It was a wild week with stock indices surging the most since April. Despite a record voter turnout, we have seen neither a blue wave nor a red wave as results were mixed and many races were very tight.
As of this time (Friday), the presidential election is not final with several states too close to call. Biden is leading in Nevada by 1.6%, Georgia by 0.03% and Pennsylvania by 0.11%. Georgia and Wisconsin have announced recounts while other states with razor thing margins may follow suit.
One Senate seat flipped from Republican to Democrat, while both Georgia Senate seats go to a runoff election in early January as no candidate got over 50% as required by state law. Two more Senate seats remain too close to call and there is no clear majority.
While Democrats still have a majority in the House, Republicans so far time have gained six seats. 34 seats remain undecided with the Louisiana 5th congressional district house seat headed for a runoff between two Republican candidates as the seat became open too late for a primary election.
Central banks met this week:
- The FED made no changes to monetary policy and is maintaining its bond purchases but called for more fiscal support to the economy. Mitch McConnell pledged to take up relief/stimulus when the Senate reconvenes next week.
- The Bank of England boosted its bond purchases in response to the second wave of Covid-19.
- The European Central Bank announced it will likely take action in December to increase its support the Eurozone’s economy.
Treasury yields fell with the 30-year bond yield at 1.594% and the 10-Year note at 0.818%. Crude oil rose to $37.28 a barrel and natural gas fell to $3.035 per MMBTUs. The U.S. dollar index fell to 92.26 and gold prices rose to $1954 an ounce.
In the economic numbers this week:
- IHS Markit reported purchasing managers indices for October:
- U.S. manufacturing increased from 53.2 in September to 53.4 in October.
- U.S. services rose from 54.6 to 56.9, the fastest increase since April 2015.
- Eurozone manufacturing PMI increased from 53.7 in September to 54.8 in October.
- Eurozone services fell from 48.0 to 46.9 in October.
- China manufacturing increased from 53.0 in September to 53.6 in October, the strongest since January 2011.
- China services rose from 54.8 in September to 56.8 in October.
- Japan manufacturing rose from 47.7 in September to 48.7 In October, still experiencing contraction, but at a lower rate.
- Japan services rose from 46.9 in September to 47.7 in October.
- The Commerce Department reported the U.S. trade deficit fell from $67.04B to $63.86B in the month of September as exports rose 2.6% and import rose only 0.5%.
- The Labor Department reported:
- A seasonally adjusted 751,000 workers filed initial claims for unemployment in the week ending October 24th down 7,000 from a revised 758,000 the week before.
- Continuing claims for regular unemployment fell from 7.756M to 7.285M in the week ending October 24th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 22.7MM to 21.5MM as of October 17th.
- The U.S. added a net 638,000 jobs in October and the unemployment rate fell to 6.9%. For the full report go here: https://www.bls.gov/news.release/pdf/empsit.pdf
- The EIA weekly oil report is here http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the past week:
- Field production of crude oil fell from 11.1MM barrels per day to 10.5MM barrels per day.
- Natural gas storage fell by 36BN cubic feet and is above the average level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 5 to 226. The number of active natural gas rigs fell 1 to 71.
- Factset reported that with 89% of S&P500 companies reporting earnings, the blended earnings decline from Q3 2019 is 7.5%. However, the percentage of companies beating earnings forecast and the magnitude of the earnings beats are at or near record levels.
Please call us if you have any questions.
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.