Both the economy and the COVID situation are much better than media reports suggest. Stay positive on the outlook for the economy and financial markets.
The latest weekly data show the U.S. labor market continues to improve in spite of COVID. Initial unemployment claims fell to 709,000 in the first week of this month. That is down about 140,000 from the previous month.
For the final week of October, the insured unemployment rate fell to 4.6 percent, down from 7.5 percent from the previous month. The number of people receiving insured unemployment payments fell to 6.8 million. There were close to 11 million a month ago.
What to Expect Next Week
Look for the economic numbers to continue to show the economy performing well. Tuesday’s report for manufacturing in October should be a strong one. Business surveys show manufacturing production increasing dramatically in October. Hence, the Fed’s manufacturing number should be up substantially.
Another report on Tuesday will be for October retail sales. In recent months, retail sales have been particularly strong, rising by 33 percent in the three months ending in September. This brought sales 4 percent above the previous peak in February.
Sales have gotten a bit ahead of themselves, so they are due to ease up a bit and let the rest of the economy catch up.
Also on Tuesday, Homebuilders will report their survey from early this month. The September survey hit another all-time record, at 85. November should also be strong.
COVID Cases Soar, Deaths Still Contained
Data through yesterday show daily COVID cases continue to soar to new highs. After doubling from April to July, they doubled again from July into November. Fortunately, doctors and medical staff have been keeping daily death rates significantly below predicted rates.
Anecdotal reports from Northwestern Memorial Hospital in Chicago confirm a spike in COVID-19 cases. However, 50 percent or more of the cases were found when people came in for accidents or elective surgery; they didn’t even know they were sick. COVID-19 wards are at 30 percent of capacity, and the treatments are becoming more routine and very manageable, with good outcomes—less-invasive treatments and fewer deaths.
If reports of a highly effective vaccine are accurate, what we are seeing represents the last gasp of life for COVID-19.
The country with the best success in dealing with COVID has been Taiwan. It has 24 million people and has experienced only seven COVID deaths. Taiwan’s success in containing COVID has been based on a combination of advance planning and identification and isolation of infected individuals. The United States would be wise to use Taiwan’s approach to prepare for the next outbreak of infectious disease.
Stocks were mixed this past week. The previously out-of-favor small caps rose by 3 to 4 percent, while the Nasdaq and QQQs fell by 2 to 3 percent. The Dow and S&P500 gained 1 to 2 percent. I expect stocks to continue to consolidate within the range of the past five months.
Joe Biden’s choice of advisors is interesting. His prospective chief of staff was the one in charge of fighting the Ebola virus. He admitted they made every mistake imaginable in that fight. Another Biden medical advisor says the country should lock down for four to six weeks and can simply pay workers and businesses for lost income. That’s just what Biden needs: another advisor with no concept of economics feeding him mush.
It is important to pay attention to Biden’s advisors. Their ideas can provide a clue to just how crazy things can get. We must hope that cooler heads will prevent the chaos that would result from such complete nonsense.