Dow dropped 247, decliners over advancers about 4-1 & NAZ fell 72. The MLP index fell 2+ to 90 & the REIT index was off 4+ to 285. Junk bond funds were sold again while Treasuries continued in demand. Oil rebounded 1+ to 27 on hopes for production cuts (more below) & gold went up 6 to 1644.
AMJ (Alerian MLP Index tracking fund)
The US economy lost a whopping 701K jobs in Mar, snapping a decade-long record of employment growth, as strict measures to contain the coronavirus pandemic shuttered businesses & forced Americans to stay at home. It was the first decline in payrolls since 2010 & the steepest since 2009. The unemployment rate jumped to 4.4%, up from a ½-century low of 3.5% in Feb. The forecast called for a payroll decline of 100K & the unemployment rate to rise to 3.8%. Restaurants, bars, hotels, airlines, cruise lines, automakers & entertainment venues have been hit hard by the pandemic as a growing number of jurisdictions have ordered the closure of nonessential businesses & directed residents to stay at home. But the Labor Dept's employment report, which is based on surveys conducted in the early weeks of the month, when large swaths of the economy had not yet shut down, does not fully reflect the depth of the economic calamity that the virus outbreak has inflicted. In the final 2 weeks of the month, 10M Americans applied for unemployment benefits, a stunning sign of the scope of the economic crash. The US has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the novel coronavirus, with more than 245K infected, according to Johns Hopkins University data. More than 6K in the country have died from the virus. Estimates vary drastically for how high unemployment will climb, but economists broadly agree that it will be grim. An analysis published by the Federal Reserve Bank of St Louis last week projected that unemployment could hit 32% in Q2 as more than 47M workers are laid off because of the pandemic. That would exceed the 25% peak during the Great Depression. "Much bigger job losses are coming," said Mark Zandi, Moody's chief economist said earlier this week. He estimated that 10-15M jobs could disappear from the economy as a result of the outbreak, with the worst taking place in Apr. Lawmakers are looking to provide relief to laid-off workers with a $2T stimulus package, the largest relief bill in memory, that Pres Trump signed last week. In addition to giving adults who earn less than $99K annually up to $1200 checks, the bill expanded unemployment benefits.
Oil prices spiked amid reports OPEC members & their allies will hold a virtual meeting to discuss an end to their price war. Brent crude oil, the intl benchmark, climbed 15% to $34.42 per barrel while West Texas Intermediate crude oil, the US benchmark, gained 12% to $28.31. The reports say the alliance is willing to cut production, but that US shale producers must also be willing to lower output. Trump, who is scheduled to meet with oil execs at the White House today, has not yet indicated that's something US producers are willing to do. “I think they both want to make a deal,” Trump told reporters last evening. Oil prices posted their biggest one-day gain in history yesterday, with WTI surging 25%, after Pres Trump tweeted that he expected Russia & the Saudis to cut production by about 10M barrels per day. The oil market, which was already experiencing a glut, saw prices crash to an 18-year low last month as Saudi Arabia & Russia lurched into a price war after the latter refused to join OPEC in deepening production cuts. In response, Saudi Arabia lowered prices & increased output, causing Russia to follow suit. That meant the world's 3 largest producers, including the US, were pumping out record amounts of crude oil at a time when the COVID-19 pandemic was causing significant demand destruction.
The US economy is suffering through a painful period, but the damage caused by the COVID-19 pandemic will be temporary, stressed top Trump economic adviser Larry Kudlow. “We are suffering through a very painful, very difficult economic contraction,” Kudlow, head of the National Economic Council, said. “That's the way I look at it. It's going to be temporary, but it's going to be very difficult.” While Kudlow doesn’t see the situation improving immediately, he said conditions may get better in the next 4-8 weeks.
