Wise Owl Trading

Is there another shoe to fall....

Do you feel like I do that another major crisis (financial, covid-19 etc.) could erupt at any moment?  In 2020, it has just been one thing after another, and we have been conditioned to expect the unexpected (but the markets have been on an energizer bunny romp all year!  I am now anticipating that big trouble is just around the corner, but as we wait for “the other shoe to drop”, economic conditions all over the US continue to rapidly deteriorate. 

 On Thursday we learned that the number of initial claims for unemployment benefits last week was the highest in “4” months…The job market continues to suffer. Another 885,000 people filed for first-time unemployment benefits last week an increase from the week prior and higher than the 800,000 claims that economists were expecting. The latest figures, which are adjusted for seasonal factors and reported by the Labor Department, are particularly grim since last week’s numbers were revised up to 862,000 the highest level since mid-September.

In a so-called recovery this is not how the numbers are supposed to be trending now are they. For four of the past 5-weeks we have seen the number of new unemployment claims rise, and I have been warning that we should expect things to get even worse as we head into the New-Year as US weekly jobless claims continue to head in the wrong direction. The labor market outlook is bleak as the Covid-19 next nasty wave of the virus is going to likely lead to more shutdowns. Could we soon see more than a million Americans filing new claims for unemployment each week like we did earlier in the pandemic 1^st wave! Remember that the previous all-time record prior to 2020 was just 695,000, and that old record was set all the way back in 1982. We are seeing numbers that we have never seen before in all of U.S. history every single week, and now they are starting to rise once again thanks to new lockdowns in various states.

The number of jobless folks who are collecting aid from one of the two federal extended-benefit programs the Pandemic Unemployment Assistance program, which offers coverage to gig workers and others who don´t qualify for traditional benefits surged to 9.2 million from 8.6 million for the week that ended 11/28/2020.

 The number of folks receiving aid under the second program “the Pandemic Emergency Unemployment Compensation program” which provides 13 weeks of federal benefits to people who have exhausted their state aid also rose from 4.5 million to 4.8 million.

By now, the KING-Trump “recovery” was supposed to be in a raging surge, but instead major firms keep laying off more workers at an astounding pace (cutting costs and establishing new demand levels) on Thursday we saw that Coca-Cola will be eliminating 12 percent of their entire U.S. workforce...I serious doubt that Coca-Cola wouldn’t be doing this if the U.S. economy was about “to turn an hard corner”. All of these large corporations that are letting workers go can see what is about to happen, and they are reducing their payrolls in an attempt to make it through the next economic storm.

 Meanwhile, the lamebrains in Congress is supposedly getting close to approving yet another massive “bailout” “stimulus package”, and the FED is promising to do whatever it takes to support the financial markets (code for propping up the stock markets). Trillions upon trillions of dollars are being blasted into the financial system, and as a result M-2 money supply is up more than 60% so far this year increasing at an almost parabolic vertical rate in 2020.

 Food inflation is rising quite fast...as when the cost of “real” living continues to soar into cloud-9 many American families are going to discover that they are no longer able to afford enough food for the week. And once millions of Americans become hungry, that is when we will see absolutely insane economic riots in this country. All of these things are coming, and we definitely will not have to wait very-long at all for “the other shoe to drop”.