Initial claims for unemployment fall a bit but still signal an economy losing momentum
Initial claims for unemployment dropped to 814,000 last week from 873,000 the prior week, the Labor Department reported today, Thursday, December 31.
Morning Briefing
Lots of trading action but no trend so far from Santa Claus
Today, Wednesday December 30, is pretty much the reverse image of yesterday’s stock market action. Traders are having fun–and making money, I’d hope–in the day to day action but I don’t see a trend in this market that might extend into 2021. So, for example, the Standard & Poor’s 500 was up 0.13% today at the close in New York after falling 0.22% yesterday
More, more (stimulus), cries the stock market
Yesterday stocks moved higher on news that President Donald Trump had actually signed the combined coronavirus stimulus/relief and government spending bill. I guess after contemplating the possibility of no bill and another government shutdown, even $600 checks seemed like a big deal. Today, not so much. Worries that Republican Senate Majority Leader Mitch McConnell will prevent the House-passed bill increasing the size of those checks to $2,000 from even coming up for a vote on the floor of the Senate were enough to trigger a mild retreat in stock prices.
Welcome back Santa Claus rally
With President Donald Trump signing the coronavirus stimulus/relief and fiscal 2021 government spending bill, financial markets can go back to their favorite holiday week activity–using the opportunity afforded by shrunken volumes to push up stocks. As of the close on December 28 in New York, the Standard & Poor’s 500 was up 0.87% and the Dow Jones Industrial Average was ahead 0.68%. The NASDAQ Composite was higher by 0.74% and the NASDAQ 100 had gained 1.01%. The Russell 2000 small cap index was a laggard with a 0.38% loss. The iShares MSCI Â Emerging Markets ETF (EEM) also lagged on continued Alibaba (BABA) turmoil in China with a gain of just 0.28%. Too soon to tell decisively, where the very short term action will be, in my opinion. But the day’s action is suggestive of where we can look for gains.
On Sunday night President Trump signed the coronavirus stimulus/relief and government spending package
After criticizing the coronavirus stimulus/relief and government spending bill as a “disgrace” and threatening a veto President Donald Trump unexpectedly signed the bill on Sunday night.
Everybody leaves Washington with everything still hanging fire, but markets still assume President will sign coronavirus bill
Congress dispersed for Christmas. President Donald Trump headed to Florida. And there’s still no telling whether President Trump will, as he’s suggested via Twitter, whether he will veto the huge coronavirus relief/government spending bill.
The U.S. economy looks to be slumping in newest data
Okay, so the news on new claims for unemployment was sort of not too bad. About 869,000 people filed initial claims for unemployment in regular state programs for the week ended on December 17. That was lower than in the prior week but still above the levels in early November. Another 398,000 people filed for Pandemic Unemployment Assistance, one of two federal programs to expand jobless benefits  set to expire this month. But that was the best news on the economy today. A report from the Commerce Department showed that personal income fell in November for the second straight month and that consumer spending fell for the first time since April.
Consumer confidence plunges in December–and expectations are mixed
U.S. consumer confidence unexpectedly fell in December to a four-month low. The Conference Board index dropped to 88.6 from a downwardly revised 92.9 in November, according to a report Tuesday. That missed all estimates in a Bloomberg survey of economists that had called for a rise to 97 in the index. At least that’s the headline story.
Saturday Night Quarterback (on a Monday) says, For the two weeks ahead expect Ho, Ho, Huh! Is this the shape of this year’s Santa Claus rally to come?
The major indexes aren’t showing much of a move today even on the news that a new coronavirus stimulus/relief bill is like to pass today (along with the massive fiscal 2021 spending bill for the rest of the government.) I think a good part of that lack of reaction comes since the market has been assuming a stimulus bill would pass for days if not weeks and the actual bill is priced in to a great degree. That isn’t to say that there weren’t big moves to the upside of the sort that I expect could be the order of the day during the low volume trading days around the Christmas and New Year’s holidays. In many years bulls try to use the low trading volumes during these days to generate moves to the upside.
Stocks aren’t happy as Congress misses deadlines on spending bill and coronavirus stimulus/relief effort–but they’re not too unhappy
The Standard & Poor’s 500 closed down 0.35% and the Dow Jones Industrial Average dipped 0.415. The NASDAQ Composite was off 0.07% and the NASDAQ 100 slipped 0.11%. The small cap Russell 2000 dropped 0.41%. The iShares MSCI Emerging Markets ETF (EEM) closed off 0.22%. Those aren’t bad results for the day–considering. Considering that Congress is watching the clock tick down to a government shutdown at midnight tonight without a stopgap or a complete spending bill for the fiscal year that began on October 1, 2020. Considering that Congress  has not been able to resolve the remaining disagreements and pass a new coronavirus stimulus/relief bill. Federal programs such as unemployment extensions, unemployment for gig workers and the self-employed, and a moratorium on evictions all expire on December 31.
Initial claims for unemployment even worse than expected as coronavirus shutdowns bite
For the week ended December 12, the number of Americans filing initial claims for unemployment in regular state programs rose on a seasonally adjusted basis to 885,000, an increase of 23,000 from the previous week. That was the largest gain in the last three months. A Bloomberg survey of economists had projected 818,000 initial state claims and 5.7 million continuing claims on an adjusted basis.
Surprise? Maybe Congress will pass a new coronavirus stimulus/relief package this week
Knock me over with a feather. Leaders of both parties in Congress look to be near a deal on a $900 billion coronavirus stimulus/relief package with passage possible by the end of the week, the Washington Post is reporting this morning.
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