U.S. shoppers boosted retail spending by nearly 10% in March, as a result of the federal-stimulus check, warmer weather, and a reopening economy. Retail sales jumped about 9.8% last month, becoming the largest monthly gain since May 2020. Shoppers spent more across several categories, where restaurants and bars are in the top registering double-digits gains in sales. Due to the past lockdown, consumers were not able to spend as much in restaurants and bars, which is the main reason why the entrainment industry reported double digits sales in March. Moreover, going down the list, clothing, electronics and sporting goods increased at physical and online stores. In more positive news, March industrial production increased while unemployment decreased thanks to positive outlook of the economy and reopening of businesses. Interesting enough, due to the reopening and the amount of American’s getting vaccinated debit and credit card’s expending graphs completely turned around compared to March 2020. In March 2020, the top 3 expenses in a credit and debit card were Groceries, and home improvement. Now, March 2021, those two are in the bottom of the list with Airlines, Gas, and Clothing being the top 3 most expenses in American’s credit and debit cards.
On Tuesday, Johnson & Johnson’s COVID-19 vaccine rollout was recommended to be stopped by the FDA after 6 out of nearly 7 million recipients developed dangerous blood clots. Although many people agreed with the decision, other people believed it shouldn’t have been stopped as only a very small group of people suffered from the previously mentioned side effect. Alex Tabarrok, an economist at George Mason University had another perspective, he said “ It’s very clear that the dangers of COVID are much larger than the dangers of the J&J vaccines” who also added at the end “I worry that the public will confuse a pause to mean that the FDA thinks people shouldn’t take the J&J vaccine”. The rollout paused have bigger impacts in the process of getting American’s vaccinated by the middle of summer. This decision not only obligated many test centers to shut down for the week as the vaccine they were providing was J&J, which ultimately slows down the process as thousands of American’s now have to reschedule at another test center where J&J isn’t provided, but could also send the wrong message to American’s as Alex Tabarrok mentioned. In addition, the University of Cambridge supported indirectly Alex’s comment by saying “the virus is a much bigger risk than blood clots”. Moreover they said “In every 100,000 people in their 40s with low exposure to the virus, the vaccine will cause blood clots in 0.5 while preventing COVID-19 virus serious enough to require intensive care in six others”
Markets increased this week. The S&P 500 rose by 1.38% and closed at 4,185.74. The Dow Jones rose by 1.18% and closed at 34,200.12. Year-to-date, the S&P 500 is up 11.87% and the Dow Jones is up 12.28%
Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.83% and 1.58%, respectively.
The spot price of WTI Crude increased this week. Prices rose by 6.41% and closed at $63.12 per barrel. Year to date, Oil prices are up 30.09%.
The spot price of Gold rose by 1.84% and closed at $1,775.90 per ounce. Year to date, Gold prices are down -6.47%.
Initial jobless claims declined by 193,000 to 576,000 for the week ended April 10, much larger decline than expected.
The Empire manufacturing index increased by 8.9pt to +26.3 in April, well above expectations.
March core CPI rose by 0.34% month-over-month, beating consensus and boosting the year over year rate +1.6%.
March CPI rose +0.62% month over month beating expectations of +0.5%
Import prices increased above expectations +1.2% month over month vs median forecast of +0.9%. Year over year, import prices increased by +6.9%
Import prices ex-petroleum rose +0.9% month over month for March, beating expectations by 0.5%. Year over year, pries increased +4.1%
Retail sales increased by +9.8% month over month in March, 4.0pp above expectations.
Key retail control measures increased by +6.9%, 0.3pp below expectations
Retail sales core/control increased +6.9% month over month for March, just below expectations of +7.2%
The Philadelphia Fed manufacturing index increase by 5.7pt to 50.2 in April from a downwardly revised March value and above expectations for a slight decrease.
Trade deficit rose to -$71.1bn versus expectations of a balance of -$70.3bn.
