\n
Jobless claims are rising and once again well above expectations. <\/span><\/p>\n Initial jobless claims are a measure of the number of filings for state unemployment benefit and most economists were expecting 490k 500k for new claims. This morning, we saw a rise \u00a0 increase to 524k – not pretty.<\/em><\/p>\n <\/span>Beginning November 2008, we were beginning to see claims consistently above the 500k mark. <\/span>In more stable economic times we should typically see claims in the 280k 320k level. <\/span>Initial claims of this magnitude have not been seen since October of 1982 when we saw claims rise to well over 650k.<\/p>\n <\/span><\/p>\n With claims continuing to rise we should obviously expect that the unemployment rate will continue to climb. <\/span>The recent trend as many Americans are unemployed is to look to the state governments for assistance. <\/span>Unfortunately, these local options are already struggling with budget constraints and this will not assist with the situation.<\/p>\n \n Inflation Takes a Backseat to its Ugly Stepsister, Deflation<\/strong><\/p>\n \n Now we are hearing that deflation is becoming an increasing concern for the Fed. <\/span>Much of the decline has been due to the large decrease in oil prices. <\/span>Demand for oil across all nations has come to a complete halt. <\/span>People are not driving to work due to increased layoffs, companies are not building due to increased concerns in the economy and overall oil demand has declined. <\/span>Oil prices have seemed to bottom out at least in the short run with Crude Oil prices just above $36. <\/span>It is hard to imagine that just less than 6 months ago consumers were paying over $4 for a gallon of gas and a barrel of Crude Oil was over $140 per barrel.<\/p>\n <\/span> <\/span><\/p>\n Although demand for oil has slowed, many companies are stocking reserves for future use. <\/span>Airline companies will have hopefully learned their lesson and continue to hedge their oil prices while prices are low. <\/span>This was a major problem for many airlines such as United (UAUA) and American Airlines (AMR) as they were caught without much of a hedge and were paying the price for high oil. <\/span>They were then unable to compete against smaller domestic airliners such as Southwest (LUV) who had properly hedged their gasoline prices and could offer lower prices to consumers.<\/p>\n \n With interest rates near 0%, \u00a0 inflation could tick higher rather rapidly if banks should decide to unleash cash reserves. <\/span>Unfortunately big banks such as Citigroup (C) and Bank of America (BAC) continue to struggle to keep their own balance sheets afloat let alone loan out to consumers. <\/span>It will be important to monitor PPI and CPI over the coming months for any indication of a tick higher. Even though<\/span> inflation seems to be a “dirty” word of the past, stocks would surely get a push higher if we could spark just a tad. <\/span><\/p>\n Deflation is a major concern and if we continue down this path, markets will continue to fail.<\/strong><\/p>\n \n Also:<\/p>\n <\/strong><\/strong>Banks: \u201cWe Don\u2018t Need No Stinkin\u2018 Lending\u201d\u009d<\/a><\/strong><\/strong><\/p>\n![\"claims\"](\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/01\/claims.png\" "\\"claims\\"")
<\/p>\n![\"ppi\"](\"https:\/\/thedisciplinedinvestor.com\/blog\/wp-content\/uploads\/2009\/01\/ppi.png\" "\\"ppi\\"")
<\/p>\n