This morning's economic data provides no comfort to those
looking for evidence that last Friday's jobs miss was a one-off
event. We have a big negative jump in Initial Jobless Claims, which
could be interpreted as confirmatory of the March payroll miss. But
it may be premature to reach that conclusion given the impact that
the Easter holiday had on these numbers. The inflation data this
morning - benign on the 'headline', but somewhat hot on the 'core'
- is not consistent with it needs to show to pave the way for
further QE from the Fed. All in all, this morning's basket of data
provides no clarity about the underlying economic picture.
The initial Jobless Claims data came in weaker than expected,
the second soft labor market reading after Friday's surprise
non-farm payroll miss for March. When you add in the 10K upward
revision to the previous week's tally, we saw a 23K jump in initial
claims to 380K. The four-week average, which tends to smooth out
the inherent week-to-week jumpiness of this series, increased by
4.2K to 368.5K last week.
The increase in claims was not altogether unexpected given the
earlier Easter holiday in the survey week, but the extent of the
jump is nevertheless disappointing. This is particularly so as many
in the market were looking this report to confirm that the payroll
miss last Friday was a surprise one-off event. Optimists, like
myself, will continue to assign the blame for today's claims miss
on the inherent difficulties and complications of seasonal
adjustments. But this argument will become weaker if this negative
trend fails to reverse in the coming weeks.
In other economic news this morning, the March Producer Price
Index (PPI) came in weaker than expected on the 'headline' at
'unchanged' vs. up 0.4% in February. The 'core' reading, which
strips out the food and energy components, came in hotter than
expected at up 0.3% vs. up 0.2% in February. We will get the March
CPI report tomorrow, but this PPI reading is not benign enough from
a QE perspective. Meaning that those looking for further Fed action
will see it as a negative read. Overall though, the PPI reading
appears to show some pricing pressures building in the supply
chain, but there is no reason to doubt the Fed's view that these
pressures will prove to be temporary.
On the earnings front, we a better than expected showing from
) this morning, while earnings from
), the nuts and bolts distributor, came in-line with
expectations. The major earnings report today is from
) after the close, whose shares have noticeably been absent from
the market rally lately given its sub-par results in the last
quarter. In other news, shares of
Royal Dutch Shell
) will be in focus after an oil sheen was spotted in close
proximity to its fields in the Gulf of Mexico. There is no
indication of a leak yet, but the market is justifiably wary of any
such development following the
) disaster two years ago.
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