The S&P 500’s selloff over the last week heading into today’s CPI print caused bullish sentiment to dip a little.  Compared to last week when 49% of respondents to the weekly AAII survey reported as bullish, this week only 44.7% reported as such. That is the weakest reading on optimism in a month, but remains well above the range of readings of most of the past year and a half.

The drop in bullishness was met with an increase in bearishness.  Bearish sentiment rose back above 25% for the first time since the week of July 14th.

In turn, the bull-bear spread moved lower this week, crossing back below 20 to 19.2. That is the lowest reading in four weeks as the spread continues to point toward an overall bullish tilt to investor sentiment.

In fact, this week marked the tenth in a row that bullish sentiment sat above its historical average while simultaneously bearish sentiment was below its historical average.  Looking across the past twenty years, there are not many examples of this sort of extended bullish sentiment streaks. In fact, only three other periods saw streaks of similar length. The most recent ended in May 2021 at 13 weeks. Before that, there was an identically long streak in the first quarter of 2012 and prior to that, you’d have to go all the way back to 2004 to find an example. In the 1990s through late 2000, such streaks were much more common.

Initial Jobless Claims have been back on the rise for the last two weeks with this week’s reading coming in at 248k versus estimates for 230k.  That is the most elevated reading since the first week of July and marks the largest week-over-week rise since the first week of June.

Before seasonal adjustment, claims totaled 225.6K, up roughly 20K from the previous week.  At those levels, claims are above those of the comparable week of last year and multiple pre-pandemic years. The past couple of weeks have seen particularly pronounced seasonal tailwinds which have historically ebbed this week and will again likely happen next week. However, those tailwinds are set to continue later this month into September when claims have typically reached an annual low point.

Lagged one week to initial claims, continuing claims came in lower than expected, dropping to 1.684 million from 1.7 million. That is slightly above the low from two weeks ago but does not yet disrupt the trend downward in continuing claims.

As for a state level breakdown of claims, in the heatmap below we show where continuing claims are most and least elevated as a share of the each state’s respective labor force.  As shown, the West Coast and Northeast are the two weakest regions of the country with the highest percentage of continuing claims.  Some states in the Southwest like Texas and New Mexico and the Midwest like Illinois and Minnesota also have pockets of weakness. Given various states have different unemployment insurance program eligibility requirements, benefit amounts, and program lengths, that is not necessarily to say these are the areas with the highest unemployment rates, but rather these are the places contributing the most to national claims counts.