COVID, Inflation: O2 Wealth Economic Update, June 11, 2021

U.S. and World News

  • iStock-1075953222_370The COVID-19 outbreak has led to global shipping delays from the world’s busiest ports in Asia. The late and slow vaccination campaign against COVID-19 in Asia is not only hurting their continent and its economy, but also the global supply chain threatening to push up prices and slowing down the post-pandemic recovery. Auto and Technology industries are among the top affected so far due to the semiconductor supply chain in Taiwan and Malaysia which has slowed down their shipments due to daily record highs of infections. This also worries certain countries such as the United States who recently recorded the biggest annual jump in inflation in factory gate prices and consumer prices since 2008. As many companies have already taken actions by increasing prices to adapt to inflation, it could be expected to see even higher prices to adapt to new global shipping delays. Let’s not forget what happened a couple months ago with the Suez Canal delaying shipments for over a week, which still has effects on global supply shipments. A similar situation is happening in the Yantian District of South China, where roughly 160,000 empty containers are waiting to be loaded as a result of COVID-19 restrictions being brought back due to high daily cases. According to the Freightos Baltic Index, it costs $6,341 to ship a 40-foot container to the West Coast of the US, which is up 63% since the beginning of the year.

Markets

  • Markets were mixed this week. The S&P 500 increased by 0.43% and closed at an ALL TIME HIGH of 4,247.47. The Dow Jones decreased by -0.77% and closed at 34,480. Year-to-date, the S&P 500 is up 13.77% and the Dow Jones is up 13.65%.
  • Yields were mixed this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.75% and 1.45%, respectively.
  • The spot price of WTI Crude increased this week. Prices rose by 1.69% and closed at $70.79 per barrel. Year to date, Oil prices are up 45.89%.
  • The spot price of Gold fell by -1.15% and closed at $1,876.70 per ounce. Year to date, Gold prices are down -7.87%.

Economic Data

  • Initial jobless claims declined by 9,000 to 376,000 for the week ended, in line with expectations
  • The trade deficit decreased to $68.9bn in April from an upwardly revised $75.0bn in March.
  • Job openings surged by 998,000 for April vs 8,200 median forecast, prior revised 8,288 according to the Openings and Labor Turnover Survey.
  • The job openings rate increased by 0.6pp to 6% and the hiring rate was unchanged at 4.2%
  • Wholesale inventories rose by 0.8% in April, in line with expectations
  • Wholesale sales ex-petroleum increased by 1.7% and the wholesale inventory-to-sales ratio remain at 1.22
  • CPI month over month increased 0.64% for May vs expectations of 0.5%, prior +0.8%
  • Core CPI month over month increased 0.74% for May vs expectations of 0.50%, prior 0.9%
  • CPI year-over-year increased 4.99% for May vs median forecast of 3.5%, prior 3.0%
  • Core CPI year over year 3.80% for May vs median forecast of 3.5%
  • The University of Michigan’s index of consumer sentiment rose by 3.5pt to 86.4 in June preliminary report, above consensus expectations.

Fact of the Week

Congress is debating legislation (known as SECURE Act 2.0) that would require any employer with at least 10 employees who sponsors a 401(k) plan to automatically enroll eligible employees at a 3% contribution rate. Employees would retain the right to opt out of the plan (Source: SECURE Act 2.0)
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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Vaccine: O2 Wealth Economic Update, June 4, 2021

U.S. and World News

  • iStock-1299255987_370U.S. Covid-19 deaths have fallen to the lowest levels since March 2020. Many analysts point to this as a promising indication that we are in the homestretch of the epidemic, largely due to the help of vaccinations. According to the CDC, more than half of the U.S. population has reached full vaccination status, and almost 63% of U.S. adults have received at least one dose. Hospitalizations have also fallen not only thanks to vaccinations, but also due to the steadily improved treatment protocols. Despite the good news in the United States, the global pandemic is far from over, as Covid-19 continues to rage in less-vaccinated parts of the world. Epidemiologists say that high infection rates carry the risk of new and dangerous variants of Covid-19 emerging. Health officials continue to explore ways to prolong immunity and better protect people.
  • The White House has announced it will be sending out the first wave of 25 million doses of Covid-19 vaccines overseas in an effort to assist countries that have been struggling with shortages. International aid organization COVAX will receive 19 million doses of the 25, allocating 6 million to countries in South and Central America, as well as the Caribbean. Another 7 million will be distributed to Asian nations, including India, and 5 million is to be sent to the African Union. The remaining 6 million doses will be sent directly to governments that have requested the vaccination shots, are experiencing surges, or are immediate neighbors to the United States. The White House has not announced a timeline for shipping the doses but has stated “specific vaccines and amounts will be determined and shared as the administration works through the logistical, regulatory and other parameters particular to each region and country.”

