I think we we're the only Macro Team who read the June unemployment report as bullish, on the margin. That was not born out of a self perpetuating Wall Street narrative fallacy; it was born out of the math.
On the margin is where things matter in our Macro Model. Here are the two most recent data point that matter on US Employment:
1. The US unemployment rate flashed a double top in the rate of month/month acceleration in February and May (+50bps m/m)
2. The US jobless claims data (weekly, and less of a lagging indicator as unemployment is), continues to improve, sequentially (see chart)
Please send the chart below to the qualitative journalist who doesn't do calculus (derivatives). This is very straightforward.
At 565,000 claims, the first week of July broke the 600,000 line for the first time since the second half of January and represented a 52,000 improvement (8%) over the prior month. US jobless claims were also 41,000 below the 4-week moving average.
It's time for the one-factor model bears (200-day moving averages) to wake-up here.
Keith R. McCullough
Chief Executive Officer