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Pre-Market Primer: Jobless Claims Unexpectedly Plummet


The IMF's Christine Lagarde is pushing against the austerity argument with Greece's unemployment rising.


Stocks are set to rise today after jobless claims unexpectedly fell precipitously.

Initial claims for unemployment insurance fell to 339,000 from an upwardly-revised count of 369,000 in the week before. Economists expected claims to rise to 375,000. The US trade deficit rose to $44 billion in August from $42.5 billion in July.

US equity indices will probably rise this morning as Citigroup (C) analysts recommended US equities as overweight today. Future contracts on the Dow (INDEXDJX:.DJI) gained 0.22% to 13,297.00, S&P 500 (INDEXSP:.INX) futures rose 0.31% to 1,430.70, and Nasdaq (INDEXNASDAQ:.IXIC) futures jumped 0.39% to 2,733.25.

European shares were in positive territory despite a lousy opening and a not-so-surprising downgrade of one of the world's largest economies. Standard & Poor's downgraded Spain's debt by two notches from BBB+ to BBB-, leaving the country one small step above junk status. S&P cited the recession, unemployment, and intensifying social discontent that is already leading to friction between Madrid and regional governments such as Catalonia.

Price inflation in both Germany and France was low in September. German prices were flat and France's declined by 0.3% from the month before. From the year earlier, CPI increased by 2% and 1.9%, respectively.

Sprint (NYSE:S) shares surged by 12.3% this morning on reports that SoftBank, a Japanese telco, is looking into taking a stake in Sprint worth $12.8 billion. Sprint's market capitalization is $15.12 billion. Japanese companies are taking advantage of the historically stronger yen to make strategic overseas acquisitions.

Lenovo (HKG:0992), the Chinese computer maker, gained market share in the past quarter, knocking Hewlett-Packard (NYSE:HPQ) from the top spot. According to Gartner, Lenovo leads in shipments ahead of HP, whose shipments dropped 16.4%, and Dell (NASDAQ:DELL) in worldwide computer shipments.

Bank of America (NYSE:BAC) CEO Brian Moynihan warned of even more job cuts at the country's second-largest lender.

At the IMF and World Bank's meeting in Tokyo, IMF managing director Christine Lagarde departed from the organization's usual message and came out against austerity for Greece.

Rather than forcing Greece to take budget cuts and structural changes straight away as the troika and Germany advocate, allowing the business cycle some time to recover is better, given the circumstances.

"This is what we advocated for Portugal, it's what we advocated for Spain, and it's what we're advocating for Greece, where I have said repeatedly that an additional two years was necessary for the country to actually face the fiscal consolidation program that is considered," Lagarde said.

Today, underscoring immediate lack of results from fiscal austerity, Greece's unemployment rate was reported as 25.1%, up from 24.8% in June.

Twitter: @vincent_trivett
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