Markets

  • Markets were higher this week. The S&P 500 increased by 0.64% and closed at 4,229.89. The Dow Jones also increased by 0.69% and closed at 34,756.39. Year-to-date, the S&P 500 is up 13.29% and the Dow Jones is up 14.49%.
  • Yields were mixed this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.78% and 1.55%, respectively.
  • The spot price of WTI Crude increased this week. Prices rose by 4.70% and closed at $69.44 per barrel. Year to date, Oil prices are up 43.12%.
  • The spot price of Gold fell slightly by -0.66% and closed at $1,891.21 per ounce. Year to date, Gold prices are down -0.39%.

Economic Data

  • Initial jobless claims declined by 20,000 to 385,000, in line with the expectation of a decline to 387,000.
  • The unemployment rate fell by 0.3 to 5.8% versus expectation of a decrease to 5.9%.
  • Non-farm payrolls rose 559,000 versus the expectation of a higher increase of 675,000.
  • Average hourly earnings increased by 0.5% versus expectation of a smaller increase of 0.2%.
  • Private sector employment in the ADP report rose by 978,000 versus the expectation of only a 650,000 gain.
  • Continuing claims increased to 3,771,000 versus expectation of a much smaller increase to 3,614,000.
  • The ISM manufacturing index increased by 0.5pt to 61.2, close to the expectation of an increase to 61.0.
  • The ISM services index increased by 1.3pt to 64.0, highest level on record, versus expectation of an increase to 63.2.
  • Construction spending increased by 0.2% versus the expectation of a larger increase by 0.5%.
  • Factory orders decreased by- 0.6% versus expectation for a decrease of only -0.2%

Fact of the Week

59% of US households made a “large purchase” during the first 4 months of 2021, i.e., January 2021 through and including April 2021, the highest percentage reported in 5 years. “Large purchases” include furniture, home repairs and automobiles (source: Federal Reserve Bank of New York).

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Infrastructure bills, Budget: O2 Wealth Economic Update, May 28, 2021

U.S. and World News

  • infrastructure-619668880_370On Thursday, Senate Republicans unveiled their $928 Billion infrastructure offer. The Biden administration recently trimmed its proposal to $1.7 trillion from its original $2.3 trillion plan, so the two sides remain far apart. The Republicans plan which is dedicated to roads, bridges, rail, and transit systems for a period of 8 years, just received represents an increase of $300 Billion, from the $568 billion originally proposed. to $928 billion. President Biden will be hopes to making progress in the bipartisan talks over on Memorial Day. Although the Biden administration remains positive about the possible outcome, Republicans on the other hand panned the White House proposal to of $1.7 trillion, arguing that the proposal wasn’t specific enough. While there is progress between the White House and Republicans, the major difference between these two parties is how to at least partially offset the spending. yet to come, the form of spending. Republicans on one hand already rejected to raising taxes on companies, while on the other hand the White House has rejected the transportation user fee increase proposed by some Republicans.
  • President Biden unveiled his 2022 fiscal year budget proposal to Congress today. The budget includes his two yet to be voted on proposals, the American Families Plan and the American Jobs Plan. Notable funding changes include a 41% increase for the Department of Education, a 23% increase for the Department of Health and Human Services, and 22% more for the Environmental Protection Agency. The topline budget request for $6 trillion is pair with tax increases for corporations and individuals. The corporate tax rate would rise from 21% to 28% under the proposal. It also returns the top marginal income tax rate to 39.6% and imposes an increased capital gains tax rate retroactively to sales made since April 2021. Biden’s budget will now go to Congress debate and inevitable alterations.

Markets

  • Markets were up this week. The S&P 500 increased by 1.20% and closed at 4203.32. The Dow Jones also increased by 1.03% and closed at 34530.38. Year-to-date, the S&P 500 is up 12.57% and the Dow Jones is up 13.71%
  • Yields moved higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.75% and 1.62%, respectively.
  • The spot price of WTI Crude increased this week. Prices rose by 4.82% and closed at $66.62 per barrel. Year to date, Oil prices are up 37.30%.
  • The spot price of Gold rose by 1.20% and closed at $1,903.73 per ounce. Year to date, Gold prices are up 0.22%.

