First month over month decrease since August 2021: O2 Wealth Economic Update, May 13, 2022

U.S. and World News

  • RolledMoneyInflation numbers are in for April with the first month over month decrease since August in 2021. Annual inflation slowed to 8.3% in April from the 41-year high 8.5% in March. The rate of inflation is a backward looking statistic showing the year over year rate of increase in prices. The largest contributor to this figure is energy, specifically gasoline soared 80.5% year over year, with new cars jumping 13.2%, and food prices increasing 9.2%. Federal Reserve Chair Jerome Powell was confirmed for his second term in the senate 80 for and 19 against. Following his confirmation Powell spoke about whether he believed the Fed could reach a soft landing, meaning that they get inflation under control without putting us into a recession or devastating the labor markets. Fed chair Powell stated, “So it will be challenging, it won’t be easy. No one here thinks that it will be easy …Nonetheless, we think there are pathways …for us to get there.”

Markets

  • Markets dipped this week. S&P 500 fell by 2.36% and closed at 4,024. Dow Jones was down and lost 2.08% and closed at 32,197. Year to date the S&P is down 13.05% and the Dow is down 8.90%.
  • Yields rose quite a bit this week. The 5-year and 10-year U.S. Treasury Notes are yielding 2.89% and 2.94%, respectively.
  • The spot price of WTI Crude Oil decreased by 0.05% and closed at $110.41/barrel. Year to date Oil prices have risen 46.87%.
  • The spot price of Gold declined  3.89% this week and closed at $1,827.50/ounce. Year to date Gold prices are down 1.01%.

Economic Data

  • Initial jobless claims increased by 1,000 to 203,000, this is 10,000 higher than analyst expectations of 193,000.
  • Producer Price index increased by 0.5% in April meeting analyst forecast and falling short of last month’s 1.6% month over month increase.
  • Consumer Sentiment decreased by 6.1 points from April to May, coming in at 59.1 falling short of the median analyst forecast of 64.0

Fact of the Week

FEWER FUTURE TAXPAYERS – The US had 7.27 million births in the back-to-back years 2020-2021, i.e., the pandemic years. That’s the fewest number of American births in back-to-back years in 40 years. The US had 7.24 million births in 1980-1981. 30 years ago (1990-1991), the US had 8.27 million births in back-to-back years.

(SOURCE: National Vital Statistics System)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Fed Chair says inflation way too high, working to bring it down: O2 Wealth Economic Update, May 6, 2022

U.S. and World News

  • InflationThis week the Federal Reserve concluded its meeting that took place on Tuesday and Wednesday with the announcement of a much expected 50 Basis Point hike for the Federal Funds Rate. This rate marks the first time in over two decades that the Federal Reserve has done a 50 Basis point rate hike. In addition to the 50 Basis Point rate hike the Fed said that beginning June 1st they would start to reduce the balance sheet, which includes holdings of US Treasuries and mortgage backed securities. This would start at $47.5 Billion per month, eventually raising the cap to $95 Billion per month. During his conference Federal Reserve Chair Jerome Powell addressed inflation directly by saying, “I would like to take this opportunity to speak directly to the American people. Inflation is much too high. We understand the hardship it is causing, and we are moving expeditiously to bring it back down.”

Markets

  • Markets dipped this week. S&P 500 fell by 0.18% and closed at 4,123. Dow Jones was slightly down and lost 0.21% and closed at 32,899. Year to date the S&P is down 13.05% and the Dow is down 8.90%.
  • Yields rose quite a bit this week. The 5-year and 10-year U.S. Treasury Notes are yielding 3.04% and 3.12%, respectively.
  • The spot price of WTI Crude Oil increased by 6.00% and closed at $110.46/barrel. Year to date Oil prices have risen 46.87%.
  • The spot price of Gold declined  0.80% this week and closed at $1,882.20/ounce. Year to date Gold prices are up 2.99%.

