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Economic Data Deluge

One unexpected development of our nearly 2-month sequestration from the COVID-19 pandemic is the ability to recognize silver linings. Don’t believe me? Try this on: April private sector jobs numbers from Automatic Data Processing ADP were supposed to come in around -22 million on the headline; we “only” saw losses in the month of 20.236 million!

Yes, this is an all-time record. Yes, it is up big from the -27K originally reported in March. But it’s still less of a multiple month over month than the downwardly revised -149K for March. See how this works? It gets easier with practice. Just look at the pre-market Dow following these numbers: it’s up 100 points. The Nasdaq is up 50!

All kidding aside, Services once again took the lion’s share of the headline totals — it lost 16 million positions last month, as opposed to the 4.2 million jobs lost in Goods-producing industries. Leisure/Hospitality, as predicted, fared worst: -8.6 million, followed by Trade/Transportation -3.4M, Construction -2.5M, Manufacturing -1.7M and Professional/Business Services -1.2M. And it doesn’t really matter what size of company, they’re all really bad: Small businesses (<500 employees) lost -6M, Medium-sized firms -5.3M and Large companies (>500) -9M positions in April 2020.

So if companies had decided to “write off” Q1 earnings results, they’re really going to have to do that for Q2. Depends on when our economy can begin to bounce back, and how that affects employment. But first, we have tomorrow’s latest Initial Jobless Claims figures and Friday’s U.S. Employment Situation report from the Bureau of Labor Statistics (BLS). Expectations aren’t pretty for either of these: -3.1M and -22M are the current respective positions.

Hopefully the trillions of dollars being spent to shore up the economy temporarily will at least begin to turn around these dire employment numbers in the weeks and months to come. Right now we’re getting a big smack of reality right in the face.

General Motors GM served up gently mixed Q1 results ahead of today’s opening bell: earnings of 17 cents per share missed the Zacks consensus by a penny, while $32.7 billion in quarterly revenues outpaced the $32.6 billion expected. Income and adjusted Earnings Before Interest & Taxes (EBIT) included a $1.4 billion charge related to COVID-19.

Shares are still wallowing around all-time lows, but are trading up 7% in today’s pre-market. GM had been trading in the mid-$30S before the bottom dropped out mid-March. We will have to look at pent-up demand to see if/when GM can get back up to their previous strength selling automobiles around the world, but we’re not quite there yet.

Shopify SHOP posted big beats on both top and bottom lines this morning, swinging an expected 18 loss per share to a profit of 19 cents. The Canada-based e-commerce company also saw 47% year-over-year revenue growth in the quarter to $470 million — also ahead of the $444 million our analysts were expecting. Subscriptions grew 34% year over year. This Zacks Rank #2 (Buy)-rated stock (it held this rank prior to the earnings release) was already gaining steam; “shelter in place” may provide further near-term growth for the company.

Shares of SHOP are selling off following the earnings release, likely a “sell the news, book the profits” story. Shopify had gained more than 68% year to date.

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