Last week the Dow gained about 0.66% over the course of the week to close at 34,756. Trading volume for the period was down but this was due to a Memorial Day shortened trading week. IBD still lists the rally as “under pressure” citing a series of higher volume down days since a record high of 35,091 was reach about three weeks ago. It seems some of the big boys are taking profits and risk off the table.
The Economy and Earnings
Economist Chris “Real” Low over at FHN Financial noted that both the ISM and Market gauges rose showing strength in orders but a slowdown in production. The backlog and supplier delivery times surged and bottlenecks in the supply chain remain an issue. The general feeling at the Federal Reserve is that shortages and bottlenecks are transitory and will end eventually.
Car sales in the US fell from an annualized pace of 18.51 million units to 17.4 million. The reason behind the falloff is a decrease in the number of cars available for sale due to the parts and chip shortages. Elon “Megalomaniac” Musk compared the chip shortage to the toilet paper shortage last year and said car companies are hording chips and making it worse for everyone else. On a side note I was at the GAR on Memorial Day and had a chance to talk to a scout dad who works in that industry. He said the current feeling is the chip shortage will last until mid-2022. He also mentioned that Malaysia just shut its boarder due to a covid surge and will be offline for a few weeks which could further mess up the supply chain.
The US added 559,000 jobs in May and the unemployment rate fell from 6.1% to 5.8%. While the report was a positive step is revealed that job growth is still falling short of employers need for labor. An example is seen in a recent Seattle Times article where the local hospitality industry has need of over 30,000 workers to fill vacancies. One thing working against this however is current unemployment benefits which total $640 per week putting them at $16 per hour. Since this is above the minimum wage of $15 per hour there are some who don’t want to take a pay cut to go to work!
Items of Interest
Jeff Bezos and his brother are headed to space next month in late July. Bidding to see who rides along with them has already passed the $2 million mark. This will be interesting to watch. I wonder if Elon Musk will bid on the seat as a teaser.