That means anybody younger than 49 years and four months hasn't been alive long enough to see the unemployment rate this low.
According to the U.S. Census Bureau, as of 2017, the median age of all Americans was 38.1, meaning that half of the population was younger than that age.
A further breakdown of ages shows that 64% of Americans were aged 49 or under. While some of them would have been born before December 1969, primarily the age group would have been born after.
The robust economy is likely the biggest factor working in President Trump's favor in his reelection bid, even as other factors, such as his low approval rating, cut against him. If the numbers remain strong in 2020, it will become more challenging for Democrats to campaign against the him on economic issues. The arguments are going to have to be more structural, such as arguing that the boom has been unequally felt due to deeper flaws in the American economic model.
Stocks popped out of the starting gate Friday, with a strong push from earnings news and a blow-out April jobs report.
X
The Nasdaq led the early advance, up 1% shortly after the starting bell. The Dow Jones industrials climbed 0.5% and S&P 500 rolled up a 0.6% gain.
MercadoLibre (MELI) and Monster Beverage (MNST) topped the Nasdaq, surging on earnings news. Weight Watchers (WW), Adidas (ADDYY) and Universal Display (OLED) also posted powerful early gains on earnings results. Arista Networks (ANET) led the downside, tanking nearly 18% on weak second-quarter sales guidance.
Amazon.com (AMZN) climbed more than 2%, leading its FANG stock peers in early trade, after a boost from Warren Buffett. Marijuana stocks were in motion, with Canopy Growth (CGC) and Tilray (TLRY) surging in early action. Beyond Meat (BYND), which spiked in its Thursday initial public offering, traded sharply higher early Friday.
Chip stocks were mixed Friday, with Cree (CREE) and Taiwan Semiconductor (TSM) rising in morning trade. The iShares PHLX Semiconductor ETF (SOXX) dipped just below the breakeven line, giving it a 0.8% gain so far for the week.
Jobs Growth Soars; Services Data Mixed
U.S. non-farm payrolls swelled by 263,000 new workers in April, the Labor Department reported Friday. That was a full 34% above March's 196,000 new hires, confounding estimates for a drop to 189,000 hirings. Business services, construction and healthcare saw the largest growth, while manufacturing, retail and mining remained largely flat.
The unemployment rate slipped to 3.6%, from 3.8% in March. Average hourly earnings ticked up 0.2%, vs. a 0.1% increase a month earlier. The labor participation rate eased to 62.8%, from 63%.
Markets received a mixed dose of economic news just after the open. Researcher Markit reported the reading for its April services purchasing managers index decreased to 53. That was down from 55.3 in March, while holding just above expecttions for a drop to 52.9.
The Institute For Supply Management reported its April Non-Manufacturing ISM easing to 55.5 for the month, down from 56.1 in March and disappointing forecasts for an increase to 57.3.
Federal Reserve officials could provide some impact on afternoon trade, with speeches scheduled from Chicago Federal Reserve Bank President Charles Evans, Fed Vice Chairman Richard Clarida, New York Federal Reserve President John Williams and Fed Governor Michelle Bowman before the market's close.
Amazon Rises On Berkshire Stake
Amazon climbed 2%, retaking some ground after a four-day decline. Warren Buffett told CNBC Thursday that Berkshire Hathaway (BRKB) established a new stake in the e-commerce, cloud services giant.
Amazon shares touched their highest level since October on Monday. The stock has formed a seven-month cup base with a 2050.60 buy point. This week's pullback leaves the stock chart one day shy of a handle on that base pattern, which could potentially lower the buy point to 1956.44. The IBD Leaderboard stock also cleared an earlier entry for aggressive investors at 1736.51.
MercadoLibre Enters Gap-Up Buy Zone
Latin America e-commerce giant MercadoLibre rocketed 14% higher after reporting its first profit in six quarters. Earnings rose 145%, sales surged 48% — both above analyst targets. The stock had pulled back to test support at its 10-week moving average after a run-up that followed an February breakout.
The stock market slipped into May, after a strong April, with the Dow Jones Industrial Average down 0.9% for the week heading into Friday session. The Nasdaq is off 1.4%, and the S&P 500 is toting a 0.8% decline.
