Market Morning: Boeing Going On, Unemployment Confusion, Gilead Treatment, China Barely Contracts

Market Morning

Boeing Back to Work?

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Could Boeing (NYSE:BA) be going back to work? It says so, by April 20th, to resume producing commercial airplanes, which doesn’t seem to be such a smart idea considering that demand for commercial flights has plummeted and the price of flights is in freefall. Commercial airplanes under such conditions aren’t likely to command a very high price and manufacturing them at this point may not be a prudent use of resources. Nevertheless, Boeing is going ahead with this and stocks have taken it as an encouraging sign.

Official Unemployment Rate Meaningless?

The unemployment rate is about to become meaningless. Or perhaps it already is. The 20 million some-odd people that have lost their jobs because of the pandemic crisis are obviously unemployed right now, but they will not be counted in the upcoming statistics by the Bureau of Labor and Statistics. This is because most of those who have lost their jobs are not actually looking for work, and in order to be considered unemployed, you have to be actively looking for a job. The formula used by the BLS for calculating the unemployment rate is the sum of people looking for work divided by the workforce. The 20 million who have lost their jobs are not part of this calculation, by and large, partially because they expect to get their jobs back or are expecting to live off of bailout checks for the next few months. This suggests that the official unemployment rate will climb slowly, and only reach its peak once those that have lost their jobs, start looking for work again.

The question is, will those who have lost their jobs just get their old jobs back? Unlikely, at least not most of them, since most of the jobs lost have been in the service sector where demand will be down for quite a while. Freelance demand though could start to climb as entrepreneurs need spot work done in a more intermittent global economy. Meaning, laborers may have to change their orientation towards making money to a more saltatory stance. According to Dreamshala CEO Siva Mahesh, one should never change your personality for money in this economy. “Instead,” he says, “change your ways of production to earn, save, and invest more money.”

Gilead May Have COVID-19 Treatment

This isn’t the first time that rumors of a possible coronavirus treatment have hit the headlines. Gilead (NASDAQ:GILD) was making headlines in this direction even at the very beginning of the current pandemic. But the most recent story appears to be catching waves as Gilead shares are up 16% on rumors that a possible treatment is progressing. A trial of 125 COVID-19 patients all with respiratory distress, showed that subjects responded well to the drug and most of them have been discharged. The actual results of the trial are not ready yet, so there is nothing official to report other than rumors. Another company that may have a possible treatment that has been attracting investment over the last few days is Pluristem (NASDAQ:PSTI) which is trialing its PLX-PAD cell treatment originally designed for critical limb ischemia, on coronavirus patients. Gilead so far is ahead in the race though, at least according to informal rumors.

China’s GDP Contracts by 6.8%, Officially, As World Furrows Global Brow

In a statistic that surprised pretty much nobody, China’s economy barely contracted considering the entire country was basically shut down. GDP fell officially by 6.8%. Communist party officials likely figured that given the shutdowns during the quarter, it wouldn’t be credible to record growth this time. By contrast though, JP Morgan (NYSE:JPM) believes that second quarter US GDP will contract by about 40%.

“First-quarter GDP data is still largely within expectations, reflecting the toll from the economic standstill when the whole society was on lockdown,” said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank. “Over the next phase, the lack of overall demand is of concern. Domestic demand has not fully recovered as consumption related to social gatherings is still banned while external demand is likely to be hammered as pandemic spreads.”

Chinese stocks, (NYSEARCA:ASHR) meanwhile, haven’t moved much. They remain well within a trading range established since 2016.

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