The Wall Street Examiner » Wall Street Examiner Exclusives http://wallstreetexaminer.com Get the facts. Sat, 31 Jan 2015 20:41:36 +0000 en-US hourly 1 Is The FOMC Deliberately Misleading Us or Just Stupid, and The LTRO BLOCKBUSTER! http://wallstreetexaminer.com/2015/01/is-the-fomc-deliberately-misleading-us-or-just-stupid-and-the-ltro-blockbuster/ http://wallstreetexaminer.com/2015/01/is-the-fomc-deliberately-misleading-us-or-just-stupid-and-the-ltro-blockbuster/#comments Fri, 30 Jan 2015 19:27:55 +0000 http://wallstreetexaminer.com/?p=235071 The Fed said something in its statement that had me dumbfounded. Here’s what’s terribly wrong with the Fed’s thinking, along with BLOCKBUSTER news from the ECB that you will only see here, because the mainstream media only reports what everyone else pays attention to and not what’s actually important. I also give you a market look ahead with a few charts that clearly show what’s likely in the weeks ahead.

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Initial Claims Show The Healthiest Jobs Market in History, Or Maybe Not http://wallstreetexaminer.com/2015/01/initial-claims-show-the-healthiest-jobs-market-in-history-or-maybe-not/ http://wallstreetexaminer.com/2015/01/initial-claims-show-the-healthiest-jobs-market-in-history-or-maybe-not/#comments Thu, 29 Jan 2015 18:54:06 +0000 http://wallstreetexaminer.com/?p=234879 The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 265,000, which blew out the Wall Street conomist crowd consensus guess of 301,000. The pundits had shaved 1,000 off  their guess after missing on the low side last week. My, my! Such pessimists!

But my interest is not in the silly expectations game of pin the tail on the number. My interest is in the actual, unmanipulated data. Analyzing that is the only way to be sure that you are seeing what’s really going on.

The Department of Labor prominently reports the actual unadjusted data clearly and illustrates it in comparison with the previous year. As it does with virtually all government economic data releases, the mainstream financial media crowd chooses to ignore reality by not reporting the actual number. In the case of this report, the DoL also reports exactly how messy the seasonally adjusted data is by reporting what the seasonal adjustment had forecast based on the arbitrary mathematical calculation of what’s normal.

According to the Department of Labor the actual, unmanipulated numbers were as follows. “The advance number of actual initial claims under state programs, unadjusted, totaled 280,237 in the week ending
January 24, a decrease of 102,358 (or -26.8 percent) from the previous week. The seasonal factors had expected a decrease of 57,297 (or -15.0 percent) from the previous week. There were 357,806 initial claims in the comparable week
in 2014.”

Initial Claims and Annual Rate of Change- Click to enlarge

Initial Claims and Annual Rate of Change- Click to enlarge

The actual week to week change last week was a drop of 102,000 (rounded). This is a greater decline than the 10 year average decrease for that week, which was a decrease of 88,000 (rounded). This year’s drop was also larger than the comparable weeks of 2014 and 2013 which fell by 58,000 and 68,000 respectively.

Actual first time claims were 21.7% lower than the same week a year ago. This is at the extreme of the normal range, which since 2010 years has mostly fluctuated between -5% and -15%. There have only been a few weeks where the year to year decline was more than 20%. But that’s the 4th instance since last September.

In the past 5 months, businesses have been unusually reluctant to cut workers. In fact, these are all time record lows in terms of the number of claims per million workers. Is that a sign of a healthy, growing economy, or a bubble economy stretched to the limit? The last two times these numbers were nearly as strong were at the tops of the housing bubble and the internet/tech bubble. The current readings come on the heels of the long running US oil/gas bubble, which has recently collapsed.

I track the daily real time Federal Withholding Tax data in the Wall Street Examiner Professional Edition. It too has been very strong over the past couple of weeks. The growth rate of withholding taxes is now running at an annual rate of gain of about 3.75% in real terms, adjusted for the trend rate of increase in workers’ weekly incomes.

While we have been teased with signs of change in the claims data from time to time, the trend is still in force. Only if we start to see the numbers coming in above the comparable week for the past year for a few weeks would it be a sign of material change in trend, and a possible excuse for the Fed to bring back the Ghost of QE Past. The current data will encourage the Fed start the smoke and mirrors game of pretending to raise interest rates.

