Daily Stock Market Articles

Small Businesses Less Concerned With Inflation
Tue, Aug 8, 2023

In an earlier post, we noted the improvement to small business sentiment per the latest data from the NFIB. The report also includes survey responses as to what small businesses perceive to be their biggest problems. The July report showed that small businesses have begun to take notice of easing inflation. As shown below, throughout 2022 and into portions of 2023, inflation has ranked as the number one problem among small businesses. But in July, Quality of Labor retook the number one spot as it had temporarily back in May. Meanwhile, there has been a rise businesses saying that government requirements and red tape are their number one problem, tying cost of labor for the fourth most pressing issue.



Obviously, as it still occupies the number two spot, inflation remains a major problem. Even though it is a big improvement from 37% exactly one year ago, there continues to be 21% of firms that report inflation as their biggest problem. That is also well above any reading observed pre-pandemic.



On a combined basis, cost and quality of labor are the most commonly reported problem for small businesses at 33% of responses. Unlike inflation which is hitting new lows, that is in the middle of the past few years' range.



Historically, the NFIB survey has had sensitivities to politics with a bias towards being more optimistic during Republican administrations and vice versa. Since the Biden Presidency began, government related problems have been on the backburner given that inflation has been playing a more pressing role. However, there has been a steadily rising number of responses once again reporting government red tape or taxes as their biggest issues. That has come hand in hand with an increase in the survey's Economic Policy Uncertainty Index which experienced a pronounced 4 point jump month over month in July.





Finally, we would note very few firms are reporting sales as their biggest problem. That is a significant disconnect from the index on actual sales changes which hit new lows in July.

 

Claims Seasonal Tailwinds Waver
Thu, Aug 10, 2023

Initial Jobless Claims have been back on the rise for the last two weeks with this week's reading coming in at 248k versus estimates for 230k. That is the most elevated reading since the first week of July and marks the largest week-over-week rise since the first week of June.



Before seasonal adjustment, claims totaled 225.6K, up roughly 20K from the previous week. At those levels, claims are above those of the comparable week of last year and multiple pre-pandemic years. The past couple of weeks have seen particularly pronounced seasonal tailwinds which have historically ebbed this week and will again likely happen next week. However, those tailwinds are set to continue later this month into September when claims have typically reached an annual low point.



Lagged one week to initial claims, continuing claims came in lower than expected, dropping to 1.684 million from 1.7 million. That is slightly above the low from two weeks ago but does not yet disrupt the trend downward in continuing claims.



As for a state level breakdown of claims, in the heatmap below we show where continuing claims are most and least elevated as a share of the each state's respective labor force. As shown, the West Coast and Northeast are the two weakest regions of the country with the highest percentage of continuing claims. Some states in the Southwest like Texas and New Mexico and the Midwest like Illinois and Minnesota also have pockets of weakness. Given various states have different unemployment insurance program eligibility requirements, benefit amounts, and program lengths, that is not necessarily to say these are the areas with the highest unemployment rates, but rather these are the places contributing the most to national claims counts.

 

Bulls and Bears Beat the Average for Ten
Thu, Aug 10, 2023

The S&P 500's selloff over the last week heading into today's CPI print caused bullish sentiment to dip a little. Compared to last week when 49% of respondents to the weekly AAII survey reported as bullish, this week only 44.7% reported as such. That is the weakest reading on optimism in a month, but remains well above the range of readings of most of the past year and a half.



The drop in bullishness was met with an increase in bearishness. Bearish sentiment rose back above 25% for the first time since the week of July 14th.



In turn, the bull-bear spread moved lower this week, crossing back below 20 to 19.2. That is the lowest reading in four weeks as the spread continues to point toward an overall bullish tilt to investor sentiment.



In fact, this week marked the tenth in a row that bullish sentiment sat above its historical average while simultaneously bearish sentiment was below its historical average. Looking across the past twenty years, there are not many examples of this sort of extended bullish sentiment streaks. In fact, only three other periods saw streaks of similar length. The most recent ended in May 2021 at 13 weeks. Before that, there was an identically long streak in the first quarter of 2012 and prior to that, you'd have to go all the way back to 2004 to find an example. In the 1990s through late 2000, such streaks were much more common.

 

Disinflation is Happening, And There’s More to Come
Posted on August 10, 2023

Inflation has been top of mind for investors over the past year and a half, both from the perspective of what that means for the economy as well as monetary policy. So, the latest release of the Consumer Price Index (CPI), which tracks a basket of goods and services purchased by households, looms large every month. The big question going into this report was: inflation has pulled back, but will it stay lower and continue to pull back further?

