Today’s chart of the day comes to us courtesy of Wells Capital Management. It clearly shows the correlation between jobless claims and the equity markets over the last 10 years. Today’s jobless claims are potential cause for concern as we continue to see zero signs of a recovery in jobs.
Econoday notes that the data is “not consistent with a recovering job’s market”. Based on the very high correlation between claims and the equity market it is not a stretch to conclude that this morning’s data is not consistent with a stock market recovery:
“Layoffs continue at a rate not consistent with a recovering jobs market. Initial claims rose 12,000 in the June 12 week to 472,000 with the prior week revised 4,000 higher to 460,000. The four-week average slipped slightly to 463,500 but is still about 10,000 higher than this time last month which points to another disappointing monthly employment report.
Continuing claims rose 88,000 in the June 5 week to 4.571 million, retracing about a third of the prior week’s big dip. Here the four-week average is slightly below this time last month though the unemployment rate for insured workers ticked higher to 3.6 percent.”
Source: Wells Capital Management
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.