MARCH’S UNEMPLOYMENT DATA

I believe March’s jobless data was the tip of the proverbial iceberg.  Non-farm payrolls fell by 701k.   The reference period was based on the week ending March 12 thus suggesting companies were firing workers considerably earlier than thought.  Losses were concentrated in the service sector with leisure/hospitality plunging by 459k.

Bloomberg is suggesting April jobs losses will be at least 30 times larger, in the vicinity of 20 million.  In other words, it doubled the number of jobs (10 million) lost during the past two weeks.

Bloomberg writes the worst nonfarm payroll print was 1059k in September 1945, 838k in 1949 and 800k in 2009.

A loss of 20 million jobs would erase 20 years of job creation in the course of two months.

The loss of wages and salaries is gargantuan.  It is hoped the funds from the stimulus will help mitigate the loss of wages and support small businesses.  About 60 million workers or around 48% of the workforce were at small businesses in 2018 according to the SBA.

Last week I referenced an optimistic Citibank report stating that it believes the economy will reopen quicker than planned, suggesting 60% of the workforce will be working by the end of the month and 95% by the end of May.  The basis for this optimistic outlook is increased testing.

As noted I share this optimistic outlook.

Some have accused me of being Pollyannaish.  Others naive or uninformed.  While others stating hope is not a strategy.

I don’t know how to respond to any of the above other than I am attempting to look at the data in a rational and objective manner, focusing on what is known, acknowledging assumptions change hourly as more data is obtained.  [Note:  35 years ago, I did graduate with a biology degree]

Naïve or uninformed, no I refuse to catastrophize like most in the media and the blogosphere, searching for more information.  And hope, yes this is a strategy.

Like most I have a pit in my stomach, but I am refusing to go there.  Today shall to pass, perhaps within the next 7-14 days in the NY and NJ area if the virus takes the same path as in China, South Korea, Japan, Israel, Italy, Washington, California and Oregon.  I will write other hotspots could occur but the population density is not as great as in the Northeast.

We will overcome and tomorrow will arrive, a tomorrow however much different than yesterday and today.

Last night the foreign markets were up.  London was up 1.95%, Paris up 3.45% and Frankfurt 4.39%.  China was down 0.60%, Japan up 4.24%, and Hang Sang up 2.21%.

The Dow should open considerably higher on virus optimism.   The 10-year is off 17/32 to yield 0.65%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.