Dow jumped up 338. advancers over decliners 4-1 & NAZ gained 115. The MLP index added 6+ to 122 & the REIT index rose a modest 1+ to the 323s. Junk bond funds crawled higher while stocks rose in price & Treasuries edged higher. Oil shot up 4 to the 17s on renewed tensions with Iran (more below) & gold climbed 18 to 1756 & approaching the record close of 1891 in 2011.
AMJ (Alerian MLP Index tracking fund)
Another 4.4M Americans filed for unemployment claims last week, the Labor Dept reported, as massive job losses caused by the coronavirus pandemic continued to grow. The new report, which covers the week ending Apr 18, brings total job losses since the virus outbreak triggered widespread stay-at-home measures 5 weeks ago to more than 26M, erasing the entirety of the 22.8M labor market gains since the last recession more than a decade ago. With a labor force that totals about 162M, the claims figures suggest the unemployment rate is about 16% (roughly one in 6 Americans) significantly higher than the 10% peak seen during the 2008 financial crisis. The previous one-week high for jobless claims was 696K in 1982. A growing number of economists have warned the "Great Lockdown" will push the global economy into the worst recession since the Great Depression, when unemployment spiked to 25%. Economists expected the number of initial claims for state unemployment benefits to hit 4.2M. The 4-week moving average was more than 9M, up 3.5M from a week ago. Last week's total was revised down by 8K at 5.2M. The $2T stimulus package signed at the end of Mar was designed to blunt the economic pain from the virus outbreak. As of Mon, more than 40 states were paying laid-off workers an additional $600 a week in unemployment benefits, in addition to regular state payments, Labor Secretary Eugene Scalia said earlier this week.
Oil prices surged for a 2nd day as the market digests a flareup of tensions in the Middle East & looks ahead to production cuts from the world's largest producers. West Texas Intermediate crude oil, the US benchmark, surged 17% to $16.18 barrel while Brent crude, the intl benchmark, was higher by 7.6% at $21.92. Today's advance is a continuation of the gains seen yesterday after Pres Trump heightened tensions in the Middle East by ordering the Navy to destroy Iranian gunboats that harass US ships. The Pentagon later tamped down his comments, suggesting ships have the right to self-defense. The oil market has come under siege this year as ballooning supplies exacerbated by the price war between Russia & Saudi Arabia hit the market at the same time that gov responses to COVID-19 destroyed demand. Yesterday, the Energy Information Administration said crude oil stockpiles rose by 15M barrels last week. At 518M barrels, US inventories are 9% higher than their average for this time of year. The inventory build has no end in sight & producers are running out of storage. The huge runup in supply has been the catalyst in oil falling 81% this year thru Tues. Earlier this week, prices plunged into negative territory for the first time. The wild swings come as the besieged market looks ahead to May 1, when the production cuts agreed to by the world's largest oil producers takes hold. The agreement will see OPEC & its allies reduce output by 9.7M barrels per day & other large producers such as the US & Canada deliver cuts mostly as a result of lower prices. In total, the deal will remove 20M barrels a day. With demand down about 30M barrels a day globally, however, there are concerns the agreement doesn't go far enough. OPEC is reportedly considering another meeting in May to address those issues.
US business activity plumbed new record lows in April as the novel coronavirus severely disrupted manufacturing & services industry production, pushing the economy into uncharted waters. Data firm IHS Markit said its flash US Composite Output Index, which tracks the manufacturing & services sectors, plunged to a reading of 27.4 this month. That was lowest since the series began in late-2009 ^ followed a final reading of 40.9 in Mar. A reading below 50 indicates a contraction in private sector output. States & local govs have issued “stay-at-home” or “shelter-in-place” orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, & abruptly halting economic activity. Since Mar 21, more than 22M have filed for unemployment benefits.
