Stocks ended the holiday shortened week mixed.
Congress finally passed a bill Monday on a $900BN relief/stimulus and $1.4TN to fund the government through September 2021. However, approval of this bill was thrown in doubt Tuesday evening by President Trump insisting it would need, among other things, larger stimulus payments for him to sign it. On Christmas Eve, House Speaker, Nancy Pelosi, tried to get a vote on a bill to increase the stimulus payments to $2,000 but to get a vote on such short notice required unanimous consent by the GOP leadership and they declined. Ironically, most Democrats support the bigger stimulus payments but the President’s own party does not. President Trump hasn’t said that he will veto the already passed legislation. In most cases a bill becomes law if the president does nothing after 10 days. However, the 116th Congress ends at year end and if it is not signed by then, it will be a “pocket veto” and will a new bill will need to be passed by the 117th Congress after the first of the year. Nancy Pelosi intends to go through the more lengthy procedure on the 28th to get a bill up for a vote that will only need a majority to pass the House. Then it would need support from the Senate leadership to put it up for a vote and the president would need to convince several Republicans in the Senate to back it. If this doesn’t get approved, there will need to be another stop gap spending bill or the government will shut down.
A second vaccine from Moderna was approved and started distribution. Also, federal government is procuring another 100M doses of the Pfizer vaccine. This success was overshadowed by reports of two new, more contagious strains of the virus, one in London and another in South Africa. At this point, it is believed the vaccines will still be effective against the London strain but perhaps less effective against the South African strain. More testing is required to verify this.
The U.K. technically left the European Union at the beginning of 2020 but had until the end of 2020 to negotiate a trade deal. On Christmas Eve the U.K. and Europe announced an historic trade deal pending approval by their respective legislatures.
Economic data this week provided a mixed economic picture as household spending and incomes fell in November but so did unemployment claims.
Treasury yields fell with the 30-year bond yield closing at 1.663% and the 10-Year note at 0.93%. Crude oil fell to $48.30 a barrel while natural gas fell to $2.542 per MMBTUs. The U.S. dollar index rose to 90.32 and gold prices fell to $1882.60 an ounce.
In the economic numbers this week:
- The National Association of Realtors reported that existing-home sales fell 2.5% in November from October. However, November home sales were 25.8% higher than November 2019.
- While record low interest rates have boosted sales, the inventory of existing-homes have fallen to their lowest level in records starting in 1982.
- The median price for existing homes has risen 14.6% from a year ago.
- The Commerce Department reported in November:
- Household spending fell 0.4%.
- Personal income fell 1.1%.
- The personal consumption expenditures price index was unchanged.
- The personal savings rate fell from 13.6% to 12.9%.
- New home sales fell 11% but were 20.8% higher than last November, as builders struggle to keep up with demand.
- The Labor Department reported:
- A seasonally adjusted 803,000 workers filed initial claims for unemployment in the week ending December 19th. This was down 85,000 from a revised 888,000 the week before.
- The four week moving average of initial claims, designed to smooth out weekly volatility, rose 4,000 from the previous week’s revised average of 812,250.
- Continuing claims for regular unemployment fell from 5.5MM to 5.3MM in the week ending December 12th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 20.6MM to 20.3MM as of December 5th.
- For the full report go here: https://www.dol.gov/ui/data.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 was unchanged at 11.0MM barrels per day.
- Natural gas storage fell 152BN 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 1 to 264. The number of active natural gas rigs rose 2 to 83.
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
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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.