INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM

Takeaway: Another strong week for the labor market as non-seasonally adjusted claims continue to register accelerating improvement.

Below is the breakdown of this morning's claims data from the Hedgeye Financials team.  If you would like to setup a call with Josh or Jonathan or trial their research, please contact .

 

A Steadily Widening Divergence

This past week's claims data looks almost identical to that of the prior week. Rolling NSA claims were better by 9.6% YoY, which was a hair better than the 9.5% improvement in the previous week. SA claims were better WoW but essentially flat on a rolling basis. Clearly all eyes are on the Friday payrolls report. Historically the ability to forecast NFP with claims has been poor, i.e. there's typically a high correlation but with a fairly high standard error. Nevertheless, the 4-wk print (SA) this week was 346.5k, which was actually down from the 4-wk print for May at 352.5k. Based on this and last month's NSA print of 175k and this month's consensus of 161k, we'll go out on a limb and suggest that there's a better than 50% chance the NFP print will come in nominally ahead of expectations.

 

Tactically thinking about the Friday number aside, the real takeaway is that the fundamentals of the labor market (NSA YoY) continue to improve at an accelerating rate. Deep value, credit quality-levered longs like BAC remain among our top picks on this basis, coupled with the fact the recovering housing market shows no signs of derailing on the recent back-up in rates.

 

The Data

Prior to revision, initial jobless claims fell 3k to 343k from 346k WoW, as the prior week's number was revised up by 2k to 348k.

 

The headline (unrevised) number shows claims were lower by 5k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -0.75k WoW to 346.5k.

 

The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -9.6% lower YoY, which is a sequential improvement versus the previous week's YoY change of -9.5%

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 1

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 2

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 3

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 4

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 5

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 6

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 7

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 8

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 9

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 10

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 11

 

INITIAL CLAIMS: DATA SHOWS ONGOING POSITIVE MOMENTUM - JS 12

 

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 

 


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more