As 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 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%.
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).
Hurricane Laura made landfall in Western Louisiana Thursday morning as a Category 4 storm. The storm, that brought maximum sustained winds of 150 mph, caused catastrophic damage that is estimated to cost billions of dollars. The hurricane left six people dead and caused a hazardous chemical fire at a BioLab plant, however, the damage was not as bad as what was expected. Louisiana Governor John Bel Edwards said “It is clear that we did not sustain and suffer the absolute catastrophic damage that we thought was likely based on the forecast that we had last night”. Hurricane Laura was the strongest hurricane to ever hit Louisiana, surpassing Katrina which was a Category 3 storm. This year is expected to be the worst ever for hurricanes, as Laura was the seventh named storm to hit the United States before the end of August, a record.
In a historic Jackson Hole speech this week, the Federal Reserve issued an update to its longer-term goals on Monetary Policy. The Fed stated that its policy decision will be affected by its “assessments of the shortfalls of employment from its maximum level” instead of “deviations” above or below its maximum level. Also, the Fed announced a more flexible approach to price stability, stating that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” Additionally, the Fed stated that it will respond to “risks to the financial system that could impede the attainment of the Committee’s goals.” The changes that were made to Monetary Policy will likely lead to low interest rates for the foreseeable future.
Markets rose higher every day of the week this week. The S&P 500 surged 3.29% and closed at 3,508, AN ALL-TIME HIGH. The Dow Jones spiked 2.64% and closed at 28,653. Year-to-date, the S&P 500 is up 9.96% and the Dow Jones is up 2.03%.
Interests rates moved higher this week and the curve steepened. The 5 year and 10 year U.S. Treasury Notes are yielding 0.27% and 0.72%, respectively.
The spot price of WTI Crude oil rose this week. Prices rose 1.51% and closed at $42.98 per barrel. Year to date, Oil prices are down -29.61%.
The spot price of Gold jumped 1.23% and closed at $1,964.27 per ounce. Year to date, Gold prices are up 29.46%.
Initial jobless claims fell by 98,000 to 1 million and the four-week moving average of claims fell by 68,000 to 882,000. Claims fell by 28,000 in Florida, 18,000 in New York, and by 11,000 in Texas. Claims rose by 22,000 in California.
Second-quarter real GDP growth was revised up by 1.2% to -31.7%, versus expectations for a reading of -32.5%
The core PCE price index rose by 0.4% versus expectations for an increase of 0.5% and the year-over-year rate rose 1.3% versus expectations for an increase of 1.2%
Personal income rose by 0.4% versus expectations for a decline of -0.2%
Personal spending rose by 1.9% versus expectations for an increase of 1.6%
Retail inventories rose by 1.2%, in-line with expectations
Wholesale inventories fell by -0.1% versus expectations for a decline of -0.9%
The FHFA house price index increased by 0.9% versus expectations for a decline of -0.2% and the year-over-year rate rose by 5.7%
Sales of new single-family homes rose by 13.9% to a seasonally-adjusted-annualized-rate of 901,000 units versus expectations for 790,000 units
Pending home sales rose by 5.9% versus expectations for an increase of 2.0%
New orders for durable goods increased by 11.2% versus expectations for an increase of 4.8%
Durable goods orders ex-transports rose by 2.4% versus expectations for an increase of 2.0%
Core capital goods orders rose by 1.9% versus expectations for an increase of 1.7%
Core capital goods shipments rose by 2.4% versus expectations for an increase of 1.8%
The Conference Board index of consumer confidence fell by 6.9 points to 84.8 versus expectations for a reading of 93.0
The University of Michigan’s index of consumer sentiment rose by 1.3 points to 74.1 versus expectations for a reading of 72.8
Fact of the Week
Apple surpassed $2 trillion market cap last week, becoming the first company to be valued at $2 trillion. Apple became the most valuable publicly traded company on July 31st, when it passed oil giant Saudi Aramco. Apple was also the first company to pass $1 trillion back in 2018 (Source: CNBC).
Two tropical depressions are being watched closely as computer models show a high probability of one making landfall in Texas and one making landfall in Florida on Monday. University of Miami meteorologist Brian McNoldy stated that “We could actually have Laura and Marco sharing the Gulf of Mexico on Monday, and both making U.S. landfalls on Monday”. The National Hurricane center is forecasting that both tropical systems will develop into mild hurricanes. If computer models and forecasts are correct, it would mark the first time in history that two hurricanes move through the Gulf of Mexico.