I have been reporting that claims were at record bubble levels since September 2013. At the tops of the last two bubbles in 1999-2000 and in 2006-07 claims persisted at record low levels for a year before the economy plunged. The economic foundations were already beginning to crumble by the time the first anniversary of record readings rolled around. In other words, employers were either slow to get the message or slow to act. In the current market, the claims numbers have stayed near or at record lows from September 2013 until now. The extreme condition has now persisted for 17 months. It seems that this is either the healthiest job market ever, or the bubble to end all bubbles.

I have inverted the scale on the chart below to show the correlation with stock prices. The rate of improvement clearly slowed in 2013 and 2014 concurrent with the massive surge in Fed QE. The rate of improvement in claims was much stronger in 2012 when the Fed was not doing QE. And it appears that once again when the Fed has stopped shoveling cash at financial engineers and speculators, the jobs numbers perk up.

While the direction of the stock market is positively correlated with QE, since 2012, improvement in the job market has been negatively correlated. This is clear evidence that the conomists and media pundits are wrong. QE did NOT boost the US recovery. It suppressed it while enabling and encouraging their financial engineers ran their skimming scams.

Claims and Stock Prices? Click to enlarge

Claims and Stock Prices? Click to enlarge

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Here Are The 13 Banks That Rule The World http://wallstreetexaminer.com/2015/01/the-same-sharks-swim-in-the-worldwide-liquidity-pool/ http://wallstreetexaminer.com/2015/01/the-same-sharks-swim-in-the-worldwide-liquidity-pool/#comments Wed, 28 Jan 2015 18:00:38 +0000 http://wallstreetexaminer.com/?p=221064 Originally posted 12/20/15 under the headline The Central Fact – The Same Whales Rule In The Worldwide Liquidity Pool

A central tenet of my view of the markets is that there’s just one worldwide pool of liquidity, and it is ruled by the same Killer Whales operating out of a few world financial capitals. We call those whales (or sharks if you prefer) Primary Dealers. They feed in the ocean of cash pumped in by the world’s major central banks, essentially the Fed, the ECB (Europe), and the BoJ (Japan). The PBoC (China)  is also playing a growing role as it integrates its financial markets with the rest of the world’s, but its system does not use Primary Dealers, per se, and its linkages to the rest of the world are more obscure. The BoE (UK) is a minnow in the sea of big fish. It swims along with them.The same banks feed at the BoE trough.

Here are the Big 3’s Big Fish. 13 big banks are the kings of the financial world. 28 others are also players who drink from one or two central bank fountains and play in the worldwide sea of liquidity.

The Big Fish- Click to enlarge

The Big Fish- Click to enlarge

(Download PDF)

Central banks only pretend to make policy. Once they print the money and purchase securities from the Primary Dealers (or lend the cash to them), the dealers decide what to do with it. The dealers are the real policy makers. The central banks have no control over where the cash goes once they intone “Abracadabra” (Aramaic for “I will create as has been spoken”) and magic wand wave the cash into existence.

With Quantitative Easing, the central banks bring the money into existence by making deposits in the Primary Dealers’ accounts at the central banks in payment for the securities the central banks purchase from the Primary Dealers, or by making loans to them. What the dealers do with the money from there is up to them, although they are loosely required to purchase government securities when the central government auctions them. Since there are always plenty of other bidders for the government paper, the Primary Dealers end up with billions in excess cash.

That is why this happens.

Major Central Bank Balance Sheets and US Stocks- Click to enlarge

Major Central Bank Balance Sheets and US Stocks- Click to enlarge

In 2001 the IMF surveyed 39 of the world’s national governments to get an idea of whether Primary Dealer systems were positive factors for financial system development. Not surprisingly, there was broad agreement that Primary Dealer systems were “to be highly recommended.”

The IMF study asked the nations about the advantages and disadvantages of Primary Dealer systems.  On the disadvantages question, 11 of the 20 developed nations in the survey either had no comment or said there were no disadvantages. 7 of the nations beat around the bush with niggling issues. Two, the UK and Canada cited the need to supervise and regulate. The UK cited “cartels” as an issue. Singapore cited an “unlevel playing field.”

Only one, Belgium, the headquarters of the ECB, nailed it. Belgium said:

A concentration of PDs is developing in the banking community over the world, with the same PDs evident globally. The result is a certain degree of oligopoly power.

There you have it, right from the horse’s mouth. This fact has been the basis for my research in tracking the actions of the major central banks every week for the past dozen years.

