Archives of “May 2020” month

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Trump/Saudi Arabia’s king agreed on importance of stability in global energy

  
  Analysis
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Trump, Saudi Arabia King speak: White House

A White House spokesman is out saying that
  • Pres. Trump and Saudi Arabia’s king in a conversation agreed on importance of stability in global energy markets
  • The leaders reaffirmed strong US – Saudi defense partnership
The tumble in crude oil prices has had to strong catalysts. One was Saudi Arabia flooding the market with supply after failing to reach an agreement with Russia on production cuts. The next was the impact from the global coronavirus. 1 influenced supply in a bearish way. The other influenced demand in a bearish way.
The price of WTI crude oil futures for the July contract is trading up $1.16 or 4.67% at just below’s $26 a barrel. Brent crude oil prices moved above the 30 level today after rising $1.38 to $30.84.

Stocks close the week with positive gains for the 1st time in 3 weeks

  
Analysis, US Market

Major indices close near session highs

The major US stock indices are ending the day with positive gains for the 1st time in 3 weeks. The major indices are also closing near session highs for the day.
The gains today were led by the small-cap Russell 2000 index. That index rose by 3.64%, far outpacing the next largest gain from the Dow industrial average (up 1.91%). The Russell 2000 index of small-cap stocks has been hit particular hard this year and still is lower by around -20% on the year.
The final numbers for the major indices are showing:
  • The S&P index +48.61 points or 1.69% at 2929.80. The high price reached 2932.61. The low reached 2902.88
  • The NASDAQ index close up 141.65 points or 1.58% and 9121.32. It’s high price reached 9125.98, while the low was at 9018.21. The NASDAQ index erased all declines this weekend is closing up on the year for the 1st time since March 4.
  • The Dow industrial average rose by 455.43 points or 1.91% at 24331.32. The high price reached 24349.90. The low extended to 24107.05.
Major indices close near session highs_

For the trading week, the major indices all closed higher led by the NASDAQ index:

  • S&P index rose by 3.5%
  • NASDAQ index rose by an even 6.0%
  • Dow industrial average rose by 2.56%
As mentioned, the NASDAQ index closed in the black since the 1st time since early March. The NASDAQ index was down some -26% from the end of year level at the year lows in April.The S&P index and Dow industrial average are still lagging will behind the gains from the NASDAQ.
The year to date percentage changes currently shows:
  • S&P index -9.32%
  • NASDAQ index +1.66%
  • Dow industrial average -14.74%
As mentioned the Russell 2000 index of small-cap stocks was the largest percentage gainer for the day. For the week the Russell 2000 rose by 5.41%, and for the year the index it is still lower by -20.36%.

European shares end the day with gains. Changes for the week are mixed.

  
Analysis, Global Indices

German Dax up 1.4%.

The European major indices are ending the day with gains.
The provisional closes are showing:
  • German DAX, +1.4%
  • France’s CAC, +1.1%
  • UK’s FTSE 100, +1.4%
  • Spain’s Ibex, +0.6%
  • Italy’s FTSE MIB, +1%
For the week, the major indices were mixed:
  • German DAX, +0.4%
  • France’s CAC -0.5%
  • UK’s FTSE 100, +0.6%
  • Spain’s Ibex, -2.1%
  • Italy’s FTSE MIB, -1.5%

White House’s Hassett and Kudlow doing the 1-2 spin job after jobs report.

  
  Analysis
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Both White House advisor is speaking

Kudlow:

  • does not think contraction has fully run course
  • US jobs report full of heartbreak, hardships
  • reopening phase will be intimate, spill into June
  • jobs numbers will continue to deteriorate
  • appropriate policies can make roaring economy in 2021
  • will see positive numbers and 2nd half of year
  • providing for virus safety should be fully deductible
  • having meetings with lawmakers of both parties
  • Trump weighing making business expenditures to make changes for coronavirus safety tax deductible
  • three quarters of today’s numbers are temporary layoffs
  • people expect to go back to work
Hassett:
  • unemployment numbers are heartbreaking
  • almost all unemployed expect to be re-hired by employer
  • next report could show 25% unemployment
  • payroll tax cut would only be a part of next package
Clearly there is a coordinated effort to use the word “heartbreaking” (and rightfully so).  They are also aware and touting that the numbers will get worse before they get better. The spin job is less rah-rah than the usual.
Stocks are not worried. They are trading at session highs as the two men finish their interviews.
S&P up 32.65 points at 2913
Nasdaq is up 81 points at 9060.62

Pres Trump: Does not believe China release the coronavirus on purpose

  
  Analysis

According to Fox news interview

Pres. Trump an interview with Fox news is out saying

  • he does not believe China release the coronavirus on purpose
  • he will decide soon on World Health Organization funding
  • he has not tested for coronavirus antibodies, but will probably do that soon
  • says he will provide Biden rapid testing if he needed it
  • jobs numbers are fully expected, no surprise
  • lost jobs will be back, economy artificially closed
  • he does know if Biden accusations are false or not
The tone on China has changed. Reports that China and US negotiators were getting together seems to have tilted the bias a little bit more toward a cooperative tone versus one that is accusing and blaming.  I am sure that will change and change again over time given the pattern and history.

US Nonfarm payroll for April tumbled -20500K vs -22000K

  
Analysis, Economy

The US jobs report for April 2020

us
  • change nonfarm payroll -20500 vs -22000K. Prior month revised to minus 870K from -701K previously reported
  • 2 month payroll revisions-214K
  • private payrolls felt -19520K versus -22000K estimate
  • unemployment rate 14.7% vs 16.0% est
  • change manufacturing jobs -1330K vs -2500K est
  • average hourly earnings MoM 4.7% vs 0.4% est
  • average hourly earnings YoY 7.9% vs 3.3% estimate
  • average weekly hours 34.2 vs 33.5 hours
  • labor force participation rate 60.2% vs 61% estimate
  • Labor Department said large number of workers classified as employed, but absent. That likely The unemployment rate at 8 number better than estimated him

The numbers came out remarkably near the estimates (give or take 1.5 million).  The unemployment rate was better-than-expected however the Labor Department did say that large number of workers classified as employed, but absent. If those tilt to unemployed the unemployment rate would be higher.

The US labor department is out saying that the unemployment rate would be 5% higher if that workers were classified correctly. That would take the unemployment rate to near 20% (19.7%).
The initial reactions:
  • USDJPY moves higher. The EURUSD and GBPUSD moved lower.  AUDUSD move marginally higher but as rotated back lower
  • US stocks are higher. The Dow is up 319 points.  The NASDAQ index is up 110 points
  • US yields are higher with the 2 year up 2.1 basis points the 30 year is up 3.0 basis points
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