A look at jobless claims, mergers
TEXT OF INTERVIEW
BILL RADKE: Chief economist Chris Low at FTN Financial is here live from New York. Hi, Chris.
CHRIS LOW: Good morning.
RADKE: So stocks have tumbled again this week. The general vibe is downbeat. But you say the gloom is a little overdone?
LOW: Yeah, I think it is. It’s one of those weeks where we didn’t get a whole lot of economic news, and when that happens we focus on some of the second-string stuff. And that’s what we did this time, and it was to the low side.
RADKE: The new unemployment claims, for example?
LOW: Well, that’s right. So those hit half-a-million this week, which is something of a milestone. The thing is, I think the reason they are up is that GM did not lay off workers this year during the usual plant shut down period. And this is the week they should have hired them back. There are seasonal adjustments that offset things that happen every year, so those seasonals push the numbers upward. Because GM didn’t hire them back and take them downward, the result was a spike. I think it will reverse next week.
RADKE: OK. So it ain’t good, but it maybe is not that bad.
LOW: Exactly.
RADKE: Now what about this, Chris, the big takeover news. We had the world’s largest mining company trying to buy the largest fertilizer company, Intel buying the security software firm McAfee. Is all that a good sign?
LOW: It’s certainly a good sign if you’re a stockholder. What’s happening is companies are sitting on a record amount of cash and they’re reluctant to invest it because consumers aren’t spending a whole lot. If you got cash burning a hole in your pocket and you’re not investing in new equipment, what happens is they start looking around for deals. We had five big deals announced this week. And the analysts are saying this is probably going to be the beginning of a trend. We’ll see a whole lot of mergers and acquisitions this year.
RADKE: Well I hope some of that trickles down. Chief economist Chris Low at FTN Financial. Thank you.
LOW: Thanks.
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