As new jobless claims rise so does the stock market

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retireIn2020
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As new jobless claims rise so does the stock market

Post by retireIn2020 » Fri May 08, 2020 1:54 am

Anyone have a chart that can show the relationship? seems to me new jobless claims spiked right at the low in March and gradually lower about the same pace as the market goes up.

https://www.cnbc.com/2020/05/07/us-week ... laims.html

minimalistmarc
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Re: As new jobless claims rise so does the stock market

Post by minimalistmarc » Fri May 08, 2020 2:21 am

retireIn2020 wrote:
Fri May 08, 2020 1:54 am
Anyone have a chart that can show the relationship? seems to me new jobless claims spiked right at the low in March and gradually lower about the same pace as the market goes up.

https://www.cnbc.com/2020/05/07/us-week ... laims.html
I don’t have a chart but it wouldn’t be actionable even if there was an apparently clear pattern

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jeffyscott
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Re: As new jobless claims rise so does the stock market

Post by jeffyscott » Fri May 08, 2020 10:40 am

Unlike normal times, the jobless will, in aggregate, be getting just about as much money as they did when working. At least for the next 3 months. I am assuming those who file claims are, in fact, eligible for unemployment compensation. The income distribution for the jobless will change and be more equal than it was when they were working. Is it possible that the low income jobless people getting a small windfall could even lead to an increase in total spending by this group of people?
Time is your friend; impulse is your enemy. - John C. Bogle

jhh9327
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Re: As new jobless claims rise so does the stock market

Post by jhh9327 » Fri May 08, 2020 10:50 am

jeffyscott wrote:
Fri May 08, 2020 10:40 am
Unlike normal times, the jobless will, in aggregate, be getting just about as much money as they did when working. At least for the next 3 months. I am assuming those who file claims are, in fact, eligible for unemployment compensation. The income distribution for the jobless will change and be more equal than it was when they were working. Is it possible that the low income jobless people getting a small windfall could even lead to an increase in total spending by this group of people?
It's not just the US market. International stocks are also rising during this and pretty much go and up and down as the US does. If the various federal stimulus actions are lifting the US market, what is propping up the rest of the world?

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jeffyscott
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Re: As new jobless claims rise so does the stock market

Post by jeffyscott » Fri May 08, 2020 11:02 am

jhh9327 wrote:
Fri May 08, 2020 10:50 am
jeffyscott wrote:
Fri May 08, 2020 10:40 am
Unlike normal times, the jobless will, in aggregate, be getting just about as much money as they did when working. At least for the next 3 months. I am assuming those who file claims are, in fact, eligible for unemployment compensation. The income distribution for the jobless will change and be more equal than it was when they were working. Is it possible that the low income jobless people getting a small windfall could even lead to an increase in total spending by this group of people?
It's not just the US market. International stocks are also rising during this and pretty much go and up and down as the US does. If the various federal stimulus actions are lifting the US market, what is propping up the rest of the world?
But international had not gone up like US stocks. Despite that it got beaten down as much or more than US. I'd expected it to do better than US as they recovered, but it has not. At one time we were at a point where international had had no net gain for something like 12-13 years. Other governments have also supplemented normal unemployment benefits, I think. And some had much better pre-existing safety nets than the US.

Of course, the biggest factor in all of this is probably the obvious one that markets are forward looking.
Time is your friend; impulse is your enemy. - John C. Bogle

Blue456
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Re: As new jobless claims rise so does the stock market

Post by Blue456 » Fri May 08, 2020 11:22 am

jeffyscott wrote:
Fri May 08, 2020 11:02 am
At one time we were at a point where international had had no net gain for something like 12-13 years.
Wasn't there a period during 1970s with US underperformance?
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Same for 2000-2010
https://www.portfoliovisualizer.com/bac ... ion2_2=100

rockstar
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Re: As new jobless claims rise so does the stock market

Post by rockstar » Fri May 08, 2020 11:46 am

This becomes a problem when the stimulus dries up and unemployed people start selling off their retirement portfolio to pay their bills. The good news is that options exist to defer your mortgage bills for a while. However, this doesn’t help renters.

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jeffyscott
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Re: As new jobless claims rise so does the stock market

Post by jeffyscott » Fri May 08, 2020 12:01 pm

Blue456 wrote:
Fri May 08, 2020 11:22 am
jeffyscott wrote:
Fri May 08, 2020 11:02 am
At one time we were at a point where international had had no net gain for something like 12-13 years.
Wasn't there a period during 1970s with US underperformance?
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Same for 2000-2010
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Sure, may we have another, please?

I'm just talking about now, where the US had gone up about a million percent from 2009, while International went up 10%. And then Covid-19 hits and they both go down 30% (not fair :!: ). And then they both back up by about the same amount (still not fair :!: ).

