Stocks ended the holiday shortened week significantly lower with foreign stocks and small cap stocks declining less than U.S. large cap stocks as trade concerns weighed on the markets. Volumes were very light on Friday’s shortened trading day. The 10 year treasury yield fell to 3.08% and the dollar gained against a basket of currencies. Crude oil prices plunged to $50.42, the lowest in over a year due to increases in inventories in the U.S. and overseas. Saudi Arabia has been reluctant to call for a cut in production given President Trump’s calls for continued OPEC production to keep oil prices low. However, late Friday news broke that Saudi Arabia is considering rather than cutting production targets to enforce the production limits now in force. It is believed that the Saudis are producing 1MM barrels a day over the current targets, initially to offset drops in Iranian production. However, due to seven countries including China, India and Japan receiving exemptions from the Iranian sanctions, the decrease in production has been less than initially expected.
A lot will be weighing on the G20 summit November 30th and December 1 to see if there is any progress in the trade situation between the U.S. and China. Also, Black Friday and Cyber Monday sales have the potential to move the markets this week. Adobe analytics reported a 28% increase in online sales on Thanksgiving day.
In the numbers this week:
- The Labor Department reported:
- Consumer prices rose 0.3% in October and were up 2.5% from a year earlier. Excluding volatile food and energy prices were up 0.2% in October and 2.1% form a year earlier.
- Initial jobless claims rose 3,000 in the prior week to a seasonally adjusted 224,000. The week of November 10th was revised up from 216,000 to 221,000. The four-week moving average of claims rose to 218,250.
- The Commerce Department reported:
- Housing starts increased 1.5% in October. The increase was due to multifamily housing with single family home starts falling 0.6%. Rising interest rates and materials costs were attributed to the decline in single family homes. Housing starts have increased 5.6% for the first 10 months of 2018 compared to 2017.
- Durable goods orders in October fell 4.4%, the largest monthly decline since July 2017. Nondefense capital goods orders excluding aircraft, a measure of business investment, were unchanged in October. September durable goods orders were revised down from an increase of 0.7% to a decrease of 0.1%. However, for the first 10 months of 2018 durable goods orders have increased 8.7% from last year.
- The National Association of Realtors reported that existing home sales rose in 1.4% October. However, October was 5.1% below October of 2017.
- The Energy Information Administration weekly report is here: wpsrsummary. Also, the EIA reported
- U.S. Crude oil production remained unchanged at 11.7MM barrels per day.
- Storage of natural gas fell 134BN cubic feet for the first decline since spring as cold weather demand for heating drew down inventories. 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 885 and natural gas rigs was unchanged at 194.
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
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
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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.