July 10, 2020
Initial Jobless Claims continue to decline slowly and remain at levels well above anything witnessed since the advent of unemployment insurance. The highest weekly total prior to this year was 692k. Last week 1.314 million people filed for insurance. Continued claims continue to drop but remain stubbornly high at 18 million. Most concerning within this report is that persons claiming benefits in all programs, Federal and state, rose from 31.5 million to 32.92 million. The data however, is two weeks old. This LINK contains the full set of data if you are interested.
The CBO released the latest Monthly Budget Deficit, which reports that the federal deficit for June was $863 billion. The current deficit for the fiscal year (October 1, 2019 – September 30, 2020) is already $2.7 trillion. In regards to June’s deficit, there have only been five annual deficits that have been greater. Four were in the years surrounding the financial crisis and the other was last year. The total annual deficit is already nearly two times the largest annual deficit from 2009 with three months remaining.
Yesterday we discussed the sharp decline in consumer credit. The graph below, courtesy Brett Freeze puts historical context to the drop.
Yesterday, the NASDAQ was up by .92% while the Dow fell by 1.39%. It seems that such divergences have been occurring with increasing frequency. As shown below, we analyzed historical data to see just how uncommon this is. To qualify as a daily divergence in the graph, one of the indexes needs to be up or down by more than half a percent. At the same time, the other index had to move in the opposite direction. For example, if the Dow was down .75% and the NASDAQ was higher on the day, that daily instance would qualify. The graph shows the number of such instances in rolling 50 day periods. Over the last 50 days, it has happened 11 times or more than 20% of the time. The last time there were 11 instances in a 50 day period was during the Financial Crisis. Before that in 2002.