The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

A Good Morning, Indeed!

09/09/2010

It’s nice to start the day with two pieces of good economic data. First, initial jobless claims dropped more than expected, down 27,000 to 451,000. That makes three jobless reports in a row that have been better than expected. It certainly smells like a bottom in an awful jobs market.

Second, the trade deficit shrank more than expected, from $49.8 billion last month to $42.8 billion this month. Exports were up significantly, and imports were down. This could reflect the improving dollar, but it is premature to make that judgement. If our imports are down because our consumers cannot afford to buy foreign goods, that would be a bad thing. Or, it could reflect improving quality in U.S. made goods. But, exports are clearly up, because the rest of the world is recovering faster than we are.

Futures immediately jumped about 50 points on the news. This looks like the sixth up day out of the past seven. I’ve been expecting the market to rally, once the election reduces uncertainty, but this seems a bit too soon for that. Interestingly, famed investor Mario Gabelli said this morning that he thinks the market will be up 5% by year-end. I hope he’s right!

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