Dow shot up 228, advancers over decliners 5-2 & NAZ climbed 119. The MLP index went up 2+ to the 183s & the REIT index advanced 4+ to the 428s. Junk bond funds rose & Treasuries were weak. Oil crawled higher in the 64s & gold jumped 16 to 1832 on the negative jobs report (more on both below)
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
More than 1 in 4 unemployed Americans have been out of work for over a year, according to Bureau of Labor Statistics. Long-term joblessness has been rising steadily throughout the Covid pandemic & poses greater financial risks for affected households. Nearly 2.7M people were unemployed for 52 weeks or more in Apr — more than double the number in Feb. They represent 29% of the 9.2M total jobless workers last month. These data don't include a seasonal adjustment. “Ten million Americans are still looking for work, and many of them have been since the beginning of the pandemic,” Rep Don Beyer said. These statistics are likely an undercount. Certain workers, like those who left the labor force entirely due to pandemic health risks or child-care duties, aren't considered unemployed since they're not actively looking for work. It's likely that the long-term unemployed are overrepresented in the hardest-hit industries, i.e. leisure & hospitality. There are almost 3M fewer jobs in that sector relative to pre-pandemic levels — accounting for a 3rd of the 8.2M jobs yet to return. Hiring in the sector, which includes restaurants, bars & hotels, for example, grew by 331K last month. In Apr, 4.2M were long-term unemployed — 43% of all jobless workers. That's close to the historical peak hit in the aftermath of the last recession: 45.5% in Apr 2010. In Apr 2010, more than 4.6M had been out of work at least 52 weeks & it took another 20 months for that number to dip below the 4M mark.
29% of unemployed Americans have been jobless over a year
Rising asset prices in the stock market & elsewhere are posing increasing threats to the financial system, the Federal Reserve warned. In its semiannual Financial Stability Report, the central bank said that while the system overall has remained largely stable even thru the Covid-19 pandemic, future dangers are rising, in particular should the aggressive run on stocks tail off. Investors have snapped up equities, corp bonds & cryptocurrencies. They've poured Bs into blank-check companies called SPACs, & the market has been mostly brisk for traditional initial public offerings. Fed Chair Jerome Powell & others have been asked repeatedly about whether they're concerned over the rising prices. Powell specifically has said that as long as interest rates stay low, the valuations are justified. However, the report notes that there's danger lurking should market sentiment change. “High asset prices in part reflect the continued low level of Treasury yields. However, valuations for some assets are elevated relative to historical norms even when using measures that account for Treasury yields,” the report states. “In this setting, asset prices may be vulnerable to significant declines should risk appetite fall.” In an accompanying statement, Fed Governor Lael Brainard said the situation bears watching & points out the importance of making sure the system has proper safeguards. She specifically mentioned having banks increase their capital requirements during economic expansions as a buffer against downturns. The report also mentions risk at hedge funds & other nonbank financial institutions on several occasions as potential threats to the system. “Vulnerabilities associated with elevated risk appetite are rising. Valuations across a range of asset classes have continued to rise from levels that were already elevated late last year,” Brainard said. “The combination of stretched valuations with very high levels of corporate indebtedness bear watching because of the potential to amplify the effects of a re-pricing event.” The report notes that particular sectors including energy, travel & hospitality have particularly high vulnerabilities because of their sensitivity to the pandemic. The Fed also talks about potential threats from money market & open-end funds.
Fed warns about potential for ‘significant declines’ in asset prices as valuations climb
India's daily new Covid-19 cases crossed 400K for the 3rd time this month as the country struggles to contain a devastating second wave. Health ministry data released today showed there were 414K new cases over a 24-hour period, where at least 3915 people succumbed to the disease. But reports of cemeteries as well as a growing number of obituaries in local papers suggest the official figures undercount the true death toll. Total reported cases in the South Asian country currently stands at 21.5M while fatalities exceed 234K. In just the last 7 days, India has reported more than 2.7M cases & over 25K deaths, for an average of at least 153 people dying every hour.
India reports over 400,000 daily cases for the third time in seven days
Just 266K nonfarm payroll jobs were added to the US labor market in Apr, far below the estimated 1M new jobs projected, surprising economists & analysts who expected a healthy number of gains as more Americans get vaccinated & businesses reopen during the ongoing pandemic. By comparison, the labor market added 770K jobs in Mar & 536K jobs in Feb. The 6.1% unemployment rate & 9.8M people unemployed remained steady in Apr compared with the months prior. However, today's snapshot is much better than exactly a year ago, but improvements are leveling off while rates of joblessness remain well above pre-pandemic levels. Some of the biggest gains in jobs occurred in the leisure & hospitality industry, which added 331K new jobs in Apr. Hiring happened across restaurants & bars; gambling & recreation; & accommodation. Gains also happened across local gov education, as schools reopened & rehired teachers as well as office administration & support roles. The social assistance industry saw a boost in child care services jobs, as facilities nationwide welcomed kids back in-person. The financial industry saw jobs increase across real estate & rental leasing; in “other services,” workers filled roles in maintenance repair & laundry services. Gains elsewhere in the labor market did little to offset major losses. The worst performing industries for the month include temporary help services jobs, which lost 111K positions last month. This could indicate that staffing firms are having trouble finding businesses that want to hire temporary workers which could be an indicator of labor shortages or that workers are holding out for permanent jobs during the market recovery. Transportation & warehousing, which remained strong during market upheavals last spring to keep pace with skyrocketing e-commerce demand, shed 74K workers in Apr, most being couriers & messengers.
The workforce added just 266,000 new jobs in April—what that means for workers
Gold prices climbed to log their highest finish in almost 3 months after a closely watched reading of US labor conditions for the month was much weaker than forecast. The Labor Dept reported that the economy gained only 266K jobs in Apr, far fewer than even the most subdued forecast for the month, raising some questions about the strength & pace of the recovery from the COVID pandemic. Minneapolis Fed Pres Neel Kashkari after the jobs report said that Apr surprise for jobs shows the importance of basing monetary policy on outcomes, not forecasts. Jun gold added $15 (0.9%) to settle at $1831 an ounce, following a 1.8% rise yesterday. Prices for the most-active contract was 3.6% higher for the week & marked their highest finish since Feb 10.
Gold settles at a nearly 3-month high after a weaker-than-expected U.S. April jobs report
Oil futures rose & scored weekly gains on growing optimism over the economic reopening in the US & Europe, though concerns remain about the surge in COVID-19 cases in India. West Texas Intermediate crude for Jun delivery tacked on 19¢ to settle at $64.90 a barrel, leaving front-month prices for the US benchmark up 2.1% for the week. Jul Brent crude, the global benchmark, rose 19¢ at $68.28 a barrel & Brent gained 2.3% for the week. Strong economic data out of the US & China & optimism over prospects for Europe as vaccine distribution improves has helped buoy oil. China's exports & imports grew faster than expected in Apr. At the same time, upside for oil has been limited, with Brent failing earlier this week to top the $70-a-barrel threshold, as COVID-19 cases continue to surge in India, the world's 3rd-largest oil importer.
Oil scores weekly gains as reopening optimism outweighs COVID worries
The easiest explanation for stock buying today is that the jobs report will stimulate those guys in DC to pass those pork bills. We'll see. Last Apr, over 20M jobs were lost, a truly eye popping number. Since then there has been monthly increases, although the numbers have slowed in recent months. The US economy is one of the best performing ones in the world. But those who can not find work are facing times. The outlook for the Dow is very optimistic as it approaches 35K even though some people are hurting. There was a little selling into the close which should be expected. And safe haven gold continues in demand.
Dow Jones Industrials
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