4 charts that explain what 366k Initial Claims mean

Let’s start with the inverted claims/S&P 500 chart:

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On top of dispelling the notion that equities aren’t priced based on fundamentals, this simple chart has provided a very effective fair value metric for four years running.  And it’s implying higher.

Initial claims & the unemployment rate:

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This long-standing relationship confirms what we see in the unemployment statistics.  We’ve previous written that this gap would converge, and weren’t taken too seriously at the time.

Initial claims & payroll growth:

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The extremely low turnover (from the BLS Labor Turnover Survey) means that the drop in initial claims likely directly relates to payroll growth.

Initial claims & household liabilities:

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One Response to 4 charts that explain what 366k Initial Claims mean

  1. adsanalytics says:

    Interesting – however chances are any activity indicator (IP, ISM, etc) is as correlated to the unemployment rate as is investment. This doesn’t tell us very much – wishing investment to increase does not make it so. More specifically, the interesting question is when and how far will unemployment fall? To answer that question we need to look at leading, rather than coincident, indicators of jobs. A good one is New Orders which tends to lead payrolls by about 4 months – see chart.http://www.adsanalytics.com/dashboard/docs/dashboard.php?treepage=tree_defini…ADS Analytics

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