by Michael Tarsala
Uh Oh. Jobless claims posted their biggest one-week gain in more than a year.
An increase of 34,000 from last week brings the new claims reading to 386,000, topping even the highest economic projection out there, at 375,000, and above the consensus expectation of 365,000.
What’s arguably worse is the four-week average for continuing claims — arguably a better measure of the trend — also rose.
Benzinga notes that a growth in the claims numbers could increase investments in defensive consumer staples companies, making note of Procter & Gamble (PG) and Colgate (CL).
Rising claims could be another negative sign for the economy, and could be bad news for economically-sensitive stocks, including retailers.
Of note, though is that several Covestor managers have increased their retail holdings despite the poor economic headlines.
“The retail economy is not as bad as people think it is, and it helps that energy prices are down,” said Sreeni Meka, manager of the Long Term Value investment model. “Customers are spending less to get to the stores. And they still have some disposable income, even though the employment picture is not that great.”
Meka doubled his position in department store chain Kohl’s (KSS) in June; it now is his third-largest position at about 13% of his investment model. He says there are still plenty of cars in its parking lot ahead of the back-to-school shopping season.
“It’s true, retail is the first stock group people think about when there are new worries about the economy and the job situation, yet I have been surprised by the resiliency and the performance results from this group,” said Walt Sokira, manager of the Focused Stock investment model.
Sokira has been cautious on the economy, and still holds a large cash position. Yet he is seeking to become fully invested by year’s end, and plans to add to retail holdings as part of his mix.
Photo by: Nik Hewitt
