Thursday, February 18, 2021

Markets drop after jobless claims report disappoints

Dow declined 204, decliners over advancers 3-1 & NAZ fell 152.  The MLP index pullled back 3+ to the 151s & the REIT index slid fractionally lower to the 385s.  Junk bond funds were off a tad & Treasuries rose while stock were sold.  Oil was down pennies, but remained above 61, & gold added 3 to 1776.

AMJ (Alerian MLP index tracking fund)







CL=FCrude Oil 60.68
- 0.46-0.8%






GC=FGold   1,770.40 
-2.40- 0.1%















 

 




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The number of Americans filing for first-time unemployment benefits climbed again last week as the coronavirus pandemic continues to weigh on the labor market & trigger a high number of job losses.  Figures from the Labor Dept show that 861K Americans filed first-time jobless claims last week, higher than the 765K forecast.  Last week's figure was revised upward by 55K to 848K.  The number of Americans applying for aid has remained stubbornly high for months, hovering around 4 times the pre-crisis level, although it's well below the peak of almost 7M that was reached when stay-at-home orders were first issued in Mar.  More than 70M Americans, (40%) of the labor force, have filed for unemployment benefits during the pandemic.  Continued claims, the number of Americans who are consecutively receiving unemployment benefits, fell to 4.49M, a decline of about 64K from the previous week.  The report shows that roughly 18.3M Americans were receiving some kind of jobless benefit thru Jan 30, a decrease of about 1.3M from the previous week.  The federal gov renewed its programs at the end of Dec with the passage of a $900B relief package, which includes a supplemental $300-a-week jobless benefit, a one-time $600 stimulus check for most adults & new funding for a small business rescue program.  But those benefits expire in mid-Mar & could leave more than 11M Americans without an income,

Another 861,000 Americans filed for unemployment benefits last week

The EU will take a new approach to intl trade, recognizing that it’s time to stand up for itself after challenging times with countries like the US.  The European Commission, which negotiates trade deals on behalf of the 27 member states, proposed new tools to become a more “assertive” player in global trade.  The region is a top trading partner for 74 nations around the world & 2-way trade accounts for about 43% of its total GDP growth, according to data from the commission.  “The challenges we face require a new strategy for EU trade policy,” the EU's trade chief, Valdis Dombrovskis, said.  “It should also give us the tools to defend ourselves when we face unfair trade practices. We are pursuing a course that is open, strategic and assertive, emphasizing the EU’s ability to make its own choices and shape the world around it,” he added.  Over the past few years, the EU has struggled to push its multilateral trade agenda.  The US, under the leadership of Trump, imposed tariffs on EU products & threatened to charge additional duties on European carmakers.  In 2018, both sides vowed to work on a small trade agreement, but that failed to materialize.  In addition, Trump also challenged intl trade rules by blocking the WTO's appellate body & he was not seen as a typical partner for the EU when addressing global trade issues.  However, there have been internal pressures too.  The EU reached an agreement in principle with Mercosur states (Argentina, Brazil, Paraguay & Uruguay) in 2019, but the deal has not yet been ratified by European lawmakers who are concerned about deforestation & other practices in Brazil.  Despite these challenges, the European Commission believes it is time to develop commerce around the world even further, so it can better deal with the economic shock from the coronavirus crisis.  But by proclaiming a new more “assertive” position, there could be ramifications for China & the US.

The EU says it’s going to toughen up on trade

Walmart (WMT), a Dow stock & Divided Aristocrat, reported Q4 earnings that fell short of expectations as the retailer aims to turn the strength of its e-commerce business during the pandemic into lasting momentum & higher profits by boosting investment.  It said EPS will decline, but will range flat to slightly higher after excluding divestitures.  The big-box retailer has benefited from pandemic trends, as Americans buy more groceries, cleaning products & other essentials.  It also got a boost in the fiscal Q4 as many customers spent their stimulus checks.  But the pandemic has also increased its costs — in Q4 alone Covid-related expenses tallied $1.1B.  CEO Doug McMillon said that it is retooling its business to better serve customers, tap new revenue streams & create a diverse ecosystem of services, from delivering groceries to people's fridges to offering annual health checkups & new kinds of financial services.  It's also bulking up its advertising business.  WMT is targeting about $14B in capital expenditures this fiscal year, up from a rate of $10-11B, as it invests in supply chain, automation & improvements to the customer experience, CFO Brett Biggs said.  For the 3 months ended Jan 31, EPS the loss per share was 74¢, compared with EPS of $1.45 a year earlier.  The company said a loss on its UK & Japanese operations reduced EPS by $2.66, which was partially offset by a gain of 49¢ on equity investments.  Excluding these & other items,  EPS was $1.39, missing estimates of $1.46 (not including the impact from UK taxes).  Total revenue grew by 7.3% to $152.1B from $141.7B a year earlier, topping expectations of $148.3B.  The company raised its div by a penny to 55¢ & approved a $20B stock buyback program. The stock sank 8.16 (6%).
If you would like to learn more about WMT, click on this link:
club.ino.com/trend/analysis/stock/WMT?a_aid=CD3289&a_bid=6ae5b6f7

Walmart shares fall on earnings miss, retailer sees sales growth slowing

Investors are taking the day off after seeing the jobless claims data.  Jobless claims have been trending sideways for around 5 months & there are few expectations for that number to decrease significantly over the short term even though the economy is showing improvement.

Dow Jones Industrials

 






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