All four of the top stock market indexes rose for a fourth straight month in April. The Dow gained 2.6% for the month, the Nasdaq jumped 4.7% and the S&P 500 grabbed a 3.9% gain. That moved the Nasdaq and S&P 500 briefly to new highs early in the week. The Dow Jones industrials ended Thursday 2.4% below its October high.
For more detailed analysis of the current stock market and its confirmed uptrend, study the Big Picture.
IPO Watch: Beyond Meat, Jumia Rise, Warrior Dives
Stock market newbie Beyond Meat spiked nearly 7% in early action. The maker of plant-based meat products soared 163% in its first day of trade on Thursday. IPOs can be highly volatile on both the up and down sides. Investors should wait until the stocks form a valid IPO base, which provide entry points that help reduce downside risk.
Jumia Technologies (JMIA) traded 5.3% higher early Friday. The Germany-based e-commerce website tumbled more than 13% on Thursday, ending the session 23% below a 49.87 buy point in its IPO base. Shares are up 181% from their April 12 initial offering price.
Warrior Coal (HCC) tanked 12% in opening trade. The stock swung wildly Thursday, dropping more than 8% early, then ending 4.6% higher after its first-quarter report. Shares are up 73% from their April 2017 IPO.
Oil Prices In Flux
Oil prices remain on watch, after diving amid mixed news on Thursday. Energy stocks sold off as West Texas Intermediate swooned more than 3% to settle back below $62 a barrel. Rising U.S. stockpiles were widely cited as the cause for the price drop, even as expiring Iran oil purchase waivers should, in theory, have forced prices higher.
The Trump administration allowed the waivers to expire, putting China, India and six other nations in violation of U.S. sanctions if they purchase oil from Iran. The administration says it will attempt to drive Iran's oil exports to zero, and analysts are forecasting oil exports out of Venezuela — also under U.S. sanctions — are at risk of total collapse.
WTI oil prices inched higher Friday, up a fraction to $61.85. Europe's Brent crude benchmark eased a few pennies, to trade at $70.69 a barrel. The Citigroup Global Markets VelocityShares 3x Long (UWT) gained 1.6% in early trade. The United States Oil Fund (USO) was up 0.5%.
Oil prices may see some impact from BakerHughes (BHGE) weekly rig count survey, due out at 1 p.m. ET.
Beyond Meat Inc. stock skyrocketed Thursday in the best-performing public offering by a major U.S. company in almost two decades.
Shares of the plant-based meat maker — which priced its IPO at $25 a share Wednesday evening — started trading at $46 a share shortly after noon on the Nasdaq, and surged to $65.75 by the end of the session, for a gain of 163%. Prices hit almost $73 a share at their intraday peak. Shares were up another 4% after hours.
It was the biggest-popping IPO for a U.S. company with a market cap of at least $200 million since 2000, according to Dealogic data. That was when Palm Inc. made its debut in March 2000, at the peak of the dot-com boom. The last comparable pop in U.S. markets came in December 2010, when Chinese internet company Youku.com rose almost 115% in its debut on the New York Stock Exchange.
Beyond Meat’s
BYND, +6.75%
market cap jumped from about $1.5 billion Wednesday night to around $3.8 billion Thursday afternoon.
The company sold 9.5 million shares in the IPO to raise at least $240 million. Proceeds of the deal will be used to expand current manufacturing facilities and open new ones, to finance research and development and to boost sales and marketing, along with “general corporate purposes,” according to its prospectus.
Beyond Meat was founded by vegan Ethan Brown in 2009, and its Beyond Burger is sold at Whole Foods and restaurant chain TGIF, among others.
While the company has never made a profit, it is expecting the alternative meat category to become a multibillion-dollar market over time and to take significant share from the $1.4 trillion global market for meat.
The economy added a healthy 263,000 jobs in April, firmly beating analyst expectations of 190,000, according to Friday’s monthly snapshot from the Department of Labor.
The nation's unemployment level fell to 3.6 percent, the lowest since December 1969, and average hourly earnings grew by 0.2 percent, for an annual gain of 3.2 percent, according to the Bureau of Labor Statistics.
