China Cancels Meeting Sends Stocks Lower
It appeared the markets were going to close flat for the week after last Thursday, which would have been a positive after 3 weeks of gains. Last Friday, China was all set to meet with farmers in Montana and Nebraska and then decided to cancel… sending stocks down for the day and the week.
For the week, the Dow fell (1.04%), the S&P500 (.49%) and the Russell 2000 lost (1.14%). The International Markets had the same result with the MSCI EAFE Index down (.35%) along with the Emerging Market Stock Index, MSCI EM losing (.45%).
Bonds reversed course again sending yield down as the 10 Year US Treasury finished last Friday with a yield of 1.75%. As a reminder, we started the year with the 10 Year yielding 2.69%.
Oil Prices SPIKE! Last Monday
Wished I had bought “OIL” a couple of weeks ago and sold it last Monday as the price rose 15% in 1 day! That’s a WOW and proves that shocks can happen at any time! Oil had some air released from the current price spike, and finished the week up only about 6%. Certainly the drone attacks on Saudi have made us more aware of how critically important oil remains to our current, intermediate and longer term future.
I have been getting kind of used to gasoline prices at this level…. I certainly hope that these spikes are not frequent and long-lasting.
Fed Lowers as Expected
Had to Intervene in the Money Market
As widely expected, the Federal Reserve lowered the discount rate by .25% bring the range to 1.75% – 2.00%. In my opinion, the markets have already had this cut and the next rate cut priced in. The current thought or risk is if the Fed does NOT reduce rates further, something very positive would need to happen. Perhaps a trade deal for the markets to not react (at least temporarily negatively) to the Fed not lowering rates further.
As always, time will tell!!
The Fed had to alter their attention last week from just the rate cut debate, to intervening into a segment of the bond market, called the Overnight Repo. This is where companies go to meet very short-term borrowing needs. Apparently there was not enough cash on hand to meet the current borrowing needs, so the Federal Reserve had to pump in some cash to stabilize the money markets. As I don’t see this as a significant issue, if it continues, it will be worth paying attention!
Question of the Week…
Medicare open enrollment!
Open enrollment for Medicare runs annually between October 15th and December 7th. During this period of time, Medicare beneficiaries can change certain coverages WITHOUT having to qualify medically, so the changes are GUARANTEED!
Which of the following Medicare Coverages CANNOT be changed without qualifying medically? Meaning they are NOT Guaranteed!
- Part D Prescription Drug Program
- Part C Medicare Advantage Program
- Changing from Original Medicare to Medicare Advantage
- Changing from Medicare Advantage to Original Medicare
- Changing Medicare Advantage plan to another Medicare Advantage plan.
Answer to last week’s question…!
1 barrel of crude oil accounts for how many gallons of gasoline?
The correct answer is #4 — 19.5 gallons of gasoline are produced from 1 barrel of crude oil.