The latest U.S. COVID-19 data updates suggest that the second wave of the virus, particularly in the Sun Belt region, is subsiding. California and Florida saw a sharp decline in hospitalizations yesterday with Florida’s positivity rate coming in at under 10% for the second day in a row. Robert Redfield, head of the CDC, stated that infections in the southern-states are slowing and that the deaths should start to fall over the next week. Meanwhile, Notre Dame and the Univeristy of Pittsburgh are among several schools that have announced that effective immediately, all in-person classes will be suspended after coronavirus outbreaks at the campuses.
Markets continued to rally this week. The S&P 500 rose 0.77% and closed at 3,397. The Dow Jones rose 0.09% and closed at 27,930. Year-to-date, the S&P 500 is up 6.46% and the Dow Jones is down -0.59%.
Interests rates moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.27% and 0.63%, respectively.
The spot price of WTI Crude oil fell this week. Prices fell -0.14% and closed at $42.25 per barrel. Year to date, Oil prices are down -30.81%.
The spot price of Gold dropped -0.31% and closed at $1,939.09 per ounce. Year to date, Gold prices are up 27.81%.
Initial jobless claims increased by 135,000 to 1.1 million and the four-week moving average of claims increased by 51,000 to 942,000 million. Claims rose by18,000 in New York, 16,000 in California, and by 15,000 in Texas. Claims fell by 5,000 in Michigan.
The level of housing starts rose by 22.6% to a seasonally-adjusted-annualized-rate of 1.496 million versus expectations for an increase of 5.0%
Building permits rose by 18.8% versus expectations for an increase of 5.4%
Existing home sales rose by 24.7% to a seasonally-adjusted-annualized-rate of 5.86 million units versus expectations for an increase of 14.6%
Fact of the Week
Thursday marked 100 days since the March 23rd lows we saw in the market. The last 100 days have been the best performing 100 day period in market history, with the S&P 500 returning 50.8% over the period. The previous best was the 100 day period ending 7/30/2009, when the market returned 45.9% (Source: Strategas Research Partners)
Hurricane season in 2020 has started with the earliest 6th named storm on record set to make landfall in the Northeastern U.S. tonight. Tropical Storm Fay is sustaining winds around 50 mph as of this morning and is expected to bring 2 to 4 inches of rain with some isolated areas expecting to see 7 inches. Tropical Storm Warnings are currently in effect for New Jersey, New York, and Connecticut as the Northeast prepares for flash flooding throughout the night. The storm gained structure and transformed into a Tropical Storm this morning and the potential exists for it to become a Category 1 hurricane which is defined by sustained winds of at least 75 mph.
Tensions in Libya escalated further this week after Turkey announced that they will be holding large scale naval exercises off the Libyan coast in anticipation of war in the eastern Mediterranean. One day later, the Egyptian media announced that the Egyptian Army will host their own military drills near the western Libyan border. Turkey has been stepping up its military efforts in Libya recently in support of the government, which is currently battling a civil war. Egypt supports the opposing party in Libya, and this is the first show of force by the Egyptian Army since Turkey began intervening.
Markets rallied this week. The S&P 500 spiked 1.79% and closed at 3,185. The Dow Jones rose 0.98% and closed at 26,075. Year-to-date, the S&P 500 is down -0.38% and the Dow Jones is down -7.44%.
Interests rates were unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.63%, respectively.
The spot price of WTI Crude oil fell slightly this week. Prices fell -0.37% and closed at $40.50 per barrel. Year to date, Oil prices are down -33.67%.
The spot price of Gold rose 1.31% and closed at $1,799.18 per ounce. Year to date, Gold prices are up 18.58%.
Initial jobless claims fell by 99,000 to 1.3 million and the four-week moving average of claims fell by 63,000 to 1.4 million. Claims fell by 37,000 in New York, 23,000 in Florida, and by 12,000 in Oklahoma. Claims rose by 39,000 in Texas, 30,000 in California, and by 4,000 in Connecticut.
The ISM non-manufacturing index rose by 11.7 points to 57.1 versus expectations for a reading of 50.2
Wholesale inventories fell -1.2%, in-line with expectations
The producer price index (PPI) fell by -0.2% versus expectations for an increase of 0.4% and the year-over-year rate fell by -0.8%
PPI ex-food, energy and trade services rose by 0.3% versus expectations for an increase of 0.1% and the year-over-year rate was flat
Fact of the Week
The money used by the Federal Reserve in its lending programs and asset-buying programs was “digitally created” by the Fed, i.e., the Fed does not technically “print” money (it does not have a printing press) but rather it creates money with the press of a button on a keyboard. The Fed is forecasted to create$5 trillion of new money between March 2020 and December 2020 (source: Federal Reserve)