Week-Ending May 8, 2020

Returns in the Markets for the Week-Ending 05/08/2020 Were as Follows:

US Major Market Indexes (The first number in each category is the 1-week performance. The second number is the year-to-date performance)

Dow Jones 30 Industrial Average (+2.56%. -14.74%). S&P 500 (+3.50%, -9.32%). NASDAQ Index (+6.00%, +1.66%). Small-Cap Index (+0.5.49%, -20.30%). CBOE Volatility Index, or Fear Gage, (-24.76%, +103.05%).

US Sector ETFs

XLC Communication Services (+0.4.60%, -3.03%). XLY Consumer Discretionary (+4.47%, -6.05%). XLP Consumer Staples (+0.87%, -7.17%). XLE Energy (+8.17%, -33.86%). XLF Financial (+1.04%, -6.93%). XLV Health Care (+1.62%, -1.91%). XLI Industrials (+1.35%, -21.91%). XLB Materials (+3.33%, -13.95%). XLRE Real Estate (+1.43%, -13.07%). XLK Technology (+6.61%, +3.94%). XLU Utilities (+0.50%, -12.18%).

Global Market ETFs

ACWI all-country World index (+3.51%, -12.61%). ACWX all-country World index ex US (+3.51%, -18.12%). AAXJ all-country Asia ex Japan (+4.45%, -12.18%). EWJ Japan (+2.93%, -11.65%). EZU Eurozone (+1.73%, -22.95%). ILF Latin America 40 Index (+3.65%, -44.01%). EEM Emerging Markets (+4.30%, -17.00%).

Commodities ETFs

DBC Commodity Tracking Index (+4.55%, -29.47%). DBA Commodities Agriculture (+1.02%, -16.24%). USO United States Oil (+13.84%, -79.05%). DBB Base Metals (+4.29%, -13.86%). IAU Gold (+0.55% +12.48%). BDRY Dry Bulk Shipping (-14.02%, -70.23%).

Bond Market

In the bond market, the 10-year US Treasury interest rate went from 0.618 on May 1 to 0.685 on May 8.

Currencies

In currencies, the US Dollar DXY Index went from 99.100 on May 1 to 99.769 on May 8.

Other Significant Events

Week Ahead

Investors will continue to monitor the impact of COVID-19 on the global economy, with focus turning to US and China retail trade, industrial output and inflation data; UK, Germany and Netherlands first-quarter GDP figures; Eurozone industrial production; Australia employment figures, business and consumer morale; and India inflation and industrial activity. Also, central banks in New Zealand and Mexico will be deciding on monetary policy.

It will be a busy week in the US with retail sales and industrial production numbers for April pointing to a record decline in trade and activity due to the coronavirus outbreak. In addition, the preliminary reading of Michigan consumer sentiment for May will likely be at the weakest level November 2011, while April's inflation rate is seen slowing to the lowest level since October 2015. Other impotant publications are producer and foreign trade prices, business inventories, JOLTs job openings, NY Empire State Manufacturing Index, overall capital flows, the government's monthly budget statement and the weekly jobless report.

Elsewhere in America, the central bank of Mexico will be deciding on monetary policy on Thursday, following an emergency rate cut on April 22nd. Other key reports to follow include Canada manufacturing sales and foreign securities purchases, Mexico industrial output, Brazil retail trade, Peru monthly GDP and Colombia first-quarter GDP figures.

The UK will be publishing preliminary estimates of first-quarter GDP and business investment data, alongside foreign trade balance, industrial production and construction output for March. Britain's economy is seen contracting by 2 percent in the January to March period, the most since the last quarter of 2008, as the Covid-19 pandemic forced the government to impose lockdown measures from mid-March.

Elsewhere in Europe, several countries, including Germany and the Netherlands, will publish flash readings of first-quarter GDP, while the Eurozone is set to provide a second estimate. The bloc's largest economy is seen shrinking by 2.1 percent, the worst contraction in 11 years, as efforts to contain the rapid spread of COVID-19 forced many businesses to close and people to stay at home. Investors will also keep an eye on the Eurozone industrial production and trade balance; Germany wholesale and producer prices; Italy industrial output, factory orders and foreign trade; France first-quarter jobless rate; Turkey unemployment rate, retail sales and industrial activity; and Sweden and Norway inflation rates.

