1/10/2020 – Iran Fear Down, Stocks Up

Earlier this week, Iran retaliated for the US killing of General Soleimani by launching more than a dozen missiles at US bases inside Iraq. Stocks future declined sharply and oil spiked in the pre-market hours, but as news kept coming out, it became clear that no Americans were killed and markets rallied on the assumption that this tense period was over. President Trump announced new economic sanctions for Iran following the attacks, but thankfully took a de-escalation tone overall. For the week, the Dow gained 0.7% while the S&P 500 increased 0.9%.

The December jobs report came out this morning and showed a pretty mediocre end to the year on the hiring front. The economy added 145k net new jobs in the month and the unemployment rate remained at an historic low 3.5%. A broader measure of unemployment declined to 6.7%, the lowest it’s ever been since the government began tracking the data in 1994. Wage growth slowed to a 2.9% year-over-year rate, the first time in 18 months that the year-over-year rate was below 3%. Overall, the labor market seems strong, even with this report. For the year the economy added 2.1 million new jobs, down from last year’s 2.7 million, but in line with 2017’s figure. Given where unemployment is, it’s understandable that companies aren’t hiring at the same rate – there aren’t enough people for the jobs companies want to fill. In related news, Taco Bell announced this week it would start paying some store general managers up to $100,000. This is only in select markets, but the point is companies are realizing they need to pay more to attract and retain good employees. Read More

Oil decreased 6.1% this week to close at $59.18/barrel. The yield on the 10-yr Treasury moved higher to 1.82% from 1.79% last week. The average rate on a 30-yr fixed rate mortgage moved lower to 3.64% from 3.72% a week ago.

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