The Past Week in the Markets

01 Oct

Most stock indexes were lower for the week with developed international stocks fairing the worst.  The Nasdaq index ended with a modest gain.  As expected, the FED raised its short term interest rate to between 2% and 2.25%.  The language of the FED’s announcement no longer states that the FED is accommodative and indicated that the FED will likely do another quarter percent hike in December.  China announced it was pulling out of talks following the imposition additional tariffs.  The World Trade Organization lowered its forecast for global trade growth ½ percent to 3.9% this year and 3.7% next year.  Economists are predicting that the 3rd quarter GDP growth will slow somewhat in the 3rd quarter from the stellar 4.2% in the second quarter.  Mexico’s incoming president said he would push to keep Canada in the reworked NAFTA agreement.  OPEC met last week and decided not to raise production to offset the U.S. sanctions of Iranian oil scheduled to take effect on November.

The dollar rose this week following the FED’s interest rate increase.  The 10 year treasury yield declined modestly despite the increase in short term rates due to slower growth expectations.  Crude oil rose sharply on the heels of the OPEC announcement.

In the numbers this week:

  • The S&P CoreLogic Case-Shiller National Home Price Index was up 6% in July from a year ago.  This is a decline from the 6.2% Y-O-Y increase in June.
  • The National Association of Realtors reported that pending home sales fell 1.8% in August.
  • The Commerce Department reported
    • New home sales rose 3.5% in August.  From a year earlier new home sales rose 12.7%.
    • Durable goods orders rose a robust 4.5% in August mainly due to a 69.1% increase in civilian aircraft orders.  Excluding transportation durable goods order rose only 0.1%.  Non-defense capital goods orders excluding transportation actually fell 0.5% in August.  For the first 8 months of 2018 durable goods order were up 9.2% from last year.
    • The second revision to gross domestic product growth left it unchanged at 4.2% in the second quarter.
    • Consumer spending rose 0.3% in August.
    • The savings rate was 6.6% in August.
    • The core personal-consumption-expenditures price index, the FED preferred gauge of inflation, was unchanged in August.  The core index excludes volatile food and energy.  With food and energy included the index was up 0.1% in August.  From a year ago, the core index was up 2.0%, the FED’s stated target, and the broader index was up 2.2%.
  • The Labor department reported first time claims for unemployment rose 12,000 at a seasonally adjusted 214,000.  The four-week moving average of claims rose 250 to a seasonally adjusted 206,250.  The increase was attributed to the initial effects of hurricane Florence.
  • The Energy Information Administration weekly report is here wpsrsummary.  Also, the EIA reported
    • U.S. Crude oil production was unchanged at 11.0MM barrels per day.
    • Storage of natural gas rose 46BN cubic feet.  Natural gas storage is below the minimum for this date during the past five years.
  • According to Baker Hughes, In the past week the number of active oil rigs fell 3 to 863 and natural gas rigs rose 3 to 189.

Please call us if you have any questions.

Loren C. Rex, CFP®, AIF®, MA                                                         Erik A Smith

President                                                                                                 Managing Partner

Generations Financial Planning & Wealth Management             269-441-4143

77 E. Michigan Ave, Suite 140

Battle Creek, MI  49017

Tel 269-441-4090

Carrie Fuce, Assistant 269-441-4091

Toll Free: 800-513-8180

Fax 866-381-2301

Visit our Website:  www.genfinplan.com

Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.  Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor.  Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.  The Indices mentioned are unmanaged and cannot be invested into directly.