Dividends and US weekly unemployment claims rise to unexpected 3 month high

Macro economics are important because the macro news will determine how the federal reserve and the government enact policies. The jobless number gives an indication of how the economy is doing and the confidence of those that are working. For those that are working, if the unemployment rate is low, they have more choices, even if they do not do anything about it, to move to jobs which they like or think they would like to do. Sometimes the mobility is about money, sometimes it is about management, and there are a host of other factors.

In an article by Lucia Mutikani of Reuters, the early December filings for Americans filing first time claims for jobless numbers unexpectedly rose. President Trump has tried to pretend COVID is not a problem, but the number of cases and the people dying have increased and the only remedy is to shut down the economy. Shutting down the economy is to ensure people have little place to gather or more pain for those in the hospitality and tourist sectors.

The good news was in homebuilding where the numbers continue to rise, primarily people moving from the cities to the suburbs and country, to be in bigger houses and more space around them, if they have jobs which allow they to work from home.

The number of claims increased to 885,000 which is higher that what economists polled by Reuters had forecasted, they were expecting 800,000. (in 2007-09 Great Recession the jobless numbers were 665,000).

The jobless numbers are the reason why Congress had pressure to past a stimulus package and the federal reserve is determined to keep interest rates low.

Linking to dividend paying stocks, as long as interest rates remain low, expect a demand for dividend paying stocks where the yield comparison is higher. With all investments, there is comparison over something else, what is attractive now and for the next 3 months. Hopefully with the COVID vaccine and a new administration in the White House which acknowledges the problems of COVID, the economy can move forward. However do not expect interest rates to move in the next year.

There are more questions than answers, till the next time – to raising questions.

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