Economic activity is all but guaranteed to be gloomy in Q2 as suggested in the jobs report. Kudlow virtually said Q2, which just began, will be terrible. The data may be even worse that in the depression days of the 1930s. Safe have gold & Treasuries continue in strong demand. However, in the current low yield environment, even high yield stocks are not being purchased by investors. At today's meeting in the White House, look for Trump to get oil companies to agree to production cuts because they have no choice. Hopefully the news on fighting the coronavirus threat will show progress in the near future.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 26.56 | +1.24 | +4.9% |
| GC=F | Gold | 1,637.40 | -0.30 | -0.0% |
The US economy lost a whopping 701K jobs in Mar, snapping a decade-long record of employment growth, as strict measures to contain the coronavirus pandemic shuttered businesses & forced Americans to stay at home. It was the first decline in payrolls since 2010 & the steepest since 2009. The unemployment rate jumped to 4.4%, up from a ½-century low of 3.5% in Feb. The forecast called for a payroll decline of 100K & the unemployment rate to rise to 3.8%. Restaurants, bars, hotels, airlines, cruise lines, automakers & entertainment venues have been hit hard by the pandemic as a growing number of jurisdictions have ordered the closure of nonessential businesses & directed residents to stay at home. But the Labor Dept's employment report, which is based on surveys conducted in the early weeks of the month, when large swaths of the economy had not yet shut down, does not fully reflect the depth of the economic calamity that the virus outbreak has inflicted. In the final 2 weeks of the month, 10M Americans applied for unemployment benefits, a stunning sign of the scope of the economic crash. The US has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the novel coronavirus, with more than 245K infected, according to Johns Hopkins University data. More than 6K in the country have died from the virus. Estimates vary drastically for how high unemployment will climb, but economists broadly agree that it will be grim. An analysis published by the Federal Reserve Bank of St Louis last week projected that unemployment could hit 32% in Q2 as more than 47M workers are laid off because of the pandemic. That would exceed the 25% peak during the Great Depression. "Much bigger job losses are coming," said Mark Zandi, Moody's chief economist said earlier this week. He estimated that 10-15M jobs could disappear from the economy as a result of the outbreak, with the worst taking place in Apr. Lawmakers are looking to provide relief to laid-off workers with a $2T stimulus package, the largest relief bill in memory, that Pres Trump signed last week. In addition to giving adults who earn less than $99K annually up to $1200 checks, the bill expanded unemployment benefits.
Employers slash 701K jobs in March as virus crisis ravages US
Oil prices spiked amid reports OPEC members & their allies will hold a virtual meeting to discuss an end to their price war. Brent crude oil, the intl benchmark, climbed 15% to $34.42 per barrel while West Texas Intermediate crude oil, the US benchmark, gained 12% to $28.31. The reports say the alliance is willing to cut production, but that US shale producers must also be willing to lower output. Trump, who is scheduled to meet with oil execs at the White House today, has not yet indicated that's something US producers are willing to do. “I think they both want to make a deal,” Trump told reporters last evening. Oil prices posted their biggest one-day gain in history yesterday, with WTI surging 25%, after Pres Trump tweeted that he expected Russia & the Saudis to cut production by about 10M barrels per day. The oil market, which was already experiencing a glut, saw prices crash to an 18-year low last month as Saudi Arabia & Russia lurched into a price war after the latter refused to join OPEC in deepening production cuts. In response, Saudi Arabia lowered prices & increased output, causing Russia to follow suit. That meant the world's 3 largest producers, including the US, were pumping out record amounts of crude oil at a time when the COVID-19 pandemic was causing significant demand destruction.
Crude prices surge as OPEC plans peace talks on price war
The US economy is suffering through a painful period, but the damage caused by the COVID-19 pandemic will be temporary, stressed top Trump economic adviser Larry Kudlow. “We are suffering through a very painful, very difficult economic contraction,” Kudlow, head of the National Economic Council, said. “That's the way I look at it. It's going to be temporary, but it's going to be very difficult.” While Kudlow doesn’t see the situation improving immediately, he said conditions may get better in the next 4-8 weeks.
Kudlow: US economic recovery may start in 4-8 weeks
Economic activity is all but guaranteed to be gloomy in Q2 as suggested in the jobs report. Kudlow virtually said Q2, which just began, will be terrible. The data may be even worse that in the depression days of the 1930s. Safe have gold & Treasuries continue in strong demand. However, in the current low yield environment, even high yield stocks are not being purchased by investors. At today's meeting in the White House, look for Trump to get oil companies to agree to production cuts because they have no choice. Hopefully the news on fighting the coronavirus threat will show progress in the near future.
Dow Jones Industrials
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