The Recovery Will Be Weaker And It Will Take Longer

The Recovery Will Be Weaker And It Will Take Longer

Total State & PUA ICs



Universal Value Advisors

While markets were slightly higher on the week (see table), there was a clear rotation back toward technology after several weeks of a lull for that sector. This is clearly shown by the week's Nasdaq



NDAQ

outperformance.

Market Performance



Universal Value Advisors

Markets continue to ignore economic reality and continue to be focused on a rosy set of assumptions about a rapidly approaching post-virus period with demand so pent-up that GDP and corporate profits explode. In addition, inflation will magically appear. None of this is borne out by the emerging set of economic facts. What happens when markets wake up to reality?



Economic Reality

On the unemployment front, in the state programs, Initial Claims (ICs) fell -151K from 1.112 million (Not Seasonally Adjusted) the week of January 9th to 961K (January 16th), a seemingly upbeat number, until one views the Pandemic Unemployment Assistance (PUA) programs. ICs there swelled from 285K to 424K, or by +139K over the same week, almost completely offsetting the decline in the state programs. When viewed from this reality, ICs remained at the +1.4 million