Stock futures fall after jump in jobless claims

Stock futures are falling after a report shows initial claims for unemployment benefits rose unexpectedly last week.

Initial claims rose to 479,000 last week, indicating the jobs market remains weak and will likely slow economic growth. Economists had expected a small drop in claims to 455,000.

Again, more observational "cause and effect" used to explain the direction of one data series with another. Unfortunately, the times series are too loosely correlated for relative comparisons. This makes any cause and effect interpretation, especially short term ones, a complete waste of time.

Analysis of initial and continuing claim suggests that the labor market is likely to weaken in the near future. Continued support of near zero interest rate policies and verbally preparing the markets for further quantitative easing from key figures implies that the managers can see the coming weakness.

Average Weekly Initial Claims State Unemployment (AWIC) And YOY Change:


Average Continuing Claims State Unemployment (ACC) And YOY Change:


As for the rally in stocks, this is nothing more than the manifestation of capital flows seeking refugee from future currency debasement. Watch for a close of the August 2 breakout gap on shrinking volume. This would be a bullish setup and imply higher prices.

NYSE Composite with Exchange Volume:


Source: finance.yahoo.com