U.S. markets open in 9 hours 23 minutes
  • S&P Futures

    +15.25 (+0.45%)
  • Dow Futures

    +167.00 (+0.60%)
  • Nasdaq Futures

    +46.50 (+0.41%)
  • Russell 2000 Futures

    +7.80 (+0.52%)
  • Crude Oil

    -0.07 (-0.17%)
  • Gold

    +1.30 (+0.07%)
  • Silver

    +0.14 (+0.60%)

    +0.0021 (+0.18%)
  • 10-Yr Bond

    +0.0320 (+4.96%)
  • Vix

    +0.10 (+0.38%)

    +0.0014 (+0.10%)

    +0.0450 (+0.04%)

    +18.33 (+0.17%)
  • CMC Crypto 200

    +2.17 (+0.98%)
  • FTSE 100

    -31.40 (-0.53%)
  • Nikkei 225

    -0.19 (-0.00%)

Stocks open flat after better-than-expected jobless claims

Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss today’s market with Michael Lee, Michael Lee Strategy Chief Strategist.

Video Transcript

ALEXIS CHRISTOFOROUS: All three major indexes are right near the flatline. Let's talk more about the markets now with Michael Lee of Michael Lee Strategy. Good, as always, to see you, Mike.

Let's talk about the day's economic reports, shall we? Because we saw jobless claims come in. They declined to their lowest level since March. We had 1.2 million Americans still filing first-time unemployment benefits.

That is a shockingly large number. But when you look at it in context, it still is down from what we saw at the peak in March. What do you make of that number? And why aren't we seeing a more aggressive reaction from the markets?

MICHAEL LEE: You know what? The problem with the weekly claims and the ADP payroll we got yesterday is it's just a lot of noise. It's a lot of data coming in. And you can't quite be sure to the accuracy of it.

It is a shockingly high number. Prior to the pandemic, continuing claims were coming in and somewhere around 200,000. 400,000 is your historical mark for an expanding, contracting labor market. And so we were, for the longest period in history, below 300,000 going into this.

And so now to have these numbers come in in the millions is really not good news. But the number that I'm following closely is the continuing claims. How many people have continued to file for unemployment week in and week out? Just because the state unemployment administrators are overwhelmed, so these initial claims could have been an initial claim from a month ago, five weeks ago, two weeks ago. It's just hard to give that the accuracy that you would in normal times.

But the continuing claims, the people that are filing in for week in, week out, I think is your best gauge of labor market data at the moment. And that dropped this week by 844,000 after surprising-- after a jump last week. So I think that's very good news. We have seen a massive V-shaped recovery in this economy, whether it be industrial, production.

Yesterday we got the ISM Non-Manufacturing. And the New Order subcomponent registered the highest reading ever in this survey. So we are seeing a snapback to the economy.

At some point, this rate of change, the rate of return to normalcy is going to slow. I thought we may start to see that in the labor market this week after last week's number. We'll see how that plays out, because we can't keep coming back at this speed for forever. So when that rate of change happens, it'll be interesting to see how that plays out.

My personal opinion is that at some point, we're going to-- it's going to slow dramatically. And it's to be a slow grind to get back to where we were. But we'll see how that plays out.

BRIAN SOZZI: Mike, Goldman Sachs out with a note this morning suggesting that a COVID-19 vaccine would actually upend the market. By upend, they suggest see a rotation out of tech stocks into cyclical stocks. What do you say about that?

MICHAEL LEE: So that's an interesting point of view. I don't know that I buy it. I think right now, there's no growth in the world. Right, there's just no growth in the world.

So the reason why everyone's flooding into these tech stocks is because they are the biggest business. They are the biggest businesses. They essentially are the market, which goes back to why they were on the Hill last week and the interesting breakup questions surrounding them.

I think consumer discretionary is near 52-week highs. You saw some action in the basics yesterday. So I don't know if you're going to see a rotation out of tech at any point in the near future, given their dominance.

You guys were just talking about Apple. I know Dan Ives is a frequent guest on this program. You're heading into a 5G super cycle. You have 900 million plus iPhones that are upgrade-eligible coming into the 5G. If only a quarter or a third of them upgrade their iPhones, it'll be the largest upgrade-- largest recycle into new iPhones we've ever seen.

So I don't see a rotation out of any of these stocks. And the dominance from Amazon in this sort of economy is just-- it's just not going to change, especially with so many small businesses going under. So you may see some additional stocks perform and kind of catch up, versus a rotation out of.

What's really driving the market now, beyond the economic news, is the fact that the money supply has grown by 25% since March. That's never happened. And any time it's grown significantly, stocks go higher. And that's an 11 out of 10 times type of event.

So I don't see a rotation, necessarily, out of anything. What I see is more cash from the sidelines inflating other sectors that haven't worked as well.

ALEXIS CHRISTOFOROUS: All right, we're going to leave it there. Michael Lee of Michael Lee Strategy, good to see you.

MICHAEL LEE: Thanks, guys.