A week ago I asked if we should see late-September’s sharp drop in weekly jobless claims as a sign of things to come. Today we have an answer, at least for the moment. New filings for unemployment benefits rose last week by 6,000 to a seasonally adjusted 401,000. As always, we shouldn’t read too much into the latest data point in this volatile series. But it was just too tempting to surrender to a bit of optimism last week when jobless claims dipped under the 400,000 mark for the first time since the spring. Oh, well—another jobless claims report, another disappointment.
Who Is Mario Draghi?
He’s the incoming president of the European Central Bank, of course, and he inherits the euro mess that remains Jean-Claude Trichet’s worry through the end of this month. The big policy question surrounding Mr. Draghi’s arrival is whether he’ll change course for the ECB and switch from Trichet’s hawkish stance to using the central bank as a lender of last resort by purchasing the euro region’s distressed debt in a bid to stave off the mounting pressures of deflation?
ADP Says Private Payrolls Rose 91,000 In September
The ADP Employment Report for September reveals another month of mediocre job growth in this data series, but that’s better than what the crowd’s been expecting. It sets us up for somewhat brighter expectations that Friday’s employment report from the government will confirm a mild revival in the labor market compared with August’s dismal number a la Washington’s bean counters.
Who Moved My Market Anomaly?
A new study finds that “momentum profits have disappeared since the late 1990.” Meanwhile, a pair of analysts report that “it is time to rethink the idea that small stocks outperform large stocks on a risk-adjusted basis.” And value stocks have been trailing growth and broad equity benchmarks by substantial margins over the last five years, according to Russell benchmarks. What’s going on? Should we be surprised? No, not really.
Strategic Briefing | 10.4.2011 | Recession Risk
Still Front End of Recession: A good ISM reading doesn’t change the call
Larry Kudlow (National Review) | Oct 3
The stronger-than-expected ISM manufacturing-index reading for September might normally suggest that the economy, at least for now, has dodged a recession bullet. After zero jobs and zero real consumer spending in August, which put the stalled economy on the front end of recession, the ISM number is the first major September reading. But economist Michael Darda says hold the applause: Inside the ISM, new orders and order backlogs either flat-lined or declined and remain below 50 — the DMZ recession marker on the index. Darda believes weak data in the U.S., plus the ongoing European crisis, plus the China slowdown, plus widened corporate credit spreads and stressful financial conditions, all point to a declining economy and additional stock market drops.
Manufacturing Activity Perks Up In September
The ISM Manufacturing Index increased in September to 51.6 from 50.6, reflecting a stronger pace of expansion in the manufacturing sector. As an early reading of last month’s economic activity, the ISM index offers a bit of optimism at a time of rising fears that a new recession is approaching.
Is That A Recession Lurking In The Distance?
A new recession is inevitable, predicts the Economic Cycle Research Institute. “Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession,” the consultancy announced on Friday. “And there’s nothing that policy makers can do to head it off.”
Major Asset Classes | Sep 30, 2011 | Performance Update
September was a cruel month for risky assets, delivering the worst batch of red ink among the major asset classes since the financial crisis was roaring in October 2008. Quite simply, there was no place to hide from the selling. Well, almost no place.
Book Bits For Saturday: 10.1.2011
● The End of Progress: How Modern Economics Has Failed Us
By Graeme Maxton
Author’s lecture and book summary via publisher, Wiley
We live in an Age of Endarkenment. Our economic, social and political systems have failed us. Modern economics has not done what it promised. It has widened the gap between rich and poor. It has not allocated the world’s resources fairly. It has brought the West to the brink of financial ruin. It has valued short-term gain more than long-term progress. It has made us focus on the individual, not society. The social consequences are easy to see. Much of the world is laden with debt. Our planet is being scraped clean of the resources needed by future generations. Science and technology are exploited for profit, not social advancement. The cult of celebrity, rise in global greed and belief that information is knowledge are limiting our imaginations. We are ill-equipped to respond to these challenges. We have been dumbed-down. Our politicians have become self-serving. They play on our fears, monitor us without justification and promote conflicts for their own interests. China’s rise will make these problems worse… Economist Graeme Maxton looks at what brought us to this state and what we can do about it.
Has Anyone Seen Those Vigilantes?
The bond vigilantes are MIA, observes Ronald McKinnon, a professor at Stanford. This is unusual, he advises. “In past decades, tense political disputes over actual or projected fiscal deficits induced sharp increases in interest rates—particularly on long-term bonds.” But as anyone who watches the Treasury market these days knows, rates have been falling, and for longer than many veteran market pundits and traders expected. To put it simply, these are extraordinary times… still. On that point, at least, there’s no debate.