A Market Too Easy to Please… Even 1.3m in New Jobless Claims is Positive!

Is there anything that can knock the bulls off of their perch?

It wasn’t long ago that the markets would fret over initial jobless claims approaching anywhere near 300,000.

In the week ending 3^rd July, initial jobless claims increased by 1.314m, following a 1.413m rise in the week prior. Why the elation? Well, because economists had forecast a rise of 1.375m. Or because claims fell back to sub-1.4m levels.

Either way, the rise was still significant when considering the sheer number of jobs added in May and June.

It was interesting watching Trump’s unscheduled press conference that came off the back of June’s NFP numbers.

The media were more fixated on the weekly jobless claims figures. Mnuchin had suggested that, while getting a media grilling, a lag was to account for the anomaly.

Today’s stats suggest that the markets should have some concern over the continued unprecedented increases in claims.

One has to begin to wonder what it will take to give the baton back to the bears.

Riskier assets continue to ignore disappointing data. More importantly, the markets appear hell-bent on ignoring the recent jump in new COVID-19 cases.

This continued rise in jobless claims and new COVID-19 cases across the U.S must be a major concern.

It is hardly surprising that the U.S administration is attempting to spin the narrative. After all, Trump has very little chance of a 2^nd term if the polls are anything to go by.

U.S Political Anarchy

Perhaps it will take state governors to rebel against the wishes of the U.S President to wake markets from their zombie-like climb to towards new record highs.

But even then, the markets seem unperturbed by Joe Biden’s commanding lead in the Presidential Election Polls.

The U.S President has even attempted to show muscle by sending aircraft carriers to the South China Sea.

Not even such a demonstration of force led to any major stress…

At some point, however, Trump is going to need to get out the big guns. Blaming China for the pandemic has fallen on deaf ears.

The country’s acknowledgment of and the rise in the Black Lives Matter movement showed the administration’s detachment.

Trump’s desperation to reopen the U.S economy in time to see some form of an economic recovery was and remains alarming.

It is relentless. Granted, central banks are printing money like it is going out of fashion, so why not jump in.

But…

The U.S States Hit Pause

Reports continue to hit the news wires of U.S states seeing record rises in new COVID-19 cases. Worse yet, the most populous states are reporting healthcare systems at breaking point.

If reports are accurate that there is now airborne transmission, it is just going to get worse.

There is absolutely no cause for the blaming of Beijing or other governments for the spread of the virus across the U.S.

At some point, will the markets blame the U.S administration? As things stand, they may have. Perhaps if Trump begins to narrow the gap in the polls the markets will begin to fret…

The Week Ahead

Economic data has been on the quieter side this week. It’s a different story next week. If we see any weakening in the economic indicators the markets will need to pay attention.

Will corporate America attempt to put a positive spin on things as earnings season kicks off?

Trump may have whispered in a few ears in recent weeks just to ease some of the pain. And then, if analysts feel generous, it could even end up being market positive… After all, many are more interested in actual versus forecast. Let’s not even talk about forward guidance that should be vaguely gloomy at best.