Little trick to evaluate sea change
Posted by Jason Apollo Voss on Jun 18, 2009 in Blog | 2 commentsOK, first of all. Before reading this post, I have to tell you that the post immediately below on the details of regulatory overhaul is more important, so read that one first, then come back here.
Jobless claims data came out today and they were up very modestly, by 3,000. So the number of unemployed increased again. This was completely expected. However, claims lasting more than one week declined by their largest amount since November 2001. This big fall snapped 21 weeks in a row of increases. Yet, this is not the fascinating thing and not the point of the blog post. The point is a little trick that helps us to evaluate when big change is afoot.
Several months ago jobless claims data was the lead story in the Wall Street Journal and other business publications. What were today’s headlines as of 7:53am MDT?
- Microsoft, Google in App Clash
- Eddie Bauer Plots Its Next Ascent
- Goodwin to Forgo Part of Pension
- Surgeon Was Paid by Medtronic
- Credit Woes Ease at Discover
- Fifth Third Boosts Capital Levels
- FedEx Offers Hope Amid Grim Results
- Banks Begin Exodus From TARP
- Morgan, Deutsche Bank to Run AIA IPO
- Tepid Response to Regions Swap
- Barbarians in Bankruptcy Court
- WebMD, HLTH in All-Stock Deal
- Smucker Profit More Than Doubles
- Pier 1 Imports Reports Profit
- Nomura Taps Tokyo Banker for U.S.
- Cantillon to Close Hedge Funds
- Electricity Industry to Scan Grid for Spies
- Winnebago Swings to Loss
- UAL Says Traffic is Down
- Intel Revamps Brands, Drops Centrino
- Watson Strikes Deal with Arrow
- Boeing Scores Jet Order
OK, so where in the heck is the jobless claims data story? It is well below the headlines list I quoted above, on the right side under the “Economy” section. In fact, it’s not even the first story listed, but the second. It is entitled, “Jobless Claims Rise Slightly.” The trick my loyal readers is to read business news everyday so that you can track story arcs. It takes me about 15 minutes a day to peruse the WSJ’s headlines for pertinent news. By reading it daily I can get a gauge for how the importance of stories changes over time. You see the offices of the Wall Street Journal serve as a nexus point for the world’s business news. They have their fingers on the pulse of business and the economy. Their editors publish the stories they feel readers are most interested in. So what does it mean when the jobless data goes from overwhelmingly the lead story to barely mentioned at all? You tell me.
Jason
You said: So what does it mean when the jobless data goes from overwhelmingly the lead story to barely mentioned at all? You tell me.
– A modest rise in jobless claims simply wasn't a factor that day to the majority of private and institutional investors, particularly when a number of stories were afoot regarding individual firm performance and would likely color the upcoming quarterly earnings reports.
– Discover (access to credit), FedEx (why the bad news wasn't so bad), Boeing (hooray for large orders), and the myriad reports of profits by other firms in the list of headlines demonstrate an increase in "good news" compared to the nonstop headlines of bank failures, the collapse of the auto industry, and the lack of credit that dominated the news throughout the fall and winter. A small rise in new jobless claims pales in comparison to the positive reports coming from so many directions.
– "Banks Begin Exodus from TARP" is the sort of big picture news that investors of all stripes want to read about. Every investor who participates in the American stock markets (and really, every exchange around the world) has been impacted by this story from Day One, and its ongoing presence provides a barometer by which investor confidence might be measured. This is a progress report on a much larger scale and it dwarfs the report of the rise in first-time unemployment filings.
– An increase of 3000 new jobless claims really isn't as significant as the first decrease in over 5 months of longer-than-one-week claims, a stat offered at the beginning of your post. While some people did file new jobless claims, others didn't need to continue their existing claims, either because they found jobs or for some other reason no longer needed or qualified for unemployment payments. There was good news to mitigate the bad (or unexpected) in the jobless claims report.
Exactly! Thanks for the comment Natalie. Jason