4 Things To Watch This Week

With massive uncertainty everywhere from the economy, to the coronavirus, to unemployment, to the protests and riots, the upcoming election, and now President Trump and the First Lady having the coronavirus…

Things are nuts.

Over the last few weeks, I’ve shown you things I’m watching every week to see if the economy is recovering or stagnating so you can make better investment decisions.

Today I want to show you 4 More Things To Watch This Week that will affect your portfolio and the economy going forward.

  1. Earnings Season Continues Rolling

Earnings season is here in full affect and companies are reporting generally poor earnings in the 2nd quarter of 2020.

This was expected due to the lockdowns and quarantines.

Why?

Because an estimated 70% of United States economic output is based on consumer spending… This is us doing stuff.

So far banks, oil companies, restaurants, hotels, airlines, and car companies are all big losers of this earnings season.

And tech companies and food producers and sellers are the biggest winners.

Seeing quarterly and yearly earnings helps me understand what’s going on in the market via individual stocks…

Another major thing to keep an eye on – especially during crazy times like now – are when the US government releases updated financial and employment data.

Why do I watch this?

For the same reasons I watch quarterly and yearly stock earnings… To help spot potential trends you can and should take advantage of.  And, to help you avoid serious issues.

Here are the important government data releases I’m watching this week.

2. Markit Services PMI – Releases October 5th

This is like the Markit Manufacturing PMI we’ve talked about in past weeks.

But this one focuses on the service industry instead of manufacturing.

It’s important to watch because it shows how much companies are buying and selling services.

And because 70% of US GDP is based on consumption – us buying and selling stuff – this is super important.

For reference here are the numbers for the last year…

Any number above 50 shows economic expansion.  And any number below 50 shows economic contraction.

We saw a huge drop in March-May 2020… And then a huge rebound in June-August. And then a slight fall in September’s numbers.

I want to see if this falls again toward 50 – which would show a slowing economic recovery.

Or if this rises again – which would show the recovery is picking up.

3. Initial Jobless Claims – Releases October 8th

Pay attention to the trend.

From March-June this number declined on a weekly basis.

The absolute numbers were horrific. But the decline was a great sign we’re headed in the right direction in terms of employment.

Then when coronavirus cases began exploding in July, unemployment started rising again.

  • Eight weeks ago, this fell below 1 million job losses for the first time since March 2020.
  • Seven weeks ago, this jumped back to 1.1 million new jobs lost.
  • Six weeks ago, this was above 1 million new jobs lost again.
  • Five weeks ago, this fell below 900,000 new jobs lost.
  • Four weeks ago, this was below 900,000 new jobs lost again.
  • Three weeks ago, it was below 900,000 new jobs lost again.
  • Two weeks ago, it was below 900,000 new jobs lost again but job losses rose slightly.
  • And last week this fell below 800,000 weekly jobs lost for the first time since the pandemic began in March.

This is a good sign that the trend is down.

But its still far too high for a “solid” economic recovery… Plus on top of this California isn’t processing job losses for two weeks to catch up on its backlog.

So, the numbers above aren’t the real weekly numbers.

The still historically high amount of weekly job losses is a sign the economic recovery is stalling.  Especially with job gains slowing which we show next…

4. Continuing Jobless Claims – Releases October 8th

For the same reasons as job losses above this is also ultra-important.

But a further note on this… It’s the number of people still receiving federal and state unemployment benefits each week instead of weekly job losses.

  • This amount began falling two months ago…
  • Then it fell slightly the week after that…
  • Then again slightly the week after that…
  • Then again slightly the week after that…
  • But then they rose slightly four weeks ago to bring us up to 13.4 million continuing unemployed.
  • Then they fell three weeks ago to 12.6 million continuing unemployed.
  • Two weeks ago, this fell slightly to 12.58 million.
  • And last week this fell by 1 million to 11.4 million.

The trend here so far is good.

But we still need to watch this because there are still far too many unemployed people for a “healthy” economy.

Especially since the US economy only added 661,000 jobs in September.  Which is down drastically from the 1.5 million added in August.  And the 4.8 million added in June.

Continuing claims need to fall significantly over time because that means more people are back working.

And that’s a good sign not just for people and their families.  But also, for the entire economy.

As of this writing the economy is recovering from the worst of things back in March and April… But now that recovery appears to be slowing as we head into the Fall.

These are the major things I’m watching this week.  I’ll keep you updated on all this going forward.

Here are the articles from the last week in case you missed any…

And if you’re looking for stocks to potentially buy, click the links below to see the stocks we recommend helping Depression Proof Your Portfolio.

Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.

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