morning review - 082610

8/9/2019 Morning Review - 082610

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or [email protected] Clark: 212 448 6085 or [email protected]

Beth Reed: 212 448 6096 or [email protected]

The next three states, North Carolina, Wisconsin and Illinois, are all running 5,000-7,000 higher weekly claims since February. Only Illinois is in the topten in terms of state populations. Wisconsin barely squeaks into the top 20. Yet all are near the top of the nationwide list for job losses.

I am not going to pretend to have an answer for how this mlange of states made it to the top of the fresh layoffs list. I think the fact that there is noconvenient package of explanations is actually the most disturbing thing about our brief study. The labor market is frozen in neutral because it is not one state, or oneindustry, or even one region that is suffering from difficult labor market conditions. The problem spreads from California to Pennsylvania, through Wisconsin toMassachusetts. That makes any kind of targeted response either by state or by occupation pretty much useless. This is a very national problem and will need a verynational solution.

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Net Jobs Added/Lost Since the Low Initial C laims Number of t he Year


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Seasonal ly Adjusted vs U nadjusted Weekly Init ial Jobless Claims: 2009 -Present

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Y/Y % Change in NSA and SA Weekly Jobless Claims: 2009 - Present

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1 4 7 10 13 16 19 22 25 28 31 34 37 4 0 43 46 49 52

Week

2009 vs 2010 Seasonal Factors

2009 SF

2010 SF


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U.S. EQUITIES

TOL rallied 5.9% after the homebuilder unexpectedly posted its first quarterly profit since 2007 due to a tax benefit and a drop in writedowns. Anotherhomebuilder, DHI, added 4.7% on an upgrade to Buy from Neutral by Ticonderoga Securities. Teen retailer AEO soared 7.9% for the biggest intradaygain in 10 months as it said sales rose in the back-to-school shopping season and that it will close up to 100 underperforming stores. Shares of AMR weredown 3.1% after American Airlines mechanics gave union leaders authority to call a strike as their labor group rejected a contract that would have raisedmembers pay.

Important Conferences/Corporate Meetings Today:EnerCom Incorporated Oil & Gas Conference Denver, CO

Macquarie Securities North Asia Corporate Day - HK

Important Earnings Today (with Estimates) From

Source: Thomson ONE

Three Day (High 1080.25; Low 1037.00):Prior Day SPX (High 1059.38; Low 1039.83; Close 1055.33):

S&P Futures

One Day (High 1057.75; Low 1037.00):

JCG: $0.46 MCRS: $0.38 NOVL: $0.05Source: Bloomberg


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FIXED INCOME

Source: Bloomberg

Todays Important Economic Indicators/Events (with Consensus):Jobless Claims (8:30am EST): 495k

Source: Bloomberg

Treasuries declined Wednesday, pushing the 10-year yield up from a 19-month low, as stocks gained for the first time in 5 trading sessions. Five-yearnote yields advanced from their lowest level since December 2008 after the governments $36 billion offering of the securities. The auction drew ahigher-than-forecast yield of 1.374% (a record low, nonetheless), while coverage was 2.83 times, compared with an average of 2.72 times over the past10 sales. Foreign interest was the highest since January, with indirect bidders purchasing 50.8% of the notes.


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Top Online Social Networking Stories

Latest Popular Digg.com Business Stories:Worries About Tomorrow Hold Back Economic Growth Today - http://kiplinger.com/columns/dekaser-practical-economics/archives/worries-about-

tomorrow-hold-backeconomic-growth.html12 Job Fields That Boom During (or Because of) Recessions - http://www.focus.com/fyi/human-resources/12-job-fields-boom-during-recessions/Chart of the Day: Housing Prices Since WWII - http://motherjones.com/kevin-drum/2010/08/chart-day-housing-prices-wwiiWhere Ramadan Becomes a Season to Make Money - http://www.time.com/time/world/article/0,8599,2012684,00.htmlEconomy Caught in Depression, Not Recession: Rosenberg - http://www.cnbc.com/id/38831550Calculated RiskNew Home Sales Decline to Record Low in July - http://www.calculatedriskblog.com/2010/08/new-home-sales-decline-to-record-low-in.htmlMBA: Mortgage refinance activity increases, Purchase activity flat - http://www.calculatedriskblog.com/2010/08/mba-mortgage-refinance-activity_25.htmlThe Big PictureA Brief History of the Mortgage Interest Deduction - http://www.ritholtz.com/blog/2010/08/a-brief-history-of-the-mortgage-interest-deduction/Economic Warning: Cuban Update - http://www.ritholtz.com/blog/2010/08/economic-warning-cuban-update/Housing: Still Widely Misunderstood - http://www.ritholtz.com/blog/2010/08/housing-still-widely-misunderstood/Robert Reichs BlogTax Jujitsu: Why Democrats Should Propose a Peoples Tax Cut - http://robertreich.org/post/1004761998/tax-jujitsu-why-democrats-should-propose-a-

peoples

Bespoke Investment GroupTruly a Dead August - http://www.bespokeinvest.com/thinkbig/2010/8/24/truly-a-dead-august.htmlZero HedgeMorgan Stanley Says Governments Will Default, Only Question Is How - http://www.zerohedge.com/article/morgan-stanley-says-governments-will-default-

only-question-howThe Last Time the 10 Year Was Here, the S&P Was at 805 - http://www.zerohedge.com/article/last-time-10-year-was-here-sp-was-805The Conscience of a LiberalHangover Theory at the Fed - http://krugman.blogs.nytimes.com/2010/08/24/hangover-theory-at-the-fed/


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