By John Galt
August 5, 2011
Yesterday’s weekly report on unemployment claims from the U.S. Department of Labor reflected another decline after the huge spike of two weeks over 470,000 in early July as non-seasonally adjusted claims fell to 339,348. The pattern seems to suggest that today’s computer generated fantasy to be released at 8:30 a.m. ET might well provide an upside surprise for the markets and give an excuse to the equity bulls to bid the markets up sharply, although it would be a vain attempt to fight the technical patterns of the charts and the momentum shift.
My predictions for this morning’s report, which I note are as accurate as any dart board projection, Bubblevision economist, or the guy under the bridge with a brown bag and a bottle:
Unemployment rate (U-3): 9.3%
Real Unemployment rate (U-6): 16.1% (SA) 16.6% (NSA)
Non-Farm Payrolls: +67,000
I tend to think the seasonal adjustments will kill the report once again yet give some false hope that things are getting betters as the BLS forgot to plug the Birth/Death model computer in so they end up using a dart board similar to my own to create many of these jobs. Pay close attention to the report because any shocks to the downside, such as a number less than 30,000 jobs, massive negative revisions, or a report indicating net job losses means the markets could essentially continue selling off. The myth that the bulls spread yesterday that the markets were oversold and thus “had” to bounce, perhaps even with a “rip your face off rally,” can be dismissed easily as in a bear market oversold conditions can continue until they stop. It is really that simple. When the sellers are exhausted the traders will move back in and a new “rally” declared by the desperate souls trying to get that E-Trade brat to buy, buy, buy.
In the mean time, here is the chart of non-seasonally adjusted weekly unemployment claims which is why I might be perceived as a little more bullish on today’s number:
Unfortunately for the regime, the claims are about to take a sharp turn upwards as the cracks in the financial system begin to bring economic activity to a crawl and the U.S. enters the recession I predicted to start in September of this year.
Buckle up your seat belts, put your trays in the upright position, and extinguish all smoking materials as we are entering a day of extreme turbulence.