1. I do not understand the focus on initial unemployment claims. If they stay under 400,000 - there is little to no correlation to the jobs gain for the month. The data wobbles in any event, and is seasonally adjusted. I have no issues with the seasonal adjusting methodology of the DOL - but it still is a guess. I would only worry if claims went over 400,000.
2. There is a general softness in the coincident data but nothing to raise a lot of concern. What I am concerned about is the strengthening of the dollar which is already effecting exports. This is one reason industrial production is soft. I know of no economic forecast that adjusts for currency variations.

The Econintersect economic forecast for May 2012 declined marginally, but remains in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

Current ECRI WLI Growth Index

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Initial unemployment claims rose from 323,000 (reported last week) to 360,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - modestly degraded from 336,750 (reported last week) to 339,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line)

(click to enlarge)

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Bankruptcies this Week: SBM Certificate, Skinny Nutritional

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements are beginning to show a modest growth trend.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Weekly Economic Release Scorecard:

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The big warning sign for me is wholesale sales which is contracting in real and current dollars year-over-year. I see no other contraction - so one would conclude that the middle-man is being cut out. Just one more new normal condition.

The Econintersect economic forecast for May 2012 declined marginally, but remains in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

/images/z weekly_indexes.PNG

Initial unemployment claims fell from 324,000 (reported last week) to 323,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - modestly improved from 342,250 (reported last week) to 336,750. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

(click to enlarge)

/images/z unemployment.PNG

Bankruptcies this Week: SBM Certificate, Skinny Nutritional

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements remain mixed.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Not trying to be the "bad object" in the punch bowl - but a major portion of the leading indicators use the vision of the markets for guidance. There is a possibility we are in an unusual situation where the markets are wrong.

The trade data this week was terrible. Trade data is good at forecasting retail sales months from now, and is telling us the globe may be sliding into a recession. Manufacturing is contracting year-to-date (versus last year). Either the leading indicators are wrong, or the coincident data is wrong. It is times like these that I like to get out and stand on the sidelines to watch.

The Econintersect economic forecast for May 2012 declined marginally, but remains in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

Initial unemployment claims fell from 339,000 (reported last week) to 324,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - slightly improved from 357,500 (reported last week) to 342,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

(click to enlarge)

Bankruptcies this Week: Newland International Properties (dba Trump Ocean Club), PMI Group, CPI, [from last week: Yarway, Synagro Technologies, KIT digital]

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements remain mixed.
• Trade data (imports) is forecasting a slowing economy.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

• GDP came in under expectations but still 2.5%. The number was weaker than your first glance as inventory build was a large component in the number, and I believe the spending data and the trade data may be weaker in the last part of the quarter (meaning 1Q2013 GDP will decline by the third estimate).
• New Home sales came in strong but the data has been oscillating. If one uses a three month rolling average, the data is unchanged.
• Durable goods was down more than expected. To this analyst, the data was soft in most areas of durable goods.

Yet, all of this is rear view mirror views of the economy. My opinion is that the data overall is weaker than even my forecasts would have expected. Could it be that Federal government austerity has a higher multiplier than one would think?

I doubt it, but I am looking for a root cause of this general weakness cycle when there should be some firming

The Econintersect economic forecast for April 2012 improved marginally, and is now in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months. Not to end on a negative note, the majority of pulse points are improving.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

/images/z weekly_indexes.PNG

Initial unemployment claims fell from 352,000 (reported last week) to 339,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - slightly improved from 361,250 (reported last week) to 357,500. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

(click to enlarge)

/images/z unemployment.PNG

Bankruptcies this Week: none

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements remain mixed.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Whilst not claiming a recession is coming, the recent market uptick is not justified based on any hard data being released - or forecasts of corporate profits. In fact, there are warnings and strange things happening which point to a less robust economy:

• Manufacturing component of Industrial Production which has a high correlation to the economy declined.
• Business sales (inflation adjusted) declined (lagging indicator).
• Sea Container counts have declined significantly and these have a high correlation to the Main Street economy.
• The rate of growth of the home building sector has declined dramatically in the last two months.

I see no indicator which has a high correlation to the economy which can be described as strong. My concern is that the economic forecasts are not matching the obviously weaker hard data. This is a warning of a bizarro event - the rear view mirrors are not matching the terrain of where we thought we were driving.

Investors always drive in the fog - it is the nature of the beast. But when the rear view mirror starts showing a strange landscape, it is not time to increase speed.

The Econintersect economic forecast for April 2012 improved marginally, and is now in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months. Not to end on a negative note, the majority of pulse points are improving.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

Initial unemployment claims increased from 346,000 (reported last week) to 352,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - slightly worsened from 358,000 (reported last week) to 361,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

(click to enlarge)

Bankruptcies this Week: none

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements remain mixed.
• Industrial Production manufacturing subindex declined. One month is not a trend, but taken with other unusual data declines demands attention.
• Container counts dropped unexpectedly - with exports now contracting year-to-date. This tells you the global economy is contracting. Imports, which contracted year-over-year, is still positive year-to-date. Imports are intuitive for main street consumption.

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The case in point this week is retail sales which actually is contracting year-over-year when the data is inflation adjusted. The following graph is year-over-year growth of unadjusted retail sales (blue line) and inflation adjusted retail sales (red line adjusted using CPI-U less shelter).

(click to enlarge)

Industrial production shows no signs of improvement.

(click to enlarge)

And likewise, no improvement in employment.

(click to enlarge)

The Econintersect economic forecast for April 2012 improved marginally, and is now in a zone which says the economy is beginning to grow normally. There are some warning signs that our interpretation is not correct - but we will see how these play out in the coming months. Not to end on a negative note, the majority of pulse points are improving.

The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

Initial unemployment claims fell from 385,000 (reported last week) to 346,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - slightly worsened from 354,250 (reported last week) to 358,000. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

(click to enlarge)

Bankruptcies this Week: Central European Distribution, Rotech Healthcare

Data released this week which contained economically intuitive components (forward looking) were:

• Rail movements which are mixed.
• Is ending of Quantitative Easing a negative dynamic?

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.