This morning’s update on Unemployment Claims showed that there were 5.245 million first time claims last week. This brings the total in the past month to well over 20 million, which far exceeds any figure we have ever seen. Given that many are expected to return to work when the stay at home orders are lifted, we can expect to see the pendulum swing here in the weeks to come. Unfortunately, we have at least two to three more weeks of excessive losses before we can expect the table to turn. Once the workforce is reengaged, the question will be where the unemployment rate stabilize? I don’t expect to see us go back to the 3.5% range. I believe we will have an extended period of time in the 5-7% range. Only time will tell.
Stocks have been wildly indecisive today, going from being moderately up to moderately down. As the S&P maintains a level right neat the 2800 mark we have discussed in recent market updates, stocks seem unsure as to which direction to take. A decisive break above 2800 would likely lead to a more extended rally in the stock market. However, given the current state of the US economy, even current levels are wildly overpriced. As we see more corporations report earnings, we will see P/E ratios well above what would be considered healthy. I continue to expect to see a drop. However, in this market, anything is possible.
We will maintain a locking bias.