While some of those job gains can be attributed to government hiring of the first wave of temporary workers to carry out the 2020 Census — a number that will eventually hit 500,000 by early next year — April's figures are a firm indication that the economy remains on a robust growth track.
"With another strong employment report in April, we’ve gotten reassurance that the labor market is staying on a strong and steady course," said Steve Rick, chief economist at CUNA Mutual Group.
With more open positions than people available to fill them, it's still a job hunter's market, pushing wages higher as companies compete for the best workers. That higher pay, together with low inflation and low borrowing rates, are boosting the economy. The Federal Reserve announced on Wednesday that for the third time this year it would not raise interest rates, citing inflation below its target rate of 2 percent as one of the reasons for that decision.
Still, with an average of just 180,000 jobs added per month, 2019 lags behind 2018, when 225,000 jobs were added each month. February saw just 56,000 job gains — a number that was twice revised upwards by the BLS. Around 100,000 jobs must be added each month in order to balance out population growth.
The retail industry continues to bleed, having lost more than 30,000 jobs in just the first four months of this year. April's figures show an additional decline of 12,000 in that sector. Construction added 33,000 jobs, health care rose by 27,000, and manufacturing gained 4,000 positions.
"We shouldn’t expect eye-popping jobs numbers to continue throughout this year," cautioned Martha Gimbel, director of economic research at Indeed Hiring Lab. "The long-term unemployment rate remains almost twice what it was in the early 2000s, and the share of the labor that is working part-time but would prefer full-time work remains elevated above its low in the previous recovery."
The U.S. jobs machine kept humming along in April, adding a robust 263,000 new hires while the unemployment rate fell to 3.6%, the lowest in a generation, according to a Labor Department report Friday.
Nonfarm payroll growth easily beat Wall Street expectations of 190,000 and a 3.8% jobless rate.
Average hourly earnings growth held at 3.2% over the past year, a notch below Dow Jones estimates of 3.3%. The monthly gain was 0.2%, below the expected 0.3% increase, bringing the average to $27.77. The average work week also dropped 0.1 hours to 34.4 hours.
Unemployment was last this low in December 1969 when it hit 3.5%. At a time when many economists see a tight labor market, big job growth continues as the economic expansion is just a few months away from being the longest in history.
The unemployment rate for Asians fell sharply, plunging from 3.1% to 2.2%.
While last month's slump in the jobless rate came with strong increase in hiring, it also was helped along by a sharp decline in the labor force of 490,000. That brought the labor force participation rate down to 62.8%, exactly where it was a year ago.
A broader unemployment gauge that includes those who have quit looking for jobs as well as the underemployed held at 7.3%, where it has been since February.
Those counted as not in the labor force surged by 646,000 to a fresh high of 96.2 million.
The level of unemployed people plunged by 387,000 in April, bringing the total level to 5.8 million. However, the ranks of the employed also declined by 103,000, according to the Labor Department's household survey.
Professional and business services led job creation with 76,000 new postions. Construction added 33,000, bringing to 256,000 the total new jobs created in the field over the past year.
Health care rose by 27,000, bringing its 12-month total to 404,000, while financial positions increased by 12,000, rounding out an increase of 111,000 in the 12-month period thanks largely to growth in real estate and rental and leasing.
Social assistance increased by 26,000, while manufacturing added 4,000.
Retail, whose fortunes have fluctuated in recent months, saw a loss of 12,000 jobs.
Previous months saw net upward revisions, with February going from a scant 33,000 growth to 56,000, though March's total was reduced to 189,000 from 196,000, for a net gain of 16,000. Year to date, job gains have averaged 205,000 a month.
April's big increase comes amid a mostly postive backdrop of economic data.
GDP increased 3.2% during the first quarter, far exceding expectations, while productivity during the quarter jumped 3.6% for its best gain in five years. Pending home sales rose 3.8% in March, providing some hope in the real estate market so long as rates are held in check.
Earlier this week, the Federal Reserve held the line on its benchmark interest rate, characterizing economic growth as solid even as inflation remains tame. The central bank watches metrics like the nonfarm payrolls report closely for clues both on job creation and wage pressures.
