With all the bad news this week, I thought I’d pass along some good news. An asteroid buzzed the Earth on Monday just missing us by less than 50,000 miles. In planetary terms, that’s a close shave. The asteroid measured by 69 feet and 154 feet in diameter so it could have done some real damage.
I tell you that good news first because the economic outlook continues to resemble a loaded asteroid field. The next big economic announcement will be the employment report on Friday morning. I’ll warn you now–expect it to be very ugly. The unemployment rate may jump to the highest level in 25 years.
Wall Street currently expects that February payroll report to show a loss of 630,000 jobs. ADP says it will be 697,000. I won’t even hazard a guess but it will be bad, and we haven’t even hit bottom yet. Companies continue to announce major layoffs in order to cut costs.
The outlook for financials is also pretty bleak, even for high-quality firms. U.S. Bancorp (USB), which is probably the best-run bank in the country, just slashed its dividend by 88% (here’s what I had to say yesterday about my appreciation of dividends). I have to give USB some credit; they haven’t reported a single earnings loss during this crisis. Despite this, the environment is just too difficult and I rate the stock a Sell.
Finally, the February ISM non-manufacturing index fell to 41.6. That was just above the Street’s consensus of 41.0. Still, any number below 50 indicates a contraction.
I’m sorry to pass along all this unpleasant economic news. Did I mention that an asteroid just missed us?