The 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 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%.
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).
Hurricane Zeta made landfall in Louisiana late Wednesday afternoon as a strong Category 2, leaving over 2.6 million people without power across seven states. The hurricane quickly weakened to a Tropical Storm, but maintained that strength as it traveled northeast into the Carolinas. Zeta is the 11th named storm and 6th hurricane to make landfall in the United States this year, a seasonal record. As a result of the hurricane, at least six people died, power lines and trees were knocked down, houses were destroyed, and streets were flooded. Close to 2,000 National Guard personnel are assisting with the cleanup work in Louisiana.
Coronavirus cases and hospitalizations across the United States are at their highest levels since May, prompting some states to announce new restrictions on businesses. Global daily deaths came in at more than 7,000 twice this week, bringing the 7-day average higher. Europe continues to struggle with rapidly spreading infections as a full lockdown goes into effect today in France and will last until the end of November. France is working towards a plan that will limit the economic fallout from the lockdown, targeting a contraction in GDP of roughly half the 30% drop that was seen during the first one. Regeneron has stopped enrollment in its trial for its antibody therapy used by President Trump, for patients with serious cases, after a safety issue warning from a third party. Eli Lilly also ceased enrollments into its program after research indicated that patients were unlikely to recover from the treatment in the late stages of infection.
Markets slipped this week. The S&P 500 dropped -5.62% and closed at 3,270. The Dow Jones fell -6.47% and closed at 26,504. Year-to-date, the S&P 500 is up 2.77% and the Dow Jones is down -5.38%
Yields rose this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.38% and 0.87%, respectively.
The spot price of WTI Crude fell this week. Prices fell -10.61% and closed at $35.62 per barrel. Year to date, Oil prices are down -41.66%.
The spot price of Gold fell by -1.26% and closed at $1,878.10 per ounce. Year to date, Gold prices are up 23.78%.
Initial jobless claims fell to 751,000 and the four-week moving average of claims fell by 25,000 to 788,000. Claims fell by 12,000 in Texas, 9,000 in Florida, and by 8,000 in California. Claims rose by 10,000 in Michigan, 6,000 in Illinois, and by 3,000 in Virginia.
Real GDP rose by 33.1% versus expectations for an increase of 32.0%
Personal consumption rose by 40.7% versus expectations for an increase of 38.9%
The core PCE inflation index rose by 3.5% annually versus expectations for an increase of 4.0%
Sales of new single-family homes fell by -3.5% to a seasonally-adjusted annualized rate of 959,000 units versus expectations for an increase of 1.4%
Pending home sales fell by -2.2% versus expectations for an increase of 2.9%
The FHFA house price index rose by 1.5% versus expectations for an increase of 0.7%
New orders for durable goods rose by 1.9% versus expectations for an increase of 0.5%
Durable goods orders ex-transports rose by 0.8% versus expectations for an increase of 0.4%
Core capital goods orders rose by 1.0% versus expectations for an increase of 0.5%
Core capital good shipments rose by 0.3% versus expectations for an increase of 0.4%
The Conference Board index of consumer confidence fell by 0.4 points to 100.9 versus expectations for a reading of 102.0
The University of Michigan’s index of consumer sentiment rose by 0.6 points to 81.8 versus expectations for a reading of 81.2
Retail inventories rose by 1.6% versus expectations for an increase of 0.5%
Wholesale inventories fell by -0.1% versus expectations for an increase of 0.4%
Personal income rose by 0.9% versus expectations for an increase of 0.4%
Personal spending rose by 1.4% versus expectations for an increase of 1.0%
Fact of the Week
The price of lumber increased nearly 50% from 4/30/20 to 8/31/20, the largest 4-month increase ever in the cost of lumber based upon data maintained since 1949. The rally was driven by an acute supply shortage stemming from widespread production cuts due to pandemic-related demand concerns that proved to be short-lived and missed the positive catalysts for home construction and improvement that emerged. (source: Bureau of Labor Statistics, Bloomberg Intelligence).