Stocks ended the week mixed with in the small cap Russell 2000 and international indices up and declines in the S&P 500, Dow, and Nasdaq. Third quarter earnings have been coming in with near record percentages of companies beating estimates and the size of those earnings beats. While Steven Mnuchin and Nancy Pelosi came a bit closer in agreement on a stimulus package, the likelihood of a deal being reached before the election is fading as talks seemed to have stalled. Covid cases are rising in most states with the seven-day average number of new cases at 61,141, the highest since August 1st.
Treasury yields rose with the 30-year bond yield at 1.642% and the 10-Year note at 0.840%. Crude oil fell to $39.75 a barrel and natural gas rose to $2.958 per MMBTUs. The U.S. dollar index fell to 92.72 and gold prices rose to $1904.90 an ounce.
In the economic numbers this week:
- China reported 2nd quarter gross domestic product grew 4.9% in the third quarter. Despite a 6.8% contraction in the 1st quarter, the International Monetary Fund is predicting China will grow 1.9% for the full year 2020. China is the only major economy predicted to grow this year.
- The Census Bureau announced that seasonally adjusted housing starts rose 5.2% in September from October and were up 8.1% from September 2019.
- Single family housing starts were up 8.5% in September from August and up 22.3% from September 2019.
- Single family building permits (an indicator of future starts) were up 7.8% in September from August and up 24.3% from September 2019.
- Multi-family housing starts (>5 units) were down 14.7% in September from August and down 17.4% from September 2016.
- Multi-family permits were up 1.0% in September from August but were down 22.2% from September 2019.
- The National Association of Realtors reported:
- Existing-home sales rose 9.4% in September from August and 20.9% from a year ago fueled by record low mortgage rates.
- The median existing-home price rose 14.8% from a year ago to $311,800 a record high adjusted for inflation as the supply of homes for sale is very tight.
- The Labor Department reported:
- A seasonally adjusted 787,000 workers filed initial claims for unemployment in the week ending October 17th, the lowest since March.
- The week of October 10th was revised down from 898,000 to 842,000 due to California resuming reporting actual unemployment data versus estimates.
- The week of October 3rd was also revised lower.
- California had paused reporting claims for two weeks to work down their backlog of claims The missed weeks had been estimated resulting in claims initially reported as much higher.
- Continuing claims fell 1MM to 8.4MM.
- The EIA weekly oil report is here wpsrsummary. Also, the EIA reported in the past week:
- Field production of crude oil fell from 10.5MM barrels per day to 9.6MM barrels per day.
- Natural gas storage rose by 49BN cubic feet and is above the highest level at this time of year during the past five years.
- The U.S. consumed a record amount of renewable energy in 2019, 11.5 quadrillion BTUs versus 9.7 quadrillion BTUs in 2015.
- Baker Hughes reported the number of active oil rigs rose 6 to 211. The number of active natural gas rigs fell 1 to 73.
- Factset reported that with 27% of S&P500 companies reporting earnings, the blended earnings decline from Q3 2019 is 18.3%. However, the percentage of companies beating earnings forecast and the magnitude of the earnings beats are at or near record levels.
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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
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.