Massive Jobs Gains for June
Posted by Eddy Elfenbein on July 2nd, 2020 at 9:16 am

The June jobs report is out. The government said the U.S. economy created 4.8 million jobs last month. That blew past expectations of 2.9 million. The NFP chart looks like the back drop of a New Yorker cartoon.

The unemployment rate fell to 11.1%. Expectations were for 12.4%.

The jobs growth marked a big leap from the 2.7 million in May, which was revised up by 190,000. The June total is easily the largest single-month gain in U.S. history.

The numbers capture the move by all 50 states to get activity moving again after the virus seized up much of the U.S., particularly service-related industries.

However, because the government survey comes from the middle of the month, it does not account for the suspension or rollbacks in regions hit by a resurgence in coronavirus cases.

Weekly jobless claims rose by 1.427 million. This is the 15th straight week that the number has topped one million. Economists had been expecting an increase of 1.38 million.

The stock market is up in early trading and the cyclicals are leading the charge. The S&P 500 has been up as much as 1.5% this morning. This looks to be the index’s fourth daily gain in a row.

The stock market is closed tomorrow ahead of the Independence Day weekend.

Morning News: July 2, 2020
Posted by Eddy Elfenbein on July 2nd, 2020 at 7:00 am

China-Sanctions Bill on Hong Kong Law Passed by U.S. House

The Fed Sets Out Many Reasons to Worry About the Economy

The ‘Rocket Ship’ Economic Recovery Is Crashing

Covid-19 Isn’t Killing Cash. People Are Hoarding More of It

Clouds May Be Parting For Dividend Investors

Traders Thought Apple Had ‘The Holy Grail’ Of Oil Data, But The Quest Continues

U.S. Farmers Scramble For Help As COVID-19 Scuttles Immigrant Workforce

S&P 500 Jumps 0.5% After Pfizer Coronavirus Vaccine News

Car Sales Plunge 33 Percent in the 2nd Quarter Despite Deals

How the Facebook Boycott Could Just Make Facebook Stronger

Gun Demand Is Off the Charts in America

‘Sitting on Millions of Dollars’ and Dying to Blow It: Not This July 4

Ben Carlson: The Best and Worst Quarters in Stock Market History

Joshua Brown: The Gold Breakout

Jeff Carter: Businesses Make A Huge Mistake Choosing Political Sides

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ADP: +2.369 Million
Posted by Eddy Elfenbein on July 1st, 2020 at 11:06 am

The first half of 2020 is officially on the books. The S&P 500 fell 20% during the first quarter and it rallied 20% during the second quarter. Perhaps that’s fitting for the year 2020.

This morning, ADP said that private payrolls increased by 2.369 million in June. The expectation was for a gain of three million. The number for May was revised from a loss of 2.76 million to a gain of 3.065 million. The lockdown seems to have screwed with so much economic data.

The ISM Manufacturing Index rose to 52.6 for June. That’s up from 43.1 in May. Bear in mind that the ISM is always in relative terms. It’s only concerned with things improving or worsening, not in the overall standing. Wall Street had been expecting 49.0.

The S&P 500 is currently up about 0.5% today.

First-Half Summary
Posted by Eddy Elfenbein on July 1st, 2020 at 10:50 am

Here’s a look at how each Buy List stock did during the first half of the year. We trailed the overall market but only by a small amount.

The Buy List was down 4.39% for the first six months of the year while the S&P 500 was down 4.04%. That doesn’t include dividends. I always include dividends in the track record data. I haven’t had time yet to go through the numbers. The Buy List yields less than the S&P 500 but not by much.

Morning News: July 1, 2020
Posted by Eddy Elfenbein on July 1st, 2020 at 7:03 am

Central Europe’s Factory Decline Eases in June

New North American Trade Deal Launches Under Growing Threat of Disputes

Stocks’ Huge Rally Is Pushing Investors Back Into Hedge Funds

China Announces New Retaliation Against U.S. News Outlets

China’s Huawei and ZTE Officially Designated ‘National Security Threats’ by the FCC

As the Fed’s Powell Sounds Alarms, Mortgage Rates Tank Below 3%

Largest U.S. Pizza Hut Franchisee Files for Bankruptcy

Did a Chinese Hack Kill Canada’s Greatest Tech Company?

Adidas Executive Resigns as Turmoil at Company Continues

Facebook Bans Network With ‘Boogaloo’ Ties

Nick Maggiulli: Why Is Gold Valuable?

Ben Carlson: I’m Worried

Cullen Roche: 40 Things I’ve Learned in 40 Years

Joshua Brown: Every Cent, Plus Interest

Michael Batnick: Why Would Anyone Invest Right Now? & Animal Spirits: Existential Hurricane

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S&P 500 on Pace for Best Quarter Since 1998
Posted by Eddy Elfenbein on June 30th, 2020 at 10:35 am

The first half of 2020 comes to a close today. The S&P 500 is on pace for its best quarter since 1998. Volatility could be creeping back into the market.

Yesterday was the S&P 500’s fourth day in a row of closing up or down by more than 1%. The stock market is calmer this morning but there are still concerns over the rising number of coronavirus cases. The EU has banned Americans who are traveling abroad for non-essential reasons.

This morning’s consumer confidence report showed an increase to 98.1. That’s up from 85.9 in May. Economists had been expecting an increase to 91. Consumer confidence is now at a three-month high but it’s still below pre-crisis levels.

