Jobless Claims At Highest Level in 2012, GDP Unchanged, Obamacare Ruled Constitutional While EU Summit Silent, QE3 More Likely:
Jobless Claims Remain At 2012 Highs
Jobless claims news came in as no surprise to economic data watchers and remains at the highest levels of 2012 set in April at 386,000. The prior week’s reading was revised up to 392,000 and jobless claims for the week ended June 23, 2012 fell by a marginal 6,000 the Labor Department said today. The dismal jobs number increases the probability that June unemployment figures could rise to 8.3 which means the likelihood of QE3 by the Fed is increasing.
U.S. GDP Unchanged, EU Summit June 2012 Silent
In other economic news, first quarter U.S. GDP was unchanged at 1.9 percent. Slow U.S. economic growth makes the recovery more susceptible to economic shocks and the Fed Reserve bank is watching jobs data closely as well as Europe to keep the economy from deteriorating further. The leaders in the EU seem to be unable to come to any agreement on a solution to the region’s debt crisis which increases the possible contagion effects the Fed would like to buttress the economy against. Lack of a plausible solution proffered at the June 2012 EU Summit also increases the probability more liquidity and easing may be added to the world economy by central banks.
Obamacare Ruled Constitutional By The Supreme Court
Obamacare was considered constitutional by the Supreme Court today and stocks reacted before the news was announced gapping down prior to the session starting. This could be a buying opportunity. In essence, nothing has changed since yesterday but there is some reason to be bullish and bearish based on the result. The bullish case suggests more people will be insured which helps some sectors in the healthcare market as volume increases. Bears believe uncertainty will be added to business decisions and may keep investors on the sidelines until the November election results in the Fall.
We are watching the overall market and sectors that declined significantly today to see if they will regain traction after the dust settles. The overall bullish case will depend on the June 2012 jobs numbers we expect to be weak based on the “Bernanke Put”.