BRIAN BASHAM, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.
NICK EICHER, HOST: Let’s go straight to New York where financial analyst and advisor David Bahnsen is today in his office there—after months largely unable to travel—working from home in California. David joins us once again to talk about the state of the economy. David, good morning, good to see you.
DAVID BAHNSEN, GUEST: Well, good morning. Good to be with you.
EICHER: So, week of gains on Wall Street. Was it a moderate kind of week or what do you say?
BAHNSEN: Well, it was kind of a boring week net-net. But day by day, the market was up over 400 Monday, down 400 Tuesday, up 200 Wednesday, down almost 400 Thursday, up almost 400 Friday. So, yes, it ended up being up about 275 points, but a lot of volatility still, Nick.
EICHER: Funny you said that. Just as you were running the numbers, I was saying to myself, sounds like a volatile week. But volatility is what’s boring now, right?
BAHNSEN: Yeah. I think that this is something that investors at least have to get used to. But, really, even for non-investors that are just kind of curious about where we are in the economy, which is obviously what you and I spend a lot of time talking about, there is a lot of up and down volatility that is to be expected around the various uncertainties that exist in the system right now. There’s COVID uncertainties. There’s election uncertainties. There’s economic uncertainties. So, certainly you’re going to get that volatility in the market. Net-net, I think there’s a lot of good news out there, but there’s a lot of challenges, too.
EICHER: Well, let’s talk about challenges. We heard Brooks Brothers, the clothing manufacturer, has filed for bankruptcy. People not dressing for going to the office or having meetings. I remember a month or two ago reading Brooks Brothers was going to be sewing facemasks. But now finds itself in bankruptcy.
BAHNSEN: Let me just get the Brooks Brothers thing out of the way, but I’ll lump in with that Neiman Marcus, Limited Brands—there’s a couple of either department stores or wholesale brands that have declared bankruptcy since COVID started and I don’t think anyone should be confused. Those companies were going to go bankrupt with or without COVID. COVID probably accelerated some of it, but these were troubled companies, indebted, that had just kind of struggled through the sort of creative destruction of capitalism. There’s job losses. No one ever wants to see deterioration economically to any stakeholder in a company, but I don’t think that those types of things are indicative of the macroeconomic conditions.
The really structural stuff is what you and I have talked about the most over the last four months or so that we’ve been doing this. And that’s in the employment side. And I continue to be concerned at the elevated initial joblessness. You would think that number would have been coming down by now. It did hit its new COVID low of a little over 1.3 million on Thursday of this week. And that was less than expected, barely. The continuous claims were down almost a million and that was more than expected. That’s good, but I think until we can really feel—you’re going to see those numbers have to get a lot better before we can feel significantly out of the woods.
EICHER: Let’s talk about travel. United Airlines is talking furloughs. What does this say about that sector of the economy? The top four or five carriers are bunched up at the top—with 15 to 18 percent domestic market share each. United is among them and talking about 36,000 furloughs—not quite half the workforce, but close to it. It’s a lot.
BAHNSEN: No, it is. And I don’t know without unpacking it better what is global or international employees versus domestic. There’s a lot of spots around the world right now where international flights are still really delayed. Here’s what I know on the global story of air travel: there were 300,000 people who traveled Memorial Day weekend on one day. TSA actual headcount and there were 750,000 that traveled last Saturday. And two weeks before was like 600,000. So, the number doubled and then through the last two weeks of a lot of increases in COVID and more media craziness, the number still went up another 20 percent or so. But we were at 3 million or 2.8 million or something a year ago. So, like so many things, the numbers are way better and nowhere near where they need to be.
EICHER: Haven’t asked a political question in awhile. What can you read from the market about how it might react to the prospect of a Joe Biden presidency—that’s got to be priced in at this point. Or is that a dumb thing to think about this early?
BAHNSEN: Look, the idea that the market isn’t at all pricing in Biden is absurd. The market is not stupid and the market knows that Biden has a probably double digit lead, if not at least a very comfortable high single digit lead. Here’s the part that matters to markets more—and matters to me more: the Senate. Because if Biden is going to be our president and he says he’s going to do this, this, and this to the economy but there’s 51 Republican senators, then he’s not doing this, this, or this to the economy. So, the Senate is going to be the bigger differential, at least when we’re talking about the market’s reaction to the election, which is a totally different subject than the other political and cultural implications.
EICHER: David Bahnsen, financial analyst and advisor. Good to see you out and about in your New York office again. Thanks. Have a great week.
BAHNSEN: Thanks, Nick.