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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (86114)	9/11/2007 5:12:52 AM
From: stan_hughes	Respond to of 110194

Here's a short piece on initial claims for UI being a reliable canary in the coal mine for indicating that a recession is genuinely taking hold -- based on the analysis below and how the connection is likely broadly known and well-followed in fund management circles, IMO it would be reasonable to assume that the market will charge into full 'recession discounting' mode once evidence of rising UI claims are released. Conversely, a statistical snapback might get a lot of people hoping that employment is going to hold up through this credit crisis (not a view I share, though). In either case, because of the significance of the recession connection, don't be surprised one day when the market does something rash over what might otherwise seem like a measly single point of data about UI. From Haver Analytics: Since When has Employment been a Leading Indicator? · The decline in U.S. payrolls during August has raised the question of whether a recession in the overall economy is to come. In the past, sustained employment declines have been coincident with recession's onset, and sometimes they have lagged it. The question will become more relevant after the figures for September are released next month. · It is then that a bounce back in state employment will probably lift the numbers. State employment has declined a collective 74,000 during the last two months. This months' numbers will reflect the return of teenagers who left early for school. · As for the modest rise in private service sector jobs of 88,000, that's more problematic. Payrolls were unchanged in the financial industries following previously firm gains. Payrolls fell 4,200 in the transportation industries after modest growth earlier in the year. The 7,000 worker decline in information services looks real as it followed two months of decline in this industry where hiring is genuinely under pressure. · The 22,000 drop in construction employment is hardly problematic. Recent declines in that industry are likely to continue. The real question is whether they will spread. · What is true is that past declines in employment of one month, coupled with all these questions about its validity, have nearly always been followed by recovery; and often a sharp one. What is always true, however, is that employment declines are never sustained unless initial claims for unemployment insurance rise. And so far that has not happened. · So we're left waiting. haver.com