Based on the July report, the answer is yes.
Headline CPI rose 0.2% in July, as was expected. Inflation was up 3.2% year-over-year, a tick below expectations for a 3.3% reading. That’s well below the June 2022 level of 9%. As you can see in the chart below, energy, food, and vehicle prices have driven inflation lower. Over the past year:

• Energy prices are down 12%
• Food price inflation has eased to 4.9% (it was 11% in July 2022)
• Used car prices are down 6%

Looking at year-over-year numbers can be a little misleading, especially because they’re dependent on the data from a year ago and that’s not particularly helpful to understand what’s happening right now. At the same time, monthly data can be noisy. That is why I like to look at the 3-month average, and as of July, headline inflation is running at a 1.9% annual pace over the past 3 months.

We got good news on the core inflation front too, which is what the Federal Reserve focuses on since it removes volatile components like food and energy. Core inflation rose 0.2% in July, and over the last three months, it’s running at an annual pace of 3.1%. That’s a decisive shift lower from what we’ve seen over the past year and a half.



There are two big reasons why core inflation is pulling back, and it gets to why we believe inflation has more room to go lower. Vehicle and shelter make up 50% of the core inflation basket, and so what happens there is critical. Let’s talk about these.

As I noted above, used car prices are pulling back. In fact, private data indicates that used car prices have fallen 11% since March, but that’s yet to be fully reflected in official data. So, there’s further room to fall over the next couple of months. Also, new vehicle prices have fallen about 0.5% since March, and this could continue moving lower as auto production improves and inventories rise.



Shelter inflation has been decelerating for a while now. It was running at an 8-10% annual pace at the beginning of the year. That slowed to the 6-7% range between March and May, and over the last two months, it’s moved below 6%. That’s progress, albeit slow.

However, we know there’s a lot more room to go further down based on what’s happening in the rental market. Note that official shelter inflation does NOT include home prices and is just a measure of rents. Vacancies are up, and data from Apartment List shows that the national average rent is down 1% over the past year as of July.

Official shelter inflation may not get to that low a level, but safe to say, it’s heading a lot lower from where it is now. Shelter inflation averaged about 3-3.5% between 2018-2019, which was consistent with core inflation running at 2% (the Fed’s target). Based on what we know now, shelter could fall to an annual pace as low as 2.5%, and that would be a significant downward force on inflation.



Even beyond vehicles and shelter, there are positive signs.

A lot of supply-chain-impacted categories, like household furnishings and apparel, are also seeing disinflation. Airfares have been falling for four straight months now, with prices 20% lower from March. Even hotel/motel prices are down 4% over the same period. Of course, this is unlikely to continue, but it is more than welcome.

All in all, the big takeaway is that disinflation is happening, and we’re likely to see more of it going forward.

This also means the Federal Reserve is less likely to raise rates again at their September meeting. And if the inflation data progresses as we expect, the July rate hike may very well have been the last of the cycle. That’s going to be a big positive for investors as we head into the fall and winter.

 

Looking for a Mid-August Bounce After Weak Start


Despite modest gains yesterday by DJIA, S&P 500 and NASDAQ, all the major indexes we track were down over the first eight trading days of August. As of yesterday’s close, August 10, NASDAQ was the weakest, off 4.24% this month. Russell 2000 was the second weakest, down 4.02%. S&P 500 slipped 2.62% while DJIA was down 1.08%. Compared to past pre-election year August performance since 1950, this August has tracked closely. Should the market continue to track the historical pre-election year August pattern, a mid-month bounce could begin soon. This historical mid-month move is shaded in yellow in the following chart.

 

Why $1 Trillion in Credit Card Debt Isn’t a Bad Thing
Posted on August 11, 2023

“It’s not what you look at that matters, it’s what you see.” -Henry David Thoreau

It finally happened, US consumers officially have more than $1 trillion in credit card debt, an all-time record. Not surprisingly, many claimed this was a sign the consumer was tapped out and simply spending and buying everything on credit cards. We don’t think it is that simple, in fact, we’d take the other side that this isn’t a major warning sign and the consumer is still quite healthy and not up to their eyeballs in debt.



Every quarter the New York Fed releases their Quarterly Report on Household Debt and Credit, and this is the report that just showed record credit card debt. Here’s a great chart that showed overall debt reached $17.06 trillion. Peeling back the onion showed that mortgage debt stood still at $12.01 trillion as of the end of June, making up a huge part of overall debt. Credit cards were up $45 billion to $1.03 trillion, meanwhile, car loans were at $1.58 trillion and student loans checked in at $1.57 billion.



