Two important data points for the economy were released Thursday morning: weekly unemployment claims and GDP. Both were very bad.
From the weekly unemployment claims report - In the week ending April 23, the advance figure for seasonally adjusted initial claims was 429,000, an increase of 25,000 from the previous week's revised figure of 404,000. The 4-week moving average was 408,500, an increase of 9,250 from the previous week's revised average of 399,250.
For prior week’s claims to continue to be adjusted higher (read: worse) the following week is not only bad, it is scandalous. Haven’t the brainiacs at the BLS figured out how to correctly forecast this report? But even if that is impossible, shouldn’t the adjustments have at least as many adjustments better as worse? Or is the Bureau of Lies and Statistics just living up to its name and initially underreporting the bad news?
At this point of the so-called recovery, this data point should be well under 400k.
GDP data was equally poor, if not worse. The morning report read in part - Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011 (that is, from the fourth quarter to the first quarter) according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.
…The deceleration in real GDP in the first quarter primarily reflected a sharp upturn in imports, a deceleration in PCE, a larger decrease in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by a sharp upturn in private inventory investment.
These reports were released at the same time and led a CNBC guest to say (paraphrasing) “These reports are bad enough to guarantee more QE, more Fed easing.” QE ∞, indeed.
Many in the media tried to make a claim that the GDP report was “in line with expectations of 2%.” Wait a second, isn’t 1.8% actually ten-percent worse than 2.0%? Wouldn’t a reading of 2.2% be met with glowing and breathless exaltations of how great the economy is? Moreover, isn’t a reading BELOW 2% the territory of a coming recession? Why yes…yes it is.
Finally, there was a 7-YR Note auction. According to Bloomberg…Not all auctions are strong and the monthly 7-year note auction is weak, stopping out at 2.712 percent for a large three-point tail. Coverage of 2.63 is the lowest of the last four 7-year auctions and dealers ended up holding the largest share, 53 percent, in nearly two years. Demand for Treasuries eased following the results.
No matter to equities though. All of this new and quite bearish news was met with a collective yawn. Who cares when Benny & The Inkjets will just conjure up some fresh cash out of thin? Fraud Street will party on like it is 1999. All indices closed up with strong gains.
Trade Date: 4/28/11
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