Fact of the Week
Just 1 in 39 homeowners (2.5%) was at least 3 months behind in paying their monthly mortgage as of 12/31/20. However 1 in 5 renters (20.5%) was at least 3 months behind in paying their monthly rent as of 12/31/20 (source: Consumer Financial Protection Bureau)
President Biden announced Tuesday for states to make all adults eligible for the vaccine on April 19th , two-weeks sooner than the original May 1st goal. He has expressed optimism about the pace of the vaccinations, but he warned Americans we are not out of the woods yet in regards to the pandemic. Currently, a third of the population has received at least one dose of a Covid-19 vaccination, and one in five Americans are now fully vaccinated.
Friday morning, the La Soufriere volcano erupted on the Caribbean island of St. Vincent, making roughly 16,000 people required to evacuate their homes. Erouscilla Joseph, director of the University of the West Indies’ Seismic Research Center, has warned more explosions could occur as it is impossible to predict whether any potential explosions would be bigger or smaller than the first one. Two Royal Caribbean cruise ships and two Carnival cruise ships arrived after the explosions to help those that ad to evacuate their homes. The volcano last erupted in 1979.
President Biden has signed an executive order Friday to form a commission of experts to study reforms to the United States Supreme Court. The commission will include legal scholars, former federal judges, lawyers and reform advocates with a purpose to “provide analysis of the principal arguments in the contemporary public debate for and against Supreme Court reform”. The size of the bench has been set at nine since the late 19th century, with Supreme Court justices appointed for life, unless they elect to retire. Currently, the US Constitution gives Congress the authority to determine how to organize the court. The group has been directed to issue a report within six months on its findings.
Markets increased this week. The S&P 500 rose by 2.75% and closed at 4128.80. The Dow Jones rose by 1.99% and closed at 33,800.60. Year-to-date, the S&P 500 is up 10.35% and the Dow Jones is up 10.98%
Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.86% and 1.66%, respectively.
The spot price of WTI Crude dropped this week. Prices fell by -3.47% and closed at $59.32 per barrel. Year to date, Oil prices are up 22.26%.
The spot price of Gold rose by 0.87% and closed at $1,743.88 per ounce. Year to date, Gold prices are down -8.15%.
Initial jobless claims rose to 744,000 and the four-week moving average of claims increased by 3,000 to 724,000. Claims increased by 44,000 in California, 20,000 in New York, and by 3,000 in New Mexico. Claims decreased by 14,000 in Alabama, 11,000 in Ohio, and by 8,000 in Georgia.
Wholesale inventories rose 0.6% versus expectations of an increase of 0.5%.
The PPI rose by 1.0% versus expectations of an increase of 0.5%.
ISM services index increased by 8.4 to 63.7 versus expectations of 59.
Factory orders decreased by -0.8% versus expectations of a decrease of -0.1%.
Trade deficit rose to -$71.1bn versus expectations of a balance of -$70.3bn.
Fact of the Week
The 17.8 million college students who enrolled in the fall of 2020 were split 41% male and 59% female. 17.8 million students are down just 2.5% from the 18.2 million students who enrolled in the fall of 2019 (source: National Student Clearinghouse Research Center).
On Wednesday President Biden unveiled a $2.3 trillion infrastructure plan. The $2.3 trillion plan will be focused on fixing roads and bridges, internet access broadband expansion, and research and development funding boost. As expected, this plan will be funded with higher corporate taxes increasing to 28% from the current 21% and be paid for approximately 15 years. The infrastructure plan, which requires congressional approval, will be modernizing 20,000 miles of roadway with new building of 500,000 electric-vehicle charging stations, as well as investing billions of dollars in domestic semiconductor manufacturing. The infrastructure plan is the first of a two part economic plan that will focus on child care, healthcare and education. Although yet not ran through congress, this plan is expected to be announced and released in April 2021, with an expected cost of $3 trillion and $4 trillion over a decade between the two plans.
Following with last week’s newsletter story, the Suez Canal has been freed and the Ever Given refloated after 6 days and more than 300 ships waiting to cross through the canal in Egypt. There was work needed to be done in the sand, where engineers were utilizing conventional earthmoving equipment working on shore. In addition, work was also needed to be done under water, where tugboats and dredgers were working on a daily basis. Dredgers are ships equipped with machines to remove underwater sand and sediment. On the other hand, 14 tugboats were used to pull and nudge the Ever Given away from the canal walls. Lastly, as many people are saying “the moon, the earth, and the sun helped”. According to the Associated Press, the full moon offers spring tides, which are higher and lower than average. Also, gravity affected tides during the straight-line alignment of the Earth, the moon, and the sun. The spring high tides added a few inches of water inside the canal, making removal easier.