Fed Chairman Jerome Powell said current indications point to a prolonged period of holding pat on increases or decreases in rates. President Donald Trump has said he wants the Fed to cut rates by a full percentage point.
There will be no coasting into the weekend, with Friday looking like a kitchen-sink kind of day for investors.
What we lack in big earnings news, with the bulk now past us, we’ll make up with data as big U.S. jobs numbers roll in, stronger than forecast, and then later we’ll get an ark full of Fed speakers. On Saturday, we’ll get Berkshire Hathaway’s
BRK.A, -0.52%BRK.B, -0.36%
annual meeting, and a chance to tap into the thinking of an all-time investing legend, the conglomerate’s billionaire chief executive and chairman Warren Buffett.
The so-called Sage of Omaha has already been busy, with Amazon
AMZN, -0.56%
up after he told CNBC late Thursday that “one of the fellows in the office that manages money... bought some” shares of the e-commerce giant. While Buffett himself didn’t push the button on that trade, he admitted being “a fan” and ”an idiot for not buying” the e-commerce giant before.
Our call of the day, from Byron Lotter, portfolio manager at South African-based Vestact Asset Management, says Berkshire’s latest move holds an important lesson for investors, given the company has traditionally focused on value-oriented companies — stocks that tend to trader cheaper than fundamentals would warrant — and Amazon’s share price is fairly eye-popping.
“Look forward, don’t look back at what the share price has done. Looking at the company’s history is important, and just because it’s gone up and it’s done incredibly well, don’t let that deter you from buying a share,” Lotter told MarketWatch, in a telephone interview on Friday.
He said if Berkshire isn’t scared off by the fact Amazon shares trade at $1,900 each, neither should investors get intimidated by a share price, and sit on the sidelines because they think they’ve missed out.
“Investors think that because a share is trading at an all-time high and has a market cap of a trillion dollars, Berkshire wouldn’t be buying Amazon,“ he said. “When we were buying (Amazon) at $350 we thought it was high.”
Shares of Amazon, Vestact’s third-biggest holding have gained roughly 100% (ex-dividend) over 2 years, 517% over 5 years, 2,307% over 10 years and 2,109% over 20 years, according to FactSet.
“There’s still huge potential for this company. You have to look at where you think the company is going. Cloud services is in its infancy and so is online retail,” said Lotter.
He’s also a fan of Google parent Alphabet Inc.
GOOG, -0.47%GOOGL, -0.58%
which has seen a rough ride this week on disappointing earnings.“Google is growing at an expected 20% per annum, trading at 19 times earnings. In my opinion, it’s offering a lot of value.”
And another lesson from the Sage of Omaha? It also may be time for value investors to change their thinking a little. Berkshire has long stuck to companies that are considered less risky, with slow and steady growth, like American Express and Coca-Cola. That’s as opposed to growth stocks, companies with strong momentum like Amazon and Apple, which Berkshire also dipped into back in 2017 for the first time. Both those stocks though, have value qualities, argues Lotter.
“In this day and age, with so much information out there, and markets so transparent and liquid, if you stay in that deep-value box, you’re going to miss out and underperform the markets ,” said Lotter. “Gone are the days when you can find a quality company that has good potential trading at 10 times earnings.”
I may step on some toes here but I think Berkshire buying Amazon shares is a big blow for deep value. Value is not just about hard fundamentals anymore. Growth, transparency and a more holistic view of the bigger picture is required.
— Byron Lotter 🇿🇦 (@Byron_vestact) May 3, 2019
Europe stocks
SXXP, +0.41%
are mostly higher as a batch of companies report. Asian equities had a cautious session, with China and Japan stocks still out for a holiday.
The economy
U.S. payrolls for April jumped 263,000, better than forecast, and the jobless rate hit a 49-year low, while hourly wages rose. After that, the Markit services purchasing managers index, the Institute for Supply Management’s nonmanufacturing index.
