US Stocks had modest gains last week with the Nasdaq index providing the best performance. The broad-based S&P 500 has been in a narrow range since mid-June. Foreign stocks generally had smaller gains.
Hurricane Harvey pounded the Houston area with the highest rainfall numbers ever recorded in U.S. history. While our thoughts and prayers go out to those affected by the tragedy we encourage everyone to donate to the disaster relief through the agency of their choice. Due to the hurricane, gas prices surged as the largest U.S. refiner was shut down and the main pipeline supplying the east coast was shut down. The effects of the hurricane on the economy is likely to be negative in September but simulative over the next year as rebuilding takes place. Commodities generally rose as did the U.S. Dollar and the 10-year treasury yield fell.
The additional actions of North Korea including a much stronger hydrogen bomb, more missile launches and threats to send missiles near Guam may be unsettling to the markets.
Looking ahead to the rest of September, Congress returns and will take up issues like tax reform, disaster relief and coming up with legislation to address children that were brought to the U.S. illegally but only really know this as their only country. In addition, the Federal Reserve will announce their strategy to start unwinding their balance sheet.
In the numbers, this week:
- The Institute for Supply Management reported that it’s PMI index rose from 56.3 in July to 58.8 in August, showing factory growth accelerated at a faster rate.
- The Caixin/Markit China manufacturing PMI rose from 51.1 in July to 51.6 in August.
- The Commerce Department reported:
- U.S. gross domestic product was revised for the 2nd quarter to a 3.0% annual pace. This is now the strongest quarter of grown since Q1 2015. The revision recorded stronger consumer and business spending and weaker state and local government spending.
- Consumer spending rose 0.3% in July.
- Personal income rose 0.4% in July.
- The index for personal-consumption expenditures, the FED’s preferred measure of inflation, rose only 0.1% in July. From a year ago prices rose 1.4%.
- The Energy Information Administration’s Weekly Petroleum Data report is here wpsrsummary (1). I believe it is important to point out that as of August 25th, crude oil inventories have fallen to the middle of the average range for this time of year. It had been running in the upper part of the range.
- The Labor Department reported:
- First time jobless claims rose 1,000 to 236,000 in the prior week. Claims have now remained below 300,000 for 130 weeks, the longest since 1970.
- The U.S. created 156,000 non-farm jobs in August and the unemployment rate ticked up from 4.3% to 4.4% as more people entered the workforce. August has been a tricky month usually coming in low with sharp upward revisions. We’ll see if this month is the same. July’s payroll gain was revised down from 251,000 to 210,000.
- Average hourly earnings rose $0.03 per hour in August. From a year earlier wages are up 2.5%.
- The Energy Information Administration reported
- Weekly field production of crude oil rose 2,000 barrels per day in the prior week.
- Natural gas in storage rose 30Bcf last week from the prior week.
- Baker Hughes reported that oil drilling rigs was unchanged at 759. Gas drilling rigs rose 3 to 183. However, not all rig activity was able to be confirmed due to hurricane Harvey.
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Loren C. Rex, CFP®, AIF®, MA Erik 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
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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.