Markets increased this week. The S&P 500 rose by 1.16% and closed at 4019.87. The Dow Jones rose by 0.2514% and closed at 33,153.21. Year-to-date, the S&P 500 is up 7.40% and the Dow Jones is up 8.83%
Yields moved slightly higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.90% and 1.68%, respectively.
The spot price of WTI Crude rose this week. Prices increased by 0.99% and closed at $61.30 per barrel. Year to date, Oil prices are up 26.34%.
The spot price of Gold fell by -0.15% and closed at $1,729.60 per ounce. Year to date, Gold prices are down -8.90%.
The S&P/Case-Shiller 20-city home price index increased by +1.2% in January month over month in line with expectations, and +11.1% from +10.2% year over year
The FHFA house price index increased +1.0% in January month over month, just below expectations of 1.2%. Meanwhile, year over year rate increased +12%
The Conference Board index of consumer confidence increased by 19.3pt to 109.7, beating expectations.
Core PCE inflation stands at 1.41% year-on-year through February and core CPI stands at 1.28%
Private sector employment in the ADP report rose by 517,000 in March month-over-month vs expectations of 550,000
Pending home sales declined by -10.6% in February vs expectations for a 3% decline. The year over year rate declined to -2.7% vs +8.8% expectations.
The ISM manufacturing index increased by 3.9pt to 64.7 in March vs expectations and to the highest level since 1983
Construction spending decreased by -0.8% month-over-month in February, beating expectations of -0.12% and likely reflecting winter storms in the South.
Initial jobless claims increased to 719,000 from a downwardly revised level for the week ended March 27
The 4-week moving initial jobless claims moving average decreased by 11,000 to 719,000.
Nonfarm payroll growth surged to 916,000 in March, well above consensus of about 256,000, resulting in +156,000 net revision to prior months
Average hourly earnings declined 0.1% month-over-month, below expectations for a 0.1% increase. Meanwhile, the year-over-year rate fell to +4.2%
Fact of the Week
An average American worker has increased his/her productivity by +50% in the last 21 years, i.e., an average worker can complete in 2 hours as of 12/31/2020 the same amount of work that it took him/her 3 hours to finish as of 12/31/1999 (source: Department of Labor).
On Tuesday, a container ship blocked one of the world’s busiest shipping arteries, the Suez Canal. This canal is a key trade route between Asia and Europe, as not only oil and natural gas is transported through it, but also clothing, electronics and heavy machinery. According to the maritime industry trade group Bimco, an average of 39 ships transit the canal which connects the Red Sea with the Mediterranean on a daily basis, and 19,000 vessels crossed the canal in 2020. Due to a dust storm where wind speeds reached 40 knots, the huge “Ever Given” carrying 20,000 containers ran aground, blocking the whole canal both ways. Although Egyptian authorities are working daily trying to dig out the huge vessel to make it partially refloat again, the issue has created concerns to analysts due to the delay in oil shipment. Dredging the “Ever Given” to make it refloat and taking weight off the ship by removing containers, fuel and ballast water, will help to open the canal for the 120 other boats waiting in traffic.
Gasoline prices rose to an average of $2.88 a gallon over the past week, according to AAA. As usual, anticipation of high demand for gasoline when summer approaches and U.S. highways start to get crowded, gasoline prices started to see gains. Almost a year ago, May 2020, gasoline prices were at $1.78 due to low demand and lockdowns. However, this summer, there are higher expectations for economic recovery as a result of the quick vaccine rollout. This economic recovery and high energy demand has helped the energy sector to be the top-performing sector in the S&P 500 so far in 2021. Analysts are attempting to forecast the direction of gasoline prices as we approach summer time. Many of them are predicting higher prices as lockdowns end and employees begin to head back to the office.
