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Markets retreat a touch in September. But finish strong on hopes of another round of Congressional Covid spending.
The S&P roller coaster last week: Down, up, down a lot, up, and up a lot.
The Debate: Due to my radio responsibilities I ended up watching the Debate three times. I watched it live Tuesday night and was very upset by it. I was upset with the level of interruptions between the candidates, especially by Trump. I was equally upset with the level of insults thrown out by Biden towards Trump. It was a food fight, a verbal brawl. But in watching it two more times, I grew numb to the rudeness of the candidates and I was actually able to hear what was said. Being the anal guy I am, I started a separate page for each of the seven topics/sections moderator Chris Wallace asked, and started making hash marks as I listened. While there was plenty of substance from the candidates, it was overshadowed by the interruptions and by the Tone of the debate. I counted 203 interruptions: 66 by Trump; 40 by Biden; and 97 by Wallace. Trump was Trump: he was aggressive and rude. Biden was sarcastic and laughed 18 times at Trumps answers. Both candidates needlessly insulted the other candidate: the count for Trump was 3 insults, the count for Biden was 20 insults. Wallace set up his questions differently depending on who he was addressing. Both candidates got direct pointed questions. But Trump got the regular Fox News Sunday show grilling; especially on his tax returns and white supremacy questions. Biden did not get that grilling treatment: Wallace noticeably let Biden get away with not answering his questions about packing the Supreme Court and doing away with the Senate filibuster. What I will remember most is the Tone of the debate. Both candidates were hostile towards one another, and it was clear they didn’t like the other at all. It’s one thing to see two candidates disagree aggressively but agreeably. It’s another to watch verbal grenades get thrown back and forth for 90 minutes. I don’t think either candidate won. I give an average grade to Wallace. And the loser… those of us who watched it.
GDP: The final read for Q2 came in at -31.4% (slightly better than the second read of -31.7%). Expectations for Q3 are something around +20%.
ISM: The key number is 50. Anything above 50 means expansion. Below 50 means contraction. August came in at 56. September was forecasted at 56.3, with the actual number coming in at 55.4. Not as high as hoped for, but still very healthy.Jobs: In August we had almost 1.4 million new jobs. Expectations were for about 900,000 new jobs in September. The actual number came in at 661,000. Though less than expected, it’s still a good number.
Jobless claims: They came in at 837,000. That’s the 6th time in the last 8 weeks the number has been below 1,000,000. We continue to solidify between 800,000-900,000.
Unemployment: In August the U3 was 8.4%. Expectations were for an 8.2% rate. The actual number came in at 7.9%. A great number compared to where we were just six months ago.
Focus of the week: Two things. First, when will President Trump be released from Walter Reed? Reports are he’s doing well and could be released this week. Second, will there be another Congressional Covid deal? The initial proposal from the House was for $3.4 Trillion. The original Senate deal was for $500 billion (do you remember when $500 billion was considered a lot of money?). Pelosi said she wouldn’t come to the table for less than $2.2 Trillion. And now the House has passed that. She’s said last week she’d rather have no deal than what she didn’t feel was the right deal. The Senate package went from $500 billion, to $1 Trillion, and now $1.6 Trillion. Markets are way up this morning on hopes a new Covid spending deal will get done this week.
Indicator focus: ISM services index (Mon); the FOMC minutes from their last meeting (Wed); and jobless claims (Thu).