Markets were buoyed by a speech Wednesday by FED Chair Powell indicating smaller rate hikes beginning in December.  Also, the FED’s preferred measure of inflation, the core personal consumption expenditures index, rose only 0.2% in October creating optimism that inflation may be coming down.  Even a stronger than expected jobs number on Friday did little to derail the optimism and the rally left all major stock indices with gains for the week.  Emerging Markets saw the biggest gains, likely due to anticipation of an easing of Covid Zero in China.

The EU reached an agreement to cap the price paid for Russian oil at $60 per barrel.  This should take effect on Monday which will affect purchases from all EU countries and non-EU members of the group of seven including the U.S., Canada, Japan and Australia.  The agreement will prevent the disruption and destabilization of global oil markets while limiting Russia’s profits from selling oil.  Russia claimed it would not sell oil under a price cap and would rather cut production.  Russia has focused on exports to China and India which are not taking part in the cap.  Ukraine criticized the $60 cap as too high.

Over the weekend, OPEC+ met and decided to leave production levels unchanged due to uncertainty.  It is not known how the supply of oil will pay out given the Russian price cap and the possibility of Covid Zero being relaxed in China.

Treasury bond yields fell with the 30-year bond down to 3.545% and the 10-Year note at 3.494%.  30-year mortgage rates fell to 6.57%.  Crude oil rose to $80.24 a barrel and natural gas fell to $6.227 per MMBTUs.  The U.S. dollar index fell to 104.49 and gold rose to $1812.80 an ounce.

• S&P Global released its purchasing manager’s indices for November.  Keep in mind that anything over 50 represents expansion while anything under 50 represents contraction.
  • Japan manufacturing PMI fell from 50.7 to 49.0.
  • Mexico manufacturing PMI rose from 50.3 to 50.6.
  • U.S. manufacturing PMI fell from 50.4 to 47.7.
  • China manufacturing PMI rose from 49.2 to 49.4, still contracting for the fourth month in a row.
  • Eurozone manufacturing PMI rose from 46.4 to 47.1, the fifth month in a row of contraction.
• The S&P CoreLogic Case-Shiller National Home Price Index fell 1% in September, declining for the third straight month.
  • From last September the index is up 10.6%, down from a 12.9% year over year increase in August.
• The Eurozone reported inflation in was 10.0% from a year earlier in November.  This was down from 10.6% year over year in October.
• The Commerce Department reported:
  • 3^rd Quarter gross domestic product was revised from previously reported 2.6% to 2.9% annualized growth rate.
  • Personal spending rose 0.8% in the month of October. 
    • The personal consumption expenditure price index rose 0.3% for the month and 6.0% from a year ago.
    • Adjusted for inflation, spending increased 0.5%.
    • Excluding volatile food and energy, prices rose 0.2% for the month and 5.0% from a year ago.  This is the FED’s preferred measure of inflation.
  • Personal incomes rose 0.7% in October and 0.4% adjusted for inflation.
  • The personal savings rate was 2.3%.
• The Labor Department reported:
  • The U.S. created 263,000 jobs in November, beating expectations. 
    • The unemployment rate remained at 3.7%.
    • Average hourly earnings rose 5.1% from last November.
  • There were 10.33MM job openings in October.  The number of openings were down 353,000 from September and 760,000 from last October.
    • The ratio of openings per unemployed worker was 1.7, down from 2.0 a few months ago.
    • The number of job quits was just over 4MM, down from a high of 4.5MM in November of 2021.
  • Seasonally adjusted first-time claims for unemployment were 225,000, down from a revised 241,000 in the prior week.

• • • The 4-week moving average of claims, designed to smooth out volatility, was 228,750 up from a revised 227,000 in the prior week.
    • For the full unemployment 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 prior week:
  • Field production of crude oil was unchanged at 12.1MM BPD.
  • Natural gas storage fell 81BN cubic feet and is slightly below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs was unchanged at 627.  The number of active natural gas rigs was unchanged at 155.

Please call is if you have any questions.

Thank you,

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

Founder / Emeritus                                                                            President & C.E.O.                                  269-441-4143                                                                                    517-795-2025

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.