Tomorrow it’s Thursday and time for another weekly report on initial claims for unemployment. In absolute terms the numbers are likely to be grim. Economists project that tomorrow’s report will show another 1.8 million workers have filed new claims for unemployment. But that would be down from 2.1 million in the prior week. Which itself was down from the week before that.
The number will bring the 11-week total to a shocking 42.5 million new claims for unemployment. But I think the financial markets are likely to see this as more evidence that the re-opening of economies in all 50 states is leading to a turnaround in the economy and that the soon to be concluded second quarter will market the bottom for the economy.
I think anticipation of this data is one of the reasons that the Standard & Poor’s 500 rose by 1.36% at the close today, June 3, and why risk-on assets such as emerging market stocks climbed so strongly. The iShares MSCI Emerging Markets ETF (EEM) closed up 2.33% today.
And I expect another move higher tomorrow on the initial claims trend.
Friday brings another jobs number–on the economy for a whole in May. Economists are expecting that unemployment hit 19.6% in May.
Again, I think the likelihood is that the financial markets will see the downward trend in job losses as confirmation that the economy has bottomed. And that we’ll get a continuation of the rally that we’re seeing the bottom of the economy on numbers that are, from an absolute point of view, shockingly bad.
In trying to make sense of all this it helps to remember that the stock market is an anticipatory system that looks forward to in figuring out what assets are worth.