From my Daily Blog found at www.europac.net

After having to do the perfunctory revision higher to the previous week's claims data, the Labor Department announced that initial jobless claims jumped by 35k in the first week of 2011. Seasonally adjusted first-time claims registered 445k. However, if that wasn't bad enough, the unadjusted claim number surged by 191,686 claims in the week ending January 8th. Let's just hope the good folks at the Labor Department are really great at seasonal adjustments, because the raw data is simply horrific. The increase in claims from the previous week was the biggest since July 17 2010. I wonder what the number of initial claims will be when Bernanke stops printing money and starts significantly raising interest rates and draining liquidity and when our government stops borrowing hundreds of billions of dollars each year from the Chinese. But the good news and the bad news is that we don't have to worry about that for quite a while.

Another report from the Labor Department today showed prices paid by producers rose 1.1% in December, which was the most in 11 months. And the YOY increase in finished goods rose by 4%, while crude goods were up 15.5% from the year ago period.

On the trade front, the Commerce Department said the U.S. trade deficit shrank just 0.3% to $38.3 billion, despite the fact that the dollar has lost over 10% of its value since June of last year. Sorry to inform you Mr. Geithner, a weak dollar doesn't reconcile a trade imbalance. And please Mr. Bernanke, don't let the flood of stagflationary data get in your way. Feel free to continue to claim there is no inflation and that America's real battle is still over deflation.

Michael Pento

Euro Pacific Capital

Senior Economist/Vice President Managed Products

mpento@europac.net
www.europac.net

800-727-7922 ext. 144

732-203-1333

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