U.S. Futures Rise Despite Record Unemployment

Back on October 4th 2019, the White House Releases an article with the Bureau of Labor Statistics (BLS) which showed a highlight of its Monthly Employment Situation Report. the Trump Administration took great pride in announcing the success it has had in its ability to develop over 6.4 Million Jobs into the economy since the president’s election into office.

The household survey found that unemployment rates fell to under 3.5 percent of the total U.S. population in September of 2019. This marked the 19th Consecutive month that unemployment rates were below 4%. These numbers have been soon lost in the massive global panic that has come due to the outbreak of the novel COVID-19.

As investors and analyst are pushing through the noise of the media looking to gain access to information on the current market to determine the current status of the damages caused by the spread of the Coronavirus many have been shocked to see the latest news regarding Unemployment levels in the United States.

With business around the world closing their doors to guest and visitors the workforce has been experiencing a major issue as business have had to lay-off employees or even ask some employees to stay at home without pay.

Although the the spread of COVID-19 is still a factor present in our world the S&P 500 has been able to create some support and has been pushing up since March 20th after experiencing one of the fastest and sharpest sell offs the market has ever experienced.

On March 26th a record 3.3 million Americans have applied for unemployment benefits from the government. Many of these works are employees of restaurants, hotels, barber shops, gyms and more that have been mandated to closed doors in a nationwide effort to stop the spread of the virus.

As we are now entering the first week of April that number of Americans applying for unemployment benefits is perceived to have doubled to over 6.5 Million. The most frightening part of this to many individuals is that applying for a job right now is a very difficult hurdle to overcome.

As millions of Americans are now looking online for “work-at-home” opportunities the competitiveness for these positions has greatly increased. Many customer service centers that deal with inbound phone calls and online instant messaging support have experienced such a demand in requests for service that they are not able to hire and train individual fast enough to meet the demand. This is resulting in individual needing to wait hours to be attending.

As Americans are being asked to stay indoors they resources are becoming scarce as their wages are cut and expenses remain high. The inflation rate for the U.S. over the last decade of financial growth has left many struggling due to lack of cash flow.

U.S. Stock Market Pushes Up in Pre-Market

Many investors are curious as to why the S&P 500 continues to push upwards regardless of such negative reports being released in the news. With unemployment rates at record highs we are experiencing levels that are beyond that of which was experienced during the great depression.

On Friday of last week Non-Farm Payroll numbers were announced and the market experienced very little movement as a result. Part of this is due to the element of job losses already being priced into the market. It was expected for the value of stocks and companies to drop and stores around the nation closed their door. As many analysts anticipated these small business not being able to support paying their staff salaries with their doors closed for long this resulted in many investors running to sell their shares and close positions with the anticipation of a worse case scenario.

Over the last few weeks there has been signing of stimulus bills in the United States focused on providing relief to small business who are struggling to pay their staff and keep doors open. In addition funds are planned to be distributed through the nation to millions of Americans to assist with any loss wages they may be experiencing. There is optimism priced into the market currently that these efforts will aid in slowing down the damage being done to the market.

Although we can not be certain of what the next few weeks will bring the overall idea is that we will recover and regain stability in the world despite this global novel outbreak. The question on many investors minds is what companies will remain victors through the struggle and which will fail to be able to remain in business.

The Tech sector is helping push up the value of the S&P 500 as families are being asked to stay at home to prevent the spread of the virus. This is resulting in more online shopping, video streaming, and digital communications.

Aviation Industry Outlook

For the Airline industry the question of load factors remains at the front of our minds. Will the airlines regain back the same volume of travels they had back in the end of 2019 where we had record highs of international travel occur?

In 2019 the travel and leisure industry sky rocketed as our economy flourished. With individuals making pay increases and earning more in their jobs they were able to travel more and often. In 2020 with airlines grounding nearly 70% of their fleets worldwide many are curious to see if operation will recover to full capacity again or if we will enter a new reality.

Our transportation and logistics network is vital to the distribution of products, goods and supplies. Although when it comes to leisure travel 2020 may experience record low levels and families around the world are practicing social distancing and turning towards communicating digitally instead of on vacation.

Although the forecast for Commercial airlines is unclear, cargo airlines will experience a thriving year. As many commercial airlines close routes the need for supplies and goods to specific areas which are often travel to are now being supplemented by cargo aircraft to meet to current demands.

Freight Forwarders and logistics coordinators must now work diligently to use the services and supplies that are still currently operating to ensure that products can arrive to end consumers when they need them.

As we enter a new week, we continue to look forward to the spread of the virus declining and the confidence of families to rise. We encourage you all to listen to your government officials who advise staying at home and staying safe in this time where we must all work together to protect the ones we love.

As always stay safe, and happy trading.

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Disclosures
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf

Air Market Group content is provided solely by Air Market Group LLC and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. Air Market Group, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Air Market Group is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Multi-leg option strategies incur higher transaction costs as they involve multiple commission charges. Air Market Group is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.


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