I talked about this in the summer of 2013 in a documentary about the Fed by CNBC Africa’s Lindsay Williams. Here are the excerpts from that documentary where I discuss these facts. 

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Here’s a Picture of The Single Family Housing Recovery- Holy Cow! http://wallstreetexaminer.com/2015/01/heres-a-picture-of-the-single-family-housing-recovery-holy-cow/ http://wallstreetexaminer.com/2015/01/heres-a-picture-of-the-single-family-housing-recovery-holy-cow/#comments Tue, 27 Jan 2015 17:33:48 +0000 http://wallstreetexaminer.com/?p=234614 Here’s a brief comment from leading analyst on the new home sales news.

Single Family Housing Recovery- Click to enlarge

Single Family Housing Recovery- Click to enlarge

In case you’re wondering, the seasonally adjusted (SA) headline, larger than expected gain, was due to calendar factors and the bogus drill of annualizing monthly SA data, which merely magnifies the monthly error times 12. But hey, who thinks about that! Certainly not mainstream financial news repeaters.

Builders typically don’t book sales on weekends, even though contracts are often signed on weekends. The worker bees who review the contracts and enter the data, work regular business hours Monday to Friday. Sales from November 29 and 30 were booked on December 1. That’s why the headline number “beat” Wall Street conomist consensus expectations. Likewise, the November number “missed” by a significant margin because those end of month sales in November weren’t booked in November, but in December.

To get around that problem I looked at the two months combined. This year, November-December actual monthly sales were down an average of 4,000 units from October. In 2013 they were down an average of 5,000. In 2012 they were down 1,000. So there’s just no news here. A drop of an average of 4,000 unit sales per month in November and December is par for the course for this time of year. At an average of 32,000 unit sales for November-December, total sales stink on a historical basis. There’s no sign in the current data that they will stop stinking any time soon.

When you take the time to look at the actual unadjusted data, you see these things. If you’re the mainstream media, you just ignore the facts and parrot everybody else–crowd behavior at its worst. So if you feel compelled to read and believe the headlines, you’ll be misled time and again. At least look at a chart of the actual data over time, see the trend for yourself, and ask yourself the question, “Has anything changed here.” Amidst all the media histrionics, either jumping up and down and cheering, or hand wringing and gnashing of teeth, most of the time the answer will be, “No, nothing has changed.” And that’s the answer here.

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Durable Goods False and Misleading Headlines Bestow Gifts On Wall Street Dealers http://wallstreetexaminer.com/2015/01/durable-goods-headlines-bestow-gifts-on-wall-street-dealers/ http://wallstreetexaminer.com/2015/01/durable-goods-headlines-bestow-gifts-on-wall-street-dealers/#comments Tue, 27 Jan 2015 15:10:47 +0000 http://wallstreetexaminer.com/?p=234593 The market is taking a huge dump this morning, misled yet again by phony, fictitious, misleading, and flat-out wrong seasonally adjusted (SA) data on Durable Goods orders. The Wall Street conomist consensus guess was for a gain of 0.5% in the SA headline number. Woops. It came in at minus 3.4%. The crowd shit its pants and dumped stocks into the arms of waiting market makers, your friends and mine, the Primary Dealers and their little partners in crime.

Here’s how the Wall Street Journal put it.

Durable Goods Orders Fall Sharply

Demand for big-ticket manufactured goods tumbled last month, a sign U.S. businesses remain cautious about spending.

Bloomberg-

Orders for U.S. Capital Goods Drop for Fourth Straight Month

Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies.

Bookings for non-military capital goods excluding aircraft dropped 0.6 percent for a second month, data from the Commerce Department showed today in Washington.

But what are the facts? I looked at those same core durable goods orders on an actual, not seasonally adjusted (NSA) basis in real terms, that is, adjusted for changing price levels, to arrive at a number showing the actual unit volume of sales. I put that data into a chart so that you can see for yourself just how bad December was.

Real Core Durable Goods - Click to enlarge

Real Core Durable Goods – Click to enlarge

Now, it is no lie that the long term trend STINKS. Core durable goods orders have been declining for 15 years. Manufacturing in the US is a dead business. It’s not a zombie rising from the grave. It’s dead. But this is not news. Conversely, December’s order volume was UP 3.7% year versus December 2013. That’s a big uptick in momentum from November’s 0.6% year to year gain.

