feb 17  welcome to the home for realtime coverage of markets brought to you by reuters reporters you can share your thoughts with us at marketsresearchthomsonreuterscom thursdays data included jobless claims and housing starts that were less than stellar but economists seemed unperturbed the number of americans filing new claims for jobless benefits unexpectedly rose last week but remained below prepandemic levels as labor market conditions continue to tighten and the first increase in a month reported by the labor department on thursday did not change economists expectations for another month of solid employment gains in february however thomas simons money market economist at jefferies is still bullish on labor demand for labor remains strong job openings are plentiful and a oneweek deviation from trend is nothing to get too worried about claims will continue to grind lower but it wont happen in a straight line and oxford economics attributed the uptick to the omicron wave and said it is in the rearview mirror meanwhile freezing temperatures depressed homebuilding in january as commerce department data showed housing starts dropped 41 to a seasonally adjusted annual rate of 1638 million units last month read more oxford economics says the level of housing starts suggests an upside risk to its outlook for a 161 million pace in 2022 at least for early in the year despite the january decline the reasoning is that pentup demand need for supply elevated backlog and relatively upbeat homebuilder sentiment will support new home construction despite ongoing supplyside challenges and sharply higher mortgage rates also rubella farooqi chief us economist at high frequency economics wrote that a lack of inventories should be positive for building activity even as high input costs and shortages – of both labor and materials  remain headwinds for builders time to study up for midterms 1119 est1619 gmt the midterm elections are now a little more than eight months away with that lpl financial research is taking a look at just how many seats the democrats may lose according to lpl a new president has historically lost about 30 house seats in the midterm election they note that with the democrats holding a historically slim majority in the house a swing of this size would give the republicans control yes history would say the republicans likely gain control of the house and very well could gain the senate as well” explained lpl financial chief market strategist ryan detrick “coming into midterms the party that lost the presidential election is usually more motivated party gaining close to 30 house seats going back to woodrow wilson in 1914” what if the republicans take both the house and senate “the good news is one of the best scenarios for stocks is a democratic president and republican controlled congress in fact the late 1990s saw that same scenario and it was one of the best times for investors ever” added detrick in any event lpl supplies some additional midtermelection year tidbits first off they say that midterm years have seen the largest intrayear pullbacks down more than 17 on average but the sp 500 has rallied more than 30 a year off those lows in other words don’t panic if we get some normal midterm volatility it could be an opportunity for longerterm investors lastly early in a midterm year stocks historically are quite weak it isn’t until the election is over and the uncertainty lifts that a rally typically unfolds every year is different but maybe the weakness early in 2022 shouldn’t be a big surprise wall streets main indexes are lower in early trade on thursday as escalating tensions between the west and russia surrounding ukraine unnerved investors with some disappointing earnings also weighing on the mood all major sp 500 spx sectors are red with financials spsy taking the biggest hit this as the us 10year treasury yield is sliding back under 2 tech splrct is also weak this in the wake of reports from nvidia nvdao and applied materials amato which is putting chip stocks among the days underperformers the philadelphia se semiconductor index sox is off more than 2 here is where markets now stand volatility is the best policeman of risk appetite and risk assets we need a volcker moment  where vol stands for vol – as in volatility so says credit suisses zoltan pozsar in his latest global money dispatch in which he argues the fed must take a radically different course to bring inflation down instead of raising the fed funds rate it should lift longdated yields in order to bring down asset prices from stocks to credit and especially housing pozsar says the fed cannot deflate goods prices unless it curbs demand by jacking up the policy rate this will cause a recession so it is a nonstarter but it can  and should  tackle services inflation by bringing down asset prices which will also help boost the labor supply to do this the fed will have to inject financial markets with huge shots of volatility to push risk premia higher end policy press conferences sell 50 billion of 10year bonds with no warning cease market jawboning and guidance keep the market guessing pozsar admits this is an extreme prescription but insists lower risk assets and higher longterm rates wont kill growth  this is not a balance sheet recovery and 5 wage growth can cover higher mortgage repayments these are radical proposals would they work its safe to say uncorking volatility ripping up 30 years of fed communication strategy and opening the door to a potential crash in asset prices would not come without risk the nasdaq composite ixic collapsed nearly 17 from its november record close into its january 27 finish since then the techheavy index has managed to stabilize and fight its way higher by about 6 with this the nasdaq daily advancedecline ad line has also managed to chop its way higher however both the index and the breadth measure have work to do to suggest room for greater recoveries of note the nasdaq ad line peaked in february 2021 in the wake of a protracted divergence the composite followed suit with its november 2021 top in a testament to just how much internal damage the broad nasdaq suffered into its latejanuary low while the composite was hitting its lowest levels since may of last year the ad line fell to its lowest level since late 2018 with their choppy recoveries both the ixic and the ad line will still need to reclaim their descending 30day moving averages since the ad lines severe break lower in latenovember and the composites in earlyjanuary this moving average has been capping strength given that the 30dmas are now nearing and pressing down on both the ixic and the ad line a resolution to the recent choppy action one way or the other may soon be at hand the ixics 30dma may fall to around 14250 in early trade if both the ixic and ad line can overwhelm the shorterterm moving average it may suggest potential for a broad rally to unfold especially if the composite can reclaim its 200dma which ended wednesday around 14750 the ad line has substantial room to rise before it would reach its 200dma new lows in both measures can suggest bearish forces continue to have the upper hand read more for thursdays live markets posts prior to 0900 est1400 gmt  click here read more terence gabriel is a reuters market analyst the views expressed are his own