8 Things To Watch In The Market This Week


With massive uncertainty everywhere from the economy, to the coronavirus, to politics, to the protests and riots…

Today, I want to give you some clarity on 8 Things To Watch This Week that will affect your portfolio and the economy…

  1. Earnings Seasons 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.

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

And tech companies and food producers and sellers appear to be the biggest winners.

I’ll keep you up to date on what these mean – if anything important – to the long-term prospects of the companies we’ve written about.

You can find links to these recommendations at the end of this message.

Seeing quarterly and yearly earnings helps me understand what’s going on in the market via individual stocks… And this helps me spot potential trends to take advantage of and trouble areas to watch out for so I can let you know about them.

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 as above… To help spot potential trends you can and should take advantage of.  And, to help you avoid potential major problem areas.

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

  1. IHS Markit Manufacturing PMI – Releases September 1st

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 – 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.

This reading will be important to watch to gauge whether the economic recovery is picking up steam or slowing down.

  1. Motor Vehicle Sales – Releases September 1st

Like the Manufacturing PMI above, this is also important to watch to see how vehicles are being bought in the US… Again, because this directly affects not only US economic output, but it’s also a sign of economic strength as well.

To find out more reasons this is so important read the following articles.

If this increases substantially when this number is released it could be a sign of economic recovery.

But if it falls it could be a sign the recovery is stalling.

  1. ADP Employment Report – Releases September 2nd

This number is published monthly and shows the monthly change and trend in employment…

More people employed and working is good for all of us and the entire economy.

More people unemployed and on government benefits is bad for all of us and the entire economy.

Most of the time the absolute number isn’t the most important thing… The trend is. the change in the total value of new orders for manufactured goods.

Here are last month’s numbers for reference.

  1. United States Federal Reserve Beige Book – Releases September 2nd

This report is important because it aggregates and shows “anecdotal information on the current economic conditions.”

Many people watch the findings in this report to get a “true” look at the economic conditions… Without – supposedly – any politics involved in the process.

Here’s what to look for in this when it comes to the US economy…

  • Is it recovering?
  • Is the recovery stalling?

While this book doesn’t give direct answers to these questions… It does show signs of which way we’re headed based on real world data.

  1. Initial Jobless Claims – Releases September 3rd

Pay attention to the trend.

From March until about June this number declined on a weekly basis… Even though the absolute numbers were still horrific.  The decline was a great sign we were headed in the right direction in terms of employment.

Then when the coronavirus cases began exploding it started rising again on a weekly basis.

Three weeks ago, this fell below 1 million jobs losses for the first time since March 2020.

Two weeks ago, this jumped back above 1 million to 1.1 million new jobs lost.

And last week this went to above 1 million new jobs lost again…

If the trend continues down this week, that’s a great sign of economic recovery.

If it goes back up it’s a sign the recovery may be stalling.

Again, the trend here will be more important than the absolute number.  And I’ll keep you up to date on this in the coming weeks.

  1. Continuing Jobless Claims – Releases September 3rd

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

But a further note on this one is that this is the number of people still receiving federal and state unemployment benefits each week.

This amount fell slightly three weeks ago which is a good first sign of an economic recovery.

Then it fell slightly the week after that…

And then fell again this past week.

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.

If this keeps going down this week, it’s a good sign the economy is recovering.

If it raises again it’s a sign the recovery is stalling.

You want to see this go down 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.

  1. United States Unemployment Rate – Releases September 4th

This is important to look at to see what the “official” unemployment rate in the United States is because this directly affects the economy.

More people working is better for the economy and each of us individually.

Fewer people working is worse for the economy and each of us individually.

I’m interested to see if this number falls below 10%…  Or if it stays above 10%.

If it falls below this number, it may be a sign of economic recovery.

If it stays above this, it’s a sign the economic recovery is slowing due to the continued high cases of coronavirus in the United States as of this writing.

I put official in quotes above and say it may be a sign of economic recovery because these are the true numbers of unemployed people…

The official numbers don’t count people who have stopped looking for work and people who are still getting paid but not working.

That’s the true number and its always higher than the officially released government info.

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

In the meantime, 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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