In Asia, China will be publishing April's price data, with forecasts pointing to a slowdown in consumer inflation and a deeper producer deflation amid the coronavirus crisis. Other important releases include industrial production, retail sales, unemployment rate, fixed asset investment and monetary indicators. In Japan, investors will turn their attention to the current account, producer prices, Eco Watchers Survey, and March's preliminary reading of the leading economic index.

Meanwhile in Australia, traders will focus on employment figures, NAB business confidence, Westpac consumer confidence, and home loans. Across the Tasman Sea, the Reserve Bank of New Zealand will hold its monetary policy meeting on Wednesday, but no changes are expected.

Other key data for the Asia-Pacific include: India consumer and wholesale prices, industrial production and trade balance; South Korea unemployment rate; Malaysia first-quarter GDP and industrial output; and Indonesia trade balance.

US Stocks Climb Despite Historic Job Losses

Wall Street closed deeply in the green on Friday despite a record 20.5 million jobs lost in April and an all-time high unemployment rate of 14.7%. Stocks rallied as investors bet on an eventual reopening of the economy and that tech companies will continue to drive growth. Meanwhile, WTI crude prices rose 5% to book the second weekly gain. On the corporate side, airline and cruise stocks outperformed the market, suggesting that sentiment is pricing that the worst is over on the health side. The Dow Jones gained 455 points or 1.9% to 24331. The S&P 500 climbed 49 points or 1.7% to 2930. The Nasdaq added 142 points or 1.6% to 9121. All three averages posted their first weekly advance in three. The Dow and S&P 500 were up 2.5% and 3.5% for the week, respectively, while the Nasdaq jumped 6%.

Brent Crude Posts Back-to-Back Weekly Gain

Brent crude settled at $30.97 a barrel on Friday in its second consecutive week of gains, after data showed producers in the number of oil and natural gas rigs in the US fell to a record low of 374 this week. Hopes for a recovery in fuel demand as more countries including Australia moved ahead with plans to gradually lift coronavirus-related lockdown measures also supported prices.

US Participation Rate Falls to 47-Year Low

The US labor force participation rate dropped to 60.2 percent in April 2020 from 62.7 percent in the previous month, reflecting the negative effects of the coronavirus pandemic and efforts to contain it. That was the lowest rate since January 1973.

US Economy Sheds Record 20.5 Million Jobs

The US economy lost 20.5 million jobs in April, less than market expectations of a 22 million cut, and after declining by 870K in March. It is the largest drop ever, bringing the employment to 131 million, its lowest level since February 2011, due to the coronavirus pandemic and consequent restrictive lockdown restrictions imposed such as business closures. Job losses were widespread, with the largest 7.7 million decline occurring in leisure and hospitality. Almost three-quarters of the decrease occurred in food services and drinking places (-5.5 million). Employment also fell in the arts, entertainment, and recreation industry (-1.3 million) and in the accommodation industry (-839,000). The change in total nonfarm payroll employment for February was revised down by 45,000 to +230,000, and the change for March was revised down by 169,000 to -870,000. With these revisions, employment changes in February and March combined were 214,000 lower than previously reported.

US Unemployment Rate Hits Record High

The US unemployment rate jumped to 14.7 percent in April 2020, the highest in the history of the series and compared to market expectations of 16 percent, as the Covid-19 crisis threw millions out of work. The number of unemployed persons rose by 15.9 million to 23.1 million, while the number of employed declined by 22.4 million to 133.4 million. The labor force participation rate decreased by 2.5 percentage points over the month to 60.2 percent, the lowest rate since January 1973.

Thank you and please stay tuned for more upcoming reports.

Institutional Investors - Be sure to visit my website to subscribe and ask for a free copy of the "Bull Valley Advisor" stock market newsletter:

www.bullvalleyadvisors.com

You can also subscribe and listen to my podcasts on Anchor at: anchor.fm/len-martinez-phd-cpa

You can also subscribe and listen to my podcasts on Google Podcasts, Apple Podcasts, Breaker, Radio Public and Spotify

Len Martinez is a Financial Consultant. Information in the "Bull Valley Advisor” newsletter should not be considered as investment advice or an offer to buy or sell securities. Data is derived from sources considered to be reliable including Morningstar, StockCharts.com, YAHOO Finance, FINVIZ, TipRanks, Investing.com, ECRI, OECD, gurufocus, Crestmont Research, Trading Economics and S2O. Results are not guaranteed. Len Martinez is not an RIA. The data is shown for informational purposes and should not be considered investment advice or an offer to buy or sell securities.