965,000 folks filed “first-time” unemployment claims last week, which was close to 200k above expectations. Another 284k filed initial claims on the Pandemic Unemployment Assistance program; 161k was the estimate.
And of course the stock market’s rallying this morning!
Yes, to all of you with a little grey, or a little skin, on top, whom I’ve spoken with in recent months, the stock market is disconnected from economic reality like it’s nearly never been.
Now, that said, according to the University of Chicago, roughly 75% of those who received that extra $600/week last year were receiving more income than they were while working. The $300 extra unemployed folks are now receiving, per the study, amounts to more than their employment income for roughly half of them.
So, sure, why wouldn’t stocks rise when personal incomes are rising?
“Carts before horses”, “tails wagging dogs”, etc., memes are screaming in my mind…
Also loudly coming to mind are the immortal, timeless and ever-prescient (eventually) words of investment legend Sir John Templeton:
“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”
Moving on:
In Part Five of our year-end letter I talked about how China is helping our commodities trade, economist Peter Boockvar is talking about that this morning:
“China’s appetite for commodities remained robust. Crude imports rose 7.3% y/o/y, by 9.5% for iron ore, by 64% for steel products, by 13.3% for soybeans, by 34% for copper and 5.3% for natural gas.”
Asia closed mixed overnight, with an even up/down split among the 16 markets we track.
Europe’s looking up this morning, with 17 of the 19 bourses we follow trading higher as I type.
U.S. major averages are doing well as well: Dow’s up 100 points (0.32%), SP500’s up 0.23%, Nasdaq’s up 0.61%, Russell 2000’s up 1.50%.
The VIX (SP500 implied volatility) is down 1.76%. VXN (Nasdaq i.v.) is down 1.39%.
Oil futures are down 0.36%, gold’s down 0.16%, silver’s up 1.32%, copper futures are up 1.04% and the ag complex is up 0.22%.
The 10-year treasury is down (yield up) and the dollar is up 0.06%.
Led by oil services, energy, banks, silver and emerging market equities — while dragged by utilities*, Verizon, consumer staples*, materials* and the yen — our core mix is up 0.45% to start the day.
The president-elect will be speaking today about his economic support plans. $2 trillion is the rumored number. Sketchy breadth (note the down sectors*) notwithstanding, that’s certainly not hurting stocks this morning…
I love the following from Popper.
Sadly — given the growing frequency of Fed-induced financial bubbles, with each burst being bigger than the last — the second quote vividly describes today’s central banker:
“We are always learning a whole host of things through falsification. We learn not only that a theory is wrong; we learn why it is wrong. Above all else, we gain a new and more sharply focused problem; and a new problem, as we already know, is the real starting point for a new development in science.”
“When we are faced with a falsification, we can always talk our way out somehow or other; we can introduce an auxiliary hypothesis and reject the falsification. We can ‘immunize’ our theories against all possible falsification (to use an expression of Professor Hans Albert’s).”
Have a nice day!
Marty