NSA claims. Total NSA claims rose 104k WoW. We would expect to see a preponderance of that increase represented by New Jersey, New York and other hard-hit East coast states. Unfortunately, the state level data is not yet available on the Labor Dept website. Stay tuned.

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - sandy vs katrina

Initial Jobless Claims: The Data

Initial claims rose 84k last week to 439k (an increase of 78k after a 6k upward revision to last week's data). The rolling claims series rose 11.75k WoW to 384k. On a non-seasonally adjusted basis claims rose 104k to 466k. The year-over-year rolling NSA change made a dramatic jump to ~0% improvement. Last week the YoY rolling NSA change was -6.5%. 

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Seasonality

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - rolling claims NSA YoY data

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Raw

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Rolling

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - NSA

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Rolling NSA

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - SPX

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Fed

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - NSA YoY

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Recessions

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Claims Linear

Yield Spreads

The 2-10 spread fell 3 bps WoW to 133 bps. So far 4QTD, the 2-10 spread is averaging 1.43%, which is up 6 bps relative to 3Q12.  

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - 2 10 spread

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - 2 10 QoQ

Financial Subsector Performance

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

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Subsector performance

INITIAL JOBLESS CLAIMS: SANDY vs. KATRINA - Companies

Joshua Steiner, CFA

203-562-6500

jsteiner@hedgeye.com

Robert Belsky

203-562-6500

rbelsky@hedgeye.com