Seasonal Bump Absent in Claims Data

Jul 20, 2023

Among the many economic indicators updated this morning, seasonally adjusted initial jobless claims came in stronger than expected, falling to 228K.  That reversed the recent jump in claims observed throughout the late spring.

Looking at the non-seasonally adjusted data helps to explain the recent decline in the adjusted number.  As shown below, barring the pandemic years of 2020 and 2021, claims remain at one of the higher readings for the current week of the year in recent history. Typically, in late June and early July, seasonal headwinds cause a significant bump in claims. This year, that increase has been relatively modest.

Pivoting to continuing claims, the indicator had been on the decline since early April, but the first two weeks of July have seen a modest turn higher.  At those levels, continuing claims remain in the middle of the range from the few years leading up to the pandemic.

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Bulls Dominate

Jul 20, 2023

The past week has provided some positive developments on the inflation front that in turn sent equities higher. In response, readings on investor sentiment have shown a dramatic positive turn.  The latest AAII survey showed more than half of respondents reported as bullish for the first time since April 22, 2021.  As we noted in today’s Morning Lineup, this week’s reading ended an over two-year-long streak without a reading above 50% which was the third longest such streak on record.

Given the elevated reading of bullish sentiment, a minor share of respondents are reporting as bearish. In fact, that reading fell to 21.5% this week which is the lowest reading since June 2021.

Last year saw a record streak of weeks where bearish sentiment outnumbered bullish sentiment.  With the total reversal in sentiment, the bull-bear spread now heavily favors bulls. The spread reached 29.9% this week for the highest reading since April 2021.

The gains to bullish sentiment have not entirely come from bears. Neutral sentiment is also reaching new lows, registering just 27.1% this week. Unlike bearish sentiment, that is only the lowest level since the last week of 2022.

In tonight’s Closer we will discuss the surge in other sentiment indicators and what that has historically meant for S&P 500 performance.

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