Suitably Flip

Vacation

Light-to-non-existent blogging for the duration of the week!

Jobless Thursdsay: Still Above 400,000

And last week was (typically) worse than initially reported.

Initial jobless claims decreased by 13,000 to a seasonally adjusted 403,000 in the week ended April 16, the Labor Department said Thursday in its weekly report. The prior week’s figures were revised up to 416,000 from an originally reported 412,000.

The market was expecting to see claims duck back under 400k, so this is a miss, but not so big a miss that it ought to swamp the renewed frothiness owing to outsized quarterly numbers from the likes of Apple and GE.

Economists surveyed by Dow Jones Newswires had forecast claims would fall by 17,000 in the latest week. The four-week moving average of new claims, considered a more reliable indicator because it smoothes out volatile weekly data, rose by 2,250 to 399,000 in the week ending April 16.

The fact that claims have again fallen to about 400,000 is considered by economists a sign that the economy is gaining more jobs than it is shedding.

National Debt Pierces Debt Cieling, Hits $14,305,336,580,992.11

But in a way that doesn't really count (as much (yet)).

FoxNews.com Live 11-12

I'll be on FoxNews.com Live this morning from 11-12, talking about taxes.

The show will be available at the link until 5 pm (dial the tape back to 2:00:00).

Update:  Here's a clip

Jobless Thursday: Back Above 400,000

At 412,000, initial unemployment claims increased 27,000 over the previous reading.  Economists had predicted 385,000, no increase from the upwardly revised prior week.

While not much can be drawn from a single reading, today's disappointing number does tend to bolster the flat-to-mild-uptrend in new jobless claims that set in toward the end of February.  If new claims tick  any higher, it'll suggest net job creation has basically petered out.

Previewing Obama's Budget Plan Redux

Four points of light:

In a major speech Wednesday on fiscal policy, President Obama will lay out four steps he thinks the federal government should take if it wants to balance its budget.

Obama will talk about the need to keep domestic spending low, cut defense spending, reform Medicare and Medicaid and reform the tax code, according to a White House official.

The White House provided no more specifics on the four steps to be offered in his afternoon speech at George Washington University. But an official said his plan would "borrow" from the recommendations of the 2010 fiscal commission that Obama empaneled but whose proposals he never fully embraced.

#1 and #2 smell like red herrings - comparatively inconsequential and unspecific offerings to placate the opposition and base, respectively. One shores up most of the $1.6 trillion shortfall through some combination of #3 and #4: entitlement and tax reform.  Stanch and reverse the runaway spending increases (true entitlement reform being a necessary and sufficient condition for doing so) or start harvesting a much larger share of Americans' income.

Don't hold your breath for specifics this afternoon on what a "reformed" entitlement framework would look like.  For hard numbers, listen to the tax proposals.  But don't expect to hear much you didn't hear during the tax debate at the end of last year.  Raise the top individual income tax rates from 35% and 33% to 39.6% and 36%; raise the top capital gains tax rate from 15% to 20%; reduce deductions, exemptions, and loopholes.  And above all else, resist the urge to consider any taxable income elasticity effect when calculating the impact on future deficits.

Sadly, even a rosily static analysis sees such tax hikes yielding around $100 billion per year.  With $1.5 trillion left to go, we'll need to start slapping actual numbers on entitlement reform at some point too.  The sooner the better, with the federal government now spending money 8x faster than it raises it.

So maybe check back in about 20 months.

Clipworthy

From yesterday's show - KT McFarland, Rob Taub, and I chat about the next chapter in Libya.

Mitt Launches

Via Hot Air, Mitt Romney's 2012 campaign site is live.  He was this blogger's pick in 2008 and may well regain such honor this go-round.

In any event, the contest is joined.  Huzzah.

Obama Explains Hypocrisy Over Debt Ceiling Vote

It's different, you see, because the shoe is on the other foot.

President Barack Obama “regrets” his vote against raising the debt ceiling when he was a senator and George W. Bush was president, White House press secretary Jay Carney said.

“He realizes now that raising the debt ceiling is so important to the health of this economy and the global economy that it is not a vote that even when you are protesting the administration’s policies you can play around with,” Mr. Carney said during Monday’s daily press briefing.

From Obama's floor speech before the vote in question in 2006.

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

How the current situation differs (other than each of the cited conditions being even more pronounced), I'm uncertain.

FoxNews.com Live 11-12

I'll be on FoxNews.com Live this morning from 11-12.

Topics will include Obama's revamped budget plan (this time, featuring actual cuts! Well, maybe, but definitely featuring tax hikes) and Ghadafi's embrace of the African Union's roadmap for peace.

The show will be available at the link until 5 pm (dial the tape back to 2:00:00).

Oil Marching Toward $112; Stocks Refuse Drubbing

We're up $3 over the last 48 hours.  Up $25 over the last 2 months.  Yet stocks are virtually unchanged over both periods.

Over our first few forays into triple digits in March, the market dutifully fell into its tight inverse correlation with oil prices, spooking every time we saw another spike.  But since mid-March, we've seen a 15% surge in crude prices and... a gain of nearly 7% for stocks.

