Reply #1: WrapUp by Chris Puplava [View All]

[ozymandius]

MARKETS FAIL TO RALLY AFTER RELEASE OF MORE NEGATIVE ECONOMIC NEWS

The markets moved lower in early morning trading after the release of the productivity report and the mixed October sales report. Nonfarm productivity came to a standstill in the third quarter, with the quarter-over-quarter growth rate coming in at 0%, below the consensus of 1.0%, with unit labor costs (ULC) coming in at 3.8%, above expectations of 3.4%. Compared to third quarter of 2005, productivity rose 1.3% while ULC rose 5.3%. The trend since late 2005 has been for falling year-over-year (YOY) rates of change in productivity while the YOY rate of change for ULC has accelerated. Falling or flat productivity against the backdrop of rising ULC adds to inflationary pressures, not what the markets were looking for as many are hoping for the Fed to lower rates in the future.

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Although durable goods orders put in a strong performance in September, both the durable goods and nondurable goods industries inventory-to-shipments ratio (I/S) rose to their highest levels in over a year, with the overall I/S rising to 1.22, a three-year high. The I/S ratio for durable goods industries rose to 1.39 in September from 1.34 of the previous month, and nondurable goods rose to 1.03 from 0.98 in the prior month.

Another negative economic release was the weekly jobless claims report, with initial jobless claims rising 18,000 to 327,000 last week, well above the consensus estimate of 310,000 claims. The increase in claims last week brought the 4-week moving average up to 311,000 from 306,000.

http://www.financialsense.com/Market/wrapup.htm