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THOUGHTS ON THIS MORNING’S DATA

Mixed economic news this morning despite the can’t lose market.  Jobless claims came in better than expected at 545K vs expectations of 575K.  Continuing claims, however, climbed to 6.23MM.  Employers are still not making a hiring push despite signs of stability across the economy.

The Philly Fed Survey came in better than expected and helped provide some buoyancy to the market, however, the underlying data was mixed.  Econoday reports:

The Philadelphia Fed’s business activity index rose solidly to 14.1 for September vs. August’s 4.2 though details in the report point to less strength. New orders continue to rise month-to-month but at a slower pace, 3.3 vs. 4.2 in August. Delivery times continue to quicken, not lengthen, at minus 8.9 vs. August’s minus 7.0. Manufacturers in the area continue to cut back on their labor forces with the employment index showing greater trouble, at minus 14.3 vs. minus 12.9. Shipments were up in the month but manufacturers used inventories to meet output needs. At minus 18.1, inventories betray continued cautiousness. Unfilled orders continue to decline and the six-month general outlook shows less optimism.

Price readings, as in similar reports, continue to show rising input pressures but no pricing power for finished goods. Prices paid rose nearly 5 points to 14.9 but prices received fell more than 9 points to minus 10.6. Markets showed little reaction to the report, in line with the mixed message. Still this report together with Tuesday’s Empire State report point to another reading just above 50 for the ISM national report on manufacturing, a reading that would indicate continued but modest expansion.

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On the housing front starts continue to show signs of stabilization.  Starts rose 1.5% in August which was roughly in-line with expectations.  Single family starts fell for the first time since January which is signaling the start of some seasonal weakness.  Single family homes represent 85% of the housing market.

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Perhaps the most important news of the day is out of FedEx.  The economically sensitive transport is beginning to see sure signs of improvement in the economy:

“While we see signs of improvement in the economy, the year-over-year comparisons will remain very difficult for our second quarter,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. “We remain focused on managing our expenses and generating positive cash flow.”

Despite the somewhat mixed data and jobs data that is downright alarming this late in a recession, stocks are making new 2009 highs.

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