Another 2.12 Million People Filed for Initial Jobless Claims… The nine-week total now stands at 40.7 million people.
What it means— With states reopening their economies, many investors are looking past this huge number and assuming that many of the unemployed will quickly return to their old posts. Maybe. But many workers at recently bankrupt companies such as Nordstrom’s, Tuesday Morning, Hertz, and JCPenney won’t be able to go back.
Expect the May unemployment rate reported next Friday to top 20%. If we get half of those people back to work in short order, we will still have unemployment at 10%.
New Home Sales Edge Up 0.6% in April But Are Down 6.2% Over Last Year… New home sales were expected to fall to an annualized rate of 480,000 but instead inched up from 619,000 to 623,000.
What it means— Builders did a lot better than existing homeowners, who reported weak sales last week based on falling inventory. But some of this might have to do with pricing.
While existing home prices edged upward, new-home prices dropped more than 3%, from $321,400 in March down to $309,900. Builders MUST sell units to keep their companies running, while many existing homeowners can put off selling for a bit to wait for a more stable market. New home inventory came in at 6.3 months’ supply.
March S&P CoreLogic Case-Shiller 20-City Home Price Index Up 4.4% Over Last Year… The index showed consistent strength in home prices just as the pandemic and economic shutdown hit.
What it means— Given that existing home sales make up 90% of all sales and that existing home prices moved up in April, it’s likely that the Home Price Index will remain strong for April and May as well. If home prices can maintain their lofty levels, it will be great news for many Americans, because a home tends to be the largest asset held by most families. With unemployment expected to skyrocket, this might be a hope too far.
April Durable Goods Orders Fall 17.2%… Orders fell almost another 20%, after dropping more than 16% in March.
What it means— Combined, orders for items that last more than three months fell 33.8% over the past two months. That’s staggering. But a small bright spot in the report showed that core capital goods orders, excluding transportation and defense orders, fell just 5.8% on expectations of a 15.4% drop. Airplanes make up a big part of durable goods orders, and aviation orders fell more than 47%. It’s unlikely that those orders will return quickly.
Hertz Car Rental Closing After 102 Years of Service… It’s official, The Hertz Corporation is bankrupt.
What it means— In recent years the company took on loads of debt and updated its fleet with cars that few people want, such as sedans. With almost no one renting vehicles during the economic shutdown, the company couldn’t make good on its debts.
Hertz’s pain could be your gain. To raise cash, the company is selling a large chunk of its 500,000+ vehicle fleet. The move likely will further depress used car prices, but if you’re in the market for a new set of wheels, this could be a great thing. To check out their inventory, just click here.
Data supplied by HS Dent Research
“When the facts change, I change my mind.
What do you do, sir?” ~ John Maynard Keynes
Our plan is “the plan will change.”
What is your plan?
Relative strength measures the price performance of a stock against a market average, a selected universe of stocks or a single alternative holding. Relative strength improves if it rises faster in an uptrend, or falls less in a downtrend. It is easily applied to individual positions in your portfolio and to sectors and asset classes.
WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Investor Resources, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient.
This message is intended only for the use of the person(s) (“intended recipient”) to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Investor Resources, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message.
Investor Resources, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion.