U.S. and World News
· In a move that surprised the markets, the European Central Bank cuts interest rates to a record low on Thursday and said it could take them even lower in order to prevent the Eurozone’s recovery from stalling in the face of falling inflation. The ECB cut its main refinancing rate by 25 basis points to 0.25% and cut its emergency borrowing rate to 0.75% from 1%.
· Also this week, the European Commission has lowered its 2014 Eurozone GDP forecast to 1.1% from 1.2%. It also expects unemployment to remain high at 12.2% and inflation to remain low at 1.5%. These estimations may have been what led to the ECB’s rate cut decision.
- Stock markets set new record highs again this week as the S&P 500 Index increased by 0.51%, closing at 1,771. The Dow Jones Industrial Average was up 0.94% to close at 15,762. The S&P and the Dow respectively are up 24.15% and 20.28% year to date.
- Treasury yields trickled upward this week with the 5 year and 10 year treasury now yielding 1.42% and 2.75% respectively.
- The spot price of WTI Crude Oil continued to tumble this week, dropping by 0.26%, closing at $94.36 per barrel. Lower oil prices are being reflected at the pump as nationwide gas prices have been falling as well. Year to date, oil is now only up 1.06%.
- The spot price of Gold continues to fall, dropping by 2.14% this week and closing at $1287.95/ounce. Gold is now down 23.12% this year.
- Initial jobless claims declined from last week to 336,000 vs. consensus estimates of 335,000. The Labor Department noted again that all issues related to collecting data in previous weeks have been resolved so this is being taken as another positive report.
- The October employment report was stronger than expected, showing gains of 204,000 jobs in the month vs. expectations of 120,000. The report also included upward revisions totaling 60,000 for August and September. The Labor Department noted that there was little impact from the government shutdown on employment in the month.
- The unemployment rate fell in line with estimates at 7.3%. There was also a large drop in the labor participation rate of 0.4% to 62.8%, but that was likely due to furloughed government workers not reporting themselves as seeking employment during the shutdown.
- U.S. 3rd quarter GDP rose more than expected at 2.8% vs. expectations of 2.0%. The beat came largely from a larger than expected inventory contribution and a smaller than expected decline in government spending.
Fact of the Week
- Annual federal expenditures for food stamps are $75 billion, an amount that has doubled in the last 4 years. As of May 2013, 46.6 million Americans (15% of our 316 million citizens) are food stamp recipients. The $75 billion represents just 2.0% of the $3.7 trillion annual spending by the US government
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