5 Things To Watch This Week

With massive uncertainty everywhere from the economy, to the coronavirus, to unemployment, to the protests and riots, to the upcoming election…

Things are a bit nuts.

Over the last few weeks, I’ve shown you the 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 5 Things To Watch This Week that will affect your portfolio and the economy.

  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 and overall lack of people doing things, buying stuff, and going places.

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.

This week 2 stocks we’ve written about release updated earnings.

I’ll update you on these stocks as needed in the coming days.

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. Existing Home Sales – Releases On September 22nd 

It’s important to see because it shows if people are still buying and selling houses.  If they are that’s a good sign for the economy.  If they’ve slowed down, it’s a bad sign for the economy.

Why?

Because if this slows significantly it means people either don’t have the money to buy a house due to unemployment issues.  Or that banks aren’t lending as much to people to buy houses.

Neither is good for the economy.

The opposite of these things is true and would be positive things for the economy.

Last months reading was 5.86 million.  Watch if the number is above or below this number this month.

3. IHS Markit Manufacturing PMI – Releases September 23rd

This is important to watch because it shows how much companies are buying, manufacturing, and selling things.

And because 70% of US GDP is based on consumption – us buying and doing 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, April, and May 2020… And then a huge rebound in June, July, and August.

Last month this reading was 53.1.

Watch this month if its higher or lower than this to see if the economic recovery is picking up steam or slowing down.

4. Initial Jobless Claims – Releases September 24th

Pay attention to the trend.

From March until about 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.

  • Six weeks ago, this fell below 1 million jobs losses for the first time since March 2020.
  • Five weeks ago, this jumped back to 1.1 million new jobs lost.
  • Four weeks ago, this was above 1 million new jobs lost again…
  • Three weeks ago, this fell below 900,000 new jobs lost.
  • Two weeks ago, this was below 900,000 new jobs lost again.
  • And last week it was below 900,000 new jobs lost again.

This is good.

But economists are now worried job losses and recovery of jobs are plateauing… And that they’re still far too high for an economy to be in full recovery mode.

5. Continuing Jobless Claims – Releases September 24th

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 about a month and a half 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 two weeks ago to bring us up to 13.4 million continuing unemployed.
  • And then they fell again last week to 12.6 million continuing unemployed.

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.

This needs 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.

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…

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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