It was revenge of the nerds this week with the formerly lagging large value stocks up sharply while the effervescent large growth stocks, who had benefited from online shopping and work at home, were modestly lower. News of a successful phase 3 trial of a vaccine and an antibody treatment, submitted for emergency use authorization, raised hopes for the end of the pandemic. This caused many out of favor stocks to rise. Still the pandemic rages on and it will likely be second or third quarter before we turn the corner on this ugly disease. The logistical challenges will be great for the vaccine as it needs to be shipped at -94 degrees Fahrenheit. However, market traders are always looking ahead and liked what they saw.
The International Energy Association and OPEC both lowered their forecast for oil demand on the continuing virus impacts on the global economy and there was talk of a three to six month extension of the OPEC+ production cuts to cure excess oil inventories.
Treasury yields rose with the 30-year bond yield at 1.648% and the 10-Year note at 0.896%. Crude oil rose to $40.13 a barrel and natural gas rose to $3.111 per MMBTUs. The U.S. dollar index rose to 92.73 and gold prices fell to $1886.60 an ounce.
In the economic numbers this week:
- China reported that consumer inflation rose only 0.5% in October from a year earlier, the slowest pace since 2009. Core consumer inflation also rose 0.5% from a year ago. Pork prices have fallen 2.8% from a year ago. Overall food prices were up 2.2% in October from a year ago, down sharply from the 7.9% in September from a year earlier. Factory prices have fallen 2.1% from a year ago.
- Th U.K. reported that it grew 15.5% in the third quarter but was down 9.7% from the third quarter last year. This was the weakest performance of any advanced economies. The new lockdown and the uncertainty over the next steps in its divorce from the European Union further could its outlook.
- The Labor Department reported:
- A seasonally adjusted 709,000 workers filed initial claims for unemployment in the week ending November 7th down 48,000 from a revised 757,000 the week before.
- Continuing claims for regular unemployment fell from 7.2M to 6.8M in the week ending October 31st.
- A broader measure of claims including extended benefits, pandemic assistance and other programs fell from 21.5MM to 21.2MM as of October 24th.
- The U.S. added a net 638,000 jobs in October and the unemployment rate fell to 6.9%. For the full report go here: https://www.dol.gov/ui/data.pdf .
- The Consumer Price Index was unchanged in October. Grocery and restaurant prices rose but were offset by decreases in clothing and household furnishing prices. Core prices, excluding food and energy were also flat. From a year earlier, consumer prices have risen 1.2% and core prices were up 1.6%.
- 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 unchanged at 10.5MM barrels per day.
- Natural gas storage rose by 8BN 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 10 to 236. The number of active natural gas rigs rose 2 to 73.
- Factset reported that with 92% of S&P500 companies reporting earnings, the blended earnings decline from Q3 2019 is 7.1%.
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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
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Carrie Fuce, Assistant 269-441-4091
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