12/6/19 – Strong Jobs Report Lifts Stocks

The November jobs report came in significantly higher than expectations leading to a 300+ point rally in the Dow on Friday. The economy added 266k net new jobs, the unemployment rate declined to 3.5% and wages grew at a 3.1% annual rate. While this was a good report, it’s important to remember it’s only one month. We have good and bad months on the employment front. Job creation remains positive in 2019, but it is down from 2018 and the few years before that. However, the low unemployment rate makes finding employees for new positions more difficult than it has been in decades. The President of the Dallas Federal Reserve Bank spoke on CNBC recently and mentioned that some companies are reducing new capital investment because they can’t find the employees to support their ventures. For the week the Dow declined 0.5% while the S&P 500 decreased 0.2%. Read More

Amazon sells a ton of products to people around the world. Sometimes, people return those purchases. What happens with those returns is a great example of the beauty of a free-market economy. While some products are added back to inventory and resold through the Amazon platform, others are roughly grouped in bins and auctioned off to discount resellers. Repackaging and putting products back in inventory has a cost – selling those products at a steep discount generates some money and eliminates those costs. People are calling this the ‘reverse supply chain.’ A pallet of returned goods with a suggest retail price of $4,000 might get sold for $200. If you’ve ever watched the show Storage Wars, you understand the game. Buy a pallet with a vague idea of what’s on it and hope to find a treasure or two that make buying the whole pallet profitable. Companies now exist that conduct the auction of the Amazon pallets and numerous small entrepreneurs are buying pallets and setting up cheap retail websites to sell the stuff. What a country! Read More

Oil increased 1.6% this week to close at $59.06/barrel. The yield on the 10-yr Treasury moved higher to 1.84% from 1.77% last week. The average rate on a 30-yr fixed rate mortgage held steady at 3.68%.     

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