Weekly Market Commentary August 12 2020

The Markets

There was good news and bad news in last week’s employment report.

The good news was the U.S. Bureau of Labor Statistics delivered better-than-expected data about employment. In July, the U.S. economy added about 1.8 million new jobs. The Canadian economy was no slouch, either, with unemployment falling to 10.9 percent, from a high of 13.7 percent in May.

According to Jeff Cox of CNBC, who reported, “…there were wide variations around the estimates as the pandemic’s resurgence dented plans to get the shuttered U.S. economy completely back online. Forecasts ranged from a decline of half a million jobs to a rise of 3 million…

The flip side of employment is unemployment. The U.S. “U-3” unemployment rate, which reflects unemployed people who are actively seeking a job, declined in July. It has moved steadily lower during the last few months, from 14.7 percent in April to 10.2 percent in July. The “U-6” rate, which includes unemployed, underemployed, and discouraged workers (those who are not typically counted as unemployed because they are no longer trying to find a job), has declined from 22.8 percent in April to 16.5 percent in July.

Canada has not released any official data on underemployment and discouraged workers, but the situation here is likely comparable to the data coming out of the United States.

Despite declining unemployment numbers, the U.S. and Canadian unemployment rates are still at around 10 percent – a level that rivals unemployment during the 1981-82 recession and the Great Recession. On Friday, Matthew Klein of Barron’s explained:

“The July data were better than feared, but that doesn’t mean the U.S. economy is in good shape. The danger now is that the private sector’s slowing momentum will be exacerbated by ongoing state and local government retrenchment and the expiration of emergency unemployment benefits that had been supporting disposable income.”

Although hiccups in extending emergency unemployment benefits in the U.S. and CERB in Canada have injected some uncertainty into the markets, major North American stock indices finished higher for the week.

Source: Refinitiv

Uncrowded

As professional sports resume play in empty stadiums, teams are finding innovative ways to support and encourage players and, sometimes, viewers. For instance:

• The National Hockey League has announced that they will hold a modified season through the summer. The league commissioners have decided that all games shall be played in one of a handful of dedicated “hub cities” to limit travel and reduce the risk of spreading the coronavirus. In Canada, the league has chosen Toronto and Edmonton as hub cities.
  
  
• Japan’s Nippon Professional Baseball has robots that dance to the Fukuoka Hawks’ fight song before each game. Jack Tarrant of Reuters reported one humanoid robot and several four-legged robots, “…stamped and shimmied in a choreographed dance that is usually performed by the Hawks’ fans before games…”
  
  
• U.S. Major League Baseball stadiums are filled with cardboard cutouts of fans. However, one broadcaster faked crowd noise and filled the stands with virtual fans in some shots, but not others. Overall, real fans were not impressed, reported USA Today.
  
  
• The National Basketball Association is bringing basketball fans courtside through a virtual experience during live games. The ‘Together Mode for Teams’ uses artificial intelligence to segment fan’s faces and shoulders and show them in courtside seats. “This new experience…gives participating fans the feeling of sitting next to one another at a live game without leaving the comfort and safety of their homes,” reported Tom Warren of The Verge.
  
  
• The Women’s National Basketball Association hosted the first ever live virtual draft by a professional league. Sports Illustrated reported, “…the WNBA draft recorded its best ratings in 16 years. While [WNBA commissioner Cathy Engelbert] noted fans may have been hungry for a live sporting event, she also acknowledged the importance of naming Gianna Bryant, Alyssa Altobelli, and Payton Chester, who died in a helicopter crash on January 26, as honorary draft picks.”

Weekly Focus – Think About It

“Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish.”

--Sam Walton, Businessman and entrepreneur

Best regards,