Jobless claims may have moved down 52,000 to 565,000 but the unemployed still can't find jobs as the continuing claims hit a new high not seen since 1967. The weak employment picture and the decreased appetite for spending by the consumer resulted in very soft retail sales in June, Weather was also likely a big factor but our concern for earnings should be highlighted. Retailers have been aggressively marking down prices which should create a dismal earnings picture.
Alcoa may have beat expectation but the numbers are still ugly. Perhaps lower oil prices and declining interest rates will give the consumer a new lift as gasoline prices should begin to decline and mortgage rates are coming down again. An improved affordability index could lift consumer confidence but unless businesses think they can generate stronger earnings in the second half of 2009, stocks will only make investors miserable.
We remain cautious and anxiously await comments from corporate chiefs' outlooks for the rest of the year.
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