Now that claims didn’t fall…

Claims didn’t fall, they went up some.

So dollar still weak/commodities and stocks still moving up, and bonds only a touch off their recent highs.

With the large output gap and unit labor costs well contained, it can be said it’s not so much the dollar is weak but the other currencies strong, particularly the euro, where it looks like they are trying to force deflation with their austerity measures during a time of high unemployment. And the yen, too, is still struggling with deflation.

If I recall 1980 correctly silver has been lagging and ‘caught up’ with gold just before it all came apart? Silver peaked at maybe $60 while gold peaked at maybe $880?

The Reagan expansion that followed the end of the oil shock was not a good time for gold and silver.

And today they are going up for the ‘wrong’ reason- market participants believe and are shifting portfolios as if the Fed and other central banks were ‘printing money’ when they are not. And this can persist for a considerable period of time.

If initial claims fall again

If today’s initial claims fall again, indicating underlying employment improvement, there is a lot to think about.

The Fed might decide QE isn’t needed- yields back up due to the Fed not buying and the concern rates might not be low for all that long.
The low for long/QE 2 scenario is almost entirely based on employment showing no signs of life.

The dollar might suddenly reverse as short dollar positions that were placed due to qe2/low for long outlooks are reversed.

Messages more mixed for stocks and commodities.
Employment growth indicates more demand is possible.
But fears of money printing induced inflation (whatever that actually means doesn’t matter for short term trading) subside.
Dollar strength causes dollar prices of commodities to fall.
Commodity stocks hurt by falling prices, internationals hurt by rising dollar/earnings translations/falling export margins, etc.
Valuations hurt by higher term structure of rates.

Basically a partial unwinding of the massive qe2/low forever/weak dollar market of the recent past.