U.S. and World News
- Japan has approved a ¥18.6 trillion ($182 billion) stimulus plan to offset a hike in sales tax that is due to go into effect in April. The government plans on using the new tax revenue to finance the spending and will forgo raising new debt. The cabinet expects the measures to add 1% to GDP and create around 250,000 jobs, although many economists aren’t as optimistic.
- The state of Illinois’ Senate and House have approved an overhaul of the state’s pension system, one of the most underfunded in the country with an funding gap of almost $100 billion. The plan is designed to fully fund Illinois’ five pension systems by 2044 by saving an estimated $160 billion over 30 years with cuts and other measures. The state’s unions strongly oppose the proposals and intend to go to court to try to block them, although it is not clear if the unions actually have an alternative plan.
- The House of Representatives has overwhelmingly passed legislation designed to discourage patent trolls from filing frivolous lawsuits by requiring them to disclose more information about who owns the intellectual property involved. The Innovation Act as it’s called, also requires judges to decide early on in the proceedings of a case whether a patent is valid, thereby potentially saving companies millions of dollars on discovery. The legislation now heads to the Senate.
- Stock markets rallied on Friday to end the week mostly flat as the S&P 500 Index was unchanged, closing at 1,805. The Dow Jones Industrial Average was down 0.37% to close at 16,020. The S&P and the Dow respectively are up 26.57% and 22.25% year to date.
- Treasury yields rose this week based on better economic data. The 5 year and 10 year treasury are now yielding 1.49% and 2.86% respectively.
- The spot price of WTI Crude Oil rallied this week with prices rising by 5.37% and closing at $97.70 per barrel. Year to date, oil is now up 6.40%.
- The spot price of Gold fell a bit this week, dropping 1.96% and closing at $1,228.81 per ounce. Gold is now down 26.65% this year.
- Initial jobless claims fell from last week to 298,000 vs. consensus estimates of 320,000. The four week moving average for claims fell to 322,000. The Labor Department noted that while no states estimated claims, seasonal adjustment around the holidays may be affecting claims numbers.
- The monthly nonfarm payrolls number increased by more than expected, showing gains of 203,000 jobs vs. expectations of 185,000. The unemployment rate fell to 7.0% vs. expectations of 7.2%. The labor force participation rate also saw a gain (although it remains near cycle lows) which is a positive sign. The strong data leaves open the possibility of a December Fed taper, although it is probably unlikely to occur before the end of the year.
- Retail sales data over the Thanksgiving holiday weekend came in mixed. The National Retail Federation estimated that consumers spent $57.4 billion from Thursday through Sunday, which was down 2.7% from last year even with the number of shoppers increasing to 141 million from 139 million a year ago. Meanwhile, Adobe estimates internet sales on Cyber Monday climbed 16% from last year to a record $2.29 billion. Internet sales over the five-day Thanksgiving shopping period rose by 26% over last year to $7.4 billion.
Fact of the Week
- The number of banks in the United States has dropped to below 7,000 for the first time since records began in 1934. The number of banks fell to 6,891 as of the end of the 3rd quarter from a peak of over 18,000. Reasons for the trend include consolidation and failure, while tighter regulation makes it harder to open banks.
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