Stocks had another strong week on vaccine and stimulus hopes. All major indices rose with emerging markets posting the biggest gains. The bipartisan Problem Solvers Caucus unveiled a compromise proposal for Covid relief/stimulus. The proposal for relief running through March 2021 includes $160BN of state and local government aid, $228Bn for small-business relief, including a new round of the payroll protection program, $82BN for schools, $25BN for rental assistance, $17BN for airlines and $180BN for enhanced unemployment benefits. The total bill is about $900BN, about half of the $1.8BN discussed before the election. Talks have restarted with Senate and House leadership and Treasury Secretary Mnuchin. Comments from all sides indicate talks appear to be moving towards a compromise.
The Black Friday sales statistics continue the dichotomy we’ve seen this year with online sales up 22% from last year and in-store sales down about 30%.
The Government Accountability Office released a report that said the Labor Department’s weekly jobless claims report published “flawed estimates of the number of individuals receiving benefits each week throughout the pandemic”. Also the report said the Pandemic Unemployment Assistance program underpaid benefits in most states. It is not known at this point when and how much the reports will be revised.
OPEC+ agreed to a modest 500,000 barrel per day increase in oil production in January. The small size of the increase boosted oil prices.
The Federal Reserve reported that it is extending from the end of the year to the end of March the following programs. These are separate from the five programs Treasury Secretary Steven Mnuchin said he would let expire at the end of December:
- The Paycheck Protection Program Liquidity Facility (to protect small banks making PPP loans)
- The Commercial Paper Funding Facility
- The Money Market Fund Liquidity Facility
- The Primary Dealer Credit Facility
Treasury yields rose on anticipated growth in federal borrowing. The 30-year bond yield ended at 1.74% and the 10-Year note at 0.97%. Crude oil rose to $46.09 a barrel while natural gas fell to $2.553 per MMBTUs on mild temperatures. The U.S. dollar index fell to 90.8 and gold prices rose to $1842 an ounce.
In the economic numbers this week:
- IHS Market reported the following purchasing manager’s Indices:
- The U.S. manufacturing PMI rose from 53.4 in October to 56.7 in November, the fastest acceleration since 2014..
- The U.S. services PMI rose from 56.9 in October to 58.4 in November.
- The Eurozone manufacturing fell from 54.8 in October to 53.8 in November.
- The Eurozone composite PMI fell from 50.0 in October to 45.3 in November. Keep in mind that anything less than 50 indicates contraction.
- The China manufacturing PMI rose from 53.6 in October to 54.9 in November.
- The China services PMI rose from 56.8 in October to 57.8 in November.
- The Japan manufacturing PMI rose from 48.7 in October to 49.0 in November.
- The Japan services PMI rose from 47.7 in October to 47.8 in November.
- The National Association of Realtors reported that pending sales of existing homes fell 1.1% in October but are up 20.2% from October 2019.The Labor Department reported:
- A seasonally adjusted 712,000 workers filed initial claims for unemployment in the week ending November 28th down 75,000 from a revised 787,000 the week before . Although some economists warned that this decrease could be an anomaly due to the Thanksgiving holiday.
- The four week moving average of initial claims designed to smooth out weekly volatility fell 11,250 to 739,500.
- Continuing claims for regular unemployment fell from 6.1M M to 5.5MM in the week ending November 21th.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 20.5MM to 20.2MM as of November 14th.
- For the full report go here: https://www.dol.gov/ui/data.pdf .
- The U.S. added a net 245,000 jobs last month, the seventh straight jobs gain but less than half the jobs added in October.
- The unemployment rate fell from 6.9% to 6.7%.
Source: U.S. Department of Labor
- 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 rose from 11.0MM barrels per day to 11.1MM barrels per day.
- Natural gas storage fell 1BN 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 246. The number of active natural gas rigs fell 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
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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.