Good Thursday A.M.,

Day 2 of the employment picture has unemployment claims better (far less) than forecast. Reading the news wires, pundits across the country scratching their heads over the disparity between yesterday’s ADP employment report being dismal for new jobs and this week’s new unemployment claims. Are the reports telling two different economic stories? I don’t think so and I don’t think the markets think so. When we dissect the data, ADP is looking over a month of job openings. Most companies are reducing staff and not hiring yet (and I hate to say it, but especially since any company who took the PPP money is now out of the look-back period and does not need to keep the same staff).

Today’s unemployment claims were lower I imagine because the Federal bonus unemployment pay has lapsed. For some, no reason to file for unemployment if you can make more money elsewhere (Uber, Grub Hub, etc.). A crazy statistic is that 73 cents of every dollar of bonus unemployment was immediately spent back into the economy. That’s a lot of cheddar being reinvested. No $600/week, no $438/week per person back to the economy. How do you think that will impact sales, manufacturing, GDP? There will be a new stimulus package. I don’t know we will get a congressionally-approved one before congress goes on vacation tomorrow but if not, I would expect at least an executive order giving at least $200 in bonus unemployment wages this week.

Equity markets should be up today on the unemployment report but are not. They are realizing that there is more behind the data than the number, new stimulus will weigh heavy, and that with 90 days left before the election, there is not a clear picture on the shape of Washington. A liberal congress and White House would not likely be interpreted positively by markets. Bonds are doing well again, but have been flirting with both, died of the current trading channel. I am typically bond bullish, so I think floating is the call right now, but that can change quickly. If you do float today just be careful, as tomorrow brings the Non-farm payroll numbers and it has an uncanny ability to create volatility. It is a risk to float ahead of a jobs report.

Please be safe and remain healthy, make today great!