Unemployment Plateaus, Good News for Banks, and a Look at Post-Recession EPS Recoveries
June 26, 2020 | FIRESIDE CHARTS
Unemployment continues to dominate headlines in the COVID-19 era, and the onslaught of new claims isn’t slowing as quickly as many had hoped. Last week’s numbers showed only a 2% decline in new claims as they top 1 million for the 14th straight week… and continuing claim numbers aren’t faring much better. The manufacturing recovery continues to offer some signs of hope, as does reinvigorated crude oil production—both hard-hit sectors may soon be looking to repopulate their workforces as activity picks up. Yesterday offered some good news to banks as the Fed put a cap on dividend payouts and stock buybacks following the industry’s annual “stress test” and regulators announced some bank-friendly updates to the Volcker Rule. Yesterday also saw new COVID-19 cases rise at record rates for the second day in a row though, and many badly battered sunbelt states are now hitting pause on reopening. Though the markets remain largely resilient, historical post-recession EPS recoveries were anything but quick. Are we in for more of the same, especially if states have to go beyond “hitting pause” and start down the path toward another lockdown?
1. New unemployment claims barely declined last week. Continuing claims are back above 30 million or ~15% of the U.S. workforce.
Source: WSJ Daily Shot, from 6/26/20
2. Another nice rebound…
Source: WSJ Daily Shot, from 6/26/20
3. As crude prices climb above $40/bbl, production starts to increase…
Source: WSJ Daily Shot, from 6/25/20
4. While the U.S. shows signs of recovery, travel bans and obvious Covid restrictions are still keeping international trade at depressed levels…
Source: WSJ Daily Shot, from 6/26/20
5. Banks got some good news yesterday:
Source: WSJ Daily Shot, from 6/26/20
6. Just how far ahead are the markets looking?
Source: WSJ Daily Shot, from 6/26/20
7. Despite some dividend cuts and suspensions, stocks have a higher yield than 10-year U.S. Treasuries…
Source: WSJ Daily Shot, from 6/25/20
8. QE is not just for developed nations anymore…
Source: WSJ Daily Shot, from 6/25/20
9. Covid and politics… did leaders take it seriously?
Source: WSJ Daily Shot, from 6/25/20
10. Mask wearing needs to be the new normal until a vaccine or cure…
Source: WSJ Daily Shot, from 6/25/20
Disclosure:
Copyright © 2024 Beaumont Capital Management LLC. All rights reserved. All materials appearing in this commentary are protected by copyright as a collective work or compilation under U.S. copyright laws and are the property of Beaumont Capital Management. You may not copy, reproduce, publish, use, create derivative works, transmit, sell or in any way exploit any content, in whole or in part, in this commentary without express permission from Beaumont Capital Management.
Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.
This material is provided for informational purposes only and does not in any sense constitute a solicitation or offer for the purchase or sale of a specific security or other investment options, nor does it constitute investment advice for any person. The material may contain forward or backward-looking statements regarding intent, beliefs regarding current or past expectations. The views expressed are also subject to change based on market and other conditions. The information presented in this report is based on data obtained from third party sources. Although it is believed to be accurate, no representation or warranty is made as to its accuracy or completeness.
The charts and infographics contained in this blog are typically based on data obtained from third parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.
As with all investments, there are associated inherent risks including loss of principal. Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Sector and factor investments concentrate in a particular industry or investment attribute, and the investments’ performance could depend heavily on the performance of that industry or attribute and be more volatile than the performance of less concentrated investment options and the market as a whole. Securities of companies with smaller market capitalizations tend to be more volatile and less liquid than larger company stocks. Foreign markets, particularly emerging markets, can be more volatile than U.S. markets due to increased political, regulatory, social or economic uncertainties. Fixed Income investments have exposure to credit, interest rate, market, and inflation risk. Diversification does not ensure a profit or guarantee against a loss.
The federal funds rate is the interest rate at which banks lend money to each other overnight. A treasury yield is the interest rate the U.S. government pays on its debt, and the annual return that investors can expect from holding a U.S. government security.
Please contact your BCM Regional Consultant for more information or to address any questions that you may have.
Beaumont Capital Management LLC, 125 Newbury St. 4th Floor, Boston, MA 02116 (844-401-7699)