When we were at the recent bottom, International total return from some point in 2007 or 2008 to that date had been 0. At the same time US was only back to where it was something like 2-3 years ago.
Time is your friend; impulse is your enemy. - John C. Bogle

Bir48die
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Re: As new jobless claims rise so does the stock market

Post by Bir48die » Fri May 08, 2020 12:09 pm

The market is moving up with the anticipation of restrictions loosening. Some see this as the buy opportunity in the sectors that actually will come back faster. That being said, the states unfortunately are in charge so it will be a long process.

rich126
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Re: As new jobless claims rise so does the stock market

Post by rich126 » Fri May 08, 2020 12:13 pm

I think the market is being very optimistic. As an investor my view would be if you are young and have a lot of earning years left, then don't worry about it, if you are older, I'd be more concern of a big drop than missing out on gains. The odds of cases increasing as states open up are high and if so, then the country is back to where it was at the beginning. Lots of sick people, hospitals overcrowded, no vaccine, no real useful treatment (just a lot of speculative things to try), etc.

dziuniek
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Re: As new jobless claims rise so does the stock market

Post by dziuniek » Fri May 08, 2020 12:23 pm

Bad news is good news again.

bad news = good news = fed printing more and more?

illumination
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Re: As new jobless claims rise so does the stock market

Post by illumination » Fri May 08, 2020 1:00 pm

jeffyscott wrote:
Fri May 08, 2020 11:02 am
jhh9327 wrote:
Fri May 08, 2020 10:50 am
jeffyscott wrote:
Fri May 08, 2020 10:40 am
Unlike normal times, the jobless will, in aggregate, be getting just about as much money as they did when working. At least for the next 3 months. I am assuming those who file claims are, in fact, eligible for unemployment compensation. The income distribution for the jobless will change and be more equal than it was when they were working. Is it possible that the low income jobless people getting a small windfall could even lead to an increase in total spending by this group of people?
It's not just the US market. International stocks are also rising during this and pretty much go and up and down as the US does. If the various federal stimulus actions are lifting the US market, what is propping up the rest of the world?
But international had not gone up like US stocks. Despite that it got beaten down as much or more than US. I'd expected it to do better than US as they recovered, but it has not. At one time we were at a point where international had had no net gain for something like 12-13 years. Other governments have also supplemented normal unemployment benefits, I think. And some had much better pre-existing safety nets than the US.

Of course, the biggest factor in all of this is probably the obvious one that markets are forward looking.

One big reason is the US stock market is tech heavy, tech is almost the perfect industry for a situation like Covid. With the ex-US, it's way less and also I would argue less competitive globally.

MDfan
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Re: As new jobless claims rise so does the stock market

Post by MDfan » Fri May 08, 2020 2:06 pm

rich126 wrote:
Fri May 08, 2020 12:13 pm
I think the market is being very optimistic. As an investor my view would be if you are young and have a lot of earning years left, then don't worry about it, if you are older, I'd be more concern of a big drop than missing out on gains. The odds of cases increasing as states open up are high and if so, then the country is back to where it was at the beginning. Lots of sick people, hospitals overcrowded, no vaccine, no real useful treatment (just a lot of speculative things to try), etc.

I don't know. I keep reading things like this from a Wharton finance professor. I'm a year from retirement and I'm not doing a thing.

"Still, Siegel, says unprecedented support for the economy now by the Federal Reserve and the U.S. government make it nearly impossible for the stock market to revert to its late March lows.

The Dow Jones Industrial Average DJIA, 1.61% is up about 30% from its March 23 low at 18.591.93, while the S&P 500 SPX, 1.50% is up by about the same amount from its low at 2,237.40 and the Nasdaq Composite Index COMP, 1.44% has climbed by 32.5% from its bear-market nadir at 6,850.67, according to FactSet data.

In fact, the Wharton professor envisions equity markets rising well into 2021 as treatments and vaccines for the COVID-19 disease are discovered.

“I think 2021 could be a boom year,” he told the business network. “With the liquidity that the Fed is adding, unprecedented. It could be a really good year,” he said.

rich126
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Re: As new jobless claims rise so does the stock market

Post by rich126 » Mon May 11, 2020 12:22 am

MDfan wrote:
Fri May 08, 2020 2:06 pm
rich126 wrote:
Fri May 08, 2020 12:13 pm
I think the market is being very optimistic. As an investor my view would be if you are young and have a lot of earning years left, then don't worry about it, if you are older, I'd be more concern of a big drop than missing out on gains. The odds of cases increasing as states open up are high and if so, then the country is back to where it was at the beginning. Lots of sick people, hospitals overcrowded, no vaccine, no real useful treatment (just a lot of speculative things to try), etc.

I don't know. I keep reading things like this from a Wharton finance professor. I'm a year from retirement and I'm not doing a thing.

"Still, Siegel, says unprecedented support for the economy now by the Federal Reserve and the U.S. government make it nearly impossible for the stock market to revert to its late March lows.

The Dow Jones Industrial Average DJIA, 1.61% is up about 30% from its March 23 low at 18.591.93, while the S&P 500 SPX, 1.50% is up by about the same amount from its low at 2,237.40 and the Nasdaq Composite Index COMP, 1.44% has climbed by 32.5% from its bear-market nadir at 6,850.67, according to FactSet data.

In fact, the Wharton professor envisions equity markets rising well into 2021 as treatments and vaccines for the COVID-19 disease are discovered.

“I think 2021 could be a boom year,” he told the business network. “With the liquidity that the Fed is adding, unprecedented. It could be a really good year,” he said.
People seem to assume a virus will be found quickly but based on past history the odds are against that. With all of the job losses, even in the medical field, I don’t think the future is likely to be good.

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