Dow sank 464, decliners over advancers about 5-1 & NAZ dropped 95. The MLP index fund lost 3 to the 124s & REIT index fund declined 6+ to the 338s. Junk bond funds drifted lower & Treasuries rose in price. Oil fell 1+ to the 39s & gold pulled back 18 to 1802 after a good run.
AMJ (Alerian MLP Index tracking fund)
More than 1.3M Americans filed for unemployment benefits last week, showing that many workers are still losing their jobs even as the labor market starts to recover from the coronavirus pandemic & related lockdown. The latest jobless claims figures from the Labor Dept pushes the number of job losses since the shutdown began to nearly 50M, roughly 31% of the nation's workforce. Last week's figure was revised down by 14K to 1.41M. Continuing claims, the number of people receiving benefits after an initial week of aid, fell by 698K to a little more than 18M. The previous week's total was revised down by 530K. The forecast called for 1.37M new claims & 18.9M continued claims. The numbers remain at persistently elevated levels, even as every state eases restrictions on residents & allows businesses to reopen. It's the 16th week in a row that jobless claims came in above 1M; before the pandemic, the record high was 695K set in 1982. Still, it's the 14th consecutive weekly decline of Americans seeking jobless benefits since claims peaked at the end of Mar. The report comes amid a spike in COVID-19 cases that has forced some states, including Arizona, California, Colorado, Florida, Michigan & Texas, to re-impose some stricter lockdown measures. The pullback has threatened to derail the economy's nascent recovery from the virus-induced lockdown.
Recent economic data shows signs of acceleration in the US economy, but Federal Reserve officials are cautioning that there may be a slowdown on the horizon as confirmed coronavirus cases rise in some states. Atlanta Fed Pres Raphael Bostic suggested that the US recovery could be stalling – even after more than 7M jobs were added in May & June. Bostic said that more recent data indicates “energy in terms of reopening for businesses and for just general activity is starting to level off.” there have been concerns about not only another wave of layoffs as some states pause – & even roll back – tiered reopening plans, but also that economic uncertainty could squash hiring plans even in states were confirmed cases remain low. He indicated that some less-cautious reopenings have likely led to a surge in infection rates. Rich Fed Pres Thomas Barkin expressed concern about the end of expanded benefit payments, which could render Americans unable to meet regular payment obligations & thus less likely to spend. “We have fiscal payments ... that are coming to an end and it is not clear what is going to replace them,” Barkin said. On a similar note, Randal Quarles, Vice Chairman for Supervision at the Federal Reserve, said that the financial system would face more challenges, including the inability of some borrowers to make loan payments. The $600B unemployment bump, which is scheduled to expire at the end of Jul, has helped buoy many households' financial situations throughout the pandemic. In fact, studies have shown benefits for 68% of workers would exceed earnings. More than 19M individuals were receiving these benefits as of the end of Jun. When these funds run dry, not only might people not be able to make their regular payments – including mortgage, auto & credit card expenses – but they are also not likely to continue spending. A decline in consumer spending can have detrimental effects on the economy since it accounts for more than 2/3 of economic activity. Consumers influence the production of goods and services, which in turn influences job creation. According to the Bureau of Labor Statistics, personal consumption expenditures are the main generator of employment in the economy. On the bright side, St Louis Federal Reserve Bank Pres James Bullard said he was “optimistic” about the recovery, predicting unemployment could fall below 8% by the end of the year.
The US budget deficit soared to a record $2.7T for the first 9 months of the fiscal year, as federal revenues dried up and spending surged to help offset the economic pain of the coronavirus pandemic. In Jun, the gap between what the gov spent & what it collected hit $863B, more than 107 times what it was one year ago, the Congressional Budget Office (CBO) reported. The nonpartisan agency estimated that revenue totaled $242B, down $92B, or 28%, up from last year, the result of a decline in wages & overall economic activity. Another reason for the decline in receipts was the administration's decision to extend the tax filing deadline from Apr 15 to Jul 15. That could entail a considerable increase in receipts next month. The deficit is on track to exceed $3.8T, a record-shattering number that dwarfs the previous high of $1.41T set in 2009 during the global financial crisis. "That increase stems from the economic disruption caused by the 2020 coronavirus pandemic and from the federal government’s response to it," the CBO said. Nearly ½ of the outlays in Jun stemmed from the Paycheck Protection Program, the $670B rescue fund designed to keep small businesses afloat & avert mass layoffs. It accounted for almost ½ of gov spending, roughly $511B of the $1.1T spent last month. The report comes as Congress & the Trump administration prepare to intensify negotiations on another round of virus-related aid once lawmakers return to DC from their 2-week Fourth of Jul break.
