Initial jobless claims in the US dropped to 435K last week, bringing the four week moving average down to 446.5K. As shown in the chart below, this is the lowest level in the post Lehman bankruptcy period (red line). However, the more notable aspect of this chart is the uptick in jobless claims that we saw in late August right before Fed Chairman Ben Bernanke's Jackson Hole speech where he introduced the Fed's plans for QE2.
Investors often act as though the Fed is the all knowing captain of the US economy, guiding the ship with a steady hand. However, given that the Fed started talking about QE2 just when jobless claims saw a blip higher, it is beginning to look more and more like the Fed just get 'suckered in' by a false break out in the chart?
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