Fed Chairman Jerome Powell will testify later today in front of the House Financial Services Committee. He’ll be discussing the CARES Act.

(The chart above is the Wilshire 5000, not the S&P 500, but it’s pretty much the same. FRED is only allowed to post that last 10 years of the S&P 500.)

Morning News: June 30, 2020
Posted by Eddy Elfenbein on June 30th, 2020 at 7:00 am

Business Embraces Hong Kong’s Security Law. The Money Helps.

U.S. Halts High-Tech Exports to Hong Kong Over Security Concerns

Suitcases of Cash Halted by Virus in EU Money-Laundering Hotspot

Coronavirus Strikes Down Global M&A As Companies Keep Their Distance

Powell, Mnuchin Enter the Lion’s Den Again to Discuss Pandemic Response

Paycheck Program Ends With $130 Billion Unspent, and Uncertainty Ahead

Wall Street Faces Danger Signs After Best Quarter Since ‘98

Uber Makes Offer to Buy Postmates Delivery Service

Shell Warns of $22 Billion Hit From Coronavirus Price Slump

Amazon’s Brand Value Tops $400 Billion, Boosted By The Coronavirus Pandemic

Torture, Terror, and Revenge in Battle Over Fabled Irish Company

Jeff Carter: RIP SAFT

Cullen Roche: Three Things I Think I Think – Wear a Mask (Please!)

Howard Lindzon: The Home Fitness Wars…And My Dumb Money Visit Discussing Social Signal, My 8 To 80 Stocks and Robinhood Unbundling Vanguard

Joshua Brown: Abilities, How Stocks Predict Presidential Elections & Facebook Lost $56 Billion In Market Cap Friday Afternoon

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A “Green Light” for SHW
Posted by Eddy Elfenbein on June 29th, 2020 at 9:42 am

Barron’s has a roundup of some recent economic reports. Baird Equity Research has Sherwin-Williams (SHW) as an outperform. Here’s what they had to say:

Strength in the U.S. do-it-yourself market and diverse end-market exposure from the acquired Valspar coatings assets have partly offset challenges across other portions of Sherwin-Williams’ portfolio. We continue to believe that the company remains advantaged in the current operating environment, with 2020 earnings probably biased to the upper end of its current guidance of $19 to $21 a share. Noting that Sherwin-Williams’ earnings power is $25 to $27, we believe that our raised, $650 price target is realistic. That underlies our top pick designation.

The shares haven’t done much over the past six weeks.

Morning News: June 29, 2020
Posted by Eddy Elfenbein on June 29th, 2020 at 7:09 am

Coronavirus Rekindles Global Trade Disputes

The U.S.-China Feud Gets Nasty

European Equities Fight For Gains Amid Continued U.S. Virus Concerns

Hedge Funds Are Rushing to Get Out of Bearish U.S. Stock Bets

A Cash Cliff Spells Trouble For U.S. Unemployed, and Everyone Else

Chesapeake Energy, a Shale Pioneer, Files for Bankruptcy Protection

EBay’s Critics Faced an Extreme Case of an Old Silicon Valley Habit

New Flood-Risk Data Threatens to Change Millions of American Home Prices

Starbucks Pulling Ads From Facebook and Other Social-Media Platforms

Joshua Brown: Closest To The Customer vs Suppliers

Ben Carlson: The Only Rational Deployment of Our Ignorance & How Often Do Long-Term Bonds Beat Stocks?

Michael Batnick: The Nominal Robber

Roger Nusbaum: Is Everything We Know About Retirement Planning Wrong?

Jeff Miller: Weighing the Week Ahead: Sustaining a Fragile Recovery

Howard Lindzon: Banks Join The Venture Boom…What Could Go Wrong!?

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Personal Income Fell 4.2% in May
Posted by Eddy Elfenbein on June 26th, 2020 at 10:48 am

The day after we get the GDP report, we usually get the reports on monthly personal income and spending. This is a very unusual time for both. This morning we learned that personal income fell 4.2% in May while personal spending rose by 8.2%.

Last month’s rebound in consumer spending followed spending drops of 6.6% in March and 12.6% in April, when the viral pandemic shuttered businesses, forced millions of layoffs and sent the economy into a recession. Since then, many businesses have reopened, drawing consumers back into shops and restaurants and restoring some lost jobs.

Friday’s Commerce Department report showed that Americans stepped up their spending in May despite a 4.2% decline in personal income, which had soared by 10.8% the previous month. Income had jumped in April on the strength of billions of dollars in support through government payments in the form of unemployment aid as well as one-time $1,200 stimulus checks. In May, those stimulus checks were no longer counted as income for most people.

Besides whatever unemployment aid states are providing to the 30 million jobless Americans, the federal government is providing $600 a week in additional benefits. The federal money has pumped nearly $20 billion a week into the economy and enabled many of the unemployed to stay afloat. But the $600 a week in aid will expire after July, and Trump administration officials have said they oppose an extension.

Without the stimulus checks or an extension of unemployment aid, it’s unclear whether consumers will keep spending freely. In testimony to Congress last week, Federal Reserve Jerome Powell said he thought Congress should consider providing some form of extended unemployment benefits beyond their typical six-month period, on the assumption that joblessness will likely still be quite high by year’s end.

It’s a tough day for the market. The S&P 500 is currently down close to 2%. Today’s movement suggest concerns about the economy. The cyclicals are down the most while the defensive stocks are down the least.