Thursday, August 13, 2020
Stock market futures responded favorably to new weekly Initial Jobless Claims this morning, which came in with a headline of “only” 963K new claims last week — down 228K week over week from a slightly adjusted 1.191 million, below the consensus estimate 1.08 million and representing the first week in several months we’ve seen this headline figure beneath 1M new weekly claims. The Dow and S&P has been down double digits ahead of the release; now both are tracking near a flat open.
Continuing Claims improved, as well: 15.486 million came in 600K lower than the expected week of August 1st (Continuing Claims are a week in arrears), and now a sizable margin down from when we were posting -20M claims per week all through the month of May. Since the pandemic hit the U.S. economy, jobless claims hit more than 55 million Americans total.
Analysts had been looking for evidence of the CARES Act expiration bringing flat-to-negative results on weekly jobless claims, with no new federal money allotted to alleviate domestic joblessness. The Great Reopening has been spotty, and more recently has seen some setbacks with new COVID outbreaks in school districts and sports teams, among others, so without further monetary support these weekly jobless numbers — not to mention August’s monthly jobless numbers — will start going the other direction.
It turns out defeating a coronavirus pandemic is not easy, especially with piecemeal solutions state by state, community by community. The pandemic, which initially hit the Seattle suburbs and then notably New York City and the surrounding Tri-State area, has now taken its show on the road to inland America — ex-urbian and rural communities in the Midwest, South and elsewhere.
We are still at least a month away from any meaningful data on phase 3 testing from vaccine candidates, and even if stellar results ensue, completing testing and then manufacturing and distributing the vaccine will take time. Until then, we can expect further spotty progress in the U.S. economy — especially if there is no federal support from Congress, which reportedly is still at odds on political grounds.
When the CARES Act was put forth, it was done with admirable expediency. Perhaps that had something to do with a crashing stock market and all-time record ballooning of unemployment data. Nowadays, with major indexes knocking on the door of new all-time record highs, perhaps Congress does not feel the same urgency to move quickly?
The new July Import Price Index came in slightly ahead of expectations: 10 basis points up to +0.7% — halving the headline +1.4% for June, which was the highest monthly total seen since 2011. Export Prices doubled expectations to +0.8%, depicting a stronger international trade environment as the global economy burns off plenty of pent-up demand following months on relative lock-down.
We see this earlier trying times in global trade in the year-over-year numbers: -3.3% on Imports, -4.4% on Exports. So we still have some room to go upward before we’ve reached our pre-COVID levels of trade. These figures are further complicated by the ongoing “trade war” between the U.S. and China, which occurred during the seemingly prehistoric era of last year.
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