What stands out to me the most about the chart above is overall debt was virtually flat the past two quarters, from $17.05 to $17.06 trillion. Tells a much different picture than what the media makes it sound like with all the ‘soaring debt’, huh?

I really like the chart below from the NY Fed’s report that zooms in on the relative size of each part of debt. If you look at credit card debt specifically, it has consistently stayed in the same range over the long-term. So, credit card debt might be at a nominal record, but by no means are we seeing consumers go nuts buying everything on credit anymore than they ever have in history.



Another way to think about this is wouldn’t people likely have more credit card debt if they were worth more? I call this ‘denominator blindness’. All we hear about is the numerator at a new high, but in a lot of cases, the denominator has been soaring as well. Go read the quote at the top from Thoreau again. I love that one, as there are different ways to look at things and to me, seeing the denominator is very important.

Here’s a good way to show this, overall net worth has increased significantly over time, from $44 trillion in 2000 to close to $150 trillion today. Maybe more credit debt shouldn’t be a surprise?





Taking that same denominator blindness approach and looking at the percentage change of credit card debts and net wealth showed a much better backdrop. Since 2000, credit card debt has gained 106%, but net worth was up close to 250%. I will say it again, maybe more credit debt shouldn’t be such a surprise?



Yes, rates are higher and there’s a lot of debt, so one logical question is: can consumers pay for all this debt? Here’s a great chart showing household debt service payments as a percentage of disposable income was down to 9.6% in the first quarter, well below the pre-pandemic average of 11.2%. In simple English, there might be a lot of debt, but people are making more money so it isn’t such a stretch to service all the debt. The second quarter data isn’t out yet, but given disposable income has increased and debt likely stayed flat, this will probably fall again soon.



Here’s yet another way to show things aren’t as bad out there as it sounds. Credit card debt as a percentage of disposable income is 21%, still below the 22% from the end of 2019 and well beneath the 2003-2019 average of 26%. In other words, people have been making more than they have been adding to their credit cards the past few years.



But aren’t people just maxing out their credit cards? No they aren’t is the quick and simple answer. Here’s a chart that looks at credit utilization to show what we mean. Credit utilization is how much of your credit limit you are using. Sure enough, this has held steady at 22%, compared with the pre-pandemic level of 24%. Even home equity credit utilization is running at 38%, well beneath the historical average of 51%. Again, this might shock most people who saw on the nightly news how ‘high overall debt’ has been lately. It simply isn’t true.



That’s enough about denominator blindness. Another thing we keep hearing is how consumers are in bad shape and the glass house is about to crack. Yet again, this just isn’t true, as delinquency balances didn’t increase last quarter, with 97.4% of total balances current on payments, unchanged from last quarter and higher than it was at the end of 2019. The chart below shows that delinquent balances that are more than 120 days late (including severely derogatory) are just 1.3% of total balances, below the 2.8% level before the pandemic.



There has been a jump in serious delinquencies on credit cards, but this is also simply getting back to more normal levels. The good news is other areas haven’t jumped higher yet.



Here’s one that might shock most people, third-party collections hit an all-time low. If the consumer was in such bad shape like they keep telling us, this would probably show a much different backdrop. In fact, only 4.6% of consumers have collections against them, the lowest in history and well beneath the 6.3% from a year ago and 9.2% average through 2019.



Another way of showing consumers are in better shape than they keep telling us is business applications are soaring. In other words, entrepreneurship is soaring, not something you tend to see when people are worried about paying that next bill. Nearly 300,000 applications were filed the first half of this year, 2% more than last year and 21% above 2019.



I will end this blog (which turned out to be much longer than I expected) with some help from three of my friends.

First up, Callie Cox at eToro noted that credit card debt as a percent of total bank deposits was still historically low.



Neil Dutta at RenMac noted that household balance sheets are in fine shape, as household debt to income fell to nearly 86% in Q2, the lowest level since Q4 2021. Neil surmises that it is incomes, not debt, that are the main drivers of consumption lately.



Lastly, economists at Wells Fargo in a recent note said one major positive down the road is home equity. Consumers are sitting on trillions in equity and this could help in a lot of ways over the coming years. Read their great report for more on this concept.



