- Jobless claims came in much better than expected this morning at 440K. The 43K decline is being attributed to a filing “backlog” at the Labor Department. Econoday has more details:
“The administrative backlog from the New Year holidays was supposed to have already cleared up. But not so fast! The Labor Department attributes a stunning 43,000 drop in initial claims to 440,000 for the Feb. 6 week — not to economic improvement — but to the final end of the backlog, a backlog that inflated levels in prior weeks. In only a very partial offset, the prior week was revised 3,000 higher to 483,000. Given the haze of the backlog effect, the four-week average offers the best handle on the data, falling for the first time in four weeks, though only by 1,000 to 468,500 and little changed from mid-December before the backlogs started to build.”
Continuing claims also declined substantially to 4.53MM. If the “backlog” is the true cause of the recent spike in claims then it can be assumed that the positive downward trend in claims is likely to reassert itself in the coming weeks and months.
- In more important news, EU leaders are not formulating a plan as of now that will back Greece. The Euro is down 1% in dollars as I write. As we mentioned last week, there appears to be little in terms of positive news that will come out of this for the Euro. If they back Greece currency speculators will assume that Portugal, Ireland, Italy and Spain are next in line for handouts. If they don’t back Greece the contagion worries will continue to roil the currency. The fact of the matter is, the Eurozone is a debt-laden economy and the currency weakness is not unjustified. This makes it very difficult to formulate an investment plan that doesn’t involve a higher dollar and the end of the risk trade – for now.