What about the month to month change? Since the data isn’t seasonally manipulated, we merely need to compare the November-December change to the same time frame in years past to get an idea of just how bad or good this December was. The month to month change in December was a gain of 6.9%.How good is that? December is usually an up month, but this number is better than the 10 year average for December of +5.7%. It’s better than December 2013’s +3.7%. It’s better than December 2012’s +4.6%.

That is in no way, shape, or form, what the mindless idiot Wall Street captured media told us. They told us that the US economy is going to hell and we must all jump ship now if we don’t want to burn in those hellfires. Hey, they lied. No big deal. They lie all the time and nobody calls them on it. So they’re smug. .

The media simply ignores the actual, not seasonally adjusted data. It reports only the seasonally adjusted nominal data, and that number was just wrong. But that’s the number that everybody ran with. The futures were already off sharply when this news was released at 8:30, so other things triggered much of the selling. But this news caused another wave of selling. If this is the reason everybody is selling the cash market in New York this morning, so be it, they’ve based their decision on made up “data” that in no way reflects what actually happened.

If there are lasting underlying changes in macroliquidity flows–which I have not seen yet in my proprietary research–then the selloff will stick, but if not, then it won’t, and the Wall Street media will have presented the Dealer crowd with yet another gift in their central bank funded marketing campaign to distribute stocks at ever higher prices. This is the real crime.

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Initial Unemployment Claims Plunge, Remain Near Record Bubble Levels http://wallstreetexaminer.com/2015/01/initial-unemployment-claims-plunge-remain-near-record-bubble-levels/ http://wallstreetexaminer.com/2015/01/initial-unemployment-claims-plunge-remain-near-record-bubble-levels/#comments Thu, 22 Jan 2015 19:03:09 +0000 http://wallstreetexaminer.com/?p=234100 The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 307,000, which was just a bit more than the Wall Street conomist crowd consensus guess of 302,000. The pundits had upped their guesses after missing on the low side last week. This was a virtual bullseye in the game of pin the tail on the fictitious number.

My interest is in the actual, unmanipulated data. Analyzing that is the only way to be sure that you are seeing what’s really going on.

The Department of Labor prominently reports the actual unadjusted data clearly and illustrates it in comparison with the previous year. As it does with virtually all government economic data releases, the mainstream financial media crowd chooses to ignore reality by not reporting the actual number. In the case of this report, the DoL also reports exactly how messy the seasonally adjusted data is by reporting what the seasonal adjustment had forecast based on the arbitrary mathematical calculation of what’s normal.

According to the Department of Labor the actual, unmanipulated numbers were as follows. “The advance number of actual initial claims under state programs, unadjusted, totaled 380,934 in the week ending
January 17, a decrease of 148,530 (or -28.1 percent) from the previous week. The seasonal factors had expected a decrease of 135,931 (or -25.7 percent) from the previous week. There were 416,116 initial claims in the comparable week in 2014.”

Initial Claims and Annual Rate of Change- Click to enlarge

Initial Claims and Annual Rate of Change- Click to enlarge

The actual week to week change last week was a drop of 149,000 (rounded). This is near on the 10 year average decrease for that week, which was a decrease of 156,000 (rounded). Interestingly, this year’s drop was larger than the comparable weeks of 2014 and 2013 which fell by 119,000 and 121,000 respectively. However, the previous week’s performance was worse than the prior two years. This appears to be calendar factors at work rather than any material strengthening of the economy.

Actual first time claims were 8.5% lower than the same week a year ago.This is within the normal range, which since 2010 years has mostly fluctuated between -5% and -15%. There’s no news here yet.

In the oil patch states, Louisiana, Texas, North Dakota, and Alaska had unusually large increases in claims. That’s a trend that bears watching. There will be ripple effects. The question is how large they will be.

I track the daily real time Federal Withholding Tax data in the Wall Street Examiner Professional Edition. Like the claims data, it rebounded over the past week. The growth rate of withholding taxes had dropped sharply in December. In real terms collections dropped from an annual growth rate of around 5% in early December to 0.5% by early January. That reversed in the past week with a strong uptick in collections versus the same period last year. I will be posting an in depth analysis of that data later today in the Professional Edition.

While we have been teased with signs of change in the claims data from time to time, the trend is still in force. Only if we start to see the numbers coming in above the comparable week for the past year for a few weeks would it be a sign of material change in trend, and a possible excuse for the Fed to bring back the Ghost of QE Past.