We are aware the headlines regarding record credit card debt, student loan forgiveness and now some talk of credit card forgiveness are causing much anxiety for investors. Our take is we doubt there will be any forgiveness plans, especially in an election year. Instead, these headlines are being used in the media to create more division, eyeballs and clicks.

The bottom line to us is the consumer remains in much better shape than the average investor realizes.

 

August Monthly Option Expiration Week: DJIA Down 13 of Last 18

Mid-August has historically better performing than the beginning and the end of the month. This strength is punctuated with a streak of bullish days this week from Tuesday to Thursday. In the annual Stock Trader’s Almanac, a bullish day is defined as a trading day in which the S&P 500 has risen greater than or equal to 60% of the time over the last 21 years.

Unfortunately, this bullish cluster has not always resulted in full-week gains during August’s monthly option expiration nor does this daily bullish streak guarantee market gains on each day. DJIA and S&P 500 have declined on August option expiration day eight times in the last thirteen years. Full week performance has been mixed over the longer-term. S&P 500 and NASDAQ lean bullish with more weekly gains than losses while DJIA has the opposite record, more weekly losses than gains.

 

Retailers Report Earnings
Tue, Aug 15, 2023

Major retailers are set to report earnings over the next couple of weeks as the Q2 reporting period winds down. Before highlighting a list of the names set to report, below is a look at the performance of the "Bricks and Mortar" Retail index run by Solactive-ProShares since COVID hit in February 2020. Already on death's door prior to COVID due to the "bricks to clicks" trend of shoppers ditching trips to stores for supposedly more convenient online shopping, pandemic lock-downs were supposed to be the final nail in the coffin for physical retail stores. Fast forward to today, and you may be surprised to see that brick-and-mortar retail has actually outperformed the S&P 500 by more than 50% since COVID hit. As shown below, the Brick and Mortar Retail index did fall more than SPY during the COVID Crash in February and March 2020, but the bounce back for retail was much more pronounced coming out of COVID in late 2020 and 2021. While the retail index has generally trended sideways for the last two years now, so has the S&P 500. At this point, the Brick and Mortar index is up 71.6% since 2/19/20 on a total return basis compared to SPY's total return of 39.1%. Just when investors think they have a check-mate situation, the market always seems to have a counter move.



As shown below, more than half of the major stocks in the Brick and Mortar index are set to report by the end of August. Target (TGT) and TJX (TJX) will report ahead of the open tomorrow, followed by Walmart (WMT) on Thursday morning. Other big names like Lowe's (LOW), Dick's (DKS), BJ's (BJ), Foot Locker (FL), and Ulta Beauty (ULTA) will report next week.

Looking at the table, some of the best performers in the group this year have been names like Dick's (DKS), Lowe's (LOW), Walmart (WMT), Ollie's Bargain (OLLI), Signet Jewelers (SIG), and Costco (COST), while names like Target (TGT), Foot Locker (FL), Dollar General (DG), and Walgreen (WBA) have gone in the opposite direction and traded lower. Over the last ten years, three names on the list are up more than 500% -- Lowe's (LOW), Costco (COST), and O'Reilly Automotive (ORLY) -- while AutoZone (AZO) is currently up 499.2%.

 

Manufacturer Spending Plans Spin Around
Tue, Aug 15, 2023

The New York Fed published the first of regional manufacturing surveys this morning, and results were disappointing. Whereas last month saw a slightly expansionary reading of 1.1 in the headline index, the August reading fell firmly back into contraction at a level of -19 far exceeding forecasts of -1.



In the table below, we show each category of the report. As shown, the drop in the headline number was almost entirely driven by significant deterioration in new orders, shipments, and employment metrics. Breadth otherwise was actually fairly positive. As for six month expectations, readings across the board have been much healthier. In addition to significant increases month over month (many of which rank in the top decile of historical monthly changes), these readings are not as historically weak as their corresponding levels for the current condition indices.



As previously mentioned, the big drop in the headline index was largely driven by weakness in new orders and shipments. Each of those (as with the headline index) fell by more than 20 points month over month which ranks in the 3rd percentile of all monthly moves. That shift from slightly expansionary to historically contractionary readings is another bout of volatility in these readings consistent with big swings in previous months. Amidst that volatility, these readings have generally pointed to the side of demand having weakened, but expectations have begun to move in the opposite direction. As shown below, expectations indices for new orders, shipments, and unfilled orders have all reached the highest level since March 2022.



Both prices paid and received rebounded in August with those month over month increases coming in the 87th and 91st percentiles, respectively, of all monthly changes. In spite of those increases, that overall picture of prices trending lower remain in place.



