A JPMorgan Chase measure of cross-asset complacency that includes valuations, portfolio positioning, and price momentum is nearing its higher level since the dot-com bubble burst in 2000. Global investors are the least fearful they’ve been in two decades
Before the House and Senate can move the Biden administration’s $1.9 trillion coronavirus package ahead using a process called reconciliation, individual committees need to approve their pieces of the budget. Today, February 12, the House Ways and Means Committee voted to approve $593.5 billion in $1400 stimulus checks and a $3,600 annual child tax credit as part of that Biden budget. The full House is on a schedule to vote on the complete package during the week of February 22.
In a speech on Wednesday, Federal Reserve chair Jerome H. Powell said that the unemployment rate in January was close to 10%, not the 6.3% rate reported by the Labor Department last week.
The U.S. economy gave new signs that the recovery has stalled. Today, February 5, the Bureau of Labor Statistics reported that the U.S. economy added just 49,000 jobs in January. Economists surveyed by Bloomberg had expected the economy to add 100,000 jobs in the month. The government statisticians also revised downward the jobs performance of the economy November and December. In December the revised figures say, the economy lost 227,000 jobs rather than the initially reported 140,000. In November the economy created 72,000 fewer jobs than first reported.
New claims for unemployment in regular state unemployment programs for the week ended January 30 fell to 779,000 on an adjusted basis. That was a drop of 33,000 from the previous week and it marks a third straight weekly decline.
As of 3:15 p.m. today, February 2, in New York, shares of GameStop (GME)were down 56.22% to $98.50. That a big drop from the January 27 closing high of $347.51, but it’s still significantly above the $17.25 price on January 4. Other stocks that have ridden the Reddit WallStreetBets fever for short squeeze horses are down today too. AMC (AMC) is off 39.70% to $8.02. First Majestic Silver (AG), the big silver play of the last few days, has given up 24.28% to $16.75. Bed Bath & Beyond (BBBY) is off 14.64% to $25.77. American Airlines (AAL), an early short squeeze play, slipped 1.16% to $17.65. The only potential short squeeze bet (if it was, that is) that’s still climbing is vaccine pill biotech Vaxart (VXRT), which was up 34.30% at 3:15 and looks to be riding momentum into the close. (The shares were up 54.43% as of 3:40 p.m.) Vaxart does bring this question to mind: So if the money is coming out of GameStop, etc., where is it going?
I looked at my Jubak Picks Portfolio with more than a tinge of seller’s remorse this morning. I sold shares of First Majestic Silver (AG) out of that portfolio on Friday, January 29, after the stock rose 21.38% on Thursday. That gave me a gain of 45.52% since I began this position on July 6, 2019.I argued in justification for this sell that the attempt by individual investors on Reddit’s WallStreetBets forum to force a short squeeze in silver, as they had in GameStop (GME), were likely to fail because there was such a big stockpile of physical silver ready to enter the market. So I took my profit. Only to have the stock climb an other 21.3% today, February 1, as of 2:30 p.m. New York time as individual investors did indeed drive up the price of silver futures. The Shares Silver Trust (SLV) was up 6.40% as of 2:30 New York time today as the intraday price of silver limbed to the highest level since 2013. And then I thought about that seller’s remorse.
U.S. GDP growth slowed in the fourth quarter, gaining just 1% from the third quarter. For the full year the U.S. economy contracted by 3.5%. That makes 2020 the first time that the economy has contracted for a full year since 2009 and the Great Recession. At the bottom of that recession that economy contracted by 2.5%. 2020 is also the worst year for economic growth since 1946 when the economy shrank by 11.6% as the country demobilized after World War II. Consumer spending slowed in all 15 categories tracked by the Bureau of Economic Analysis. The sectors that had powered the recovery in the third quarter–restaurants and hotels, for instance–reversed. The growth in spending on cars and health car also slowed from the acceleration in the third quarter. So why is this good news as far as the stock market is concerned?
As of 3 p.m. today, January 28, shares of GameStop (GME) were down 30.02% to $243.18. At the height of the Reddit-facilitated short-squeeze the stock traded at $357 just yesterday. The stock began 2021 at $17.25 on January 4. So we’re talking about a big gain in shares of what is, at bottom, a fading brick and mortar software gaming mall-centric retail chain. Individual traders have successfully used the big short position in the stock to squeeze short-sellers into buying to cover the bets that the stock would crumble. Today, though, some of the air has come out of the GameStop play–and out of other heavily shorted stocks that have staged their own rally in GameStock’s wake.
Johnson & Johnson (JNJ) said on its regular quarterly earnings call today, Tuesday January 26, that it expects to release data from its COVID-19 vaccine trials soon. Like next week soon.
On days when Wall Street focuses on the likelihood of Congress passing a new $1.9 trillion coronavirus stimulus/relief package, stocks rally. Why not? What’s not to like, in the short term, about putting $1.9 trillion into the economy? On days when Wall Street focuses on all the heavy lifting that it take to pass such as bill and on Republican opposition to the package stocks waver as they did last Friday. And on days like today when Wall Street can’t decide what it thinks about the prospects for the Biden administration’s coronavirus package, stocks dither
Initial jobless claims in regular state unemployment programs declined–on an adjusted basis–by 26,000 to 900,000 for the week ended January 16, the Labor Department announced today, January 21. On an unadjusted basis, initial claims for unemployment dropped by more than 151,000 to 960,668. Continuing claims in state programs–the number of people receiving ongoing jobless benefits–decreased by 127,000 to 5.05 million in the week ended January 9. In the week ended January 2 there were 3.03 million continuing claims for Pandemic Emergency Unemployment Compensation, which provides federal extended jobless benefits for those who have exhausted their regular state benefits
