Jobless claims rise at slower pace -- Cramer and three others on what to watch

New U.S. jobless claims last week rose, but at their slowest pace since the start of the coronavirus pandemic. 

Four market experts share whether they believe the worst is over. 

Glenn Hutchins, chairman of North Island, said the numbers could be far worse than the headline data suggests. 

"Right now there is almost an equal amount ... of other kinds of distress in the labor market. 6.4 million people have dropped out of the labor force in April, they're not actually looking for work anymore. They're not counted in the unemployment numbers -- that's about another 4% in labor force. There are also two parts of the part-time work community that are very large. There are part-time workers who have been forced into part-time work from full-time work and would like to work full time -- that increased by 5 million in April, which is another 3% of the labor force. And then there are other part-timers who stopped looking for full-time work. ... That's another 8% of the labor force. So if you add all those numbers up you've got about another 15% of the labor force that is in some degree of economic distress. This is a very, very weak labor market at this point."

Anastasia Amoroso, head of cross-asset thematic strategy at J.P. Morgan Private Bank, sees opportunity in some of the laggards. 

"We're definitely seeing a rotation -- I don't know if it's a great rotation that is really truly sustainable, let's say, for the next 12 months but I think it is definitely time to have more balance in the portfolios. If you look at what investors have mostly done, they have moved into tech, they have moved into health care which has been the right thing to do. They've been the only sectors that were truly investable, so to speak, but we are looking for catch-up trades and where investors can be looking for catch-up trades is in these Covid, social distancing underperformers. So, yes, some of those are airlines and hotels and consumer discretionary-type names. So we do think that there's more catching up to do in those stocks."

Jim Cramer, host of CNBC's "Mad Money," sees a major split among market participants. 

"We're at a really critical juncture because it feels that there are a lot of people who want to say 'you know what, ignore the unemployment number, full speed ahead' and then there are a lot of other people who say, 'hey, are you kidding me, 1 out of 4 people are on the unemployment line.' ... Very split market. Two very opposing camps, and it's so vociferous that you think that it's not argumentative, it's actually just at this point dogmatic and very philosophical."

Thomas Michaud, CEO of KBW, said a rebound in banking stocks bodes well. 

"The bank stocks went down so much, that there was so much uncertainty, that it was really forecasting an absolute worst-case scenario, and, yes, that's terrible that so many Americans are out of their jobs at the moment. And the second and third quarter are still going to be choppy quarters and we do think provisions could be higher in the second quarter. But I think the relief rally that we've seen in the bank stocks recently is that there are some signs that it stopped getting worse and we're seeing stability before it could get better."

Disclaimer