Monday, April 5, 2021

Markets surge after a strong jobs report

Dow shot up 365, advancers over decliners 2-1 & NAZ gained 162.  The MLP index fell 1+ to the 167s & the REIT index was flat in the 408s.  Junk bond funds hardly budged & Treasuries were sold, bringing higher yields.  Oil dropped 1+ to the 59s & gold was steady at 1728.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil59.93
 -1.52-2.5%























GC=FGold   1,728.60
+0.20+0.0%
















 

 




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The Labor Dept on Fri said 916K jobs were created last month, the most since last Aug, including 53K manufacturing positions.  That was the highest number of new factory jobs in 6 months.  The report's manufacturing diffusion index, a measure of the breadth of hiring across some 75 goods-producing industries, registered one of its highest readings ever.  Manufacturing employment suffered a much less severe blow than service sector jobs last spring when COVID-19 first brought the economy effectively to a standstill.  About one of every 10 factory jobs were eliminated in the shutdowns versus roughly one of every 6 service jobs.  Factory employment is 4% below pre-pandemic levels, a deficit of 515K jobs, versus 5.5% for overall US employment, with a total shortfall from Feb 2020 of 8.4M positions.  Other indicators also point to a tight labor market at factories.  Earlier in the week, the Institute for Supply Management said its index for national factory activity jumped to its highest reading in 37 years in Mar with its gauge of manufacturing employment rising to its highest level since Feb 2018.  One fabricated metal company quoted in the report said, "A lack of qualified machine and fabrication shop talent" has made it hard to keep up with demand.  UKG, which provides time management for small & mid-sized companies, said employee shift work at US manufacturers was up 3.4% in mid-Mar from mid-Feb, outpacing a 2.6% increase across all industries.

US factories desperate for workers, even as ranks of jobless remains high

The daily coronavirus death toll in the US is at its lowest level in months as the country continues to ramp up the pace of vaccine administration.  At the same time, outbreaks in states like Michigan are stoking fears of another nationwide Covid-19 surge.  About 63K daily new coronavirus cases are being reported across the US, according to a 7-day calculated by Johns Hopkins University.  Case counts have been on the rise again recently following months of sharp declines from peak levels in Jan.  That new case growth is showing signs of plateauing following a low number of new cases reported for yesterday, but many states did not report data on Easter Sun & will likely take a couple of days for the holiday weekend case & death counts to be reported & collected, at which point the latest direction of the outbreak's trend will become more clear.  Michigan, where average daily new cases are up 39% compared to a week ago, is currently experiencing the most severe outbreak in the country on a per capita basis.  The state's 7-day average of nearly 6K new cases per day is approaching levels seen during the winter surge, when case counts there peaked at an average of about 8K per day.  Dr Scott Gottlieb, a former Food & Drug Administration commissioner, said that he attributes the most recent uptick in Mich & other states like Minnesota & Massachusetts to multiple causes.  The spread of virus variants, colder climates that make it harder to gather outside, schools being reopened & increased mobility among residents are all contributing to the spread, Gottlieb added.  He doesn't expect these factors, however, to fuel a nationwide surge in new cases.  “I don’t think it’s going to be the start of a true fourth wave,” Gottlieb said.  “I think that this is going to be regionalized outbreaks, and hopefully we get beyond this as we vaccinate more.”  The daily Covid-19 death toll in the US currently sits at 797, based on a weekly average.  While still elevated, that figure is at its lowest point since late Oct 2020.

U.S. ramps up vaccination pace as Michigan, other states see outbreaks

Orders for US manufactured goods fell 0.8% in Feb, the Commerce Dept reported.  This was the first decline since the depth of the coronavirus recession last Apr.  Orders were up 2.7% in Jan.  The forecast was expecting a 0.6% decline in Feb factory orders.  Durable-goods orders fell a revised 1.2% in Feb, slightly weaker than the initial estimate of a 1.1% decline.  Orders for nondurable goods were down 0.4% in the month.  Orders for nondefense capital goods, excluding aircraft, fell a revised 0.9% in Feb, down slightly from the prior estimate of a 0.8% decline.  Economists blamed the weakness in Feb on cold weather & the lack of key supplies may also have placed a role.  The factory sector is expected to rebound quickly.

U.S. factory orders fall in February for first time in 10 months

The economic data looks good & even factory orders ought to show sharp improvement when the Mar data is reported.  However strong economic data should not be accompanied by another stimulus package which can lead to higher inflation.  In the past 6% unemployment did NOT require the gov to resort to massive gov spending.  The guys in DC need to learn that money does not grow on trees.  The advance/decline ratio was relatively modest.today

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