Economics Update

Image Courtesy Calculated Risk

We have the new unemployment claims numbers, and according to USA Today and Reuters, the numbers are down, though as Bloomberg notes, the numbers are still 570K, more than the 564K expected.

Only, in a bit of flagrant journamalism, they ignore the fact that, the initial numbers for last week were 570K, and this week's numbers are 570K, but since last week's numbers have been revised up to 574K, they claim a small drop in initial Filings. (H/t Dean Baker, as well as CNN, normally the Cheer-leaders News Network, out there, for the catch)

Note that if the number is much above 400K, we are still losing jobs, that the 4 week moving average rose to 571,250, and that continuing claims rose by 92K to 6.23m.

The Institute for Supply Management's (ISM) NMI (Non-Manufacturing Index) is at 48.4%, indicating further contraction, but this is an improvement.

As Atrios puts it, "Hurray, the 2^nd derivative is positive."

In retail, same store sales fell 2.9% year over year in August, the back to school season, so the consumer is not yet ready to put the economy back on their shoulders.

In central bank news from across the pond, the European Central Bankleft its benchmark interest rate at 1%, and issued a statement that it sees no prospect of either rate hikes or its unwinding its support for their banks in the near future.

In the world of credit rating, Moody's raised Ford’s debt rating to Caa1 from Caa3, but according to S&P, the default rate for junk bonds rose to 10.2% in August, up from July's 9.4%, which does not bode well for the ability of companies to raise capital.

BTW, remember last week when I said that insider selling was beating insider buying by 30.6:1? Well, it's up to 61.8:1.

The sucker's rally is coming to an end.

Finally, something I generally pay very little attention to, but gold is getting awfully close to $1000.00/oz. (Troy)

The gold bugs will tell you that now is the time to buy gold, but I'll say that gold approaching the 4 digit line means that it is time to dump gold and get the f%$# out of dodge.

In currency, the dollar was a bit stronger, largely on concern for Japan's new government, and the statement by the ECB.

In energy, oil fell slightly, largely on the unemployment numbers.