A slew of economic and earnings news provides the backdrop to
today's trading action. We have reassuring news out of Spain this
morning, with a decently successful auction for long-term
government bonds. The earnings story is also unfolding favorably,
with this morning's basket of reports from
Bank of America
) providing a positive backdrop. But the all-important domestic
labor market picture emerging out of this morning's Jobless Claims
reading is less than inspiring.
And that's not all in terms of economic reports for today: we also
have readings on Existing Home Sales, Leading Indicators and a
regional manufacturing survey from the Philly Fed on deck for
release a little later.
Importantly, Spain held a reasonably good auction for
longer-duration government bonds today, which should help allay
some of the exaggerated fears that demand for the country's bonds
was drying up. The clearing yield on the 10-year bond was higher
than what the country had to pay in the last auction, but the
improved demand picture is the reassuring takeaway, at least for
This morning's Jobless Claims data fails to satisfy the doubts
raised by last week's surprise jump in claims and the March payroll
miss the week before that. The official report says that Initial
Jobless Claims dropped by 2K to 386K, but in reality the preceding
week's tally was revised upwards from 380K to 388K. So, in reality,
we got a 6K increase last week to 386K. The four-week average,
which tends to smooth out the inherent week-to-week jumpiness of
this series, increased by 5.5K to 374.8K last week.
It is unclear at this stage whether the emerging softness in
labor market over the last few weeks is a reflection of
economic improvement stalling or just due to complications in
seasonally adjusting this data. We will know for sure in the coming
weeks, but this is nevertheless a disappointing reversal.
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.
Maybe we can take comfort in this morning's strong run of earnings
reports to get over the labor market disappointment. Results from
Bank of America appear to have topped expectations, though the
plethora of one-time charges makes it difficult to get a clearer
view of the numbers. As with its other banking peers, credit
quality at Bank of America continued to improve, with reduced
credit loss provisions helping earnings.
DuPont came ahead of earnings and revenue expectations, with
pricing gains and sales growth driving the outperformance.
) beat by a penny on in-line top-line results. Morgan Stanley also
came ahead of expectations when results are adjusted for the debt
valuation adjustment. We will be getting results from
) after the close.
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