As for Fed speakers, the day starts with a speech from Chicago Fed President Charles Evans in Sweden. Then an all-day conference at the Hoover Institute will feature appearances by Fed Vice Chair Richard Clarida and these Fed presidents—New York’s John Williams, St. Louis’s James Bullard, San Francisco’s Mary Daly and Dallas’s Rob Kaplan.
Jesse Felder, of The Felder Report says investors have been shying away from riskier sectors of the stock market, and that could mean this year’s rally could prove unsustainable. Here’s his chart and our chart of the day:
The chart stacks up the S&P 500 and a custom index Felder made to track sector preferences. When investors are embracing riskier sectors, that red line moves up, though those lines have been diverging this year. He said that also happened at the stock market’s top in 2007 and at last summer’s new high.
The buzz
Wild about non-meat. Plant-based meat maker Beyond Meat
BYND, +163.00%
is up another 13% after shares soared 163% in its Wall Street debut on Thursday, the biggest IPO pop since 2000.
Rubbermaid maker Newell Brands
NWL, +2.09%
satellite provider Dish Networks
DISH, -3.09%
and hydrocarbon exploration group Noble Energy
NBL, -2.08%
are reporting Friday.
The stat
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9.1% — That marked the first-quarter return for Norway’s $1 trillion sovereign wealth fund, marking the best-ever quarter for the biggest such fund in the world. The Government Pension Fund Global is managed by Norges Bank, which credited a strong bounce for global stocks to that hefty gain, specifically tech stocks.
He was the gentlest of giants-A big man with an even bigger heart who never failed to make me smile & a loyal friend who I loved dearly-I'm grateful for the memories we shared & I'm a better man for just having known him. Thanks Pete #RIPPeterMayhew#Heartbroken@TheWookieeRoarspic.twitter.com/8xbq9HEWF2
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At Tesla’s Investor Autonomy Day last week, Elon Musk laid out the automaker’s plan when it comes to self-driving, but now the CEO attaches a valuation prediction to it as the company attempts to raise over $2 billion.
Following the announcement, Citigroup and Goldman Sachs, two of the underwriters of Tesla’s new capital raise, held a call for investors with some Tesla executives, including CEO Elon Musk.
According to people on the call (via CNBC), Musk focused on Tesla’s self-driving effort – going as far as saying that all of Tesla’s current businesses, electric vehicles, energy storage, and solar, are just a backstop of value.
He reiterated many things that he already said last week during Tesla’s Autonomy day, but he also added that he sees Tesla achieving a $500 billion market capitalization thanks to its self-driving technology:
Musk confidently told investors on the call that autonomous driving will transform Tesla into a company with a $500 billion market cap, these people said. Its current market cap stands around $42 billion. He also said that existing Teslas will increase in value as self-driving capabilities are added via software, and will be worth up to $250,000 within three years.
It would represent a more than 10x increase over Tesla’s current market capitalization of about $42 billion.
The CEO reportedly refused to answer some questions relating to Tesla’s current business efforts in order to focus on autonomy:
“But he also tried to drive the conversation back to autonomy, calling it the fundamental driver of value for Tesla, and urged investors to stop nit-picking over vehicle margins.”
Musk plans to himself participate in the capital raise by buying an additional $10 million worth of Tesla shares.
Electrek’s Take
Here’s the thing: if Elon is right about Tesla’s self-driving strategy, then he is also right about the valuation.
If Tesla can indeed turn virtually all the vehicle it produced since October 2016 (after some computer retrofits) into self-driving cars/robotaxis with a software update at some point next year, the company would indeed create hundreds of billions in value overnight.
Of course, it’s not as simple as that. The rollout will most likely be gradual as regulatory approval will happen based on jurisdiction, but you get the point.
As I previously stated, I agree with Tesla’s approach to autonomy and therefore, I think Tesla can get there.
But Tesla’s current business of selling vehicles to customers at a decent gross margin remains extremely important.
The problem is that Tesla needs to get there and Elon has been historically inaccurate when it comes to the timeline of self-driving.
What the first quarter showed is that Tesla can really be at risk with just a few months of issues. In other words, Tesla needs to survive while delivering as many vehicles as possible until its self-driving technology works
$2 billion more in the bank should help and give them something like a year of buffer.
Getty Images