Economic Data

  • Initial jobless claims increased by 20,000 to 200,000 for the week ended April 30, this is 19,000 higher than analyst expectations of 181,000.
  • Labor Force participation rate decreased to 62.2% for April from 62.4%, analyst expected a 62.5% labor force participation rate
  • Unemployment rate stayed steady at 3.6% for the month of April, higher than the 3.5% median forecast among analyst.
  • Average Hourly Earnings rose 0.3% in April compared to a rise of 0.5% for March and falling short of the median analyst forecast of 0.4%.

Fact of the Week

DWINDLING SUPPLY – The number of existing homes for sale nationwide at the end of March 2022 was 950,000. The number of existing homes for sale at the end of March 2017 was 1.8 million. The number of existing homes for sale at the end of March 2012 was 2.32 million. The number of existing homes for sale at the end of March 2007 was 3.81 million.

(SOURCE: National Association of REALTORS)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Twitter accepts Elon Musk’s offer: O2 Wealth Economic Update, April 29, 2022

U.S. and World News

  • TwitterIn the News this week Twitter, a well-known public company received a bid to go private. Tesla and SpaceX CEO, Elon Musk made a bid for Twitter to take it private at $54.20 totaling a $44 billion offer price. This offer represented a 38 percent price premium over the active trading price of Twitter before Elon Musk’s 9.2% stake was announced. Musk, a harsh critic of Twitter’s censorship, stated his acquisition was because, “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.” There was much controversy over whether Musk could provide funding to back up his $44 billion bid, but on Monday, April 25 Twitter accepted Elon Musk’s offer.

Markets

  • Markets dipped this week. S&P 500 fell by 3.26% and closed at 4,132. Dow Jones was slightly down and lost 2.47% and closed at 32,9771. Year to date the S&P is down 12.89% and the Dow is down 8.71%.
  • Yields rose quite a bit this week. The 5-year and 10-year U.S. Treasury Notes are yielding 2.91% and 2.89%, respectively.
  • The spot price of WTI Crude Oil increased by 2.48% and closed at $104.21/barrel. Year to date Oil prices have risen 38.56%.
  • The spot price of Gold declined  1.91% this week and closed at $1,897.30/ounce. Year to date Gold prices are up 3.82%.

Economic Data

  • Initial jobless claims decreased by 5,000 to 180,000 for the week ended April 23 meeting analyst expectations of 180,000.
  • GDP unexpectedly declined -1.4% for Q1 2022 falling well short of the median forecast among analyst of +1.0%
  • Personal consumption increased slightly +2.7% for Q1 falling short of the median estimate of +3.6%, prior period was +2.5%
  • Core PCE increased +0.2% to +5.2% from +5.0% in Q1 falling short of the median analyst forecast of +5.5%

Fact of the Week

DWINDLING SUPPLY – The number of existing homes for sale nationwide at the end of March 2022 was 950,000. The number of existing homes for sale at the end of March 2017 was 1.8 million. The number of existing homes for sale at the end of March 2012 was 2.32 million. The number of existing homes for sale at the end of March 2007 was 3.81 million.

(SOURCE: National Association of REALTORS)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Fed Chair Powell signals rate hikes and balance sheet tightening: O2 Wealth Economic Update, April 22, 2022

U.S. and World News

  • RateHikeMarkets this week declined sharply following signals from Federal Reserve chair Jerome Powell of a more hawkish stance than anticipated on both Fed Funds rate hikes as well as balance sheet tightening. In an interview yesterday Fed Chair Powell in reference to a greater than 25 basis point rate hike said, “…will be on the table for the May meeting…It is appropriate, in my view, to be moving a little more quickly.” Currently the Federal Funds rate sits at 37.5 basis points (0.375%) and the balance sheets holds around $9 Trillion in assets. The balance sheet reduction is set to be $95 billion per month, $60 billion from treasuries and $35 billion from mortgage back securities. The Federal Reserve members have ranges for the Federal Funds rate ending the year between 1.5% at the lowest to 3.125% at the highest, following the projection of 6 interest rate hikes one of which has already happened at 25 basis points this would imply a nearly 50 BP increase in all but one of the remaining Fed meetings set to take place this year.