“The COVID-19 outbreak dealt a blow to the U.S. economy of a ferocity not previously seen in recent history during April,” Chris Williamson, chief business economist at IHS Markit, said. “The deterioration in the flash PMI numbers indicates a rate of contraction exceeding that seen even at the height of the global financial crisis.” Economists say the economy slipped into recession in Mar. The National Bureau of Economic Research, the private research institute regarded as the arbiter of US recessions, does not define a recession as 2 consecutive qtrs of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy & lasting more than a few months. The IHS Markit survey’s services sector flash Purchasing Managers Index dropped to an all-time low reading of 27.0 this month from 39.8 in Mar. The forecast called for a reading of 31.5 in Apr for the services sector, which accounts for roughly 2/3 of the US economy. Factory activity contracted further this month, with the flash manufacturing PMI sinking to 36.9. That was the lowest since 2009 & follows a final reading of 48.5 in Mar. The forecast called for the index of the sector, which accounts for 11% of the economy, falling to 38.0 in Apr. A measure of new orders received by factories dropped at its steepest pace since 2009, suggesting manufacturing production could continue to decline thru Q2. The Federal Reserve reported last week that manufacturing output dropped at its sharpest pace in 11 years in Q1. Manufacturing was already struggling from the fallout of the Trump administration’s trade war with China well before the before the coronavirus hit US shores. In addition to COVID-19 fracturing global supply chains, a spectacular collapse in US oil prices this week is seen undercutting demand for oil drilling & shaft exploration equipment, pressuring domestic manufacturers. According to IHS Markit, “many firms highlighted the cancellation or postponement of both domestic and foreign orders following the pandemic escalation,” noting that manufacturers were pessimistic about outlook for output over the coming year. It said though some manufacturers “expressed hopes of a turnaround in Q3, many firms were concerned about the timespan of any recovery & the longevity of current emergency public health measures.”
Despite the dreary economic news, stocks are being bid higher. The US economy, along with the global economy, is in a depression. Waiting for technical numbers to verify that simple fact is meaningless. This is a depression. Period! Business activity has fallen sharply & there is no quick cure to solve that situation. Reopening the US economy is stumbling as it tries to get started. The oil bear market, its worst in history, is making matters even worse. Yes, the problems will be solved, but not without a lot of pain. So far, investors are taking this all in & seem to have a strong underlying optimistic attitude even with a high level of uncertainty. The VIX, volatility index which also measures uncertainty, is in the 39s. That's down from its recent high of 85. However in better times last year, it was under 15.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 17.64 | +3.86 | +28% |
| GC=F | Gold | 1,759.50 | +21.20 | +1.2% |
Another 4.4M Americans filed for unemployment claims last week, the Labor Dept reported, as massive job losses caused by the coronavirus pandemic continued to grow. The new report, which covers the week ending Apr 18, brings total job losses since the virus outbreak triggered widespread stay-at-home measures 5 weeks ago to more than 26M, erasing the entirety of the 22.8M labor market gains since the last recession more than a decade ago. With a labor force that totals about 162M, the claims figures suggest the unemployment rate is about 16% (roughly one in 6 Americans) significantly higher than the 10% peak seen during the 2008 financial crisis. The previous one-week high for jobless claims was 696K in 1982. A growing number of economists have warned the "Great Lockdown" will push the global economy into the worst recession since the Great Depression, when unemployment spiked to 25%. Economists expected the number of initial claims for state unemployment benefits to hit 4.2M. The 4-week moving average was more than 9M, up 3.5M from a week ago. Last week's total was revised down by 8K at 5.2M. The $2T stimulus package signed at the end of Mar was designed to blunt the economic pain from the virus outbreak. As of Mon, more than 40 states were paying laid-off workers an additional $600 a week in unemployment benefits, in addition to regular state payments, Labor Secretary Eugene Scalia said earlier this week.
