Bellevue Perspectives

Monday Minute

  • April’s ADP private employment report came in last week as bad as expected, declining 20.236m vs. 20.550m consensus.  March’s figure was revised down to -149k from -27k, underscoring that the employment backdrop had weakened earlier than previously assumed.  This is the weakest print in the series history, by a long shot (previous low was –835k in Feb 2009).  The service sector accounted for most of the weakness (-16.007m in services vs -4.229m in the goods producing sector), and smaller firms (1-499 employees) experienced more layoffs (-11.27m) than larger firms, with 500+ employees (-8.96m).  On Thursday, the Department of Labor reported that initial jobless claims for the week were 3,169,000 a decrease from the prior week but above expectations.  While leisure sector employment will suffer outsized job losses in the near term, and remain weak longer term, other sectors, including technology and health care, should strengthen in the months ahead, and likely drive job growth longer term.  In addition, manufacturing and construction employment should also show long-term growth.
  • Friday morning before the opening bell the Labor Department reported that the economy lost an historic 20.5 million jobs during April, bringing total employment to its lowest level since February 2011. Estimates were for losses of 21.5 million.  The unemployment rate jumped 10.3 percentage points to 14.7% (consensus estimate was 16%), representing the largest month over month increases in the history of the data. The labor force participation rate — which accounts for the number of Americans looking for work or currently working – fell 2.5 percentage points to 60.2%, representing the lowest rate since January 1973.  There seems to be a disconnect between main street and wall street as investors look past the expected numbers and continue to push the markets higher on the hope that this could be the worst of the data as economies begin to reopen.  The QE/liquidity the Federal Government is injecting into the system and the market is unprecedented.  Per Blackrock, Fed Purchases through year-end will equate to nearly 20% of the US Aggregate Index, taking their balance to roughly 45% the size of that index. Moreover, Fed Purchases through year-end will equate to nearly 1/3rd of US GDP, and equate to nearly 28% of the S&P 500 market cap.  Those are very large numbers that will continue to impact the direction of the markets.
  • The stock markets are mixed today with Dow Industrials down .45%  and the tech heavy Nasdaq trading higher by .78%.  The “stay-at-home” economy continues to garner investor attention as many feel the trend may continue long after economies get back to normal.  That “normal” may look a little different and many of the big tech players are creating and have created the platform to enable it.

HighTower Bellevue is registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and Hightower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of Hightower Advisors, LLC, or any of its affiliates.