Coronavirus housing rentals, TikTok deal: O2 Wealth Economic Update, Sept. 4, 2020

U.S. and World News

  • iStock-1215329461_370As Congress is unable to come close to finding any common ground on another coronavirus related relief package, the CDC announced that they would suspend most rental evictions for people struggling to pay rent through the end of 2020. In order to receive protection, a renter must prove that they have taken “best efforts possible to seek government assistance to make their rental payments” and “declare that they are unable to pay rent due to COVID fiancial hardship” and must prove that they “will likely become homeless or move into congregate housing settings if they are evicted.” Originally, under the CARES act, rental evictions were suspended only for people living in federally-backed rental units and federally-backed single-family homes. The CDC has full authority to enact this policy as they have been tasked with using reasonable efforts to combat the spread of communicable diseases and if people are evicted, they may land in an overcrowded living facililty or homeless shelter, leading to further spread of the coronavirus.
  • Just as a deal seemed imminent for TikTok, China has required the parent company ByteDance to obtain a license before it can sell TikTok’s algorithm to another company. China did not comment on its motivation for the requirement, but one Wall Street analyst made a case that the Chinese company would likely not be sold until after the U.S. election as a result of lengthy regulatory procedures. Three weeks ago, President Trump signed an executive order that would require Apple and Google to remove TikTok from their app stores by September 15th. TikTok, among other Chinese apps, have already been banned in India.

Markets

  • Markets pared their gains this week. The S&P 500 fell -2.27% and closed at 3,427. The Dow Jones dropped -1.73% and closed at 28,133. Year-to-date, the S&P 500 is up 7.32% and the Dow Jones is up 0.27%.
  • Interests rates finished the week mostly unchanged. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.72%, respectively.
  • The spot price of WTI Crude oil fell this week. Prices dropped -8.05% and closed at $39.51 per barrel. Year to date, Oil prices are down -35.29%.
  • The spot price of Gold fell -1.59% and closed at $1,933.56 per ounce. Year to date, Gold prices are up 27.44%.

Economic Data

  • Initial jobless claims fell by 130,000 to 881,000 and the four-week moving average of claims fell by 17,000 to 994,000. Claims fell by 12,000 in Florida, 6,000 in Georgia, and by 5,000 in Michigan. Claims rose by 41,000 in California.
  • Nonfarm productivity rose by 10.1% versus expectations for an increase of 7.5%
  • Unit labor costs rose by 9.0% versus expectations for an increase of 12.0%
  • The ISM manufacturing index rose by 1.8 points to 56.0 versus expectations for a reading of 54.8
  • The ISM non-manufacturing index fell by 1.2 points to 56.9 versus expectations for a reading of 57.0
  • Factory orders rose by 6.4% versus expectations for an increase of 6.1%
  • Construction spending rose by 0.1% versus expectations for an increase of 1.0%
  • Private sector employment in the ADP rose by 428,000 versus expectations for an increase of 1 million
  • Nonfarm payrolls rose by 1.37 million versus expectations for an increase of 1.35 million
  • Average hourly earnings rose by 0.4% versus expectations for a flat reading
  • The unemployment rate fell to 8.4% versus expectations for a reading of 9.8%

Fact of the Week

The median sales price of existing homes sold in the United States was $304,100 in July 2020, the first time in US history that the median sales price has exceeded $300,000. The $304,100 median price is also a record on an inflation-adjusted basis, besting the inflation-ajusted $293,096 from July 2006. (source: Nat’l Association of Realtors).

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA® – (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

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