On Thursday evening, President-elect Joe Biden revealed his proposal for a $1.9 trillion fiscal relief package. The proposed spending includes $1,400 stimulus payments to all Americans, an extension of expanded unemployment benefits through September of 2021 that would include an additional $400 a week, $370 billion of aid to state and local governments, and $190 billion for public health funding. Additionally, an increase of the federal minimum wage to $15/hour has been included in the bill which has been strictly opposed by Senate Republicans. Due to the overwhelming size of the relief bill and the inclusion of a minimum wage hike, it is expected that the fiscal relief bill will face opposition in the Senate, where 10 Republican votes will be required.
The U.S. House of Representatives voted to impeach President Donald Trump for the second time this year following the event that took place at the Capitol on January 6th. The article of impeachment accuses President Trump of “willfully inciting violence against the government of the United States”, referring to his tweets in the days following up to January 6th and his rally that he held in Washington on that day. President Trump was subsequently removed and/or suspended from most all popular social media platforms. Speaker of the House Nancy Pelosi announced today that she plans to send the impeachment to the Senate sometime next week, as President-elect Joe Biden is scheduled to be officially sworn into office on Wednesday, January 20th.
Markets fell this week. The S&P 500 lost -1.46% and closed at 3,768. The Dow Jones fell -0.91% and closed at 30,814. Year-to-date, the S&P 500 is up 0.38% and the Dow Jones is up 0.73%.
Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.45% and 1.09%, respectively.
The spot price of WTI Crude fell this week. Prices were down -0.13% and closed at $52.17 per barrel. Year to date, Oil prices are up 7.52%.
The spot price of Gold fell by -1.22% and closed at $1,826.49 per ounce. Year to date, Gold prices are down -3.79%.
Initial jobless claims rose to 965,000 and the four-week moving average rose by 18,000 to 834,000
Import prices rose by 0.9% versus expectations for an increase of 0.7%
Import prices ex-petroleum rose by 0.4% versus expectations for an increase of 0.1%
The Consumer Price Index (CPI) rose by 0.4%, in-line with expectations and the year-over-year rate rose by 1.4% versus expectations for an increase of 1.3%
The core CPI index rose by 0.1%, in-line with expectations and the year-over-year rate rose by 1.6%, in-line with expectations
Retail sales fell by -0.7% versus expectations for a flat reading
Core retail sales fell by -1.9% versus expectations for an increase of 0.1%
The Producer Price Index (PPI) rose by 0.3% versus expectations for an increase of 0.4%
PPI ex-food, energy, and trade services rose by 0.4% versus expectations for an increase of 0.2%
Industrial production rose by 1.6% versus expectations for an increase of 0.5%
Business inventories rose by 0.5%, in-line with expectations
The University of Michigan’s index of consumer sentiment fell by 1.5 points to 79.2 versus expectations for a reading of 79.5
Fact of the Week
More new brokerage accounts (an estimated 10 million) were opened during calendar year 2020 than in any other year in US history (source: JMP Securities).
The year 2020 ended with the United States remaining far behind its goal of 20 million vaccinations, sitting at just 6.25 million vaccinated. There has been criticism of the Trump administrations strategy of withholding 50% of the available supply, so that they can then distribute the second wave of doses for the second round of vaccinations that is needed for immunity. Further, the FDA has backed this up by stating that there is no evidence that immunity can develop with just a single dose, and that both are needed. President Elect Joe Biden stated his intention to accelerate the distribution of the vaccine, releasing every available dose when he takes office. While this strategy will certainly speed up the process of distribution, it will not solve the issue that hospitals currently have with government regulations recently put in place. New York Governor Andrew Cuomo and New York City May Bill de Blasio have had their trouble as they argue the effectiveness of Cuomo’s penalties for New York hospitals missing vaccination targets.
As a result of the Georgia run-off election, Democrats are now set to control the senate in the coming weeks with Vice President Elect Kamala Harris being the tie-breaker. The Democratic sweep has led to expectations of potential trillions in new stimulus, until this afternoon when Democratic Senator Joe Manchin III poured cold water on that potential after he said that he would “absolutely not” support a new round of stimulus checks. With the new composition of the Senate, Joe Biden and Majority Leader Chuck Schumer cannot afford to lose one Democratic vote to pass legislation. Shortly after the Senator’s statement, he issued a follow-up statement that he would evaluate Joe Biden’s aid plan when the time comes, adding further confusion to expectations.
Markets continued rallying in the first week of the year 2021. The S&P 500 surged 2.48% and closed at 3,825. The Dow Jones rose 2.31% and closed at 31,098. Year-to-date, the S&P 500 is up 2.48% and the Dow Jones is up 2.31%.
Yields rose sharply higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.48% and 1.11%, respectively.
The spot price of WTI Crude rose this week. Prices were up 8.43% and closed at $52.61 per barrel. Year to date, Oil prices are up 8.43%.
The spot price of Gold fell by -2.70% and closed at $1,847.49 per ounce. Year to date, Gold prices are down -2.70%.
Initial jobless claims fell to 787,000 and the four-week moving average fell by 19,000 to 819,000
Construction spending rose by 0.9% versus expectations for an increase of 1.0%
The ISM manufacturing index rose by 3.2 points to 60.7 versus expectations for a reading of 56.8
The ISM non-manufacturing sector rose by 1.3 points to 57.2 versus expectations for a reading of 54.5
Private sector employment in the ADP report fell by -123,000 versus expectations for an increase of 75,000
Factory orders rose by 1.0% versus expectations for an increase of 0.7%
Wholesale inventories were flat versus expectations for a decline of -0.1%
Nonfarm payrolls fell by -140,000 versus expectations for an increase of 50,000
The unemployment rate came in at 6.7% versus expectations for a reading of 6.8%
Average hourly earnings rose by 0.8% versus expectations for an increase of 0.2%
Fact of the Week
The life expectancy at birth of an American baby in 1971, i.e., 50 years ago, was 71.1 years. The life expectancy at birth of an American baby today is 78.7 years. Thus, life expectancy in the United States has increased 7.6 years over the last half century while the full retirement age under social security has only increased by two years, i.e., American life expectancy at birth is increasing at the rate of 1 ½ years every decade (source: Center for Disease Control).