Selling today was even felt by tech stocks which have been in a rally mode all year. The Dow began the day near breakeven & then sellers took over. Virus worries are affecting the younger part of the population, but their strong bodies are better able to fight off its effects. However the number of new cases keeps rising & that raises concerns about the virus spreading. Also confusion over restarting school season (just a few weeks) can affect the economic recovery, adding more anxiety to the minds of investors. The Dow has been holding near 26K for nearly 2 months.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 39.87 | -1.03 | -2.5% |
| GC=F | Gold | 1,818.30 | -2.30 | -0.1% |
More than 1.3M Americans filed for unemployment benefits last week, showing that many workers are still losing their jobs even as the labor market starts to recover from the coronavirus pandemic & related lockdown. The latest jobless claims figures from the Labor Dept pushes the number of job losses since the shutdown began to nearly 50M, roughly 31% of the nation's workforce. Last week's figure was revised down by 14K to 1.41M. Continuing claims, the number of people receiving benefits after an initial week of aid, fell by 698K to a little more than 18M. The previous week's total was revised down by 530K. The forecast called for 1.37M new claims & 18.9M continued claims. The numbers remain at persistently elevated levels, even as every state eases restrictions on residents & allows businesses to reopen. It's the 16th week in a row that jobless claims came in above 1M; before the pandemic, the record high was 695K set in 1982. Still, it's the 14th consecutive weekly decline of Americans seeking jobless benefits since claims peaked at the end of Mar. The report comes amid a spike in COVID-19 cases that has forced some states, including Arizona, California, Colorado, Florida, Michigan & Texas, to re-impose some stricter lockdown measures. The pullback has threatened to derail the economy's nascent recovery from the virus-induced lockdown.
Unemployment claims sink in better-than-expected report as layoffs plateau
Recent economic data shows signs of acceleration in the US economy, but Federal Reserve officials are cautioning that there may be a slowdown on the horizon as confirmed coronavirus cases rise in some states. Atlanta Fed Pres Raphael Bostic suggested that the US recovery could be stalling – even after more than 7M jobs were added in May & June. Bostic said that more recent data indicates “energy in terms of reopening for businesses and for just general activity is starting to level off.” there have been concerns about not only another wave of layoffs as some states pause – & even roll back – tiered reopening plans, but also that economic uncertainty could squash hiring plans even in states were confirmed cases remain low. He indicated that some less-cautious reopenings have likely led to a surge in infection rates. Rich Fed Pres Thomas Barkin expressed concern about the end of expanded benefit payments, which could render Americans unable to meet regular payment obligations & thus less likely to spend. “We have fiscal payments ... that are coming to an end and it is not clear what is going to replace them,” Barkin said. On a similar note, Randal Quarles, Vice Chairman for Supervision at the Federal Reserve, said that the financial system would face more challenges, including the inability of some borrowers to make loan payments. The $600B unemployment bump, which is scheduled to expire at the end of Jul, has helped buoy many households' financial situations throughout the pandemic. In fact, studies have shown benefits for 68% of workers would exceed earnings. More than 19M individuals were receiving these benefits as of the end of Jun. When these funds run dry, not only might people not be able to make their regular payments – including mortgage, auto & credit card expenses – but they are also not likely to continue spending. A decline in consumer spending can have detrimental effects on the economy since it accounts for more than 2/3 of economic activity. Consumers influence the production of goods and services, which in turn influences job creation. According to the Bureau of Labor Statistics, personal consumption expenditures are the main generator of employment in the economy. On the bright side, St Louis Federal Reserve Bank Pres James Bullard said he was “optimistic” about the recovery, predicting unemployment could fall below 8% by the end of the year.
Fed officials warn of potential economic slowdown — despite positive data trend
The US budget deficit soared to a record $2.7T for the first 9 months of the fiscal year, as federal revenues dried up and spending surged to help offset the economic pain of the coronavirus pandemic. In Jun, the gap between what the gov spent & what it collected hit $863B, more than 107 times what it was one year ago, the Congressional Budget Office (CBO) reported. The nonpartisan agency estimated that revenue totaled $242B, down $92B, or 28%, up from last year, the result of a decline in wages & overall economic activity. Another reason for the decline in receipts was the administration's decision to extend the tax filing deadline from Apr 15 to Jul 15. That could entail a considerable increase in receipts next month. The deficit is on track to exceed $3.8T, a record-shattering number that dwarfs the previous high of $1.41T set in 2009 during the global financial crisis. "That increase stems from the economic disruption caused by the 2020 coronavirus pandemic and from the federal government’s response to it," the CBO said. Nearly ½ of the outlays in Jun stemmed from the Paycheck Protection Program, the $670B rescue fund designed to keep small businesses afloat & avert mass layoffs. It accounted for almost ½ of gov spending, roughly $511B of the $1.1T spent last month. The report comes as Congress & the Trump administration prepare to intensify negotiations on another round of virus-related aid once lawmakers return to DC from their 2-week Fourth of Jul break.
US deficit soars to record level in 9 months
Selling today was even felt by tech stocks which have been in a rally mode all year. The Dow began the day near breakeven & then sellers took over. Virus worries are affecting the younger part of the population, but their strong bodies are better able to fight off its effects. However the number of new cases keeps rising & that raises concerns about the virus spreading. Also confusion over restarting school season (just a few weeks) can affect the economic recovery, adding more anxiety to the minds of investors. The Dow has been holding near 26K for nearly 2 months.
Dow Jones Industrials
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