1. Jobless Turn In, Tune Out and Drop Off as Benefits Expire

Last Thursday the Labor Department reported continuing claims for unemployment fell by 148,000 to 6.69 million, yet another "green shoot" for the "economy is bottoming" crowd. This was the first decline in continuing claims since early January, breaking a string of 21 consecutive increases, the final 19 of which were records. But let's look a little closer at the numbers.

Even though there was a small jump in initial applications for unemployment insurance, the decline in continuing claims was largely due to benefits exhaustion. Unemployment benefits are provided for 26 weeks, after which those claimants are dropped from the rolls. According to the New York Times, the number of recipients whose claims were exhausted was about 36% in 2007, but at the end of last month that number had risen to nearly 50%.

The bottom line is that people are not dropping off the benefits list because of new jobs, but because they are exhausting their eligibility to receive them.

Barry Ritholtz (The Big Picture) this morning directed me to the Exhaustion Rate for jobless benefits via Bloomberg. The EXHTRATE (Index) shows the rate at which U.S. workers are losing unemployment benefits.

On the quarterly chart below I overlaid DeMark TD Sequential and TD Combo. The turns have have been pretty closely captured by TD Buy or Sell Setups in most cases, the exception being Q3 1983's peak and the double peak in Q1 1994. We are currently on bar 7 of a potential 9 setup, so that would suggest two more quarters before a potential reversal in the exhaustion rate.

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2. Morgan Stanley, Goldman Sachs Boost TARP Index Return

Speaking of interesting Bloomberg indexes, the Bloomberg U.S. Treasury Capital Purchase Program Index (BTCPP Index) covers 252 companies that accepted money from the Troubled Asset Relief Program.

According to the news service, the BTCPP Index has lost "just" 12% this year, compared to 19% for the PHLX Bank Index. The AmEx Broker Dealer Index, on the other hand, is up 22%, thanks largely to BTCPP components Morgan Stanley (MS), up 72% year-to-date, and Goldman Sachs (GS), up 65% year-to-date. Both of the firms were among those recently paying back TARP funds.

According to Bloomberg, the largest gainer in the index was First Defiance Financial Corp. (FDED), an Ohio-based lender with a market value of about $112 million and $37 million in federal bailout funds. FDEF is up 78 % year-to-date.

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