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Weekly Market Recap: May 11, 2020

The week in review

  • Markit non-mfg. PMI at 26.7
  • ISM non-mfg. PMI at 41.8

The week ahead

  • CPI
  • PPI
  • Retail sales
  • Industrial production
  • JOLTS

Thought of the week

The April employment report carved out the left-hand side of a U-shaped recession in brutal fashion. Nonfarm payrolls fell by 20.5 million and the unemployment rate spiked to 14.7%, the highest rate on record back to January 1948. As highlighted in this week’s chart, job losses were concentrated in industries directly impacted by this crisis or tied to social distancing. Leisure and hospitality had the sharpest decline of 47%, or 7.7 million jobs. While 18.1 million workers have reported they are on temporary layoff, and therefore a portion could be reemployed as the country gradually reopens, workers in industries most restricted by social distancing could also be the last to recover completely until we get a vaccine.

Additionally, expanded unemployment benefits through July 31 could make unemployment a more financially viable option than going back to work for lower wage earners. The longer this downturn persists, the more companies so far only indirectly impacted by this crisis will be forced to lay off workers due to cash flow and profitability pressures. Therefore, the unemployment rate could rise over the next few months before drifting down slowly by the end of the year, but it is likely to remain in the double digits entering 2021. It may be some years before the unemployment rate falls to the historic low it set just a few months ago, but we do expect that the vast majority of the jobs lost in April should be regained within two years of a post-vaccine economic reacceleration.

JPM Asset Management Weekly Market Recap Chart of the Week May 11 2020

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Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

JPMorgan Distribution Services, Inc., member of FINRA.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

©JPMorgan Chase & Co., May 2020

Unless otherwise stated, all data is as of May 11, 2020 or as of most recently available.

Disclosure: J.P. Morgan

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. International investing involves a greater degree of risk and increased volatility. There is no guarantee that companies that can issue dividends will declare, continue to pay, or increase dividends. Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage.

JPMorgan Distribution Services, Inc., member of FINRA.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. and JPMorgan Asset Management (Canada) Inc.

 

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