Better jobs report than widely expected?
https://www.bls.gov/news.release/empsit.nr0.htm
Well, I like the trend lately ?. Talk of a major drop in August. Still trying to figure this all out. Seems like everyone is just guessing at this point. Anyone’s insight is welcomed
PPP program for businesses over at end of July.
Today’s job numbers also aren’t new jobs being created - it’s people furloughed going back to work with reopening in some sectors. Their UE benefits in many states ends if they don’t go back to work when mandated by their employers.
Stock market is divorced from reality.
One of the tv stations did a “breaking news- special report” this morning when the jobless rate was about to be reported, and she was clearly genuinely shocked when the jobless numbers went down a bit (its still really high). Whatever the reason, I am happy to see the market improve.
My coworker talked about this today and, yes, while we are happy that our portfolio is doing well…it’s amazing/nuts that no matter what happens, the top half (or whatever the percentage) is still not impacted. The world can still be burning (i know it’s exaggerated and traumatic), and the rich is still doing fine. The gap keeps widening.
“Still, economists warn that it will take far longer for the economy to climb out of the hole than it did to fall into it. Job openings have begun to rise but remain far below normal levels. Millions more people have been laid off in the weeks since the data released Friday was collected in mid-May. And the trillions of dollars in government assistance that have helped keep the economy on life support may be nearing their end.“
“We might have climbed one rung of the ladder out of the hole, but it’s still a long ladder,” said Ian Shepherdson, chief economist of Pantheon Economics.
“The Labor Department cautioned that data-collection issues that have plagued the agency throughout the crisis continued last month. Some temporarily jobless workers were characterized as “employed” in May; had they been counted correctly, the department said, the unemployment rate would have topped 16 percent.”
The last 50 days have been the S&P’s best since 1933, up 40%+ since Mar 23 lows.
Many headwinds still out there though, who knows where it goes from here.
Stock market loves trump. He can do no wrong with the stock market. You gotta give him that.
60% of American households own stocks. I don’t think that number includes those on fixed pensions; the pension plans owning stock. So this is really good news.
For the 1% in particular since the richest 1% owns HALF of all stock equity. The rich get richer…
More analysis of the jobs report:
https://fivethirtyeight.com/features/mays-jobs-report-brought-good-news-but-not-for-everyone/
However, (direct and indirect) stock ownership is highly concentrated, even though a larger percentage of households may own a small amount of stock. In 2016, the wealthiest 10% of households owned 84% of stocks (including 40.3% owned by the wealthiest 1%), according to table 10 on page 53 of https://www.nber.org/papers/w24085.pdf .
It might be people buying in wagering that all will go well with the reopening experiment and they want to get in when things are “low.”
Obviously, if folks think it won’t go well with more businesses going under if things get worse and consumers don’t spend, it’s a good time to sell.
I’ll admit to readjusting - buying some and selling others. Mostly I’m holding though. It’s nice to see the total amount reach pre-selloff levels.
Table 17b on page 61 of https://www.nber.org/papers/w24085.pdf indicates that in 2016, 13.9% of households directly owned stock, while 46.6% indirectly owned stock (including 43.5% through pension accounts). For all stock holdings, 49.3% owned stock (note that some have both directly owned and indirectly owned stock), including 24.6% who owned stock worth $25,000 or more in 1995 dollars (about $39-40k in 2016 dollars).
The market is not divorced from reality. It’s an incredibly efficient synthesizer of news and information.
It’s a leading indicator and really a function of pv of discounted future earnings, dividends and cash flows.
There is quite a dynamic at play. And much of it has to do with esoteric issues like dollar strength, shrinking risk premiums and risk free rate alternatives. It’s also a reflection of global desire for us assets for a number of reasons.
And the market doesn’t know or like anyone in particular. It does digest economic info and tax policy into the equations. But a president or another. No. Policies. Yes. As it relates to cash flows references above.
If you have a pension, 401k or 529 plan it’s very good.
If you live in a state that has budget deficits and unfunded pension liabilities this is good.
If your child wants to go to a college with a modest endowment this is good.
A big endowment so they can offer great aid. This is good.
If you are a city or town trying to keep public works on schedule and need to raise money in the municipal markets. This is good. Cost of carry for the taxpayers is directly related to tax revenue and pension funding. Really important in poor communities and tax authorities.
Yes it helps the 1 percent. It really helps the other 99 percent too.
Now where we go from here is tbd. Valuations have come up so quickly. Let’s not root against our shared interests.
So today I learned that an unemployment rate of 13.3 percent is good.
Proves that everything–especially context–is relevant.
It does not necessarily mean good, just that it was better (or less bad) than expected.
This is similar to how a company can report record earnings, but its stock drops because people were expecting an even higher earnings number.
I’m not so sure going up so much so quickly is good. It all depends upon who is doing the investing and how much they can weather another crash should the reopening experiment go wrong.
'Tis better than going down though if we’re ranking things.
Well I for one am totally confused. I sold everything and went to cash a couple weeks ago, after I happened to thankfully recover nearly all I had lost from March. I figured the May rally was temporary, that we are in for another market crash once the second wave hits, and that it was better to safeguard what I have than to risk it anymore (I am five years away from when I want to retire). Now I am wondering if I should get back in. Most of me wants to keep it all out until, say, October, to see what’s going on. Maybe I’ll lose a ton of potential earnings, but at least I won’t lose what I already have.
My friends who are far more educated in the stock market than I am also seem a bit bewildered.
So you sold low and now want to buy high?