Markets increased this week. The S&P 500 rose by 1.09% and closed at 3974. The Dow Jones rose by 1.22% and closed at 33,072. Year-to-date, the S&P 500 is up 5.96% and the Dow Jones is up 8.42%
Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.86% and 1.67%, respectively.
The spot price of WTI Crude fell this week. Prices fell -1.88% and closed at $60.70 per barrel. Year to date, Oil prices are up 25.10%.
The spot price of Gold fell by -0.58% and closed at $1,732.15 per ounce. Year to date, Gold prices are down -8.77%.
Initial jobless claims declined to 684,000 and the four-week moving average decreased by 13,000 to 736,000
Existing home sales declined by -6.6% to an annualized rate of 6.22 million units versus expectations for a -3% decline
Sales of a new single-family homes decreased by 18.2% last month to a seasonally-adjusted annualized rate of 775,000 units.
The Richmond Fed manufacturing index rose to +17 in March, above expectations
The current account deficit increased by $7.6bn to $188.5bn in the Q4, up +$2.4bn from $180.9bn
New durable goods orders decreased -1.1% month over month vs -1.0% estimate, median forecast +0.5%
Core capital goods orders decreased -0.8% month over month vs -0.3% estimate, median forecast +0.5%
Durable goods orders ex-transport fell more than expected by -0.9% month over month vs -0.5% expected decrease
The PCE price index rose 0.23% month over month vs +0.24 expected, and year over year rate rose 1.55% vs expectations of 1.58%
The core PCE price index increased +0.09% month over month vs +0.10% expectation, and the year over year rate increased +1.41% just below expectations of +1.45%
Personal income fell by -7.1% last month vs expectations of -7.5%
Personal spending fell by -1.0% for February vs expectations of -0.7%
GDP rose +4.3% for Q4 vs. +4.1% median forecast
Personal consumption increased +2.3% vs +2.4% median forecast
The university of Michigan’s index of consumer sentiment increased by 1.9pt to 84.9 in March, following 6.2pt increase in the preliminary reading.
Fact of the Week
According to the most recent report from the National Association of Realtors, existing home inventory sits at 1.03 million homes while there are 1.45 million registered real estate agents, meaning there are now over 400,000 more real estate agents in the country than there are homes to sell. (Source: Strategas Research Partners)
New lockdowns have been imposed in Europe in an effort to control the 3rd wave of the coronavirus epidemic. The Lancet journal published a new model on Thursday that displayed vaccinations alone may not be enough to contain the virus. This stresses the need for gradual easing of restrictions rather than a big bang reopening. Testing will also remain the key part of their strategy, as it is estimated that 50% of infections are caused by those who do not know they have Covid-19. Although cases have increased globally, the number of deaths are still declining.
Oil prices fell Thursday afternoon due to the weighing fear of dwindling crude demand while stockpiles remain plentiful. The International Energy Agency this week has stated in their latest monthly report that an ample amount of global oil inventories and supplies will remain, which will ease some concern of possible shortages as well as a prolonged increase in gas prices at the pump.
On Thursday, top diplomats between the United States and China met in Alaska, the first high-level meeting between the two countries under the Biden administration. The meeting opened in Anchorage, Alaska intended to be a 4-minute photoshoot that ended in a battle of words, muddying the already unstable U.S.-China ties.
Fed Chair Jerome Powell held a press conference Wednesday. The Federal Reserve greatly improved its economic forecasts in its March 2021 monetary policy decision but nonetheless indicated that is doesn’t expect to hike interest rates. Powell commented that the recovery is far from complete and the Fed will continue to support the economy for as long as it takes.
Markets dipped slightly this week. The S&P 500 dropped by 0.74% and closed at 3913. The Dow Jones declined 0.45% and closed at 32,628. Year-to-date, the S&P 500 is up 4.53% and the Dow Jones is up 7.09%.
Yields continued moving higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.88% and 1.73%, respectively.
The spot price of WTI Crude fell this week. Prices fell -6.29% and closed at $61.86 per barrel. Year to date, Oil prices are up 26.67%.
The spot price of Gold rose by 0.89% and closed at $1,742.26 per ounce. Year to date, Gold prices are down -8.23%.
