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After last weeks impressive drop, claims took a step back this week, rising 31k to 473k from 442k the week prior (revised up 2k). This brings the 4-week rolling average down 1.3k to 467.5k from 468.8k last week.

The trend in claims, while still improving, is at the high end of the range depicted by our three standard deviation channel in the following chart. That is to say, the trajectory of improvement has slowed considerably over the past five weeks. We think it's still too soon to call a reversal of the trend in the recovery, but on the margin we think claims remain the best predictor of future credit trends. As such, this data represents a temporary overhang on our bull case for consumer finance companies like American Express.

Joshua Steiner, CFA

CLAIMS IMPROVEMENT TRAJECTORY HAS SLOWED OVER THE LAST 5 WEEKS - CLAIMS