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Tags: Coronavirus | invest | virus | jobs | economy | recovery | money

Investors Keep Pouring Money Into Market Despite VIrus Surge

Investors Keep Pouring Money Into Market Despite VIrus Surge
(Dollar Photo Club)

Joel Naroff By Wednesday, 01 July 2020 01:09 PM Current | Bio | Archive

INDICATOR: June Private Sector Jobs, Manufacturing Activity and Layoffs and May Construction Spending

KEY DATA: ADP: +2.37 million/ ISM (Manufacturing): +9.5 points; Orders: +24.6 points/ Layoffs: 170,219/ Construction: -2.1%; Private: -3.3%

IN A NUTSHELL: “Tomorrows employment report should be good, though there are some real questions about the May one that creates confusion about how strong it will be.”

WHAT IT MEANS: Our first reading of the pace that the reopenings are bringing back jobs comes tomorrow when BLS releases the June employment report. Today, the employment services firm ADP released its estimate of June private sector payroll changes and it was pretty much as expected. Large gains were recorded across all sizes of firms, while most industries added to their workforces. The only weak areas were information services, mining and management companies.

The ADP report is now consistent with the May BLS report and implies the June BLS should be as solid as the consensus forecasts have it. It looks like the job gains should be in the 3 million range.

In line with so many other reports, the Institute for Supply Management’s Manufacturing activity index popped in June. Orders and production surged, which hardly was a surprise. But also consistent with previous reports, employment and backlogs continued to decline, though at a slower pace. That does not bode well for employment or production.

Disappointingly, construction spending continued to decline in May. The government did its part in trying to get the economy going, but private sector housing and most components of nonresidential construction were off.

Layoffs continue at a huge pace, but at least the number of announced cutbacks slowed in June. Challenger, Gray and Christmas reported that June’s number was down 57% from the May total. Still, the second quarter total was twice as large as the previous record that occurred during the dot.com crash in 2001.

IMPLICATIONS: Tomorrow is a big day as we get both the employment report and the unemployment claims data. It looks like we could have another multi-million job gain, though who knows what the revisions to May will look like.

Regardless of what comes out, the claims numbers cannot be an afterthought. They indicate the extent to which companies and governments continue to shed workers. We need to get those number down dramatically as it is clear the reopening is not going as planned – or at least as planned by the early-openers. That has forced the more cautious governors and mayors to slow the process down.

By the way, how come no one is talking about how the hot weather will slow the spread of the virus? The sharpest increases in cases have largely been in the hot weather states of Florida, Texas, Arizona, and California.

But with investors, bad news on the virus front is viewed as good news and anything that points to some progress on the vaccine front is considered to be fantastic news. As one investment adviser mentioned to me, the strategy is simple: Invest. With the Fed backstopping the markets, that worked quite well in the second quarter.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.

© 2021 Newsmax Finance. All rights reserved.


JoelNaroff
With investors, bad news on the virus front is viewed as good news and anything that points to some progress on the vaccine front is considered to be fantastic news.
invest, virus, jobs, economy, recovery, money, amrket
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2020-09-01
Wednesday, 01 July 2020 01:09 PM
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