21 May 2.438 Million Apply for Unemployment Relief
This morning’s weekly Unemployment Report found 2,438,000 initial jobless claims were filed last week. Although this number decreased 252,000 from the previously report of 2,690,000, this shows that the many employers are still shedding labor. With the critical 8 week point for business owners who accepted PPP money quickly approaching, it is expected that we will see additional rounds of layoffs once the minimum time frame the business owners’ committed to maintaining employees lapses. With many consumers still unwilling to venture into retail stores, restaurants or travel, many of the surviving businesses are overstaffed for current demand and will be forced to make cuts. It seems unlikely that struggling businesses will be eligible for additional government support, so many are expected to fail.
Not much is new in the stock market, as stocks remain trapped just beneath their 100 and 200 day moving averages. The fact that the US economy remains in the current state and stocks are as high as they are now remains a mystery. Clearly, Main Street is doing terrible, and many Wallstreet companies are in serious trouble. My only guess is that there are clear hopes of a speedy recovery for the US economy, which seems entirely unrealistic to me. Investors must be listening to hopeful propaganda vs truly studying the dire situation that 20% of consumers are in. The best many economists are expecting is for the Unemployment Rate to get down to 8% by the 4th quarter of 2020, which certainly isn’t something that would justify the level of hype currently being demonstrated by stock prices.
We will maintain a locking bias.