At its high earlier this week (2954), the S&P 500 had risen 35% from its March 23 low. Viewed slightly differently, that equates to a little over one percentage point for every million jobs reported as lost over the last six weeks. In other words, the economic picture isn’t nearly as pretty as the stock market has made it out to be nor will it be soon. We now enter a phase where the hard part of the recovery begins — when the speculative hope clashes with the fundamental reality on the ground. Accordingly, risk-reward dynamics will be reassessed and likely challenged with more resistance than has been seen in the move of the March bottom.

May started on a rocky note, and emerging talk that the U.S. is considering retaliatory measures against China for its handling of the coronavirus pandemic is creating a new layer of angst for investors at a time when more angst isn’t needed. It’s a reminder that the easy part of the recovery rally in the stock market is over. That’s not to say we couldn’t see more upside, but at over 20.x forward twelve-month earnings, the near-term upside potential looks limited in the absence of a vaccine while the downside risk has increased.

According to FactSet, analysts predict a (y/year) decline in earnings in the second quarter (-36.7%), third quarter (-20.1%), and fourth quarter (-9.4%) of 2020. This week marked the first time the S&P 500 recorded a forward 12-month P/E ratio of 20.0 or higher since April of 2002. The forward 12-month P/E ratio is 20.3, which is above the five-year average and represents a 37% premium to the 10-year historical average, according to FactSet. 

Economic data that came out this week was all bad. April PMI declined 7.6% to 41.5% from March’s reading of 49.1%. Personal Income decreased $382.1 billion 2.0 percent in March. The advance estimate of 1st Quarter 2020 GDP  decreased at an annual rate of 4.8 percent in the first quarter of 2020. Not surprisingly, the consumer confidence index declined sharply in April following a decline in March. The Index now shows a reading of 86.9 which is down from 118.8 in March.



Fixed Income


3/15/2020 Statement

FOMC December Statement     Federal Reserve Dot Plots     US Debt Measurement    US Corporate Debt Tops $6 Trillion yields

FOMC Policy Normalization Statement


Global Bond Yields


Daily US Treasury Yields 


Foreign Exchange Market


Energy Complex

The Baker Hughes rig count was down 57 this week. There are 408 oil and gas rigs operating in the US – down 582 over last year.

  • Brent Crude Oil gained 6.57% this week closing at $26.44/bbl
  • WTI Crude Oil gained 16.77% this week to close at $19.78/bbl
  • Heating Oil gained 8.64% this week closing at $0.80/gallon
  • Natural Gas lost 0.26% this week closing at $1.89 per million BTUs
  • Unleaded Gas gained 9.46% this week closing at $0.77/ gallon

Metals Complex

  • Gold lost 2.00% this week closing at $1700.90/oz
  • Silver lost 2.13% on the week closing at $14.94/oz
  • Palladium lost 4.91% this week closing at $1887.80/oz
  • Platinum 0.01% this week closing at $773.90/oz
  • Copper lost 0.32% this week closing at $2.34/lb

Employment Picture

Employment Cost Index – Released 4/30/2020 – Compensation costs for civilian workers increased 0.8% for the 3-month period ending in March 2020. The 12 month period ending in March 2020 saw compensation costs increase by 2.8%, same as the 12 month period ending March 2019. Wages and salaries increased 3.1 percent over the year and increased 2.9 percent for the 12-month period ending in March 2019. Benefit costs increased 2.1 percent for the 12-month period ending in March 2020. In March 2019, the increase was 2.6 percent. This report is published quarterly. 

Weekly Unemployment Claims – Released Thursday 4/30/2020 – In the week ending April 25th, initial claims were 3,839,000, a decrease of 603,000 from the previous week’s revised level. The 4-week moving average was 5,033,250 a decrease of 757,000  from the previous week’s revised average. 

Job Openings & Labor Turnover Survey JOLTS – Released 4/7/2020 – The U.S. Bureau of Labor Statistics reported the number of job openings was little changed at 6.9 million on the last business day of February. Over the month, hires and separations were little changed at 5.9 million and 5.6 million, respectively.  Within separations, the quits rate was unchanged at 2.3%. The layoffs and discharges rate was little changed at 1.2%.

March Jobs Report  BLS Summary – Released 4/3/2020 – The US Economy lost 701k nonfarm jobs in March and the Unemployment rate increased to 4.4%. Average hourly earnings increased by 11 cents.  Hiring highlights include Education and Health Services -76k, Professional and Business Services -52k, Retail Trade -46k, and Construction -29k.

  • Average hourly earnings increased by 11 cents in March, y/y hourly earnings are up 3.1%.
  • U3 unemployment rate increased to 4.4%. U6 unemployment rate increased 24.3% to 8.7%.
  • The labor force participation rate declined by 0.7% to 62.7%.
  • Average workweek decreased by 0.2 hours to 34.2 hours.


This Week’s Economic Data

Links take you to the data source

PMI Manufacturing ISM Index – Released 5/1 – April PMI declined 7.6% to 41.5% from March’s reading of 49.1%. The New Orders Index was down 15.1% from March’s reading of 42.2% to 27.1%. The Production Index registered 27.5%, down 20.2%.

U.S. Construction Spending – Released 5/1 – Construction spending increased 0.9% in March measuring at a seasonally adjusted annual rate of $1,360.5billion. The March figure is 4.7% above the March 2019 estimate. Private construction spending was 0.7% above the revised February estimate at $1,005.8 billion. Public construction spending was 1.6% above the revised February estimate at $348.0 billion.

