Portfolio Advisory Council, LLC presents:
 

 

THE WEEKLY ECONOMIC UPDATE

 

November 2, 2020 

Patience this week will be your friend!

A lot of good news concerning the economy was reported last week but fears of more lockdowns spooked financial markets.  Additionally, markets expected Washington to agree on some sort of stimulus pre-election, but those hopes were completely killed last Monday. 

Looking at the actual data last week, reports were universally good. Weekly jobless claims dropped to the lowest levels since March. Continuing unemployment claims fell to the best level of the recovery. Durable goods also handily beat estimates. Overseas, Chinese, EU and UK manufacturing reports beat estimates.

The fact that business spending and investment continues to recover despite no stimulus is impressive and is a bullish factor for stocks.

Major drivers to the financial markets post election are a stimulus package and Phase III trial results for vaccine. 

Patience will be rewarded!

QUOTE OF THE WEEK 

"Regardless of who wins, an election should be a time for optimism and fresh approaches.

GARY JOHNSON 

 
THE WEEK ON WALL STREET

Stock prices dropped last week as hopes for a fiscal stimulus bill faded and investors focused on rising COVID-19 infections, here and abroad.

The Dow Jones Industrial Average slid 6.47%, while the Standard & Poor's 500 tumbled 5.64%. The Nasdaq Composite index lost 5.51% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slumped 5.02%.1,2,3

A Difficult Week for Stocks

Stocks opened the week lower as lawmakers failed to pass a fiscal stimulus bill and a pick up in the number of new COVID-19 cases in the U.S. and Europe. Hardest hit were companies most exposed to pandemic-related economic impacts, including energy, travel and leisure, and industrials.

Losses accelerated mid-week on reports of rising coronavirus-related hospitalizations, along with news that Germany and France were reinstating partial shutdown restrictions.4
Stocks attempted to recover on Thursday, but took another leg lower on Friday as earnings reports from the mega-cap technology companies failed to impress investors.
 

Positive Economic News

There were several strong economic reports during the week, but investors paid little attention. Among the highlights were durable goods orders, which rose for the fifth consecutive month, a sharp drop in initial jobless claims that were the lowest since March 14th, and a 33.1% annualized jump in economic growth during the third quarter.5,6,7

Investors also ignored a strong start to earnings season, which has seen 85% of reporting companies in the S&P 500 index beating earnings estimates by an average margin of 19%.8
 

BY THE NUMBER$

AFTER TEN MONTHS - Over the last 30 years (1990-2019), November and December have ranked as the # 1 and # 3 "best months" for the S&P 500 (source: BTN Research).

BEST EVER - The US economy rose a record +33.1% in the 3rd quarter 2020, i.e., quarter-over-quarter change expressed as an annualized result (source: Department of Commerce).
 
THE MOST PAID - The maximum Social Security benefit paid to a worker retiring at full retirement age in 2021 is $3,148 per month, more than double the $1,536 per month maximum benefit paid 20 years earlier in 2001 (source: Social Security). 9
 
 
THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: ISM (Institute for Supply Management) Manufacturing Index.

Wednesday: ADP (Automated Data Processing) Employment Report. ISM (Institute for Supply Management) Services Index.

Thursday: Jobless Claims. FOMC (Federal Open Market Committee) Meeting Announcement.

Friday: Employment Situation.

Source: Econoday, October 30, 2020

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Paypal Holdings (PYPL), The Clorox Company (CLX), Mondelez International (MDLZ), Eversource Energy (ES).

Tuesday: Humana, Inc. (HUM), Prudential Financial (PRU), Emerson Electric (EMR).

Wednesday: Qualcomm (QCOM).

Thursday: Alibaba Group (BABA), Square, Inc. (SQ), Bristol Myers Squibb (BMY), General Motors (GM), Duke Energy (DUK), Cigna Corp. (CI), T-Mobile:US (TMUS), Booking Holdings (BKNG), MetLife (MET).

Friday: CVS Health Corp. (CVS), Marriott International (MAR).

Source: Zacks, October 30, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
 
 
 
 
THE WEEKLY RIDDLE
 
Is there a number made of eleven tens of thousands, eleven thousands, eleven hundreds, and eleven units? If so, what is it?

 
LAST WEEK'S RIDDLE: Three light switches are in the "off" position. Each connects to a light bulb in an adjoining room that you cannot see into. You can freely switch the light bulbs on and off, but you can only go into the adjoining room once to check on the state of the bulbs. Is it possible to tell which switch controls which bulb?

ANSWER: Yes. Leave switch A on for several minutes, then switch it off and turn on switch B before entering the next room. The lit bulb correlates with switch B, the dark cool bulb with switch C, and the dark but still-warm bulb with switch A.
 


Portfolio Advisory Council, LLC
A Registered Investment Advisory Since 1986
             
Investment advisory services offered through Portfolio Advisory Council, LLC, and an SEC Registered Investment Adviser.
 
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James W. Hamilton, CFS, AIF
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W. Thomas Sutton  CFP(R), ChFC, CLU
713.574.6020
 
Philip B. Moran, MBA, ChFC, CFP(R), AIF
713.574.6030
 
John C. Husbands

Visit us at www.pac1000.com 



This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the "NYSE") and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions - the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.


CITATIONS:

1. The Wall Street Journal, October 30, 2020
2. The Wall Street Journal, October 30, 2020
3. The Wall Street Journal, October 30, 2020
4. CNBC, October 27, 2020
5. The Wall Street Journal, October 27, 2020
6. CNBC, October 29, 2020
7. The Wall Street Journal, October 29, 2020
8. CNBC, October 29, 2020
9. 
Reproduction Prohibited without Express Permission - Copyright © 2011 Michael A. Higley