Markets

  • Markets dipped this week. S&P 500 fell by 2.74% and closed at 4,272. Dow Jones was slightly down and lost 1.82% and closed at 33,811. Year to date the S&P is down 9.97% and the Dow is down 6.41%.
  • Yields rose quite a bit this week. The 5-year and 10-year U.S. Treasury Notes are yielding 2.95% and 2.90%, respectively.
  • The spot price of WTI Crude Oil decreased by 4.55% and closed at $101.69/barrel. Year to date Oil prices have risen 41.66%.
  • The spot price of Gold declined  2.17% this week and closed at $1,934.18/ounce. Year to date Gold prices are up 5.84%.

Economic Data

  • Initial jobless claims decreased by 1,000 to 184,000 for the week ended April 16 vs. median forecast 180,000.
  • Housing starts increased 0.3% in March vs. median forecast -1.6%. Single family starts decreased -1.7% and multi-family starts increased +4.6%.
  • Existing home sales declined -2.7% vs. median forecast -4.1%Sales declined in the Midwest (-4.5%), South (-3.0%), and Northeast (-2.9%) while they were flat in the West.

Fact of the Week

The number of Americans with at least $1 million in investable assets climbed 10% to a record 14.6 million last year. (SOURCE: Spectrum Group)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

State Surpluses Returning to Residents: O2 Wealth Economic Update, April 15, 2022

U.S. and World News

  • TaxesWith tax deadline approaching on Monday, all 50 states ended last year running budget surpluses of at least millions of dollars. In 29 states, the surpluses surpassed $1 billion. Many states have plans to return some of that surplus to their residents through either direct payments or suspension of certain taxes. Oregon is reportedly returning as much as $850 per resident, with Georgia and Kansas planning on returning between $250-500 per resident. Minnesota has proposed giving eligible households up to $350 back and an additional $1500 for frontline workers. Wisconsin, Idaho, and Maryland also have measures to return the surplus to residents.

Markets

  • Markets dipped this week. S&P 500 fell by 2.11% and closed at 4,393. Dow Jones was slightly down and lost 0.78% and closed at 34,451. Year to date the S&P is down 7.45% and the Dow is down 4.69%.
  • Yields rose quite a bit this week. The 5-year and 10-year U.S. Treasury Notes are yielding 2.79% and 2.83%, respectively.
  • The spot price of WTI Crude Oil increased by 8.90% and closed at $106.54/barrel. Year to date Oil prices have risen 41.66%.

Economic Data

  • Initial jobless claims increased by 18,000 to 185,000 for the week ended April 9 vs. median forecast 170,000.
  • Retail sales increased 0.5% in March vs. median forecast 0.6% March retail sales were strongest for gas stations (+8.9%), general merchandise (+5.4%), and electronics   (+3.3%).
  • Consumer Price Index (CPI) rose 1.2% in March, in line with median forecast. Year over year CPI +8.5%.
  • Core CPI (excludes food and energy prices) rose 0.3% vs. median forecast 0.5%. Year over year Core CPI +6.5%.

Fact of the Week

An estimated 57% of U.S. households will ultimately pay no federal income tax in tax year 2021 as legislation, most notably the increased standard deductions, have eliminated the tax bill of many American families.
(SOURCE: Tax Policy Center)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Russia/Ukraine, COVID/border: O2 Wealth Economic Update, April 1, 2022

U.S. and World News

  • ukraine_iStock-493538931The Russian invasion of Ukraine continues as Russia retreats and remobilizes into more separatist controlled regions of Ukraine. Peace talks between Russian and Ukrainian representatives were expected to be conducted today via video. Refugees continue to pour out of Ukraine with little faith in the peace talks. Efforts being made by the international committee of the Red Cross are being halted. Russia denied passage to a convoy to help civilians evacuate the besieged southern city of Mariupol.

    In other news the Biden Administration will officially end the COVID restrictions on the Southern Border on May 23 (Title 42). These restrictions served to turn away single adult asylum seekers and families under the guides of reducing the COVID spread. President Biden had been criticized by many in his party for not doing away with this sooner. This was originally imposed under President Trump in March 2020.

