The big news of the week was the agreement by OPEC to reduce oil production by 1.2MM barrels per day. Non-OPEC producers are expected to cut production by another 600,000 barrels per day with Russia agreeing to 300,000 barrels per day in cuts. This bodes well for U.S. oil producers who’ve been bleeding red ink over the collapse of oil prices. The cuts do not take effect until January and it remains to be seen how well all the producers comply with the new targets. While November was a great month for gains in stocks, the week ending December 2nd saw slight losses. The divergence of different industry groups performance on a daily basis remains wide as traders jockey to position portfolios for the year ahead. Treasury yields continued to rise and prices fell. The dollar retreated after the strong November advance. Commodity prices rose and oil prices were especially strong. Economic data this week was generally good.
In the numbers this week:
- According to S&P Global Platts, the U.S. became a net exporter of Natural Gas in November as exports of 7.4BN Cu Ft exceeded the 7.0BN Cu Ft imported for the first time in 60 years. The U.S. is now the third largest exporter of liquefied natural gas.
- According to S&P Core Logic, the Case-Shiller U.S. Home price index has finally eclipsed the all-time high set in July 2006. The index is now up 0.1% above the July 2006 level. Over the past year home prices have risen 5.5%. Adjusted for inflation, however, the index is down 16% from July 2006.
- The Energy Information Administration reported that in the prior week:
- Crude oil inventories fell 900,000 barrels
- Gasoline inventories rose 2.1MM barrels
- Crude oil production rose 9,000 barrels.
- Baker Hughes reported that oil drilling rigs rose by 3 to 477 and gas drilling rigs rose 1 to 119.
- The Commerce Department reported
- Business earnings rose 3.5% in the third quarter and 5.2% from the previous year.
- Gross domestic product grew at a revised annual rate of 3.2% in the third quarter. Previously this was estimated as a 2.9% gain.
- Personal consumption rose 0.3% in October. September was revised from 0.5% to 0.7% gain.
- Incomes rose 0.6% in October.
- The personal-consumption expenditures price index rose 0.2% in October from the prior month. From a year earlier, the index rose 1.4%. The FED’s stated goal is for inflation to reach 2%.
- The Institute for Supply Management reported that its U.S. purchasing manager’s index rose to 53.2 in November.
- The Labor Department reported
- Initial claims for unemployment rose 17,000 to 268,000.
- The US added 178,000 jobs in November and the unemployment rate fell to 4.6%.
- September’s job gains were revised up to 208,000 and October’s gains were revised down to 142,000.
- Average hourly earnings for private sector workers rose 2.5% in November from a year ago.
- The Federal Reserve reported that total household debt grew $63BN in the third quarter. Mortgage debt remained relatively flat while non-housing debt rose sharply. Delinquency rates declined for mortgages, student loans and credit cards. Delinquency rates on automobiles are rising due solely to subprime auto loans.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik Smith
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.
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