U.S. stocks had modest losses this week with the Dow 30 industrials posting significant losses as concerns over trade affected the markets. The 35 largest banks all passed the FED’s stress test, indicating they are healthy enough to withstand an extreme recession. The Supreme court ruled that states can force online retailers to collect state sales taxes which is likely to be a big win for state budgets. The 10-year treasury not closed the week below 2.9%.
OPEC reached an agreement to raise production caps but less than feared. Oil inventories outside the U.S. have fallen dramatically under the cuts in place. While the increase was 1MM barrels per day on paper, given the limited abilities of some OPEC members to increase their production, the actual increase is expected to be about 600,000 barrels per day. Crude price rallied on the news with U.S. crude prices rising 5% for the week.
Commerce Secretary, Wilbur Ross testified before Congress and said out of 98 requests they have reviewed for tariff exemptions on steel and aluminum importing to U.S. companies, they have granted exceptions to 42. However, they have received roughly 20,000 requests for exemptions and have a huge backlog. Ross said that they intend to review a much larger number of requests shortly.
The Bank of England decided not to change interest rates this week.
In the numbers this week:
- The Commerce Department reported
- Housing starts rose a seasonally adjusted 5.0% in May. For the first five months of the year, housing starts have risen 11% from a year ago.
- Building permits, an indicator of future homebuilding, fell 4.6%.
- The National Association of Realtors reported
- Existing home sales fell 0.4% in May, the third monthly decline on a seasonal basis. A shortage of existing homes, rising prices as well as rising interest rates were attributed to the slowdown.
- The median sale price of an existing home was up 4.9% from a year ago.
- The European Union reported that industrial production was 0.9% lower in April than in May. From a year earlier industrial production in the 19 countries that make up the Eurozone rose 1.7%. The decline was attributed to energy production and manufacturing.
- IHS Markit reported that its composite Purchasing Managers Index rose to 54.8 in June from 54.1 in May. This was first time in the past five months this index rose. Anything over 50 represents expansion and the increase shows a faster acceleration.
- The Labor department reported first time claims for unemployment fell 3,000 to a seasonally adjusted 218,000 in the prior week. The four week moving average of claims fell 4000 to a seasonally adjusted 221,000.
- The Energy Information Administration weekly report is here wpsrsummary (2). Also the EIA reported:
- Weekly field production of crude oil was unchanged.
- Storage of Natural Gas rose 91BN cubic feet.
- According to Baker Hughes, In the past week the number of active oil rigs fell 1 to 862 and the number of active gas rigs fell 6 to 188.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith
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.