Dear Jim,

Every month its considered a "surprise." How long does it take for a recurrent surprise to be considered the norm? At least a decade it would seem.
Best,
CIGA Pedro

US jobless claims make surprise rise
By Alan Rappeport in New York
Published: April 15 2010 14:04 | Last updated: April 15 2010 15:23

The number of Americans claiming unemployment benefits recorded a surprise rise last week, as the labour market continues to lag behind other improving areas of the economy.

Separately, Federal Reserve figures showed that US factories boosted their production for the ninth month running in March, as businesses have begun rebuilding their stocks.

Initial jobless claims rose by 24,000 to 484,000 last week, labour department figures showed on Thursday. That clashed with economists’ predictions that new claims would decline and brought the less volatile four-week average up to 457,750.

The data were a disappointment to economists, who argue that claims need to fall to the low 400,000 level before the economy can begin consistently creating jobs. The labour department noted, however, that there was increased volatility during holidays and that Easter could have caused the surge in claims.

Continuing claims, which measure the total number of people receiving benefits, also rose, climbing by 73,000 to 4.64m.

More… ^[1]

Dear Jim,

The proponents of Management of Perspective Economics (“MOPE”) believe that if you play a happy enough tune, the public will behave optimistically and generate economic growth. Government sources widely proclaim the banking sector has recovered and the economy is turning around, with no challenge from a complacent press.

Then, once in a while harsh facts come to light to a very few that are paying attention that reveal the happy talk has no basis.

There is no recovery in the banking sector when the collateral underlying loans keeps declining in value.  People are not faring better economically when 35% more lost their homes than a year before.

Even here in classic MOPE form the terrible news is cast in a favorable light. The author states the stunning increase in foreclosures is a positive sign that “banks are starting to wade through the backlog of troubled home loans at a faster pace…” God bless him for trying; at least he doesn’t have to worry about this premise being challenged by any other mainstream source.

Respectfully yours,
CIGA Richard B.

Foreclosure rates surge, biggest jump in 5 years
US homes facing foreclosure jumped 16 percent in 1st-quarter as banks take back more homes
Alex Veiga, AP Real Estate Writer, On Thursday, April 15, 2010, 12:34 am

LOS ANGELES (AP) — A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

"We’re right now on pace to see more than 1 million bank repossessions this year," said Rick Sharga, a RealtyTrac senior vice president.

Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

More… ^[2]

US Long Bonds
CIGA Eric

The test trading swing high came on light volume. I described it as a bond rally with a limp. As a result, the bonds have faded off the resistance and trend line.

Still, those expecting that the neckline will be broken without a fight, might as well pick up their marbles ^[3] and go home right now. Unless, the last week’s heavy inflows have reversed into the small up tick (doubtful), it is likely that the bulls will reorganize into this dip. A light volume dip into the lower gap will create another bullish setup. What cannot break resistance with force, will reverse and attempt to break resistance with force.

The overhead gap is the critical line in the sand. It was formed on heavy volume and will not be easy to overcome.

US Long Bonds ETF (TLT)
^[4]

More… ^[5]