Portfolio Advisory Council, LLC presents:
THE WEEKLY ECONOMIC UPDATE
QUOTE OF THE WEEK
"Editorialists who tell lies in order to advance their own agendas do more to discredit the press than all the censors in the world."
"Calm seas never made a good sailor."
FRANKLIN D. ROOSEVELT
THE WEEK ON WALL STREET
Overlooking stalled efforts by Congress to pass a new fiscal stimulus bill, stocks marched higher last week with the Dow Jones Industrials leading the way and the NASDAQ Composite setting multiple fresh record highs.
The Dow Jones Industrial Average gained 3.80%, while the Standard & Poor's 500 rose by 2.45%. The Nasdaq Composite index climbed 2.47% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.31%.
Earnings Season Winds Down
A string of encouraging news reports, including a decline in new COVID-19 cases nationwide, pushed stock prices higher throughout the week. Stocks also rallied on signs of a pick-up in manufacturing activity, factory orders that came in well above estimates, and a better-than-expected new jobless claims number.
Congress wasn't able to come to an agreement on a stimulus package, which disappointed some investors. But it wasn't enough to slow the daily climb in the equity markets, with the NASDAQ Composite index closing above 11,000 for the first time, while the S&P 500 index closed in on its record high set in February of this year.6
Stocks drifted on Friday even though the employment report showed that employers added 1.8 million jobs in July, lowering the unemployment rate to 10.2%.
One Eye on Bonds, Gold
The continued rally in stock prices appears to suggest that the U.S. economy may maintain its recovery through the second half of the year and into 2021. But the bond market and gold prices suggest a different outlook.
Last week the yield on 10-year Treasuries touched their lowest level since early March, signaling that bond investors may be less convinced about economic prospects.8
Meanwhile, gold traded over $2,000 per ounce. While the rise in gold prices this year has been largely propelled by historically low interest rates, its reputation as a store of value has attracted investors worried about stock market volatility and a potential uptick in inflation.
It was reported last week that the U.S. and China agreed to meet by video conference on August 15 to discuss compliance with the terms of the Phase One trade deal.
With tensions running high between the two nations, expect Wall Street to keep a close eye on any developments that may appear connected to the virtual meeting.
BY THE NUMBER$
HOTELS AND RESTAURANTS - The number of American workers in "leisure and hospitality" was 16.9 million as of 2/29/20, dropped to 8.5 million as of 4/30/20, and now has rebounded to 12.5 million as of 7/31/20 (source: Department of Labor).
BEING CAUTIOUS - The personal savings rate in the United States was a record 33.5% in April 2020 as Americans reacted to the COVID-19 pandemic outbreak. The personal savings rate in the United States was 7.5% in April 2019 or just 1 year earlier. (source: Department of Commerce).11
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Consumer Price Index (CPI).
Thursday: Jobless Claims.
Friday: Retail Sales. Industrial Production. Consumer Sentiment.
Source: Econoday, August 7, 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: Marriott International (MAR).
Wednesday: Cisco Systems (CSCO), Tencent Holdings (TCEHY), Lyft (LYFT).
Friday: Draftkings (DKNG).
Source: Zacks, August 7, 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
Nancy was born in summer, yet she was born in January. How is this possible?
LAST WEEK'S RIDDLE: You spend 20% of the money in your wallet. Then you spend 20% of what remains in your wallet after that. You spend $72.00 total. How much money did you originally have in your wallet?
ANSWER: $200. $200 - $40 = $160, then $160 - $32 = $128 with $72 of the original $200 spent.
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James W. Hamilton, CFS, AIF
W. Thomas Sutton CFP(R), ChFC, CLU
Philip B. Moran, MBA, ChFC, CFP(R), AIF
John C. Husbands
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.
1. The Wall Street Journal, August 7, 2020
2. The Wall Street Journal, August 7, 2020
3. The Wall Street Journal, August 7, 2020
4. MarketWatch.com, August 4, 2020
5. The Wall Street Journal, August 6, 2020
6. CNBC, August 6, 2020
7. The Wall Street Journal, August 7, 2020
8. MarketWatch, August 4, 2020
9. The Wall Street Journal, August 5, 2020
10. CNBC.com, August 4, 2020
11 - Reproduction Prohibited without Express Permission - Copyright © 2011 Michael A. Higley
The Wall Street Journal, August 7, 2020
The Wall Street Journal, August 7, 2020
Treasury.gov, August 7, 2020