The economic news has been mixed at best (job market mounting a credible, but dreadfully slow recovery; housing suffering; manufacturing showing signs of life; GDP estimates being reined in).  Yes, "mixed" represents a meaningful improvement over the long status quo of "crummy."  But with the market already enjoying post-crisis highs, despite a woefully and stubbornly lackluster recovery and numerous pianos dangling from fraying wires overhead (commodity-fueled inflation, the sepctre of rising interest rates before the economy regains any meaningful steam, spreading mideast unrest, a new war already labeled a stalemate by military leaders, a looming government shutdown, etc., etc.), mightn't we be about due for a more cathartic correction than that whimsical 6% late-winter dip?

If so, what will it take to catalyze it?

Shutdown Averted?

Maybe.

Maybe not.

Stocks Go Negative, Oil Heads Toward $110 Following Japan Quake

Actually, stocks have since recovered a good deal of what they lost in the immediate wake of the news and are now hanging out near the unchanged line.  Oil, meanwhile, continues pushing higher.

Marketbeat:

Markets swooned briefly on news of another big earthquake, magnitude 7.4, off the northeastern coast of Japan, with reports of another large tsunami, more than six feet high, on the way to the ravaged region.

The Dow went from roughly flat to down about 90 points in the minutes after the news, but has recently recovered about half of its ground. The S&P 500 and the Nasdaq took a similar dip.

The yen will be interesting to watch here. It strengthened following the big quake last month, on hopes of Japanese investors and companies bringing cash back home, but has taken a drubbing in the days since the Bank of Japan and other governments intervened to curb its strength. The currency has strengthened slightly after this latest quake, recently trading at 85.14 yen to the dollar

U.S. Treasury yields initially fell a few basis points on a knee-jerk flight-to-quality trade, but have recently recovered all of their ground, trading at about 3.57%, which would be the highest close since February.

Government Shutdown Looming?

That was one of our topics on FoxNews.com Live yesterday.

Seems like it's still in the news today, with both the White House and speaker telling us to brace for it.  What we as a nation might do with ourselves, absent access to national parks for a few days, is too terrible to contemplate.

FoxNews.com Live 10-11

I'll be on FoxNews.com Live this morning from 11-12.

Topics will include the federal budget and the Arab revolt.

The show will be available at the link until 5 pm (dial the tape back to 2:00:00).

Jobs Report: Better, But Not Good, And a Parade Worth Raining On a Little

Decent news today from the BLS, showing 216,000 jobs created in March and the unemployment rate ticking down to 8.8%.

Still, we're closing in on 2 years since the official end of the recession and, despite throwing hundreds of billions of dollars down the stimulus hole, we've still got a headline jobless rate well above the advertised cap such stimulus was alleged to impose.

The WSJ Real Time Economics blog throws some more cold water on the data.

But the jobs report is a lagging indicator, and some of the issues that have led economists to scale back growth forecasts for this year aren’t yet reflected in this report. One potential area of difficulty is disruptions in manufacturing supply chains caused by the Japanese earthquake, the ripple effects of which might not be felt for weeks or months. Manufacturing added jobs in March, but there might be some difficulties ahead.

Meanwhile, prices of food and oil have been increasing, sparking worries about consumer spending. If more people have jobs, that mutes those fears a bit. But today’s report notes that wages were unchanged. If prices are going up but workers aren’t getting paid more, it spells good news for companies who can keep labor costs low, but suggests continued struggles for consumers.

The other overarching issue is the number of people who remain unemployed. Though the rate is dropping, there are still 13.5 million people who would like to work, but can’t get a job and that doesn’t include those who dropped out of the labor force. The broader U-6 unemployment rate that includes people marginally attached to the labor force continued to decline but still remains at 15.7%. So much slack in the job market means that employers don’t feel as much pressure to increase wages.

Finally, there are still some lagging sectors. Amid the broader jobs increases, construction continued to shed jobs, a reminder that the housing market continues to struggle. Meanwhile, local governments facing budget crunches are shedding jobs, 15,000 last month, and more cuts are on the table across the country.

Also:

So, back to the Jobs news. First, our buddy Dr. Harm Bandholz at UniCredit Research in New York:

“The March employment report was probably the best in four years, i.e. when first signs of the impending recession emerged….job gains were widespread across most sectors. That said, more than 40% of the additional jobs over the last three months were created in only two sectors: education & health and in leisure & hospitality. The fly in the ointment in today’s report was stagnation in flat average hourly earnings. Earnings did not rise for the second straight month and were up only 1.7% year-over-year…Better is not good enough. While employment gains have accelerated perceptibly in recent months, they still only averaged 160k per month in the first quarter (after 140k in 4Q). Since early 2010, the US economy has recouped close on 1½ million of the 8¾ million jobs that were lost during the Great Recession (not to mention the 6½ million increase in population since late 2007). We expect monetary policy in the US to remain highly accommodative for the time being. The main focus is the combat of unemployment.”

Still, the news was unexpectedly good and the markets are rallying on it, despite oil jumping to fresh multi-year highs above $107/barrel.