Market Talk

The storms have passed, but a cloudy forecast remains for labor market.

Initial jobless claims fell and the four-week moving average of new claims also dropped, presenting growing evidence that labor markets may finally be stabilizing.

Initial claims fell 21,000 to 530,000 in the week ended Sept. 19, while economists surveyed by Dow Jones Newswires had expected a rise of 5,000. The four-week moving average of new claims also fell 11,000 to 553,500.

But while the trend’s improving, levels still remain elevated, signaling a recovery in the labor market won’t happen overnight.

“Of course, there is always the dark cloud to the silver lining,” The Economist’s Free Exchange blog says. Half a million new jobless claims every week is still terrible. And, as Calculated Risk points out, the four-week average likely has to drop below 400,000 before total employment stops falling.

“As is typically the case with positive economic data these days, the news is good, but the hole is deep,” Free Exchange says.

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"I'm about to get medieval on your..."

Treasury Secretary Tim Geithner’s reported tongue-lashing at financial regulators over the faltering regulatory overhaul plan likely won’t have a major impact.

WSJ says Geithner went on an “expletive-laced critique” last Friday against regulators who are concerned with giving the Fed too much power to regulate the financial system. From the Journal:

Friday’s roughly hourlong meeting was described as unusual, not only because of Mr. Geithner’s repeated use of obscenities, but because of the aggressive posture he took with officials from federal agencies generally considered independent of the White House. Mr. Geithner reminded attendees that the administration and Congress set policy, not the regulatory agencies.

It’s difficult to determine what Geithner’s tirade actually accomplished. Legislators from both parties seem skeptical about enhancing the Fed’s power, so yelling at regulators such as FDIC chair Sheila Bair or SEC chair Mary Schapiro essentially shows only “catharsis on Geithner’s part,” The Economist’s Free Exchange blog says.

“Perhaps this is a calculated meltdown and leak, designed to convey the impression that the administration is serious about pushing regulatory reform and ‘angry’ about delay,” blog says.

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Maybe I'll get a Ford Focus for this clunker

Cash for clunkers hype has boosted auto sales, improved sentiment and increased stock prices. But critics maintain auto sales would’ve picked up anyway in 2H09 even if the program hadn’t been implemented, suggesting the funds could’ve had a bigger impact in other areas.

Ford (F) shares – which have increased almost 83% in the last 12 months – hit their highest level since November 2007 after reporting a 2.4% year-over-year increase in US sales for July. Ford’s positive sales data is likely the first of a series of reports from other auto makers that’ll exhibit euphoria from the cash for clunkers program. Shares of Ford were recently up 6.8% at $8.54.

Buckingham Research boosts Ford to accumulate from neutral, seeing a number of catalysts for the car maker. Firm also raises sales forecast to a 12 million annualized rate from 11 million, and estimates 13.5M for 2011. Additionally, Buckingham raises its ratings on AutoNation (AN) and BorgWarner (BWA) to accumulate from neutral.

Auto parts maker Dana (DAN) also riding Ford’s coattails, jumping more than 20% in Monday trading. Ford is DAN’s biggest customer, accounting for about 17% of continuing ops sales in ’08 and 23% in ’06, ’07, according to SEC filings. DAN up 20% to $4.21 and up nearly six-fold year-to-date. In March, shares hit 19 cents on bankruptcy concerns.

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