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Third Quarter Earnings Reports Begin

Third quarter earnings season got under way last week. Financial companies kicked off the proceedings with a mixed bag of results. JPMorgan saw their profits increase and Citigroup lost less than analysts had estimated. Scandal-plagued Wells Fargo posted a 56% drop in earnings while Goldman Sachs saw theirs skyrocket 93%. Airlines were next up and reported widening losses, as expected. All-in-all the results were stronger than projected.
U.S. stocks had a volatile week and ended with a slight gain. Investors are being pulled between a flood of good news/bad news. Optimism abounds for third quarter earnings. Even though they have just gotten started, the numbers are coming in better than anticipated. On the other hand, concerns are mounting that job growth is beginning to stall. The number of people filing new applications for unemployment benefits rose last week to the highest level since late August. Expectations are for more layoffs to occur as restrictions for receiving stimulus money from the federal government expired at the beginning of October. Investors also continue to be concerned over a lack of additional stimulus aid from the government. Fed Chairman, Jerome Powell, has stressed the need for funds for struggling families and small business owners. Oh, and did I forget to mention we have two weeks left for the presidential election. Investors have much to be concerned about.
A couple of weeks ago, I showed a chart similar to the one below that illustrated the bull & bear market periods. I found the chart below fascinating and wanted to share it with you. It shows how the markets have performed while the sitting president was a Republican or Democrat (red vs. blue bars). It does a wonderful job of stressing the point that it doesn’t matter which party controls the White House. It’s about the economy.
If you have any questions, please let me know.
The Markets and Economy
  • The pandemic hasn’t been kind to retail, unless you operate online. That’s why retailers such as Walmart, Target and Bed Bath & Beyond are pushing holiday sales earlier. Deals usually held for Black Friday and days closer to Christmas are being announced effective now. The deals will also be found online as brand-name stores go head-to-head with Amazon.
  • According to the National Association of Realtors, the median price of an existing home sold in the U.S. in August, 2020 was $310,600. That is the highest ever recorded and is an 11% increase over the last 12 months.
  • Retail sales, a measure of purchases at stores, restaurants and online, rose a seasonally adjusted 1.9% in September from the prior month according to the Commerce Department. The gain marked the fifth straight month of retail-sales growth.
  • The moratorium imposed by the state of New York on commercial foreclosures and evictions ends tomorrow on Tuesday 10/20/2020. Tenants and borrowers may face financial obligations that have been accumulating since March 2020.
  • Imports from China have been decreasing in 2020. For the first six months of this year, $181 billion of goods we imported to the U.S. For all of 2019, $452 billion of goods were imported. A combination of the pandemic and trade tariffs are why.
  • Falling retail sales in the Big Apple continues to plague the real estate market. Three buildings on Madison Avenue’s main retail corridor sold for about 80% below peak sales prices in 2014.
  • The federal government announced Americans receiving Social Security will see a 1.3% increase in benefits next year. The 2021 cost-of-living adjustment is slightly smaller than this year’s 1.6% increase.
  • Global public debt, the amount of spending by the world’s governments, will hit a high this year. Overall, governments have committed $11.7 trillion, or 12% of global output according to the International Monetary Fund.
  • Car sales in Europe rose in September for the first time this year. Analysts hope the European economy has turned the corner. A pickup in auto sales generally means consumers are feeling more optimistic about their future.
  • The U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year ending September 30. Federal debt totaled 102% of gross domestic product, the first time it has exceeded the size of the economy for the full fiscal year in more than 70 years.

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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.
Note: All figures exclude reinvested dividends (if any). Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors.