Employment Reports
This cartoon pretty
much sums it up. We still have a large
section of the population that feel it makes more sense for them to stay home
than to search for work. The ADP
employment report, the initial claims report, and the continued claims report
all reflect the same info.
Payrolls up-ticked, new unemployment claims
down-ticked, continued claims stayed flat.
I’m sure the
financial press will tout this as a big win (almost 1M jobs added!), but in
reality, the economy is struggling to get back to pre-pandemic levels of
employment.
The increase in
employment was led by the services sector (850k jobs added). 440k were added to
leisure & hospitality portion of the services sector, which was the hardest
hit of all employers with the government shutdowns. The good-producing sector
added approximately 128k workers, meaning supply bottlenecks will continue.
Tomorrow the
unemployment rate will be released.
This gets back to
what I’ve been saying the past two days.
Labor conditions remain tight. To
coax workers out of hibernation, employers will need to raise wage rates. The other option for employers, is to wait it
out in hopes that your state will end the emergency unemployment benefits
early. There is going to be a red state
vs blue state battle with workers and businesses as the pawns. As a reminder, the first states to end the
bonus unemployment payments will be Alaska, Iowa, Mississippi, & Missouri on
June 12.
I anticipate that
the next employment report (due out on June 30th), will be a lot
more interesting.
ISM Services
The Services PMI
came in at 64%! A record high! This
shows expanded activity in the service sector of the economy which is also
reflected in the employment data that came out today. All industries reported growth! Respondents
to the survey were experiencing increases in activity with frustrations at
delivery delays and labor issues.
Optimism in the services sector is running high with pent-up consumer
demand coming back strong. A few respondents also mentioned concern with
escalating prices for inputs and material shortages. The list of commodities up in price and
commodities in short supply is shocking.
Gold and Silver
Gold and silver sold
off heavily this morning. This looks
like a technical pull-back to me. I
always relish the opportunity to add on red days and sell on green ones but I
think patience should be used. A better
deal could show up tomorrow or early next week while a new support is
found. I think gold will find that
support around $1850. Consolidation
needs to happen before the next move higher.
Silver has gotten
stuck at this channel between $26.50 and $29.
The last time we had $30 silver was February of 2013. I think the move
higher in silver is going to be soon. We
seem to be slowly marching higher since the low at the end of March. I think the next time $30 gets challenged, a
breakthrough will happen. I’m looking to
add to my positions of CDE, FSM, AGQ, and PSLV.
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