Stocks continued to sell off, although with less volatility. March data showed an unprecedented global slowdown as economies are hit with stay at home orders. Even China, who has largely attempted to get back to work, has seen only an anemic recovery in manufacturing with worsening contraction in the services sector in the month of March. First time claims for unemployment surged to a new all-time high last week and the March employment number saw a large drop.
Crude oil staged a huge reversal from recent lows as news from Saudi Arabia signaled a willingness to reverse its recent price war with Russia and called for an urgent meeting of OPEC+ and a group of other countries to try to rebalance supply and demand. However, at this time, it is uncertain if an agreement can be reached as Saudi Arabia is trying to include all significant oil producing countries including the world’s largest producer, the United States. The Trump administration stated that we rely solely on market forces and do not limit production at the federal level. Restrictions could take place at the state level and is being considered in Texas. The question is whether any cuts will be big enough to fix the oversupply and reduced demand to bring prices to a sustainable level.
Progress was made in starting to push out money from the Cares Act with small business beginning to apply for forgivable loans on Friday.
Treasury yields fell with the 30-year bond ending at 1.224% and the 10-Year note at 0.602%. Crude oil surged 33% to $28.86 a barrel and natural gas fell to $1.651 MMBTUs. The U.S. dollar rose sharply against a basket of currencies and gold prices rose to $1648.50 an ounce.
In economic numbers this week:
- IHS Markit reported the final (not the preliminary Flash numbers):
- U.S. Manufacturing PMI fell to 48.5 in March. This was below the preliminary 49.2 Flash number and much worse than the expansionary 50.7 for February. 48.5 represents the fastest contraction since August 2009.
- U.S. Services PMI fell from 49.4 in February to 39.8 in March.
- Eurozone composite (manufacturing and services) PMI fell from 51.6 in February to 31.4 in March
- China Caixin manufacturing PMI rose from 40.3 in February to 50.1 in March.
- China Caixin services PMI rose from 26.5 in February to 43.0 in March.
- Japan Manufacturing PMI fell from 47.8 in February to 44.8 in March.
- Japan Services PMI fell from 46.8 in February to 33.8 in March.
- The National Association of Realtors reported that in February, pending home sales rose 2.4% after rising 5.3% in January. This is the highest in three years on the heels of lower mortgage rates.
- The S&P CoreLogic Case-Shiller National Home Price Index was up 3.9% in January from a year earlier up from 3.7% year over year in December.
- The Commerce Department reported the U.S. trade deficit fell 12.2% in February from the previous month as shutdowns in China affected exports to the U.S. Both exports and imports fell.
- The Labor Department reported
- First time jobless claims in the week ending March 13th rose a record 6,600,000 to a seasonally adjusted 10MM.
- The U.S. lost 701,000 jobs in the month of March.
- The unemployment rate rose from 3.5% in February to 4.4% in March.
- In good news wages were up 3.0% from a year earlier.
- The EIA weekly oil report is attached. Also, the EIA reported in the past week:
- Field production of crude oil was unchanged at 13.0MM bpd.
- Natural gas storage fell by 19BN cubic feet and is above the five year average at this time of year.
- Baker Hughes reported the number of active oil rigs fell 62 to 562 and the number of active gas rigs fell 2 to 100.
Remember we are here to support you, to answer your questions and address your needs. Please do not hesitate to call us.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith AIF®
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
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.