The Best of Kass
Initial jobless claims came in at 380,000 compared to expectations of 355,000 and to 367,000 the week earlier. This is the highest print since late January but still consistent with healthy monthly payroll growth of close to 200,000. There is some talk that there were issues with seasonal adjustments again. We should look for 150,000-175,000 jobs growth in April and May as some weather payback occurs.
From that point, I would expect monthly payroll growth to approach 200,000 (which would be consistent with +2.25% to +2.50% real GDP growth).
Core PPI was 0.1% above expectations and a like amount above February's print. Core intermediate PPI signals some increase in pipeline inflation, but given the still-wide manufacturing output gap and still-elevated unemployment rate, inflation is expected to remain benign.
Finally, the March trade deficit was about $5 billion below expectations and under February's release. This could modestly raise first-quarter 2012 real GDP forecasts to close to 2.8%-2.9%.
At the time of publication, Kass had no positions in securities mentioned.
Coal Discounts Natural Gas Drop
Originally published on Thursday, April 12 at 9:22 a.m. EDT.
I continue to be of the view that the coal sector has discounted the drop in natural gas prices.
Here is an article in The Wall Street Journal that seems to agree with my position.
At the time of publication, Kass was long BTU.