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To: Bucky Katt who wrote (41086)	10/8/2009 9:33:15 AM
From: Rangle	Read Replies (1) \| Respond to of 48465

The latest initial claims report again showed the volatility in the labor market as claims fell 33,000 to 521,000 for the week ending Oct. 3. The drop in claims was much sharper than the 540,000 the consensus expected. The market is reacting as if the problems in the labor market have peaked and are going to be trending downward through the foreseeable future. While we agree that the initial claims numbers peaked in March, claims have been bounded between 550,000 and 600,000 since June. Only twice during this time period, Sept. 18 and Oct. 3, have claims fallen below 550,000 for the week. Instead of the beginning of a downward trend, we see claims continuing to move sideways between 550,000 and 600,000 with the occasional data point below the lower bound. There has been no significant change shown by any of the labor surveys that would suggest a sideways movement is not the correct path... Continuing claims fell for the third consecutive week to 6.04 million claims and beat the consensus estimate of 6.105 million. The drop in continuing claims is due to many jobless running out of unemployment benefits and not due to job creation. Congress recently passed a four-week extension to the jobless currently collecting unemployment benefits. The bill is currently being debated in the Senate, but we expect it to be passed shortly. The increase in duration of the unemployment insurance will limit the downward move in continuing claims for a few weeks once the law is enacted. This will help along with earnings surprises gl