Daily Commentary by Larry Baer: The
number of Americans filing first-time claims for government jobless aid surged
last week has heightened worries about the health of the economy. The economic picture was further darkened by
other reports this morning showing the pace of existing home sales fell to its
lowest level in eight months and a gauge of future economic activity tilted
lower as well.
The Labor Department showed initial jobless
claims rebounded higher by 34,000 during the week ended July 14th. A Labor Department spokesperson said today's
big upward bounce was largely the result of "seasonal quirks" related
to auto plant shutdowns for model year retooling. Maybe so - but most analysts are skeptical of
that explanation preferring instead to anticipate the "real story" is
that businesses are finding it increasingly necessary to reduce their workforce
as demand for goods and services softens further.
The decline in the pace of June Existing Home
Sales is largely a reflection of the exceptionally weak job market. Home resales fell
5.4% last month. Of all purchases, cash
transactions accounted for about 29% -- just slightly stronger than May's
28%. Distressed sales, comprised of
foreclosures and short sales, accounted for 25% of the total. Investors accounted for 19% of all existing
home sales transactions and first-time home buyers represented 32% of overall
demand - well below their typical 40% to 45% share.
In the convoluted world of the credit markets
-- weak real-estate demand and soft labor sector numbers are perfect supports
for the prospects of steady to perhaps fractionally lower mortgage interest
rates.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