I have been reporting that claims were at record bubble levels since September 2013. At the tops of the last two bubbles in 1999-2000 and in 2006-07 claims persisted at record low levels for a year before the economy plunged. The economic foundations were already beginning to crumble by the time the first anniversary of record readings rolled around. In other words, employers were either slow to get the message or slow to act. In the current market, the claims numbers stayed at record lows from September 2013 until December 2014. The extreme condition persisted for 16 months.This week they were slightly below record levels for this date but still at levels associated with bubble tops.

I have inverted the scale on the chart below to show the correlation with stock prices.  The rate of improvement clearly slowed in 2013 and 2014 concurrent with the massive surge in Fed QE. The rate of improvement in claims was much stronger in 2012 when the Fed was not doing QE. While the direction of the stock market is positively correlated with QE, since 2012, improvement in the job market has been negatively correlated.

Claims and Stock Prices? Click to enlarge

Claims and Stock Prices? Click to enlarge

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It’s Easy As 1-2-3, ECB, SNB, SOTU and QE http://wallstreetexaminer.com/2015/01/its-easy-as-1-2-3-ecb-snb-sotu-and-qe/ http://wallstreetexaminer.com/2015/01/its-easy-as-1-2-3-ecb-snb-sotu-and-qe/#comments Wed, 21 Jan 2015 02:36:45 +0000 http://radiofreewallstreet.fm/?p=24870 This is a syndicated repost courtesy of Radio Free Wall Street. To view original, click here.

Lee Adler tells what to look for in the market in reaction to the State of the Union, the Swiss National Bank removal of the Euro peg, and the ECB’s expected decision this week to undertake QE.

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Is A Bear Market Possible In US Stocks In The Era of Endless Liquidity? http://wallstreetexaminer.com/2015/01/is-a-bear-market-possible-in-us-stocks-in-the-era-of-endless-liquidity-2/ http://wallstreetexaminer.com/2015/01/is-a-bear-market-possible-in-us-stocks-in-the-era-of-endless-liquidity-2/#comments Sat, 17 Jan 2015 19:59:38 +0000 http://wallstreetexaminer.com/?p=233556

This video was originally published for Radio Free Wall Street subscribers on November 4, 2014. To see the latest videos in real time, subscribe here. Go behind the paper curtain of Wall Street propaganda and get the facts.

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Here’s Why Blowout Retail Sales Will Cause Market Blowback Next Month http://wallstreetexaminer.com/2015/01/heres-why-blowout-retail-sales-will-cause-market-blowback-next-month/ http://wallstreetexaminer.com/2015/01/heres-why-blowout-retail-sales-will-cause-market-blowback-next-month/#comments Thu, 15 Jan 2015 19:29:37 +0000 http://wallstreetexaminer.com/?p=233284 Markets top out when the news is good. Good news gives central banks the excuse they need to pull the punchbowl. In that respect, yesterday’s “bad news” on retail sales was bad news for stock market bears.

But behind the headline numbers, which were grossly misleading, the news wasn’t bad at all. In fact, in economic terms, the numbers were “good.” And behind the misleading top line,  the number excluding collapsing gasoline sales and on the basis of real, inflation adjusted sales per capita December was an absolute blowout. Individual consumers did spend more, a lot more, in December, and did spend their “gas savings” on other goods. The actual, unseasonally manipulated data leaves absolutely no doubt about that.

This means that the January headline numbers will need to be massively adjusted upward, and the December headline seasonally adjusted number revised upward, to reflect reality. The markets will react negatively as traders speculate that the Fed will move more aggressively to raise interest rates.

December’s year to year gain in real retail sales excluding gasoline per capita was +4.9%. Remember, this excludes inflation. It’s akin to the real unit volume of sales. It was the strongest year to year increase in real sales since February 2012.

The month to month change from November was a gain of 17.2%. Obviously December is always an up month versus November. So to get a handle on whether this gain was strong or not we must compare to past Decembers. The 17.2% gain was just below the 10 year average of 17.6% for December. But it was significantly stronger than December 2013 and December 2012, which rose by 13.6% and 14.7% respectively. This is an indication of increasing consumer momentum this year versus the past 2 years.

Blowout Retail Sales- Click to enlarge

Blowout Retail Sales- Click to enlarge

Applying a little technical analysis to the chart, perhaps the most important takeaway is that per capita real sales ex-gas broke out of the flat trend of the past 3 years and rose to the highest level since 2007. Consumers suddenly began spending like there’s no tomorrow.

