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BETTER, WORSE & PERVERSE

Today’s Initial Claims figure registered at 570K, down 10K from last week’s revised level but still higher than the four week moving average by almost 4k.

The rising trajectory of Claims figures since July has fueled increasing discussion of the “jobless recovery” thesis that many bears have been promoting.  We are not entirely opposed to this thinking: while unemployment and sentiment have improved sequentially as we had expected over the first half, we now believe that there is as high a probability that both will begin to deteriorate as there is of a continued improvement from here and, on the margin, this is both new and negative.

Note that from our view, the perverse mechanics of dollar degradation make it possible that converging negative factors like this can actually be a positive catalyst for US equities if they drive the dollar lower and foreign buyers take advantage of the discount.

Andrew Barber

Director

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