Initial jobless claims rose to 770,000 and the four-week moving average decreased by 16,000 to 746,000
Retail sales fell by -3% versus expectations for a decline of -0.5%
Retail sales core/control fell by -3.5% versus expectations for a decline of -0.6%
Import prices rose by 1.3% versus expectations for an increase of 1%
Import prices ex-petroleum increased by 0.5% versus expectations of a rise of 0.4%
Industrial production decreased -2.2% versus expectations for an increase of 0.3%
Business inventories rose 0.3% versus expectations of a rise of 0.3%
The level of housing starts declined by -10.3% versus expectation of a decrease of -1.3%
Building permits fell by -10.8% versus expectations of a decline of -7.2%
Fact of the Week
WHAT A COMEBACK – Many American employers have recovered and as of 2/28/21 they have hired back 67% of the 25.4 million jobs that were lost last year during 2 months of March-April 2020 (source: DOL).
President Biden signed the American Rescue Plan into law on March 11th, a front-loaded relief bill costing $1.9 trillion that will support the economy at least until September. The bill includes $400 billion in stimulus payments to Americans in the form of $1,400, which phases out starting at incomes over $75,000 per year. Also included in the relief package is $350 billion that will be allocated to state and local governments and an extension of the enhanced federal unemployment of $300 per week until September 6th. There will be $130 billion spent on education, specifically on efforts to make K-12 schools a safer environment. Other smaller items within the fiscal package include vaccine distribution, an expansion of the child tax credit and the Affordable Care Act, and the Paycheck Protection Program. The American Rescue Plan was President Biden’s first significant fiscal policy bill, and the third Covid related bill on top of the $2 trillion CARES Act, and the $900 billion Consolidated Appropriations Act 2021.
Europe experienced a setback with their vaccine distribution after discovering that a number of patients that received the AstraZeneca vaccine developed life-threatening lung clots, including one death as a result. Denmark was the first country to halt the use of the vaccine, and they were quickly followed by Norway, Estonia, Lithuania, Luxembourg, Latvia, Italy, and Iceland. Several other countries outside of Europe have also followed suit in halting use of the vaccine. AstraZeneca claims its vaccine is subject to strict and rigorous quality controls and that there have been “no confirmed serious adverse events associated with the vaccine.” Health authorities say it is impossible to tell if there is any connection between the vaccine and the blood clots, but it is enough incidents to warrant an investigation.
Markets marched higher this week. The S&P 500 rose by 2.69% and closed at 3,943. The Dow Jones climbed 4.17% and closed at 32,779. Year-to-date, the S&P 500 is up 5.32% and the Dow Jones is up 7.60%.
Yields continued moving higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.84% and 1.63%, respectively.
The spot price of WTI Crude fell this week. Prices fell -0.71% and closed at $65.61 per barrel. Year to date, Oil prices are up 35.24%.
The spot price of Gold rose by 1.39% and closed at $1,724.36 per ounce. Year to date, Gold prices are down -9.18%.
Initial jobless claims fell to 712,000 and the four-week moving average fell by 34,000 to 759,000
Wholesale inventories rose by 1.3%, in-line with expectations
The Consumer Price Index (CPI) rose by 0.4%, in-line with expectations and the year-over-year rate rose by 1.7%, in-line with expectations
Core CPI rose by 0.1% versus expectations for an increase of 0.2% and the year-over-year rate rose by 1.3%, in-line with expectations
The Producer Price Index (PPI) rose by 0.5%, in-line with expectations
PPI ex-food, energy, and trade services rose by 0.2% versus expectations for an increase of 0.3%
Job openings rose by 165,000 to 6.917 million versus expectations for a reading of 6.7 million
The University of Michigan’s index of consumer sentiment rose by 6.2 points to 83.0 in the preliminary report versus expectations for a reading of 78.5
Fact of the Week
The price of West Texas Intermediate (WTI) crude oil fell to $22.76 a barrel as of 4/09/20, i.e., 11 months ago. As of Friday 3/05/21, WTI crude oil closed at $66.09 a barrel (source: NYMEX).
