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: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd 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 helf in client accounts.