Election 2020, Stimulus Bill: O2 Wealth Economic Update, Nov. 6, 2020

U.S. and World News

  • iStock-1141007609_370The roller coaster ride that is the 2020 presidential election continues today, as absentee ballots in battleground states Nevada, Pennsylvania, Georgia, North Carolina, Alaska, and Arizona are still being counted. Contrary to what the polls suggested, the results on Tuesday night indicated that President Trump was likely to win the election, however as absentee ballots were counted throughout the week, Joe Biden took the lead in several key states. As it stands today, there is a large indication that Joe Biden will win the election, and he is expected to address the nation tonight. This is not without threatened litigation by President Trump, who claims that the election is being stolen due to orchestrated Democrat voter fraud in key battleground states. Also contrary to polling, Republicans have picked up six House of Representatives seats and have lost one Senate seat, pending further results. More clarity on results is expected going into the weekend, but anticipated litigation by the President could lead to some more uncertainty in the longer run.
  • The fate of the next fiscal stimulus bill is being questioned after Senate Majority Leader Mitch McConnell has stated that the upbeat jobs report this morning and the 6.9% unemployment rate “clearly ought to affect the size of any additional stimulus package we do”. Prior to the surprise jobs number and lower-than-expected unemployment figure, Senate Republicans had proposed a $500 billion relief bill, compared to the administrations $1.9 trillion proposal last month. Larry Kudlow also helped pour cold water on the hopes of a large stimulus package after he stated that “we’re not interested in you know two or three trillion” citing the jobs report this morning.

Markets

  • Markets surged this week in the best market week since April. The S&P 500 jumped 7.36% and closed at 3,509. The Dow Jones rose 6.89% and closed at 28,323. Year-to-date, the S&P 500 is up 10.32% and the Dow Jones is up 1.13%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.82%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 4.52% and closed at $37.41 per barrel. Year to date, Oil prices are down -38.73%.
  • The spot price of Gold rose by 3.93% and closed at $1,952.61 per ounce. Year to date, Gold prices are up 28.69%.

Economic Data

  • Initial jobless claims fell to 751,000 and the four-week moving average of claims fell by 4,000 to 787,000. Claims fell by 9,000 in Massachusetts, 8,000 in Michigan, and by 6,000 in Georgia. Claims rose by 22,000 in Illinois, 3,000 in Kentucky, and by 3,000 in Pennsylvania.
  • Nonfarm productivity rose by 4.9% in the third quarter versus expectations for an increase of 5.6%
  • Unit labor costs fell by -8.9% in the third quarter versus expectations for a decline of -11.0%
  • The ISM manufacturing index rose by 3.9 points to 59.3 versus expectations for a reading of 56.0
  • The ISM non-manufacturing index fell by 1.2 points to 56.6 versus expectations for a reading of 57.5
  • Construction spending rose by 0.3% versus expectations for an increase of 1.0%
  • Wholesale inventories rose by 0.4% versus expectations for a decline of -0.1%
  • Factory orders rose by 1.1% versus expectations for an increase of 1.0%
  • Private sector employment in the ADP report rose by 365,000 versus expectations for an increase of 643,000
  • Nonfarm payrolls rose by 638,000  versus expectations for an increase of 580,000
  • Average hourly earnings rose by 0.1% versus expectations for an increase of 0.2% and the year-over-year rate rose by 4.5%
  • The unemployment rate fell to 6.9% versus expectations for a reading of 7.6%

Fact of the Week

  • The state of Ohio has correctly backed the winner of the US presidential election in each of the last 14 races for the White House, i.e., 1964-2016 (source: USConstitution.net).

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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