As mentioned earlier, aside from new orders and shipments, employment metrics were the other point of weakness for current condition indices. However, number of employees is the most elevated category of all expectations indices after a 96th percentile month over month increase in August. Meanwhile, both capital expenditures and technology spending likewise experienced large month over month jumps in August. All combined, that would indicate a dramatic turnaround in manufacturing firms spending plans.

 

Homebuilders Consolidating
Tue, Aug 15, 2023

As the national average for a 30-year fixed rate mortgage eclipsed 7.5%recently, homebuilder sentiment has turned lower. The Housing Market Index from the NAHB fell to 50 in August from 56 the previous month. That six point drop month over month ranks as the eleventh largest decline in the survey's nearly 40-year history.



Homebuilders reported significantly weaker sentiment across the board with mid-single digit declines for present and futures sales as well as traffic. Geographically likewise also saw broad declines. The West experienced the biggest drop and now has the lowest reading with respect to its historical range. Meanwhile, the Northeast index has managed to hold at a more historically healthy level, albeit it too fell significantly in August.



Homebuilder stocks are trading higher today, but they have come well off the early highs since the release of the sentiment numbers. As things stand for the group, the past month has seen the homebuilders consolidating as they continue to trade handily above their respective 50-DMAs.

 

Stable Housing
Wed, Aug 16, 2023

The latest reads on Housing Starts and Building Permits for the month of June were released earlier this morning and showed mixed results relative to expectations (starts slightly better than expected, permits modestly weaker). The table below breaks down the report by single and multi-family units as well as on a regional basis. Two notable trends that stand out in the table concern single-family vs multi-family and regional trends. First, for both starts and permits, single-family was stronger than multi on both a m/m and y/y basis. Single-family units have more of an economic impact, so it's good to see strength on that score. On a regional basis, we found it interesting to see that while most regions of the country experienced double-digit y/y increases in starts, permits in all-four regions were down by at least 9% on a y/y basis which would suggest that the pipeline for future starts is getting smaller.



Below are a couple notable charts worth highlighting from the report. On a 12-month average basis, both Housing Starts and Building Permits are down sharply from their early 2022 peaks, but the last few months have seen some stabilization in the pace of starts. Permits, meanwhile, remain stuck in their trend, and based on the current pace and where they were last fall, we're unlikely to see any stabilization in this reading over the course of the next few months.



Last but not least, the chart below compares the trend in Housing Starts over a three-month rolling basis to the performance of homebuilder stocks as tracked by the iShares Home Construction ETF (ITB), and it provides a great example of how the market is always looking past the headlines. Even as Housing Starts continued to crater in the middle of 2022, homebuilder stocks began what looked like an inexplicable rally, but just as stocks in the group peaked ahead of the peak in Housing Starts in April 2022, they also bottomed well before the February low.

 

Now They Turn Bullish?
Posted on August 17, 2023

“When the facts change, I change my mind – what do you do, sir?” -John Maynard Keynes

One of the main reasons we were overweight equities at the start of this year was because virtually no one else was, as we explained in mid-December in Is Anyone Bullish?. Sure, there were a few bulls, but if you were bullish for the majority of this year you were crushed on social media, as it was obvious to everyone that a new bear market and recession were around the corner. Always remember what Joe Granville told us many years ago, “If it is obvious, it is obviously wrong.”

Then a funny thing happened. The economy surprised to the upside and stocks had one of their best starts to a year ever, with the Nasdaq having its best first six months ever.

Now wouldn’t you know it, we see many of those same bears changing their tune?

Mike Wilson over at Morgan Stanley is known for being one of the most bearish of the bears. He does great work and was quite right last year, but things haven’t worked so well this year, as at the start of the year he was looking for S&P 500 to go to 3,000. It’s currently around 4,400. Then two weeks ago he was saying we were in a 2019-like rally. He even apologized for being wrong on July 24 and upped his target to 3,900 this year. This by itself caught my attention that maybe it was time for some potential stock weakness when the biggest bear out there was changing his tune.



Carl Icahn is another big name who has been extremely bearish this year and is also changing his tune. In a letter to his investors sent earlier this month, he admitted he wagered too much against the stock market advance and will now focus less on hedging stocks and more on sticking to his activist strategy. “Our returns have been overwhelmed by our overly bearish view of the market,” Icahn said. “Going forward, we intend to stick to our knitting and focus on our activist strategy.”

So that’s two bears changing their views, but what about other signs?

