The market experienced its fourth week of losses in a row despite a sizeable drop in total unemployment. Precious metals were hit the hardest as the USD finally recovered some of the losses its incurred from multiple bearish months. All of this plus an exciting announcement in this week’s Konvergent Market Blog!

Here are the top three things we’re covering this week’s blog:

The Market

The S&P was down -0.71% in another volatile week. Just one hour into trading on Monday the market was down nearly 2.5% sparking concerns that a major crash was in process. Those worriers were curbed quickly as the market swiftly found a base and rallied to finish the week down less than one percent.

Economic Data

New claims were virtually flat last week increasing by 4,000 to 870,000. Pandemic claims saw a slight decrease to 630,000, bringing the total new claims to 1.5 million. The concerns of a prolonged employment crisis continue to grow as this number appears to be holding steady.

Continuing claims followed a similar pattern and came in marginally lower at 12.58 million. This number has yet to see any meaningful drop off and remains significantly higher than pre – COVID levels.

Total Claims for Unemployment from all programs dropped considerably to 26.04 million. While this certainly is a step in the right direction, it’s also important to note that this data comes at a two-week delay.

 

U.S. Dollar

After multiple months of steady losses, the USD finally broke out to the upside this week. While this move was somewhat expected through technical indicators, the effects gave way for a sharp sell-off in precious metals. There clearly is a tough road ahead for the USD with the Federal Reserve targeting a higher inflation rate and promising no rate hikes until at least 2023. To truly examine what is happening to the USD, let us first look at its correlation with the rest of the market. Note: -1.00 indicates strong negative (opposite) correlation, 1.00 indicates strong positive (similar) correlation.

On a 90D timeline, the USD has a relatively strong negative correlation with gold and equity (SPX). This would entail that as the USD moves lower, gold and equities move higher. In the economy this relationship is understandable since a lower USD value vs other currency (i.e. gold) would lead to a weaker purchasing power of equities. However, this correlation has not always occurred in the stock market. Prior to the March correction, gold was often viewed as a safe haven that Investors would look to in times of weakness in the equity market.

Articles of Interest

Stimulus Negotiations – With millions of Americans still unable to pay their bills, all eyes are on Congress to break the stalemate and return to the deal table. Check out this article for an update on the stimulus negotiations and the White House reaction to Democrats $2.4 trillion proposal.

Amateur Day Trading – Did you know that over the past 31 years the overall market was up over 2,000%, while the median stock saw gains of just 7% Check out this article for thought provoking insight into the substantial increase in the amount of amateur day traders since the beginning of the Pandemic and the risks they take in chasing returns.  

Economic Update – The future remains unpredictable with the market facing a period of heightened volatility and economic data beginning to slow. Check out this article for a deeper glimpse into where we currently stand and what the fourth quarter could bring.

Social Media Post of the Week

This was a very exciting week as we celebrated the launch of our new website. Head over to https://www.konvergentwealth.com/ to check it out!

Don’t forget to follow us on your favorite Social Media Feeds!!

Non-Financial Story of the Week

I am blessed with a very creative 9 year-old daughter.  As were preparing for an exciting Sunday Night Football game of the Seahawks vs Patriots, Lyla decided to build a Snackadium.  When she first told me what she wanted to do I had no idea what she was talking about, I wasn’t understanding what she was saying!  A what?  I eventually figured it out (it is a miniature stadium replica made to hold food and snacks) and got to see her go to work over the weekend taking all sorts of left-over food containers that were headed for the recycle bin and turn it into a masterpiece!  She did an amazing job for her first attempt!  I am sure there will be new attempts later in the year as well!

Bottom Line

The market showed some promise of a recovery with a strong finish to the week on Friday. However, there is no doubt that the next few months will bring additional volatility and likely some additional selling in the market. This week will be pivotal in determining if the support level will hold or if another leg down is imminent.

If you have any questions about any of the information in this week’s blog or what you should be doing right now with your personal and business planning, do not hesitate to reach out to us by sending an email to info@konvergentwealth.com or calling us at 253-236-7000.

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