U.S Senators are likely in for a long weekend as they hold a formal debate on the relief package. The Senate is being pressured to pass the $1.9 trillion legislation before federal benefits are set to expire in less than two weeks. Senate Majority Leader Chuck Schumer stated “No matter how long it takes, the Senate is going to stay in session to finish the bill this week. The American people deserve nothing less”. There will likely be changes to the bill within the Senate, such as lowering the top income limits that individuals and joint filers can earn and still be eligible for the $1,400 stimulus checks. The bill will then be sent back to the House, where it will likely be signed off on, and then sent to President Biden’s desk for signature.
On Tuesday, Texas Governor Greg Abbott announced that the state is lifting the mask mandate along with all other pandemic restrictions as new daily cases and hospitalizations rapidly decline. Effective March 10, all businesses will be allowed to open at 100% capacity. The Governor stated that “Too many Texans have been sidelined from employment opportunities; too many small-business owners have struggled to pay their bills”, and that “It is now time to open Texas 100%”. The state of Mississippi followed suit on Wednesday, also ending their state’s mask mandate and allowing businesses to operate at 100% capacity. President Biden responded to these actions, calling it a “big mistake” and CDC Director Rochelle Walensky urged residents of Texas and Mississippi to continue wearing masks.
Markets rose during a volatile week. The S&P 500 rose by 0.84% and closed at 3,842. The Dow Jones surged 1.85% and closed at 31,496. Year-to-date, the S&P 500 is up 2.56% and the Dow Jones is up 3.29%.
Yields surged higher again this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.80% and 1.58%, respectively.
The spot price of WTI Crude rose this week. Prices rose 7.80% and closed at $66.30 per barrel. Year to date, Oil prices are up 36.64%.
The spot price of Gold fell by -2.05% and closed at $1,698.47 per ounce. Year to date, Gold prices are down -10.54%.
Initial jobless claims increased to 745,000 and the four-week moving average fell by 17,000 to 791,000
The ISM manufacturing index rose by 2.1 points to 60.8 versus expectations for a reading of 58.9
The ISM services index fell by 3.4 points to 55.3 versus expectations for a reading of 58.7
Construction spending rose by 1.7% versus expectations for an increase of 0.8%
Factory orders rose by 2.6% versus expectations for an increase of 2.1%
Private sector employment in the ADP rose by 117,000 versus expectations for an increase of 250,000
Nonfarm payrolls rose by 379,000 versus expectations for an increase of 200,000
The unemployment rate fell to 6.2% versus expectations for a reading of 6.3%
Average hourly earnings rose by 0.2%, in-line with expectations
Fact of the Week
The average single-family home in the USA has appreciated +39.0% over the 5 years ending 12/31/20. Homes in Idaho (+82.5%) have experienced the greatest growth in value while homes in North Dakota (+14.1%) have seen the least percentage increase in value (source: Federal Housing Finance Agency).
Late Thursday night, military air strikes were carried out in eastern Syria, ordered by President Biden. According to the Pentagon, the airstrikes were authorized “in response to recent attacks against American and coalition personnel in Iraq, and to ongoing threats to those personnel.” The strikes destroyed facilities located at a border control point used by a number of Iranian backed militant groups. The sites that were targeted are believed to have been used as areas to smuggle weapons that were ultimately used for the attacks. President Biden is the third successive United States president to bomb Syria and the airstrikes against Iranian facilities is likely to make any sort of nuclear deal with Iran more difficult. It is estimated that 22 people were killed in the airstrikes.
The Office of the Director of National Intelligence has released its official report to the public on the murder of Jamal Khashoggi at the Saudi consulate in Istanbul. The conclusion read “We assess that Saudi Arabia’s Crown Prince Muhammad bin Salman approved an operation in Istanbul, Turkey to capture or kill Saudi journalist Jamal Khashoggi.” This conclusion is partly based on the Crown Prince’s support for using violent measures to silence dissidents abroad. The team that was involved in the assassination included seven members of Muhammad bin Salman’s elite personal protective detail, known as the Rapid Intervention Force (RIF). State Department spokesman Ned Price told reporters that he “expects that we will be in a position before long to speak to steps to promote accountability going forward for this horrific crime”.
