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COVID-19 UPDATE. NYC new cases FLAT 5 consecutive days.  FACT, Markets bottom before jobless claims peak.

**We are hosting a webinar/conference call on Friday 4/3 at 1pm ET to discuss to position for post-crisis strategy and ideas.  Details are at the bottom of this email.


The next few days will bring into focus the economic carnage (secondary front) of the COVID-19 pandemic—Thursday, jobless claims; Friday, employment report; next week, earnings season.

Many of our clients are talking about initial jobless claims surging to 9 million, up from a freakish 3.3 million last week.  And we think the intense selling we saw on Wednesday (-5% S&P 500) is in part, tactical investors getting short in front of the jobless report.

POINT #1: A very inconvenient fact--stocks bottom before jobless claims peak...
Jobless claims at 9 million are astounding because this represents about 6% of the employed workforce (152 million) and in just the last two weeks, 8% of the US workforce is now filing unemployment claims.  Because of the sudden stop of the economy, this figure could double again to 16% (another 12 million claims).

- But this sudden stoppage of the economy is also suggesting that we could see a peak in jobless claims within the next few weeks, and possibly the 9 million could be the high watermark.

If jobless claims are peaking soon, why does this matter?
Take a look at the charts below, which show the S&P 500 during the 2001-2003 and 2007-2009 bear market and a corresponding chart shows initial jobless claims and the unemployment rate.

- Stocks historically bottom 2-4 weeks BEFORE jobless claims peak.

- In 2003, the S&P 500 bottomed on 3/11/2003 and initial jobless claims peaked on 4/18/2003.  And payrolls were still negative through July 4, 2003.  Stocks bottomed 4 weeks before claims peaked

- In 2009, the S&P 500 bottomed on 3/9/2009 and initial jobless claims peaked on 3/27/2009.  Stocks bottomed 2 weeks before claims peaked.  And payrolls did not turn positive until November 16, 2009.

COVID-19 UPDATE. NYC new cases FLAT 5 consecutive days. FACT, Markets bottom before jobless claims peak.
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