Stocks were mixed this week with only the Nasdaq index showing gains.
Congress passed a short term spending plan funding the government through December 11th. Other than increases for food aid and farm aid, the spending bill did not address Covid relief. Hopes of a stimulus bill prior to the November election are fading. Progress on a Covid relief/stimulus bill is slow with the House working on a smaller bill of around $2.4TN, down from the $3.3TN previously passed. The White House has indicated it will support $1.5TN and several Republican Senators are skeptical of the size of the $2.4TN House Bill.
While Treasury Secretary Steven Mnuchin and Fed Chairman, Jerome Powell have both said stimulus is absolutely needed, Federal Reserve Bank of St. Louis President James Bullard gave a very upbeat assessment of the economy, predicting gross domestic product will rise 35% in the third quarter. He said the rapid expansion “may put the U.S. economy within the reach of a sort of full recovery by the end of 2020.
Treasury yields fell with the 30-year bond yield at 1.404% and the 10-Year note at 0.659%. Crude oil fell to $40.11 a barrel and natural gas rose to $2.80 per MMBTUs. The U.S. dollar index rose to 94.60 and gold prices fell to $1864.50 an ounce.
In the economic numbers this week:
- The National Association of Realtors reported that existing home sales rose 2.4% in August from July and 10.5% from August 2019. Sales of existing homes have been boosted by record low interest rates but constrained by low inventory of homes for sale, especially in lower priced homes.
- The Commerce Department reported that durable goods orders rose 0.4% in August, the fourth straight monthly increase, but smaller than expected. A proxy for business investment, new orders for nondefense capital goods excluding aircraft, rose 1.8% in August. Excluding defense, orders were up 0.7%.
- The Labor Department reported:
- A seasonally adjusted 870,000 workers filed initial claims for unemployment a increase of 10,000 from the week before.
- Correction last week continuing claims fell from 13.4MM to 12.6MM. In this week’s report, they fell from 12.75MM to 12.58MM.
- The EIA weekly oil report is here: wpsrsummary. Also, the EIA reported in the past week:
- Field production of crude oil fell from 10.9MM barrels per day to 10.7MM barrels per day.
- Natural gas storage rose by 66BN cubic feet and is above the highest level at this time of year during the past five years.
- Baker Hughes reported the number of active oil rigs rose 4 to 183. The number of active natural gas rigs increased 2 to 75.
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.