Good Morning on this thankful Thursday and last day of April,
Some tough pills to swallow today for sure. More than 3.8mm people filed new unemployment claims last week. That brings the total job losses in 6 weeks to more than 30mm. The jobs report is released next Friday and I can’t imagine what that headline unemployment number will look like. Could it be 12%, 15%, 20%? It will be big and disheartening. Bonds are up slightly today with the yield on the 10-year back down to .59%. The DOW is down 300, is this the beginning of the slide below 20k, not sure if this is it, but I do expect that to come. Jobless claims are already 4 times the number we saw in the 2008 meltdown. Meanwhile personal spending dropped a whopping 7.5% while personal income dropped a full 2%. These are just devastating numbers, and again this is only 6 weeks in. How much worse will these numbers be in 30 days? I am not trying to be negative, I am just sharing the reality of where we are. I do know this will pass and we will all get through it. I just know it is time to buckle up buttercup, its gonna be a bumpy ride.
The Fed was out yesterday with the biggest cannon you could imagine. They will continue to support the economy by buying and loaning essentially whatever is needed for as long as it is needed. Chairman Powell did call all current economic forecasts “highly uncertain,” and mapped out why he believes the economy may go through a series of peaks and troughs for at least a year or more as the world battles to keep the virus under control. The Fed is everyone’s richest Uncle, so have some faith there. What that means to our world is that rates should show continued improvements over the coming weeks as the market settles (I would say normalize but.. this is not normal).
The good news is that there are several positive reports on attacking the virus. The drug therapy Remdisivir is showing positive results and there is a vaccine trial underway in the UK which should have some results by July. We will beat this; it just takes time. If you would like to see an interactive graph (the best I have found) on the virus, here it is.
To be thorough on updates where the economy is, here are a few graphs from the WSJ to make the point. The important thing to know is that the gains will be greater on the way down than the losses we have.
The first-quarter GDP contracted by 4.8% (annualized), the biggest decline since 2008.
Please stay safe and remain healthy.
Make today great.