I happen to be a big fan of the monthly ADP Employment report, and I think it is a real rival to BLS report when it comes to the private sector. The loss of 20.3 million jobs was less than 21.0 million consensuses.
Yesterday’s results were beyond horrific, and still hard to believe. But what else could be expected when the nation shut down. The economy was stopped in its tracks, as we are ordered to retreat and stay in our homes. The nation cannot withstand this kind of carnage much longer.
This is a clarion call to get the wheels of commerce moving again.
This morning, we got another reminder of the continued destruction of employment in America, and of course, tomorrow we get a glimpse of the aforementioned government jobs report from the Bureau of Labor Statistics (BLS).
Don’t Look Now
The ten-year yield ticked up five basis points to 0.71%, which is the best corroboration a resurgent stock market could ask for if we are to see major breakouts soon.
The NASDAQ Composite is only down 1.3% for 2020. That is an unbelievable feat that will require a lot of rewriting of investing rules and explains why Wall Street and those brilliant commentators keep trying to talk the market lower. Meanwhile, there is solid resistance from 9,000 to 9,050. Through that point, we could seriously discuss the all-time high being re-tested very quickly.
NASDAQ Composite
Earnings Parade in the Age of Coronavirus
It is sort of a play on the old analogy of feast or famine, but now it’s fat or fit, which probably describes the two choice a lockdown nation has. Grocery and liquor stores have seen remarkable boost in consumption and there is no doubt most Americans are watching their waistline expand. But some are dieting, and then there are the folks that can afford to own expensive exercise equipment.
Recommended
The latter group drove Peloton (PTON) to a monster earnings beat as 1.1 million users signing up from March 16 to April 30, lifting revenues up 66% to $525,000,000. Meanwhile, Golds Gym just filed for bankruptcy protection.
PayPal (PYPL) actually missed on the top and bottom line but had a strong conference call, where management pointed out that April was the best month of business since going public. This turned the stock around. It was looking like one of the biggest losers two hours before the open and now could be among the biggest winners.
Portfolio Approach
We made quite a few changes yesterday and added a new position as well.
Today’s Session
Well, we knew it would be bad. Jobless claims rose 3.169 million. In the past seven weeks, there has been about 33.5 million new unemployment claims. The numbers shatter the records. California, which had the most overall claims, Texas, Georgia, Florida and New York saw the largest rise in new claims.
While this is heartbreaking and beyond horrific, the silver lining is that the rate of layoffs is beginning to slow. At the end of March, the apex of unemployment claims was about 6.9 million, and for the week ending May 2, the numbers were less than half of that.
The 4-week moving average, typically a better gauge, was 4,173,500, a decrease of 861,500 from the previous week's revised average of 5,035,000.
Continuing claims, which have a one-week lag, rose to 22.6 million from 18 million in the previous week. But the difference in the lag and this week’s number is puzzling. Perhaps, it’s the people still waiting for their unemployment checks.
Oil is flowing again, and WTI is up over 9% to $26.12.
The markets are rocking today. The Nasdaq has been up 3 consecutive days, and while it’s still down 10% from its February high, it is positive for 2020.
Healthcare is doing well as positive results from Moderna (MRNA) continue to add to hope of a vaccine, sooner rather than later. MRNA received the green light from the FDA for its Phase 2 trial, ramping up its timeline.
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