We have another reassuring read on the nation's labor market
through a material drop in the weekly Jobless Claims data, which
sets us up for the November non-farm payroll numbers coming out
tomorrow morning. This indicates that the recent weak weakness in
the labor market was mostly due to the effects of Sandy.
Elsewhere, the European Central Bank meeting produced what the
market was expecting - no changes to interest rates.
But the over-riding issue for the market remains the
unresolved 'Fiscal Cliff' debate and there is no substantive
development on that front at this stage. The opening positions
from both sides appear to provide enough room for some sort of a
compromise in the coming days. But the bottom line is that there
is no 'fresh' initiative on either side to bridge the gap.
Jobless Claims dropped 25K last week to 370K. The four-week
average, which smoothes out the week-to-week volatility, dropped
by 2.3K to 408K. The Jobless Claims data is not entirely where it
was before Sandy distorted it (it was in the 360K vicinity before
the storm), but the storm's effects are steadily dissipating.
Overall though, the labor market appears to be in the same shape
where it has been in the pre-Sandy months, with weekly jobless
claims in the 350K to 400K range. The monthly jobs numbers coming
out Friday morning will also likely confirm what we saw from the
ADP jobs report on Wednesday. Adjusting for Sandy, the average
monthly jobs rate likely remains in the 150K neighborhood at
present - that has been the pace consistently this year.
In corporate news,
Lululemon
(
LULU
) came out with better than expected results for the third
quarter, but it's guidance for the coming quarter raise doubts
about the sustainability of its growth trajectory. The retailer
of high-end yoga pants and other women's athletic apparel guided
towards same store sales growth in the 'high single digits' in
the fourth quarter, which is a material climb-down from the
red-hot growth pace in recent quarters.
Lululemon's sales per square foot of retail space have been in
comparable territory to such iconic brands as
Apple
(
AAPL
),
Coach
(
COH
), and
Tiffany
(
TIF
). The high-end specialty retailer had the market all to itself
for a while, but
Gap
(
GPS
) has been making a determined foray into that attractive market
through its Athleta brand. The location of many Athleta stores in
close proximity to Lululemon's may be just a coincidence, but
there is no doubt that Gap is targeting the same audience that
has loyally followed Lululemon thus far.
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