Markets fell this week. The S&P 500 declined by -2.41% and closed at 3,811. The Dow Jones dropped by -1.70% and closed at 30,932. Year-to-date, the S&P 500 is up 1.71% and the Dow Jones is up 1.41%.
Yields surged higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.72% and 1.40%, respectively.
The spot price of WTI Crude rose this week. Prices rose 3.90% and closed at $61.58 per barrel. Year to date, Oil prices are up 26.92%.
The spot price of Gold fell by -2.99% and closed at $1,730.98 per ounce. Year to date, Gold prices are down -8.83%.
Initial jobless claims fell to 730,000 and the four-week moving average fell by 21,000 to 808,000
Fourth-quarter real GDP growth was revised up 0.1% to 4.1% versus expectations for a revision to 4.2%
New orders for durable goods rose by 3.4% versus expectations for an increase of 1.1%
Durable goods orders ex-transports rose by 1.4% versus expectations for an increase of 0.7%
Core capital goods orders rose by 0.5% versus expectations for an increase of 0.8%
Core capital goods shipments rose by 2.1% versus expectations for an increase of 0.6%
The FHFA house price index rose by 1.1% versus expectations for an increase of 1.0%
The Conference Board index of consumer confidence rose by 2.4 points to 91.3 versus expectations for a reading of 90.0
Sales of new single-family homes increased by 4.3% to a seasonally-adjusted-annualized-rate of 923,000 units versus expectations for an increase of 1.7%
Pending home sales fell by -2.8% versus expectations for a flat reading
Personal income rose by 10.0% versus expectations for an increase of 9.5%
Personal spending rose by 2.4% versus expectations for an increase of 2.5%
Retail inventories fell by -0.6% versus expectations for an increase of 0.5%
Wholesale inventories rose by 1.3% versus expectations for an increase of 0.4%
The PCE price index rose by 0.3%, in-line with expectations and the year-over-year rate rose by 1.5% versus expectations for 1.4%
The core PCE price index rose by 0.3% versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.5% versus expectations for 1.4%
Fact of the Week
Tiger Woods has earned $121 million in career earnings from playing golf on the PGA tour, but has earned $1.5 billion in his career from endorsements, appearances and course design work (source: Forbes).
The Arctic weather system that moved in as far south as Houston brought a week of chaos to the state of Texas and is estimated by Accuweather to have costed $50 billion in damage. In one of the largest forced outages in American history, Texas has been suffering through rolling blackouts, controlled power outages, downed cellular networks and water treatment facilities, and temperatures as cold as 4 degrees for the past six days. Roughly 15 million people in Texas were left freezing in their homes among other complications and deaths due to the failure of the power grid to withstand a once in a century storm. The forced outages were necessary to provide a grid-wide collapse. Electricity prices that are normally around $25 per megawatt-hour rose as high as $9,000/MWh for extended periods of time, creating record electricity bills for people. As of this morning, a few hundred thousand people in Texas remain without power and forced outages are expected to continue for the next few days.
On Thursday, a Congressional hearing was held related to the GameStop crisis along with brokerage firm Robinhood and hedge fund Citadel’s role in the matter. The hearing included Robinhood CEO Vlad Tenev, Reddit trader Keith Gill, Citadel CEO Ken Griffin, and Reddit CEO Steve Huffman, with an overwhelming majority of the questions being directed towards Vlad Tenev. The Robinhood CEO was pressed on his decision to restrict trading in GameStop shares and its use of payment for order flows to generate revenue. It was discovered that more than 50% of Robinhood’s revenue is sourced from payment for order flow. Also, the company didn’t have the funds to meet the $3 billion demand for deposits from its clearinghouse, forcing them to restrict trading.
Markets were slightly lower this week. The S&P 500 lost -0.68% and closed at 3,907. The Dow Jones rose by 0.16% and closed at 31,494. Year-to-date, the S&P 500 is up 4.22% and the Dow Jones is up 3.16%.
Yields spiked higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.58% and 1.34%, respectively.
The spot price of WTI Crude fell this week. Prices fell -0.84% and closed at $58.97 per barrel. Year to date, Oil prices are up 21.54%.
