Fun Facts about November
- Birthstone: Topaz and citrine
- Flower: Chrysanthemum
- Zodiac signs: Scorpio and Sagittarius
- In the original Roman calendar, November was the ninth month of the year. It got its name from the Latin word “novem” which means nine. However, it became the eleventh month when the Romans added in January and February to the start of the year.
- It is the last month of the Fall season.
- November in the Northern Hemisphere is similar to May in the Southern Hemisphere.
- Veterans Day is held in honor of all those who served in the United States Armed Forces. It is on November 11th. This is different from Memorial Day which honors those who died while serving.
- In the United States Thanksgiving is observed on the fourth Thursday in November. In Canada it occurs on the second Monday of October.
- Elections are held in the United States on the Tuesday after the first Monday in November.
- The third Thursday of November is the Great American Smokeout. Smokers are encouraged by the American Cancer Society to stop smoking on this day.
- Some Christian churches celebrate All Saint’s Day on the first day of November and All Souls Day on the 2nd.
Stocks continued their fall swoon, with the S&P 500 index dropping 2.8% in October. The index is still positive for the year but just barely, at 1.2%. It might not get any easier for the markets with the elections coming up next week and regions across the globe shutting down again due to renewed spikes in covid cases.
Stocks have dropped about 9% since their 2020 high in early September. This just doesn’t seem that bad considering how poor our economic numbers are and all the chaos that the elections and the pandemic are bringing to the table.
Speaking of elections, many of them coming up this week are tight races, and the winners might not be determined for several days or weeks. This uncertainty will probably cause some near-term volatility in the markets. Additionally, the first holiday shopping season of the covid era could see big gains for online retailers, i.e., Amazon, and will most likely be a major disappointment for many brick and mortar stores.
Take a look at the Outlook section below to see what events could move the markets over the short term.
Bond prices moved around a bunch in October but ended up pretty much flat by the end of the month. You could say government bonds were the exception, as their prices dropped and both short term and long-term rates rose from ludicrously low levels to just ridiculously low levels. If you are a bond buyer, try and keep your bond maturities short, no more than 2 years, to reign in the risk in this abnormal environment.
The 10-year US Treasury note is yielding 0.87% and the 30 year is at 1.66%, both significantly higher from last month. Even with this rise in yields, they are at such low levels that investors will continue to look at dividend-paying stocks as an alternative to bonds to generate income.
Interest rates continued to trend lower this past month. They started to go up a little bit in the beginning of October as inflation started to appear in consumer prices but quickly reversed lower as covid cases surged across the country. I’m not sure how rates will respond to the election results next week, but we could see some whipsawing in November.
On the savings side, short-term rates, like savings and money market accounts, as well as longer-term rates, like CDs, all trended lower once again as the hope of an economic recovery faded.
Currently, the average savings account is paying 0.33%, down slightly from a month ago, 0.39%. Nobody is making money in cash, but at least it is safe.
The 1-year CD interest rate is now averaging 0.54%, lower than the 0.62% it was yielding a month ago. The 5-year CD rate is tracking lower as well, now at 0.73% from 0.77%. The average savings rate across the U.S. is still way above average at about 14%, but much lower than the high it reached in April of 34%. This makes sense since the federal stimulus is gone, layoffs have become permanent, and businesses have permanently closed. Still, the money saved by staying home is keeping this savings rate elevated for the time being.
Mortgage rates have pushed down against their all-time lows once again. Currently, the 30-year rate is at 3.01%, down from 3.09% a month ago. The Fed flooding the market with liquidity plus worries of a stalled economic recovery are helping to keep these rates extremely low, particularly for the variable rate mortgage loans. It is definitely a seller’s market as these low rates encourage first time homebuyers as well as city workers that are moving to pretty much anywhere else due to work-at-home mandates.
Oil prices slipped lower for the second month in a row as expectations of an economic recovery are being stymied by another wave of covid-19.
Oil fell 10% in October to $36.29, following a 7% drop in September. For the year, oil has dropped about 40%. With hurricane season almost over (hopefully), a glut of oil still floating around the world, relative peace in the Middle East, and covid-19 still raging globally, it is hard for oil bulls to get excited.
Gasoline prices moved as expected and dipped in October. Prices at the pump are averaging about $2.14 per gallon, $0.05 cents lower than a month ago. Missouri has the cheapest fuel, at $1.81. FYI, a year ago, we were paying $2.61.
Check out the prices at the pump in your area: Gas Buddy.
Outlook
Events on the horizon that could move the markets in the near term:
- Election: Just a few days until election day. It is highly doubtful that we will know who the winners are by the morning of November 4th. Recounts, challenges, and all sorts of other stuff could drag the results out to the end of the month, at least. This uncertainty will whipsaw the markets so buckle up if you watch it every day.
- Coronavirus: The death rate due to covid has been slowly decreasing, as our treatments have improved since March and April. Unfortunately, there are still a lot of deaths, now over 233,000 in the U.S. On the plus side, we are getting some good news on the vaccine front. You can track where we are in this process here: https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html. More outbreaks in Europe and other parts of the world are causing countries to reinstate lockdowns. Good for technology companies and online shopping; bad for everybody else.
- Interest Rates: Rates are the lowest they have ever been but there has been some datapoints showing that inflation may be rearing its ugly head in some areas of the economy, causing experts to question if we should continue to keep rates this low. Remember last month, the Fed wasn’t looking to do anything with rates until 2023 but they may be changing their outlook if prices continue to rise. The trend is still to the downside, so we just have to monitor the data until we see a solid reversal. Any positive vaccine announcement could cause a spike in rates.
- Trade Wars/Tariffs: The latest economic numbers coming in show that we are losing pretty bad in the trade war, especially with China. Tariffs have hurt U.S. companies as this tax has made their production costs rise and cut their profit margins. Hopefully, we can get this problem resolved, especially for our farmers and importers, after the elections.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
