On Memorial Day in Minneapolis, George Floyd, an unarmed black man died while being restrained by a police officer with three officers nearby, all of which have been charged with his death. The tragedy was captured in a cell phone video that went viral and sparked nationwide demonstrations last weekend, some of which escalated to violence and looting. The demonstrations have continued throughout the week and are expected to continue during the weekend resulting in curfews being put in place by major U.S. cities. The National Guard has been called in by nearly half of the country to help police protect communities in the event of violence. A memorial was held yesterday in Minneapolis for George Floyd that was broadcast on networks nationwide.
Nearly a decade after the United States shelved the space shuttle program, a private U.S. company has launched astronauts into orbit for the first time ever. Private company SpaceX, founded by Elon Musk, launched its Falcon 9 rocket with two American astronauts on board last Saturday to travel to the International Space Station. An estimated 10.3 million people viewed the broadcast of the launch, the most-watched event that NASA has ever tracked. SpaceX currently holds a $2.6 billion contract with NASA to conduct five more of the crewed flights to the International Space Station.
The markets extended their rally this week. The S&P 500 spiked 4.96% and closed at 3,194. The Dow Jones jumped 6.85% and closed at 27,111. Year-to-date, the S&P 500 is down -0.26% and the Dow Jones is down -3.90%.
Yields spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.46% and 0.88%, respectively.
The spot price of WTI Crude climbed higher this week. Prices rose 10.74% and closed at $39.30 per barrel. Year to date, Oil prices are down -35.64%.
The spot price of Gold fell -2.77% and closed at $1,682.26 per ounce. Year to date, Gold prices are up 10.87%.
Initial jobless claims fell by 246,000 to 1.9 million and the four-week moving average of claims fell by 325,000 to 2.3 million. Claims increased by 57,000 in California, 47,000 in Florida. Claims fell by 134,000 in New York, 21,000 in Georgia, and by 21,000 in Pennsylvania.
The ISM manufacturing index rose by 1.6 points to 43.1 versus expectations for a reading of 43.8
The ISM non-manufacturing index rose by 3.6 points to 45.4 versus expectations for a reading of 44.4
Private sector employment in the ADP fell by 2.8 million versus expectations for a decline of 9 million
Factory orders fell by 13.0% versus expectations for a decline of 13.4%
Nonfarm payrolls rose 2.5 million versus expectations for a decline of 7.5 million
The unemployment rate came in at 13.3% versus expectations for a reading of 19.0%
Average hourly earnings fell 1.0% versus expectations for an increase of 1.0% and the year-over-year rate rose 6.7%
Fact of the Week
The S&P 500 has returned 37.7% over the last 50 trading days, making it the benchmark index’s largest 50-day rally in history. (Source: LPL Financial)
Today the state of Illinois transitions to Phase 3 of Governor J.B. Pritzker’s reopening plan, while Chicago Mayor Lori Lightfoot has the city of Chicago on hold until June 3rd. Outdoor dining at restaurants and bars, hair salons, and non-essential retail businesses are set to reopen with capacity limitations, social distancing, and enhanced sanitary requirements. In addition to businesses reopening, people may begin gathering in groups of up to 10 people. Illinois is expected to move to Phase 4 of the five-phase plan in late June given all of the requirements are met. In New York, five regions are looking enter Phase 2 of their plan, while New York City is on hold until further notice. All 50 states in America are now at least partially reopened and the COVID-19 test positivity rate continues to decline.
Political tensions are rising between the United States and China as a result of the controversial national security law that was approved this week. Secretary of State Mike Pompeo stated that “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given the facts on the ground.” President Trump held a press conference today announcing that certain foreign Chinese nationals would be suspended from entering the United States and that Chinese officials responsible for the Hong Kong bill would be sanctioned. Additionally, the administration will begin eliminating policy exemptions granted to Hong Kong, as a result of their lack of autonomy from China. President Trump also announced that he is terminating the relationship between the United States and the World Health Organization, claiming that they are “China centric”.
Markets rose significantly again this week. The S&P 500 jumped 3.04% and closed at 3,044. The Dow Jones rose 3.85% and closed at 25,383. Year-to-date, the S&P 500 is down -5.00% and the Dow Jones is down -10.06%.
Yields declined this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.65%, respectively.
The spot price of WTI Crude rose this week. Prices rose 5.53% and closed at $35.09 per barrel. Year to date, Oil prices are down -42.53%.
The spot price of Gold fell -0.14% and closed at $1,732.23 per ounce. Year to date, Gold prices are up 14.17%.
Initial jobless claims fell by 315,000 to 2.1 million and the four-week moving average of claims fell by 436,000 to 2.6 million. Claims rose by 17,000 in Pennsylvania, 15,000 in Virginia, and by 14,000 in Kentucky. Claims fell by 48,000 in Florida, 43,000 in New York, and by 34,000 in California.