Markets

  • Markets experienced elevated volatility but ended flat this week. S&P 500 rose by 0.08% and closed at 4,546. Dow Jones was slightly down and lost 0.12% and closed at 34,818. Year to date the S&P is down 4.29% and the Dow is down 3.72%.
  • Yields fell slightly this week. The 5-year and 10-year U.S. Treasury Notes are yielding 2.55% and 2.38%, respectively.
  • The spot price of WTI Crude Oil declined by 11.84% and closed at $99.58/barrel. Year to date Oil prices have risen 32.40%.
  • The spot price of Gold lost 1.41% this week and closed at $1,927.00/ounce. Year to date Gold prices are up 5.44%.

Economic Data

  • Initial jobless claims increased by 14,000 to 202,000 for the week ended March 26 vs. median forecast 196,000.
  • Nonfarm payrolls rose 431,000 in March vs. median forecast 490,000. Headline unemployment rate fell -0.2% to 3.6%. Labor force participation is up 0.1% to 62.4%. Average hourly earnings are up 0.4% in March, and up 5.6% over the last 12 months.
  • Core PCE Price Index (Fed’s preferred inflation measure) +0.3% for February, in line with median forecast. Core PCE Prices +5.4% over the last 12 months.

Fact of the Week

WATER NEEDED – 74% of the land in the western United States (covering 9 US states) is in a “severe drought” as of 3/17/2022
(SOURCE: US Drought Monitor)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Russia, Ukraine: O2 Wealth Economic Update, March 11, 2022

U.S. and World News

  • OIL_iStock-104652261Economic Sanctions continue to be levied against Russia for its invasion of Ukraine. President Biden today announced that he will work with Congress on legislation to revoke Russia’s permanent normal trade relations. This follows the ban of Russia last week from the SWIFT payment system and serves as further sanctions to limit Russia’s ability to trade on the global economy.

    Additionally, more imports have been banned from Russia to the United States including seafood, vodka, diamonds, metals, fertilizer, chemicals, and most importantly oil. Russian oil accounts for less than 10% of United States oil imports. For reference the total U.S imports from Russia in 2019 were $22 billion.

    Rumors have also surfaced of another attempt at a false flag operation where Russia will use chemical weapons and attempt to shift the blame onto the Ukrainian military. President Biden in his remarks today when asked about this said, “I’m not going to speak about the intelligence, but Russia would pay a severe price if they use chemical weapons.”

Markets

  • Markets continued their weakness this week. S&P 500 fell by 2.84% and closed at 4,204. The Dow Jones was lower by 1.91% and closed at 32,944. Year to date the S&P is down 11.52% and the Dow is down 8.91%.
  • Yields reversed course and rose significantly this week. The 5-year and 10-year U.S. Treasury Notes are yielding 1.96% and 2.00%, respectively.
  • The spot price of WTI Crude Oil fell by 4.97% and closed at $109.31/barrel. Year to date Oil prices have risen 45.34%.

Economic Data

  • Initial jobless claims increased by 11,000 to 227,000 for the week ended March 5 vs. median forecast 217,000.
  • Headline Consumer Price Index rose 0.8% for February, in line with forecast. Headline price increases were led by higher energy prices (+3.5%).  Headline CPI +7.9% year over year.
  • Core Consumer Price Index rose 0.5% in February, in line with forecast. Core prices led by Airfares (+5%) and lodging (+2%). Core CPI up 6.4% year over year.

Fact of the Week

In 2021, 47.4 million Americans quit their full-time jobs, the highest annual number recorded since the data began being tracked in 2001. (SOURCE: Department of Labor)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Russia, Ukraine: O2 Wealth Economic Update, March 4, 2022

U.S. and World News

  • iStock-1067169154Tensions continue to rise in Ukraine as Russia’s invasion continues. In a recent and drastic action Russia captured Europe’s largest nuclear power plant.

