Initial Jobless Claims Jump, Up 137,000 to 853,000… Initial jobless claims were expected to remain almost unchanged, increasing from 716,000 to 720,000. Instead, they shot up by more than 100,000.
What it means— This isn’t much of a Christmas present, but it might be for the best. Rising initial jobless claims means that more people are losing their jobs for the first time, which isn’t what we want to see during a recovery, but it’s not surprising, given the increased lockdowns in the face of rising COVID-19 infections. Perhaps the bump in claims will give Congress the right incentive to agree on a stimulus measure in the next day or two so that they can vote on it next week.
While initial claims moved the wrong direction, overall continuing claims dipped by one million, falling from 20.16 million to 19.04 million. That sounds good, but it includes people who have exhausted their benefits as well as those who have found jobs.
A Stimulus Plan Gets a Little Closer… The number is no longer the issue, with both sides apparently happy at $908 billion, but now they are fighting over the details that have bedeviled the plan since the middle of the summer.
What it means— The Democrats want substantial support for cities, states, and mass transit programs, which the Republicans oppose. Republicans want to shield schools, businesses, and government entities from liability claims over COVID-19 infections as long as they followed local guidelines such as masks and social distancing which Democrats oppose.
The obvious thing is to do both or neither. This has been the same fight with the same obvious solution since July, and yet they are still at an impasse. They’re likely to do more instead of less, so expect the bill to include both support for cities, states, and other local government entities as well as some sort of indemnification against COVID-19 lawsuits.
Inflation Up 0.2% Last Month, Up 1.2% Over Last Year… Prices remain tame, with core inflation, less food and energy, up 0.2% last month and up 1.6% over last year.
What it means— The numbers are a bit higher than expected, but so close and so low that it doesn’t really matter. Inside the numbers, lodging-away-from-home, recreation, airline fares, and apparel gained ground, while used cars, new cars, and medical care slipped a bit. Energy remains 9.4% lower than at this time last year, even though prices have risen 30% in past three months.
The big story with inflation isn’t about prices, it’s about interest rates. The composite corporate bond 10-year yield just fell below the 10-year inflation expectation of about 1.85%. Corporate bond buyers have joined Treasury bond and municipal bond purchasers in accepting negative real rates. This is all about the Fed.
As in other markets like the EU and Japan, investors are betting that the central bank will remain involved in the markets for years to come, pushing rates well below what they would be without Fed intervention.
Goya Foods Names Rep. Alexandria Ocasio-Cortez (AOC) Employee of the Month … In July, Goya Foods CEO Bob Unanue participated in a Hispanic business leadership forum at the White House, where he commented that the nation is blessed to have a builder like President Trump in the White House.
The pushback was swift, as influencers large and small derided Unanue for his comments, and AOC pushed for a boycott of Goya Foods products. The call for a boycott spread quickly across social media, but it was followed quickly by a movement to support the company. The boycott turned into a “buycott,” with Goya products flying off the shelves. Recently, Unanue said that sales increased by 1,000%, which he attributes to AOC, which is why he named her “Employee of the Month.” Clearly, it is a well-deserved honor.
Data supplied by HS Dent Research
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