New orders for durable goods fell by -17.2% versus expectations for a -19.0% decline
Durable goods orders ex-transports fell by -7.4% versus expectations for a decline of -15.0%
Personal consumption fell -6.8% versus expectations for a decline of -7.5%
Personal income rose by 10.5% versus expectations for a decline of -5.9%
Personal spending fell by -13.6% versus expectations for a decline of -12.8%
The Conference Board index of consumer confidence rose by 0.9 points to 86.8 versus expectations for a reading of 87.0
Sales of new single-family homes rose by 0.6% to a seasonally-adjusted-annualized rate of 623,000 units versus expectations for a reading of 480,000 units.
Pending home sales fell -21.8% versus expectations for a decline of -17.3%
First-quarter real GDP growth was revised down to -5.0% versus expectations for a reading of -4.8%
The PCE price index fell by -0.5% versus expectations for a decline of -0.6% and the year-over-year rate rose by 0.5%, in-line with expectations
The core PCE price index fell by 0.4% versus expectations for decline of -0.3% and the year-over-year rate rose by 1.0% versus expectations for an increase of 1.1%
Wholesale inventories rose by 0.4% versus expectations for a -0.7% decline
The University of Michigan’s index of consumer sentiment fell by 1.4 points to 72.3 versus expectations for a reading of 74.0
Fact of the Week
Since bottoming on March 23rd, the S&P 500 gained 32.6% over the next 43 days through 5/20. It was the second best 43 day period for the index in that last 30 years, behind the 37.8% that the S&P 500 gained from 3/09/09 – 5/08/09 (BTN Research).
The People’s Republic of China proposed a national security bill for Hong Kong which could result in Chinese intelligence agencies setting up bases there, threatening the independence and pro-democracy movement in Hong Kong. Pro-democracy lawmakers called the plans “the end of Hong Kong”, arguing that it is a violation of the “one country, two systems” agreement created when Britain returned Hong Kong to China in 1997. In the proposal, China would annex laws into Hong Kong’s mini-constitution, the Basic Law, without any local legislative scrutiny and are intended to safeguard the central government’s “overall jurisdiction” as well as Hong Kong’s “high autonomy” given Hong Kong’s “increasingly notable national security risks”. Currently, China can take no enforcement action in the city of Hong Kong, but this proposal would allow agencies to be set up in the city, expanding China’s presence. President Trump warned that the United States would react “very strongly” if China put the bill into law, and Secretary of State Mike Pompeo said that it would be the “death knell” for Hong Kong’s autonomy.
Residents of Midland, Michigan began returning to their homes and assessing the damage from what is being called the “500-year flood” caused by a long period of heavy rain and the failure of two dams protecting the city. Nearly 11,000 people were evacuated from the city as the Tittabawassee River rose to a record 35.05 feet, much higher than the flood stage of 24 feet and left Midland underwater. Concerns over potential spread of toxic contamination arose as floodwaters overtook containment ponds at the nearby Dow chemical plant. Flood warnings remain in effect for the entire area and a forecast exists for more rain next week
Markets surged this week as states begin reopening. The S&P 500 spiked 3.27% and closed at 2,955. The Dow Jones jumped 3.43% and closed at 24,465. Year-to-date, the S&P 500 is down -7.77% and the Dow Jones is down -13.40%.
Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.34% and 0.66%, respectively.
The spot price of WTI Crude rallied higher this week. Prices rose 13.38% and closed at $33.47 per barrel. Year to date, Oil prices are down -45.16%.
The spot price of Gold fell -0.50% and closed at $1,734.98 per ounce. Year to date, Gold prices are up 14.35%.
Initial jobless claims fell by 249,000 to 2.4 million and the four-week moving average of claims fell by 501,000 to 3 million. Claims rose by 59,000 in New York, 41,000 in Washington, and 36,000 in California. Claims fell by 55,000 in Georgia, 46,000 in Kentucky, and 35,000 in New Jersey.
The Philadelphia Fed manufacturing index rose by 13.5 points to -43.1 versus expectations for a reading of -40.0
The level of housing starts fell 30.2% to 891,000 versus expectations for a decline of 25.9%
Building permits fell by 20.8% versus expectations for a decline of 25.9%
Existing home sales fell by 17.8% to a seasonally-adjusted-annualized rate of 4.33 million units versus expectations for a 19.9% decline.
Fact of the Week
This week in 1991, Michael Jordan won his second MVP title. When Jordan first launched his iconic Air Jordan sneaker with Nike in 1984, the company put a sales goal of $3million over 2 years for the shoe. The original Air Jordan went on to sell $126 million in the first year alone. (Source: Bleacher Report)