    After a fire at the Europe’s largest nuclear power plant was extinguished Friday following a “reckless and dangerous” Russian attack, there are no indications of radiation leaking, according to a senior U.S. Defense Department official.

    The Russians captured this nuclear power plant with the intent of using it to control the Ukrainian population… “Nuclear power plants are not designed to withstand military attacks, underscoring the recklessness of the assault”, said the official, who discussed intelligence reports on condition of anonymity.

    Following government sanctions, private companies such as Twitter and Facebook have imposed bans on state sponsored Russian propaganda. Today it was announced, “Russia has completely blocked access to Facebook & Twitter in retaliation for the platform placing restrictions on state-owned media.”

Markets

  • Markets continued their weakness this week. S&P 500 fell by 1.24% and closed at 4,329. The Dow Jones was lower by 1.23% and closed at 33,615. Year to date the S&P is down 8.93% and the Dow is down 7.14%.
  • Yields dropped significantly this week. The 5-year and 10-year U.S. Treasury Notes are yielding 1.63% and 1.72%, respectively.
  • The spot price of WTI Crude Oil spiked by 24.71% and closed at $115.03/barrel. Year to date Oil prices have risen 52.95%.
  • The spot price of Gold increased by 4.14% this week and closed at $1,967.42/ounce. Year to date Gold prices are up 7.66%.

Economic Data

  • Initial jobless claims decreased by 18,000 to 215,000 for the week ended February 26 vs. median forecast 225,000.
  • Job gains came in at 678,000 for February vs. median forecast of 423,000. By industry, job growth was strong in professional and business services (+95k), healthcare and social assistance (+94k), and constructions (+60k).
  • The headline unemployment rate fell to 3.8% in February vs. median forecast 3.9%. Labor force participation rate rose by 0.1% to 62.3%
  • Average hourly earnings were flat in February vs. median forecast +0.5%. Year over year, wages have risen 5.1%.

Fact of the Week

The average single-family home in the U.S. appreciated 54.5% for the 5 years ending 12/31/2021. Homes in Idaho (+118.2%) have experienced the greatest growth while homes in North Dakota (+23.5%) have seen the least percentage increase in value. (SOURCE: Federal Housing Finance Agency)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Russia, Ukraine: O2 Wealth Economic Update, February 25, 2022

U.S. and World News

  • *Please see yesterday’s (February 24) Market Update report for a more in-depth analysis on the Russia-Ukraine situation*

    iStock-907894254Russia now expects support from India at the UN Security council when it takes up the Russian military operation in Ukraine. Ukrainian president Zelenskyy said that sanctions imposed on Moscow are not enough and they are defending their country alone. Announced on Friday, Ukraine’s army said it was fighting invading Russian forces northwest of the capital Kyiv.

    “Airborne assault troops of the Ukrainian armed forces are fighting in the areas of the settlements of Dymer and Invankiv,” Kyiv’s army said on its Facebook page.

    Ukraine’s Ministry of Defense urged civilians to resist. “We urge citizens to inform us of troop movements, to make Molotov cocktails, and neutralize the enemy,” the ministry said.

    The Biden administration announced new sanctions but did not remove Russia from the SWIFT banking system, largely left Russia’s oil industry alone, and did not impose direct sanctions on Russian President Vladimir Putin.

    President Biden States, “Specifically, the sanctions we’ve imposed exceed SWIFT. The sanctions we imposed exceed anything that’s ever been done. The sanctions we imposed have generated two thirds of the world joining us. They are profound sanctions. Let’s have a conversation in another month or so to see if they’re working.”

Markets

  • •Markets rallied the final two days of the week, erasing losses stemming from the Russia/Ukraine conflict. The S&P 500 rose by 0.82% and closed at 4,384. The Dow Jones was lower by just 0.06% and closed at 34,058. Year to date the S&P is down 8.00% and the Dow is down 6.27%.
  • Yields ended the week slightly higher. The 5-year and 10-year U.S. Treasury Notes are yielding 1.89% and 1.99%, respectively.
  • The spot price of WTI Crude Oil rose by 1.28% and closed at $92.24/barrel. Year to date Oil prices have risen 22.64%
  •  The spot price of Gold decreased by 0.48% this week and closed at $1,889.25/ounce. Year to date Gold prices are up 3.38%.

