Afternoon all.
The ADP Payroll Report was reported today, suggesting that approximately 20 million jobs were lost in April. When the official NFP data is issued on Friday, it will confirm this and give a clearer indication of the unemployment %.
The markets keep looking through all these type of reports on jobs losses, as we have repeatedly seen from Thursday jobless claims data which despite totally about 30 million over 6 weeks, enabled markets to rally on each release except one I think.
The big assumption is that these job losses are temporary but data is starting to appear now that this is in no way guaranteed. Companies are going bankrupt, companies are taking on lots of debt to survive, and with many companies withdrawing there 2020 guidance because they can’t forecast what’s going to happen, temporary furlough layoffs are turning into permanent job cuts as they try and reign-in costs and prepare for a lower demand future.
This is in stark contract to the rhetoric coming from the Trump administration who keep talking about a Q4 which will be better then anyone can believe!
Markets are going with the optimistic outlook and investors seem willing to chase prices higher nearly everyday despite this building undercurrent of negative news.
These job stories are definitely worth following because they are really starting to add-up and they are not all temporary which means the power of the consumer is going to be negatively effected in future months. And for an economy like the US where 70% of GDP is generated by consumer spending, it should be treated as bigger deal than it currently is in my opinion.
Stay safe, thanks for your time.
$SPX500 $DJ30 $NSDQ100
