Both Weekly Unemployment Claims and Retails sales missed expectations as Claims rose 4K and Retail Sales fell .1%.The market had been looking for a drop in Weekly Claims of 9K. Continuing Claims fell 141K to the lowest level since April. Thoughts here are that the majority within that number depleted benefits instead of being called back to work. Retails Sales were a big disappointment, falling .1% headline and down .6% ex-autos. Analysis’s were looking for plus .7% print. The only sector that got a boost was auto sales as the “cash for clunkers” pushed a 2.4% gain into motor vehicle sales. Trouble is, that program will be out of money within a week. Gas station sales were the major drag in today’s report, down 2.1%. Building materials, electronics, sporting goods, and department store sales did not fare much better.
Our housing industry got an eye opener as well this morning as foreclosures rose 7.0% month on month and 32% year on year. One in every 355 U.S. homes are in some stage of foreclosure, a new record. Until we put people back to work, we will not see the end of this trend. On the bright side, it should give Congress all the ammo they need to continue the $8,000.00 1st time home buyer credit into 2010. Stocks dipped on the news and bonds reversed early losses. Currently, the 10 year note is up 7/32’s (yield 3.68%), mortgage backs are plus 5/32’s, and stocks up a baker’s dozen. Overall, we see the three bears market to be just right, not to hot or not to cold. Stocks holding their gains (on what I don’t know) and bonds challenging down trend resistance (good for mortgage pricing) are both working together. This decoupling is good to see as instruments, no matter what sector, trade on value instead of anxiety. Let’s call the market neutral/bullish as we are cautiously optimistic.