The spot price of Gold fell by -2.35% and closed at $1,781.40 per ounce. Year to date, Gold prices are down -6.18%.
Initial jobless claims rose to 861,000 and the four-week moving average fell by 4,000 to 833,000
Retail sales rose by 5.3% versus expectations for an increase of 1.1%
Core retail sales rose by 6.0% versus expectations for an increase of 1.0%
The producer price index (PPI) rose by 1.3% versus expectations for an increase of 0.4% and the year-over-year rate rose by 1.7%
PPI ex-food and energy rose by 1.2% versus expectations for an increase of 0.2% and the year-over-year rate rose by 2.0%
Industrial production rose by 0.9% versus expectations for an increase of 0.4%
Business inventories rose by 0.6% versus expectations for an increase of 0.5%
The level of housing starts fell by -6.0% to a seasonally-adjusted-annualized-rate of 1.58 million versus expectations for a decline of -0.5%
Building permits rose by 10.4% versus expectations for a decline of -1.4%
Existing home sales rose by 0.6% to a seasonally-adjusted-annualized-rate of 6.69 million versus expectations for a decline of -2.4%
Import prices rose by 1.4% versus expectations for an increase of 1.0%
Import prices ex-petroleum rose by 0.9% versus expectations for an increase of 0.4%
Fact of the Week
Single-family home values in the United States have increased by an average of +10.0% YTD through 11/30/20, likely to result in the first “double-digit” average return for home values nationwide for an entire calendar year since 2004. Data on the change in home values during December 2020 will be released on 2/23/21 (source: Federal Housing Finance Agency).
The proposed $1.9 trillion stimulus package is expected to provide a family of four making $150,000 per year with $12,800 of support over the next 15 months. This includes $1,400 stimulus payments, as well as child tax credits that would be paid monthly. Currently, the tax break is paid out as a tax refund, but with this proposal, households would receive $300 per month for children five and under or $250 per month for those six and older beginning in July. Most of this benefit will go to households making up to $91,000 per year, while about 10% will go to those making $164,000 or more. Additionally, struggling multi-employer pension plans would be bailed out in the form of loans to give them the ability to continue to make contributions. The overall package will be voted on by the House of Representatives on the week of February 22nd.
The price of WTI Crude oil has been climbing much higher as top oil producers curb production while demand expectations for the second half of 2021 continue to rise. Currently, technical indicators show that WTI Crude oil futures contracts are the most overbought since 1999. JP Morgan is anticipating a major short squeeze in oil as inventories will likely see sharp declines unless OPEC+ agrees to ramp up production. As the number of vaccinated people globally continues to increase, and daily new cases of coronavirus decline, demand expectations for the second half of 2021 will remain elevated.
The markets continued to rally into this week. The S&P 500 climbed 1.29% higher and closed at 3,935. The Dow Jones rose by 1.11% and closed at 31,459. Year-to-date, the S&P 500 is up 4.94% and the Dow Jones is down 3.00%.
Yields rose from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.49% and 1.20%, respectively.
The spot price of WTI Crude rose this week. Prices rose 4.82% and closed at $59.59 per barrel. Year to date, Oil prices are up 22.54%.
The spot price of Gold rose by 0.40% and closed at $1,821.30 per ounce. Year to date, Gold prices are down -4.07%.
Initial jobless claims fell to 793,000 and the four-week moving average fell by 34,000 to 823,000
The consumer price index (CPI) rose by 0.3%, in-line with expectations and the year-over-year rate rose by 1.4% versus expectations for an increase of 1.5%
Core CPI was flat versus expectations for an increase of 0.2% and the year-over-year rate rose by 1.4% versus expectations for an increase of 1.5%
Wholesale inventories rose by 0.3% versus expectations for an increase of 0.1%
The University of Michigan’s index of consumer sentiment fell by 2.8 points to 7.2 versus expectations for a reading of 80.9
Fact of the Week
522,808 Americans filed bankruptcy in 2020, down 30% from 752,160 bankruptcy filings in 2019 (source: United States Courts, Table F-2, Bankruptcy Filings).