Before I get to the claims data I want to quote here what former Fed Chair Ben ‘arsonist turned firefighter’ Bernanke said in a November 4th, 2010 editorial he wrote in the Washington Post defending QE1 and the onset of QE2 in terms of its impact on stocks. With respect to QE1 and at the time the newly implemented QE2, “This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth…And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”
Thus, rather than relying on savings, investment, and quicker income to driver economic growth, QE was specifically meant to lift stock prices in order to so instead. It is not a symptom of QE, it was a direct intended effect. In reverse, the response in stocks should not be a surprise.
Initial jobless claims rose to 207k from 198k. That was 12k more than expected but it’s important to smooth out the influence of the holidays. The 4 week average was 205k vs 200k last week and vs 207k in the week prior. Continuing claims totaled 1.754mm which was above expectations and up from 1.72mm in the week before but again, the holidays messes around with the seasonal calculations and thus let’s wait until next week before making any conclusions here. Either way though, we know the pace of firing’s, in the context of high demand for labor, is back to where it was pre Covid.