5: ROBERT ARMSTRONG: Welcome to Charts that Count.
7: What's wrong with this picture?
10: The red line is initial US jobless claims
14: of which there have been about 26 million
17: in the past five weeks.
19: The blue line is the S&P 500, which
22: is up almost 30% from its lows in the latter part of March.
27: Now, no one wants to pile a financial crisis on top
31: of a public health crisis.
32: But it is very fair to ask why the stock market is feeling
36: so enthusiastic when millions of Americans are out of work,
39: and hundreds of thousands of businesses are still shuttered.
44: There are two basic points to keep in mind
46: about this at the outset.
48: The first is that the stock market is not
50: the consumer economy.
52: The S&P 500 is about 25% tech stocks.
56: Another 15% is in health care.
58: And both of these sectors have done very well
61: through the crisis, supporting the rest of the index.
65: The second point is that monetary policy still matters
68: and matters immensely.
70: Central bank's easing of interest rates
73: and their purchases of bonds have driven fixed income yields
76: down to almost uninvestable levels.
79: This in turn forces investors who require real returns
84: into the stock market.
86: But is either one of these factors
89: really enough to explain the strength we see in stocks?
93: I don't think that they do.
95: I think there is another assumption at play--
97: the so-called V-shaped recovery, the idea
101: that the economy, once the virus crisis passes,
104: will rebound very quickly and hit its old levels of growth.
110: There is also the assumption that this V-shaped recovery
114: will happen relatively soon.
118: But are we really so confident in this?
120: Last week, the US automaker Ford issued bonds
125: at a yield of nearly 10%, showing just how much investors
130: demand to be paid if they are going
132: to put their money at risk in a company that
136: depends on the strength of the American consumer.
139: Oil for future delivery recently fell to negative price.
145: The market is not as strong as it seems.
149: Be careful out there.
150: [MUSIC PLAYING]
153:
Why the U.S. stockmarkets sometimes ignore the unemployment statistics. This is a short video from Britain's Financial Times but it includes loads of vital vocabulary related to the economy and market trends. The presenter has an American accent.
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