9 Things To Watch This Week
With massive uncertainty everywhere from the economy, to the coronavirus, to politics, to the protests and riots…
Today, I want to give you some clarity on 9 Things Watch This Week that will affect your portfolio and the economy…
- Earnings Seasons Continues Rolling
Earnings season is here in full affect and companies are reporting generally poor earnings in the 2nd quarter of 2020.
This was expected due to the lockdowns and quarantines and overall lack of people doing things, buying stuff, and going places.
Because an estimated 70% of United States economic output is based on consumer spending.
So far banks, oil companies, restaurants, hotels, airlines, and car companies all appear to be big losers of this earnings season.
And tech companies and food producers and sellers appear to be the biggest winners.
I’ll keep you up to date on what these mean – if anything important – to the long-term prospects of the companies we’ve written about.
You can find links to these recommendations at the end of this message.
Seeing quarterly and yearly earnings helps me understand what’s going on in the market via individual stocks… And this helps me spot potential trends to take advantage of and trouble areas to watch out for so I can let you know about them.
Another major thing to keep an eye on – especially during crazy times like now – are when the US government releases updated financial and employment data.
Why do I watch this?
For the same reasons as above… To help spot potential trends you can and should take advantage of. And, to help you avoid potential major problem areas.
Here are the major government data releases I’m watching this week.
2. Consumer Confidence – August 25th, 2020
This is important to watch because it shows how confident people are in buying and selling things.
And because 70% of US GDP is based on consumption – this is super important.
For reference this number was 131 back in February before the pandemic. And as of its last reading on July 28th it was 92.6.
This means there was a massive drop in consumer confidence from February to July due to the coronavirus and mass unemployment.
If this number goes up it’s a sign people are buying and spending more which is a positive for the economic recovery.
If it falls from 92.6 it’s a sign that people aren’t buying and selling as much as last month… This a sign the recovery may be stalling.
3. House Price Index – August 25th, 2020
We already have some preliminary data on this…
Due to historically low interest rates people are buying and selling houses more often… And this leads to higher prices on homes in many locations around the US.
This was found out last week when information on new home sales and new home builds was released.
It will be interesting to see if this trend continues for already built homes or not.
If home prices are going up nationwide it means people are buying and selling more.
If home prices fall it means the opposite.
If prices are going up it’s a good sign for the economy. If they’ve slowed down, it’s a bad sign for the economy.
Because if this slows significantly it means people either don’t have the money to buy a house due to unemployment issues. Or that banks aren’t lending as much to people to buy houses.
Neither is good for the economy.
Updated new home sales data also releases on August 25th.
And pending home sales data released on August 27th.
These 3 things combined are important factors in showing the direction the housing market – and overall economy is going.
4. Core Durable Goods – Released On August 26th, 2020
This number shows the change in the total value of new orders for manufactured goods.
It’s important because it shows if people are buying goods as much in August as they did in previous months.
Like most of the other numbers on here…
If this is rising it’s a good thing for the economy… If its falling, it’s a bad sign for the economy.
Last month’s reading was 3.3% which was down from 4% the previous month… But up from negative 7.4% in May.
This will be important to see because from July to August many cities and states saw restrictions reimposed on things like theatres and restaurants.
Watch the trend from month to month here as the most important thing.
5. Crude Oil Inventories – Released On August 26th, 2020
These are important to show how much inventory rose or fell in the month to month period.
If inventories fell it shows that people are driving, traveling, and flying more… All is good for the economy.
If inventories rose it shows people are doing these things less which is bad for the economy.
6. Initial Jobless Claims – Released on August 27th, 2020
Pay attention to the trend.
From March until about June this number declined on a weekly basis… Even though the absolute numbers were still horrific. The decline was a great sign we were headed in the right direction in terms of employment.
Then when the coronavirus cases began exploding it started rising again on a weekly basis.
Two weeks ago, this fell below 1 million jobs losses for the first time since March 2020.
But last week this jumped back above 1 million to 1.1 million new jobs lost.
If the trend continues down this week, that’s a great sign of economic recovery.
If it goes back up it’s a sign the recovery may be stalling.
Again, the trend here will be more important than the absolute number. And I’ll keep you up to date on this in the coming weeks.
7. Continuing Jobless Claims – Released on August 27th, 2020
For the same reasons as above this is also ultra-important.
But a further note on this one is that this is the number of people still receiving federal and state unemployment benefits each week.
This amount fell slightly two weeks ago which is a good first sign of an economic recovery.
And then it fell slightly again last week.
But again, the trend here is more important than the absolute numbers.
If this keeps going down this week, it’s a good sign the economy is recovering.
If it raises again it’s a sign the recovery is stalling.
You want to see this go down significantly over time because that means more people are back working.
Especially with a current estimated unemployment north of 30 million Americans.
And that’s a good sign not just for people and their families. But also, for the entire economy.
8. United States GDP Figures For The 2nd Quarter 2020 – Released on August 27th, 2020
While everything on this list is important to some degree… This one and the next one are the most important.
Because restrictions in many cities and states were reimposed over the month since the release of the 2nd quarter preliminary GDP numbers… And those numbers were the worst on record since The Great Depression.
I want to watch these to see if this estimate rose, fell, or stayed about the same as the preliminary estimate last month.
Either way, the number is going to be historically bad… But it’s just a matter of how bad it will be.
9. Federal Reserve Chairman Jerome Powell Speaks – August 27th, 2020
This is important for many reasons…
Mainly to see what Federal Reserve Chairman Jerome Powell says about the state of the economy…
- Is it recovering?
- Is the recovery stalling?
- What does the Chairman expect out of the economy for the rest of the year?
- What does the Chairman expect in 2021 and beyond?
- How long does he think it will take to recover to Pre Covid level economic output?
The answers to these questions will be ultra-important to watch to see what you should expect in the short and medium term when it comes to the economy.
And its effects on all of us.
In the meantime, click the links below to see the stocks we recommend helping Depression Proof Your Portfolio.
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Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.