Goldman Sachs hedge fund clients showed the cumulative dollar amount of short covering by hedge funds in June and July combined at the largest over a two-month period since 2016. It isn’t so cool (or prudent) to be bearish anymore is it? Here’s what the Wall Street Journal had to say.



One of my favorite monthly surveys is Bank of America’s Global Fund Manager Survey. This survey looks at real managers that manage hundreds of billions of dollars. The recent survey showed that sentiment was the least bearish since February 2022. Of course, one look at the below and it is clear that there are less bears than before, but by no means is this near what we’d call over-the-top optimism.



Another sign sentiment has shifted significantly is we are seeing bulls on magazine covers now. This recent MoneyWeek cover sure has a much different feel to it than we were seeing late last year. (But I must say I got a kick out of E.T. in the upper right-hand corner)



Speaking of last year, here’s a good reminder of what we were bombard with constantly. As horrible as a “100% chance” of a recession sounds, take note stocks formed a major bear market lows a few days before.



The economy continues to surprise nearly everyone to the upside and the Atlanta Fed is now expecting third-quarter GDP to come in at an incredible 5.8%! Take note the median expectation was for 0% at the start of the quarter, meaning half of all those economists surveyed expected negative growth! Well, that sure isn’t going to happen now. Reminds me of the old joke about why God created economists … to make weathermen look good!



One thing that has clearly worked this year and last year has been seasonality. We’ve been all over this, pointing out how bear markets tended to end in October, especially in midterm years, with the first half of pre-election years extremely bullish. That’s all played out exactly like history would have suggested, yet so many blatantly chose to ignore history.

Which brings us to now. Go read the quote from Keynes at the beginning one more time if you want. Some of the clues that had us bullish have been shifting, plain and simple. Let’s be clear, I don’t expect stocks to see a significant correction here, but some more modest weakness or consolidation would be perfectly normal. In fact, it’d be abnormal not to happen if you ask me.

Today we have some ‘johnny come lately’ bulls right as we entered a weak period historically. I discussed some of this two weeks ago in Stocks Don’t Like August, Now What? and I even joined Michael Santoli on CNBC on August 1st to discuss the increased likelihood of some volatility and weakness in August.

Here’s a chart I shared on Twitter (sorry, I’m not calling it X yet) that was quite popular. It showed that looking at prior years that were up at least 10% by the middle of the year tended to see some seasonal weakness right around here. Again, not a shock if you follow history. The good news is once you could get past that, the rest of the year tended to be strong with new highs happening later in the year. This is how we see 2023 potentially playing out as well, with potential new highs in the S&P 500 still our base case before the ball drops.



One final note is the S&P 500 recently closed beneath its 50-day moving average after being above it for more than four months. This got a lot of media attention and rightfully so. The good news (and I like to end on good news) is stocks did just fine when this triggered. In fact, since 1990, higher a month later eight of nine times and higher a year later (again) eight of nine times, but up more than 14% on average.



The bottom line is stocks had a great run, too many bears waved the white flag, and we entered a weak time seasonally. This is perfectly normal market behavior. We remain overweight equities here (like we have been since late December 2022), likely looking to use any continued weakness as an opportunity to add to positions.

 

Claims Seasonal Strength Fading
Thu, Aug 17, 2023

Jobless claims have continued to occupy the past several months' range between a low of 221K in late July and a high of 265K from a month earlier. This week, claims came in slightly below expectations of 240K falling to 239K. That compares to last week's reading of 248K which was at the higher end of the aforementioned range.



As we close in on the one year mark of last September's post pandemic and multi-decade low of 182K in initial claims, they have plateaued and are merely trending sideways. Of course, that is not to say claims are in a bad spot. Although claims have come well off that low, they have yet to move back above 300K. In fact, it has almost been 100 weeks since initial claims last printed a level of more than 300K which ranks as the third longest streak of sub-300K prints on record.



On a non-seasonally adjusted basis, claims actually dipped slightly in the latest week's data which is somewhat unusual from a seasonal perspective. As shown below, historically the past two weeks have marked modest seasonal bumps in claims before reaching a seasonal low in late August/early September. Worth noting, next week has been one of the most consistent weeks of the year to see unadjusted claims fall with a week over week drop 98% of the time.



Continuing claims are lagged an additional week to initial claims and the latest reading for the first week of August showed claims ticked back above 1.7 million. As shown below, that is only a modest turn higher as the overall trend of falling continuing claims appears to still be in place for the time being.