We found nothing to look forward to in the Weekly Jobless Claims data this morning, and with the Monster Employment Index also dipping, there's little reason to feel comfortable about tomorrow's Employment Report. Whatever the market does intraday today will probably offset itself by close, as traders focus on the critical jobs data due tomorrow morning. Therefore, this stock market report advises that we are more likely to slip at least slightly today, not on the data, but on the pending release for tomorrow. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.
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Thursday's jobs data arrived from Monster World Wide (NYSE: MWW) and the Labor Department. The premarket radar was fixated on the Weekly Jobless Claims Report, given recent tidal play. This stock market report also covers Factory Orders and Pending Home Sales, and the Fed Chief is addressing Congressmen while the ECB offered its latest monetary policy. It's a busy day, including also Chain Store Sales and a slew of other corporate news.
Weekly Jobless Claims Greek Factor: -1
The popular press wants to call this a positive swing factor, but I'm sorry to say, it just is not. The 472K claims for the week ending August 28 came in 6,000 lower than the prior week's revised count. Is this really a reason to celebrate? Should we really call this a "weak" claims count, like one TV reporter labeled it? The latest reading only exceeded the economists' consensus forecast by 2,000, but what the press is misunderstanding is that the market needs change here. More of the same lousy state of labor affairs will not cut it, as far as stock market drivers go.
For months now, weekly claims have stubbornly held in the area they currently reside, and it's not a healthy place to be. This is more evident in the measly change in the four-week moving average, which eased by only 2,500, to 485,500. And, oh by the way, last week's figure for weekly claims was revised higher, to 478K, from the initially reported 473K. Where do we find good news here?
Monster Employment Index Greek Factor: -1
Monster WorldWide's (NYSE: MWW) metric of online job demand today showed its MEI Index fell two points in August to a mark of 136. That's bad news from a solidly supportive data-point most months. August, however, marks the second month of decline in the measure, from July's 138 and June's 141. Monster points to the year-over-year improvement from last August's 121, but stock traders know very well that the change from July matters far more. Current trend dictates trade; the guy on the trading floor might say, "What have you done for me lately."
The drivers of the decline are supportive of the case for economic stagnation. Manufacturing and transportation & warehousing slowed down hiring in August; even the annual growth rate eased in these sectors. Also, troublesome news came as consumer-driven sectors exhibited mixed trends. Retail trade and accommodation and food services edge up, while arts, entertainment and recreation recorded slight decline. This report offers another negative for trader sentiment.
Chain Store Sales Greek Factor: Important
Retailers will be reporting chain store sales for the month of August throughout the day today, and in the next few days. With Labor Day again pushed out a bit, the results might not be top of the class this back-to-school season. July's data was mixed, but the total pace of sales left something to be desired. Same-store sales were up only 2% in July.
Productivity & Costs Data Greek Factor: 0
Given the deceleration in Q2 GDP, economists were already looking for a decrease in productivity of -1.9%, quarter-over-quarter. What they got was about that, a decline of -1.8%. The data was so close to forecast because it was a revision, not due to brilliant economists being spot-on. Imagine that! It was a revision and it was expected, so its impact is diluted, but it still reflects or reinforces a negative case against the economy and trader sentiment. Since the revision was slightly better than expected, we might call this a neutral factor today, but that still feels like a reach. Unit labor costs move inversely to production, obviously, and so the cost increase improved to 1.1%, versus expectations for a rise by 1.2%.
ECB Monetary Policy Greek Factor: 0
The European Central Bank (ECB) kept rates unchanged at 1.0% at its latest monetary policy meeting. It also extended emergency lending activities, and so not much new here.
Fed Speak Greek Factor: Important
Cleveland Federal Reserve Bank President Pianalto will address the Fed's neighborhoods conference. Remember, Ohio was hard hit by the forced downsizing of the US auto industry. Fed Chairman Bernanke is being grilled today by the Financial Crisis Inquiry Commission; catch the must see TV at C-SPAN.
Factory Orders Greek Factor: 0
Factory Orders were reported for the month of July at 10:00 AM. Orders fell 1.8% in May and another 0.6% in June (revised from -1.2%). Economists were looking for an increase of 0.3% for July, based on recent Durable Goods Orders data. The range of views varied widely, with the highest expectation at +0.5% and lowest at -1.2%.
July's actual data showed factory orders increased by a lesser degree than expected, moving 0.1% higher. June's orders were revised to a better result though, and that change impacted the result for July against expectations. Net net, we seemed to get little surprise here and with orders growing only slightly, we view the report a neutral driver for the day.
Pending Home Sales Greek Factor: +1
After dropping 2.6% in June, July's Pending Home Sales Index might have fallen even further in August, given the sad state of affairs since the expiration of government stilts, err tax incentive. Instead, the Pending Home Sales Index recovered 5.2%, to 79.4. The report offers a pleasant surprise for beaten down housing stocks. Toll Brothers (NYSE: TOL) is up 1% at this hour.
Natural Gas Inventory Greek Factor: +1 for Economy, -1 for Nat Gas
The EIA reported on Natural Gas Inventory again at 10:30 Thursday. For the week ended August 27, natural gas stocks increased 54 Bcf, and measured 169 Bcf above the five-year average for this time of year. However, they were 208 Bcf below last year's level. Natural gas sold off on the news and seems poised toward $3.50 on nearest futures contract.
Corporate News Drivers
On the corporate schedule, Limited Brands (NYSE: LTD) gives its prerecorded sales call. Salesforce.com (NYSE: CRM) appears on the Caris & Co. Bus Tour. Continental Resources (NYSE: CLR) presents at the Hodges Capital Management Investment Forum.
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