Chicago PMI Released 4/30  Chicago PMI declined 12.4 points decreasing to 35.4,  marking nine consecutive months in contraction and the lowest level since March 2009.

Personal Income – Released 4/30 – Personal income decreased $382.1 billion 2.0 percent in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) decreased $334.6 billion 2.0 percent and personal consumption expenditures (PCE) decreased $1,127.3 billion 7.5 percent. 

Advance Estimate of 1st Quarter 2020 GDP – Released 4/29 – Real gross domestic product (GDP) decreased at an annual rate of 4.8 percent in the first quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1 percent. The decrease in real GDP in the first quarter reflected negative contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and private inventory investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending.

Consumer Confidence Released 4/28  The Consumer confidence index declined sharply in April following a decline in March. The Index now shows a reading of 86.9  which is down from 118.8 in March.

Recent Economic Data

Links take you to the data source

Durable Goods – Released 4/24 – New orders for manufactured durable goods decreased $36.0 billion or 14.4% in March. Down following three months of increase.

New Residential Sales – Released 4/24 – Sales of new single-family homes declined 15.4% to 627k, seasonally adjusted, in March. The median sales price of new homes sold in March was $321,400 with an average sales price of $375,300. At the end of March, the seasonally adjusted estimate of new homes for sale was 333k. This represents a supply of 6.4 months at the current sales rate.

Existing Home Sales – Released 4/21 – Existing home sales decline in March. Sales declined 8.5% to a seasonally adjusted rate of 5.27 million. Sales are currently up 0.8% from one year ago. Housing inventory sits at 1.50 million units. Up 2.7% over last month. Down 10.2% over last year. Unsold inventory sits at a 3.4 month supply.

Housing Starts – Released 4/16 – New home starts in March were at a seasonally adjusted annual rate of 1.216 million; down 22.3% below February but 1.4% above last March’s rate. Building Permits were at a seasonally adjusted annual rate of 1.353 million, down 6.8% compared to February and up 5.0% over last year. 

Industrial Production and Capacity Utilization – Released 4/15 – In March Industrial production declined 5.4%. Manufacturing declined 6.3% and mining declined 2.0%. Industrial production was 103.7% of its 2012 average which is 5.5% lower than a year ago.  Total capacity utilization declined 4.3% to 72.7% in March which is 7.1% below its long-run average. 

Retail Sales – Released 4/15 – U.S. retail sales for March declined 8.7% to $483.1 billion. U.S. retail sales are down 6.2% year/y.

Consumer Price Index – Released 4/10 – The Consumer Price Index declined 0.4% in March. Core CPI, which excludes food and energy declined 0.1%. The monthly changes left total CPI up 1.5% year-over-year and core CPI up 2.1%. 

Producer Price Index – Released 4/9 – The Producer Price Index for final demand declined 0.2% in March. Core PPI was up 0.2%. Year over year the index for final demand rose 0.7%.

Consumer Credit  Released 4/7 Consumer credit increased at a seasonally adjusted annual rate of 6.50% in February. Revolving and nonrevolving credit increased at annual rates of 4.50% and increased 7.0% respectively. Total Outstanding consumer credit is currently at $4.2255 trillion. 

PMI Non-Manufacturing Index (ISM Services) – Released 4/3 – Economic activity in the non-manufacturing sector grew in February for the 122th consecutive month. ISM Non-Manufacturing registered 52.5 percent, which is 4.8 percentage points below the adjusted February reading of 57.3 percent. This represents continued growth in the non-manufacturing sector, at a slower rate.

U.S. Trade Balance  Released 4/2 –  According to the U.S. Census Bureau of Economic Analysis the goods and services deficit declined in February $5.5 billion. February  exports were $207.5 billion, $0.8 billion less than January exports. February imports were $247.5 billion, $6.3 billion less than January imports. The goods and services deficit decreased $19.7 billion or 18.7% year/y. Year – over – year exports and imports increased $1.1 billion or 0.3% and decreased $18.6 billion or 3.6% respectively.   

US Light Vehicle Sales – Released 2/28 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 16.81 million units in January. 

Next week we get data on Consumer Credit, ISM Services, the U.S. Trade Balance, and the April Jobs Report.


Data Sources:

Bureau of Economic Analysis (BEA)
Congressional Budget Office (CBO)
U.S. Bureau of Labor Statistics (BLS)
Federal Reserve Economic Data (FRED Charts)

CME Fed Watch
U.S. Treasury – Yields
U.S. Census Bureau
Institute for Supply Management (ISM)
Weekly DOL Employment Data
BLS Monthly Jobs Report

US Energy Admin (EIA)
BLS Consumer Price Index CPI
BLS Producer Price Index PPI
Atlanta Fed GDPNOW
NY Fed Nowcast GDP
US Census Bureau Housing Starts

Consumer Credit
USCB Retail Sales
Construction Spending
Federal Reserve Dot Plots
NY Empire Index
Philadelphia Federal Reserve
P/E Ratio Data -Yardeni Research

Technical Analysis Info: – Financial Charts
Exponential vs Simple moving average

Other Links:

1973 Arab Oil Embargo
Hunt Brothers Silver
Long-Term Capital bailout