Last week, the markets were supported by improving industrial and labor markets, along with news of a possible Russian vaccine. This was sufficient to push the markets higher despite rising US/China risk, the stalemate in Congress over a measly trillion dollars, and of course our upcoming Presidential election.
For the week, the Dow led in the US market, rising 1.87%, the S&P 500 .69%, the Russell 2000 .59%. The Nasdaq Composite was the US laggard rising just .09%.
International markets were also higher with developed market stock rising 2.47% and Emerging Markets .40%.
Bond yields have now started to move higher, with the 10 Year US Treasury ending last Friday with a yield of .71%. Only a couple of weeks back, the yield was moving close to .50%. If the recovery continues to move forward, which I expect, yields can move noticeably higher, however still far below whatever is really “normal.”
Economy is recovering!
Last week US initial jobless claims reported the first reading below 1 million claims, since the beginning of the crisis. It’s been reported we’ve recovered approximately 40% of the job losses since March. At this point, I believe the employment numbers will continue to improve, albeit at a slower pace.
Industrial production which fell off a cliff also met expectations, increasing last month by 3% from the month prior.
Traffic patterns on my way to work are a good indication of our economic situation. Prior to March, my short, less than 5 mile drive, which includes entering Route 295 South in Mount Laurel, near Walmart, and exiting at exit 32, was a nightmare… More “crazy” drivers than I could count. Mid-March left me as one of only a few cars on the road…. a driving pleasure! As the economy started to reopen, the traffic surged (not nearly to pre-crisis levels, however). Now the traffic seems to have leveled out. I have not had to stop or slow down on Route 295 since early March.
To me this suggests without a true vaccine, the pace of our recovery will be slower from now until year end than from May through Mid-August.
Refi-Rates/Post Office/FDA Requirement
Last week Fannie Mae and Freddie Mac announced a new fee of .50% for home refi’s beginning September 1st. A typical $250,000 mortgage will now cost an additional $1250.00. The reason reported, is for Fannie & Freddie to protect themselves for losses on their already refinanced mortgages, given lower rates. I have no comment.
The US Postal system continues to operate in the red. On CNBC this morning, it was reported in 2019 (pre-covid), the budget deficit was over 10%, meaning their expenses were 10% higher than income. I also have no comment.
The Speaker of the House, called Congress back from summer vacation to attempt to pass a $25B bailout, and an additional $3.6B for the upcoming election. The post office will probably be front and center for a while as our Presidential Election could involve a significant number of mail-in ballots. This will be interesting to watch unfold.
I had a discussion with a friend recently about the FDA requirement to approve a vaccine. I stumbled across a Washington Post article from June 30, 2020. “The Food and Drug Administration said to win regulatory approval, any covid-19 vaccine will have to prevent disease, or decrease its severity, in at least 50% of the people who receive it.” The 50% figure is definitely thought-provoking!!!
IN PERSON Social Security Workshop Resuming in September!!!
Knowledge is definitely power for good decision making. The Covid-19 situation unfortunately iced our series of educational workshops on Social Security, Medicare and Retirement Income/Tax Planning for the time being.
I’m very excited we have scheduled our educational Social Security workshop on Tuesday September 29th, 6:30 pm, at the Woodcrest Country Club. We will certainly be following proper Covid procedures and guidelines.
Covid-19 is going to push the Social Security solvency issue to be dealt with sooner than later. The workshop will certainly include a discussion on the status and possibilities for reform. To RSVP, please visit the registration page on our website by clicking HERE. Or call (856) 354-3200 extension 205 to RSVP! All are welcome!