4.4M more file for jobless claims in past week, pointing to 16% unemployment
Oil prices surged for a 2nd day as the market digests a flareup of tensions in the Middle East & looks ahead to production cuts from the world's largest producers. West Texas Intermediate crude oil, the US benchmark, surged 17% to $16.18 barrel while Brent crude, the intl benchmark, was higher by 7.6% at $21.92. Today's advance is a continuation of the gains seen yesterday after Pres Trump heightened tensions in the Middle East by ordering the Navy to destroy Iranian gunboats that harass US ships. The Pentagon later tamped down his comments, suggesting ships have the right to self-defense. The oil market has come under siege this year as ballooning supplies exacerbated by the price war between Russia & Saudi Arabia hit the market at the same time that gov responses to COVID-19 destroyed demand. Yesterday, the Energy Information Administration said crude oil stockpiles rose by 15M barrels last week. At 518M barrels, US inventories are 9% higher than their average for this time of year. The inventory build has no end in sight & producers are running out of storage. The huge runup in supply has been the catalyst in oil falling 81% this year thru Tues. Earlier this week, prices plunged into negative territory for the first time. The wild swings come as the besieged market looks ahead to May 1, when the production cuts agreed to by the world's largest oil producers takes hold. The agreement will see OPEC & its allies reduce output by 9.7M barrels per day & other large producers such as the US & Canada deliver cuts mostly as a result of lower prices. In total, the deal will remove 20M barrels a day. With demand down about 30M barrels a day globally, however, there are concerns the agreement doesn't go far enough. OPEC is reportedly considering another meeting in May to address those issues.
Oil surges on Middle East tensions and output cuts
US business activity plumbed new record lows in April as the novel coronavirus severely disrupted manufacturing & services industry production, pushing the economy into uncharted waters. Data firm IHS Markit said its flash US Composite Output Index, which tracks the manufacturing & services sectors, plunged to a reading of 27.4 this month. That was lowest since the series began in late-2009 ^ followed a final reading of 40.9 in Mar. A reading below 50 indicates a contraction in private sector output. States & local govs have issued “stay-at-home” or “shelter-in-place” orders affecting more than 90% of Americans to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus, & abruptly halting economic activity. Since Mar 21, more than 22M have filed for unemployment benefits.
U.S. business activity hits fresh record lows amid coronavirus lockdowns
“The COVID-19 outbreak dealt a blow to the U.S. economy of a ferocity not previously seen in recent history during April,” Chris Williamson, chief business economist at IHS Markit, said. “The deterioration in the flash PMI numbers indicates a rate of contraction exceeding that seen even at the height of the global financial crisis.” Economists say the economy slipped into recession in Mar. The National Bureau of Economic Research, the private research institute regarded as the arbiter of US recessions, does not define a recession as 2 consecutive qtrs of decline in real GDP, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy & lasting more than a few months. The IHS Markit survey’s services sector flash Purchasing Managers Index dropped to an all-time low reading of 27.0 this month from 39.8 in Mar. The forecast called for a reading of 31.5 in Apr for the services sector, which accounts for roughly 2/3 of the US economy. Factory activity contracted further this month, with the flash manufacturing PMI sinking to 36.9. That was the lowest since 2009 & follows a final reading of 48.5 in Mar. The forecast called for the index of the sector, which accounts for 11% of the economy, falling to 38.0 in Apr. A measure of new orders received by factories dropped at its steepest pace since 2009, suggesting manufacturing production could continue to decline thru Q2. The Federal Reserve reported last week that manufacturing output dropped at its sharpest pace in 11 years in Q1. Manufacturing was already struggling from the fallout of the Trump administration’s trade war with China well before the before the coronavirus hit US shores. In addition to COVID-19 fracturing global supply chains, a spectacular collapse in US oil prices this week is seen undercutting demand for oil drilling & shaft exploration equipment, pressuring domestic manufacturers. According to IHS Markit, “many firms highlighted the cancellation or postponement of both domestic and foreign orders following the pandemic escalation,” noting that manufacturers were pessimistic about outlook for output over the coming year. It said though some manufacturers “expressed hopes of a turnaround in Q3, many firms were concerned about the timespan of any recovery & the longevity of current emergency public health measures.”
U.S. business activity hits fresh record lows amid coronavirus lockdowns
Despite the dreary economic news, stocks are being bid higher. The US economy, along with the global economy, is in a depression. Waiting for technical numbers to verify that simple fact is meaningless. This is a depression. Period! Business activity has fallen sharply & there is no quick cure to solve that situation. Reopening the US economy is stumbling as it tries to get started. The oil bear market, its worst in history, is making matters even worse. Yes, the problems will be solved, but not without a lot of pain. So far, investors are taking this all in & seem to have a strong underlying optimistic attitude even with a high level of uncertainty. The VIX, volatility index which also measures uncertainty, is in the 39s. That's down from its recent high of 85. However in better times last year, it was under 15.
Dow Jones Industrials
No comments:
Post a Comment