Economic Data

  • Initial jobless claims decreased by 17,000 to 232,000 for the week ended February 19 vs. median forecast 235,000.
  • Headline PCE price index rose 0.6% in January vs. median forecast of +0.5%. Year over year headline PCE prices up 6.0%.
  • Core PCE Price Index (ex-food and energy) rose 0.5% in January in line with median forecast. Year over year Core PCE prices up 5.2%.
  • Case-Shiller home price up 1.5% for December vs. median forecast +1.1%. Prices rose in all 20 cities with San Diego (+2.5%), Seattle (+2.0%) and Dallas (+2.0%) having the largest increases.
  • Pending home sales fell -5.7% in January vs. median forecast of +0.2%. Sales increased in the West (+1.5%) but fell in the Northeast (-12.1%), South (-6.3%) and Midwest (-5.9%).

Fact of the Week

Global electric vehicle sales increased by 112% during 2021, rising from 3.0 million to 6.3 million vehicles. (SOURCE: Benchmark Mineral Intelligence)

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Russia-Ukraine: O2 Wealth Market Update, February 24, 2022

Market Update

  • Last night, Russia launched what is being called a “full-scale invasion” of Ukraine as shelling began shortly after Putin said he had “decided to conduct a special military operation” aimed at the “demilitarization and denazification” of Ukraine. Putin called on Ukraine’s forces to lay down their aims and surrender their country to Russian control. Thus far, reported fatalities include 40 Ukrainian and 50 Russian soldiers, along with 18 civilians in Ukraine’s Odessa as a result of the missile attack. This situation has been brewing for several months as separatist groups within Ukraine have amassed power along with 190,000 troops being assembled on the border of Ukraine. Cyber-attacks targeting the Ukraine Ministry of Defense and banks in Ukraine were launched this week as well.

    mapimage

    Markets opened down -2.7% this morning but at the time of this writing have cut those losses in half. This brings the S&P decline to -12% in 2022 as markets have retested and broken through the prior lows of late January. This geopolitical event is occurring at a time of general market weakness due to elevated inflation and the impending rate hike cycle to be taken on by the Federal Reserve. This re-introduction of volatility to the markets is notable after a calm 2021 but investors should note that the historical average intra-year decline in the S&P is -14%.

    As energy is Russia’s predominant export, oil and natural gas prices, along with energy-related stocks have risen significantly dating back to November when the first signs of Russia’s intentions became clear. As of yet, no announcements have been made regarding increased oil production in the U.S. or a release of any oil to the market from the Strategic Petroleum Reserve.

    Yesterday, President Biden announced what he said were the first tranche of sanctions against Russia which were directed at one Russian energy company and did not include any financial sanctions on Russian leaders, including Putin. Following the sanctions which did nothing to deter the invasion last evening, Biden and G-7 leaders have come out and said that more biting sanctions are coming. It remains to be seen if Biden will take the seemingly necessary step of removing Russia from the SWIFT international banking system, an act that would significantly hamper Russia’s economic activity.

    A similar situation occurred in 2014 when Russia took the Crimea region (also shortly following the Winter Olympics) and that event too roiled markets in the short term. Following that however, markets stabilized and the S&P returned 7.5% over the following six months and 12.0% over the following 12 months. While every situation is unique and there are other factors at play, this is typical market reaction for these kinds of geopolitical events.

    As we have seen throughout the course of history, markets tend to climb a ‘wall of worry’ and it is important that investors risk objectives and time horizons are aligned with their portfolios. As always, during uncertain times like this, the Investment Team at O2 Wealth Management continues to monitor these situations closely and how they will affect the long term trajectory of the economy and markets. Should you have any other questions, please reach out to your Relationship Manager.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA®
– (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 906-5478 alynch@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.