Is this is a sign that consumers are healing or simply going on a drunken spending binge from the $50 a month they’re saving in gas? As David Stockman pointed out, much of the gain was easy credit driven auto sales. I tend to agree that these gains are not indicative of “healing” but rather just more of the easy credit driven craziness that marks the end stages of all bubbles. Either that or you must believe that consumers will keep buying new cars like there’s no tomorrow.

This spike in retail sales could be the end stage of the cheap credit bubble we have been in for the past 6 years. And when the media and pundits have to adjust for the massive misrepresentation of the December numbers, traders won’t like it. The speculation on the next Fed rate rise will flare again, correctly this time.

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Here’s Why Initial Claims May Really Show “Houston We Have A Problem” http://wallstreetexaminer.com/2015/01/heres-why-initial-claims-really-might-show-that-houston-we-have-a-problem/ http://wallstreetexaminer.com/2015/01/heres-why-initial-claims-really-might-show-that-houston-we-have-a-problem/#comments Thu, 15 Jan 2015 15:50:46 +0000 http://wallstreetexaminer.com/?p=233220 The headline, fictional, seasonally adjusted finagled for initial unemployment claims came in at 316,000, which was significantly more than the Wall Street conomist crowd consensus guess of 290,000. Media pundits immediately blamed the miss on a bad seasonal adjustment factor. Apparently they heard my barrage of complaints yesterday about how they mishandled the retail sales number. The problem is that the actual, unmanipulated data really does hint at possible trouble in the employment trend.

The Department of Labor prominently reports the actual unadjusted data clearly and illustrates it in comparison with the previous year. It is only the media who chooses to ignore reality. This is true of virtual all government economic data releases. The US Government reports the actual, unmanipulated data. It is the media which chooses to ignore it. In the case of this report, the DoL also reports exactly how messy the seasonally adjusted data is by reporting what the seasonal adjustment had forecast based on the arbitrary mathematical calculation of what’s normal.

According to the Department of Labor the actual, unmanipulated numbers were as follows. “The advance number of actual initial claims under state programs, unadjusted, totaled 528,476 in the week ending
January 10, an increase of 99,660 (or 23.2 percent) from the previous week. The seasonal factors had expected an increase of 66,724 (or 15.6 percent) from the previous week. There were 534,966 initial claims in the comparable week in 2014.”

Initial Claims and Annual Rate of Change- Click to enlarge

Initial Claims and Annual Rate of Change- Click to enlarge

The actual week to week change last week was an increase of 100,000 (rounded) as seasonal retail and other service workers were laid off after the holidays. This is virtually dead on the 10 year average increase for that week from 2005 to 2014, which was an increase of 101,500. But here’s where it gets interesting. The comparable weeks of 2014 and 2013 were not nearly as weak, with a jump of 46,000 in 2014, and less than 1000 in 2013.

By the same token, actual first time claims were just 1.2% lower than the same week a year ago. The normal range of the annual rate of change the past 4.5 years has mostly fluctuated between approximately -5% and -15%. This suggests some slowing. We know that oil industry workers are starting to get laid off, or are about to be. Maybe this is the first inkling of more trouble to come in that area and its ripple effects.

The claims data for that week is not the only sign of slowing. I track the daily real time Federal Withholding Tax data in the Wall Street Examiner Professional Edition. The growth rate of withholding taxes has also dropped sharply in recent weeks. In real terms collections have dropped from an annual growth rate of around 5% in early December to 0.5% now. That condition has persisted for almost 2 weeks.

As far as the claims data is concerned, one week does not a trend make. In the week ended January 3, the annual rate of change was still extremely strong at -12%. We’ll have to see what the next couple of weeks bring before concluding that the trend is finally weakening. Only if we start to see the numbers coming in above the comparable week for the past year for a few weeks would it be a sign of material change in trend, and a possible excuse for the Fed to bring back the Ghost of QE Past.

I have been reporting that claims have been at record bubble levels since September 2013. At the tops of the last two bubbles in 1999-2000 and in 2006-07 claims persisted at record low levels for a year before the economy plunged. The economic foundations were already beginning to crumble by the time the first anniversary of record readings rolled around. In other words, employers were either slow to get the message or slow to act. In the current market, the claims numbers stayed at record lows from September 2013 until last week. The extreme condition has persisted for 16 months. Is this the new normal, or a warning of a major retrenchment just ahead?

Initial Claims and Stock Prices- Click to enlarge

Claims and Stock Prices? Click to enlarge

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