GAS PRICES SPIKE:
According to AAA, the national average price for a gallon of gas was $2.33 before Hurricane Harvey hit. It is now at $2.52. Prices should continue to rise into this coming week, then level off and come back down as refineries come back online. Do not be surprised at another 20 to 30 cents a gallon being added to the current price. We will likely see these inflated prices through mid-October before prices moderate.
SOMEWHAT DISAPPOINTING JOBS REPORT:
The U.S. economy added 156,000 new jobs in August and the unemployment rate bounced back up to 4.4%. The Labor Force Participation Rate did not change. According to the U.S. Bureau of Labor Statistics, the hurricane had no impact on these results. The impact of Hurricane Harvey will be seen in the September and October reports.
STOCKS CLIMB DESPITE HARVEY:
Stocks eked out gains all week despite the damage caused by Hurricane Harvey, renewed tensions with North Korea, and a lackluster jobs report. The tepid jobs report made it more likely that the Fed will slow down its pace of interest-rate hikes (which markets like). Some acquisition/merger announcements and landmark drug approvals also helped stock prices to edge up. For the week, the S&P 500* increased 1.37% (up 10.62% for the year). The MSCI All Country X US* increased 0.52% (up 18.15% for the year). The Barclays Global Aggregate Bond Index* increased by 0.08% (up 7.22% for the year). The HFRX Global Hedge Fund Index* increased 0.40% (up 3.81% for the year).
WORSE THAN INITIALLY DISCLOSED:
Wells Fargo was required to have a third party do a complete review of its retail banking practices. On Thursday, the results of this review was announced. Wells Fargo had to announce that the real number of potentially phony accounts it set up for customers is 3.5 million, significantly higher than the 2.1 million originally reported.
AUTO SALES WILL BE DOWN IN 2017:
According to WardsAuto, light vehicles sales in the U.S. were at 16.03 million in August, down 6% from August of a year ago, and down 3.9% from July. After two consecutive years of record sales, vehicle sales will be down in 2017.
Of the 25 richest Americans, six are over 80. Furthermore, according to the IRS, people over 80, who make up only 3.7% of the total U.S. population, control more wealth than the total of all wealth controlled by people under 50.
NOT YOUR PARENTS’ MORTGAGE:
For clients in their 20s and 30s seeking their first home, make sure to stay up to speed on the various lending programs out there. If your goal is to purchase your first home, find out the various lending options. This will help you put a true savings target in mind (3.5% down payment, 5%, 10%, 20%?). The options available now are not the same as a short time ago. The options available in a couple of years (and the interest rates that come with them), will likely change as well, so stay in touch with your favorite mortgage professional as you move toward your goal (or use a financial advisor who has relationships with these people).
RICH OCTOGENARIANS: “Octogenarians Rule a Big Share of U.S. Wealth”, The Wilmington News Journal, August 30, 2017, Page 6A.
WORSE THAN INITIALLY DISCLOSED: https://www.forbes.com/sites/maggiemcgrath/2017/08/31/wells-fargo-admits-to-more-unauthorized-accounts-increasing-tally-to-3-5-million/#72bd66fa1f1b
AUTO SALES WILL BE DOWN IN 2017: http://www.calculatedriskblog.com/2017/09/us-light-vehicle-sales-at-16-million.html
SOMEWHAT DISAPPOINTING JOBS REPORT: http://www.calculatedriskblog.com/2017/09/august-employment-report-156000-jobs-44.html; http://www.calculatedriskblog.com/2017/09/comment-solid-employment-report.html
GAS PRICES SPIKE: https://www.cnbc.com/2017/09/01/gas-prices-skyrocket-with-more-gains-expected-for-labor-day-weekend.html