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Initial Jobless Claims Fall

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Economic & Earnings Commentary

With a record 1086-point gain in the Dow and a 5.84% upswing on the Nasdaq, we saw yesterday a relief rally of the most concentrated sort. We’re back down again an hour before the opening bell today, with the Dow giving back roughly 300 points from yesterday’s quadruple-digit bid-up. It’s tough to know whether to be happy or sad on a day-to-day — or even hour-to-hour — basis.

For now, we’ll rely on new economic data to help pave the way toward relatively sane investing. For instance, today — like almost every Thursday — new Initial Jobless Claims numbers hit the tape at roughly in-line and very healthy levels: 216K on the headline, down 1000 claims from the upwardly revised 217K from the previous week. Continuing Claims, also revised higher from last week’s initial read, fell slightly from 1.705 million to 1.701 million.

All of these figures remain consistent with an excellent domestic labor market, for which we’ll see new overall figures in the non-farm payrolls and a new read on the Unemployment Rate a week from tomorrow. Aside from a couple outlier weeks, we’ve spent most of 2018 within an historically low new jobless claims range of 200-225K, with Continuing Claims between an almost unheard-of low 1.6-1.8 million. Whatever our current economic problems leading to big chunks of the stock market being sold off since the first week of October, U.S. employment is most assuredly not one of them.

We await additional economic metrics after normal trading commences today, including a new Consumer Confidence Index for December. Last time around we saw it reach 135.7; consensus estimates are currently for a steady 133.3. Obviously, holiday shopping season plays a big part in our understanding of consumer confidence, so we’ll see if the successful Retail sector Q4 translates to this index today.

Normally, we’d also see a new report on New Home Sales for the month of November, but this looks to be on hiatus for now due to the partial government shutdown that began late last week and now looks to continue until at least the new Congress is seated on January 3rd of next year. Estimates are for 563K new homes having been sold last month, up from the 544K recorded in October.

None of these numbers look like needle-movers currently, however. We have a 25% auto tariff scheduled to hit the market in the new year, along with continued strained trade relations with China, a sluggish global economy overall, oil prices way down from recent historic norms and looming legal problems for the White House. Despite all this, we saw a record-shattering trading day Wednesday; can we stay happy, or are we turning sad again?

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