Economic Data

  • Initial jobless claims declined by 34,000 to 444,000 for the week ended May 15, a slightly larger decline than expected.
  • The S&P/Case-Shiller 20-city home price index increased by 1.60% in March (mom sa), above consensus expectations for a more moderate increase
  • The FHFA house price index increased by 1.4% in March (mom sa), also above consensus expectations for a more moderate increase, and the year-over-year rate increased by 1.4pp to +13.9%.
  • Sales of new single-family homes decreased by 5.9% in April to a seasonally-adjusted annualized rate of 863k units.
  • GDP estimate increased +6.4% qoq for Q1 vs median forecast of +6.5%, prior revised +6.4%
  • Personal consumption increased +11.3% for Q1 vs median forecast of +10.9%, prior 10.7%
  • Core PCE index rose by +2.5% qoq for Q1 vs forecast of +2.3%, prior revised +2.3%
  • Durable goods orders decreased -1.3% month over month in April vs median forecast of +0.7%, prior revised +3.2%
  • Durable goods orders ex-transport increased +1.0% month over month in April vs median forecast +0.7%
  • Core capital goods orders +2.3% month over month in April, median forecast of +0.8%, prior revised +1.5%
  • Pending home sales decreased -4.4% month over month for April vs median forecast +0.4%, prior revised +1.7%
  • PCE Prince index +0.61% month over month for April, vs median forecast +0.6%, prior revised +0.56%

Fact of the Week
American drivers are projected to use 9.0 million barrels a day of gasoline during the summer of 2021, up from 7.8 million barrels a day of gasoline used during the “pandemic-summer” of 2020, but still down from the 9.6 million barrels a day of gasoline consumed in the summer of 2019 (source: Energy Information Administration).

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Israel/Hamas ceasefire, Cryptocurrency, Vaccine boosters: O2 Wealth Economic Update, May 21, 2021

U.S. and World News

  • ceasefire-512911666_370Early Friday morning Israel and Hamas agreed to end 11 days of fighting by putting a cease-fire into effect. The truce, mediated by Egypt, sparked wide celebrations in Palestinian cities to rejoice the end of the violence that has wounded more than 1,900 individuals and killed at least 232 Palestinians and 12 people in Israel. Future violence is still likely as the truce alone will unfortunately not resolve the conflict between the Israeli-Palestinian militants. The agreement, however, can offer a period of calm to allow citizens a chance to regroup and return to their homes if they were displaced. President Biden said the United States would work through the United Nations and other international stakeholders “to provide rapid humanitarian assistance and to marshal international support for the people in Gaza and in the Gaza reconstruction efforts.” He also insisted that aid will not be provided to Hamas, as the United States has designated they are a terrorist organization.
  • Cryptocurrencies made news this week after regulatory moves in China created a sell-off in the digital coins. Although volatility is expected in this area of investing, the severity has made many traders worried, questioning if tokens are good stores of value. Many analysts, however, still think digital coins are the future. US government provided two major announcements as well this week in regards to digital currency, with the first coming from the US Treasury. The report that was published on Thursday called for any crypto transfers worth more than $10,000 to be reported to the Internal Revenue Service. They also stated “As with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on.” The second announcement was made by the US Federal Reserve stating new steps in the development of a potential digital dollar to be controlled by the central bank. Chair Jerome Powell announced Thursday that this summer the Fed will publish a paper exploring technology for digital payments. Powell also stated “ We think it is important that any potential central bank digital currency could serve as a complement to, and not a replacement of, cash and current private-sector digital forms of the dollar, such as deposits at commercial banks.”
  • On Friday, Dr. Anthony Fauci announced that they are preparing for the chance that coronavirus booster shots may eventually be needed. He noted that it is unclear if they will be necessary, or when, but stated, “it would be really foolish not to plan for the possibility that we might need to boost people up.” The heads of Pfizer and Moderna held differing opinions and stated the shots could be necessary for some as early as September. Ongoing lab studies are underway and will help experts understand whether the shot will be necessary.

Markets

  • Markets were down this week. The S&P 500 decreased by -0.39% and closed at 4155.86. The Dow Jones also decreased by -0.43% and closed at 34207.84. Year-to-date, the S&P 500 is up 11.25% and the Dow Jones is up 12.56%
  • Yields moved higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.82% and 1.62%, respectively.
  • The spot price of WTI Crude decreased this week. Prices dropped by -2.31% and closed at $63.85 per barrel. Year to date, Oil prices are up 31.60%.
  • The spot price of Gold rose by 2.06% and closed at $1,881.32 per ounce. Year to date, Gold prices are down -0.91%.

Economic Data

  • Initial jobless claims declined by 34,000 to 444,000 for the week ended May 15, a slightly larger decline than expected.
  • Continuing claims increased by 111,000 to 3,751,000 versus expectation of a small decline to 3,620,000.
  • The Philadelphia Fed manufacturing index remains at a high level but decreased by -18.7 to 31.5 versus the expectation of a smaller decline to 45.
  • Existing home sales declined by -2.7% versus expectation for a +1% increase.
  • The NAHB housing market index was unmoved for May at a very high level of 83.
  • The level of housing starts decreased larger than expected by -9.5% to 1,569,000 versus the expectation for a decline of -2%.
  • Building permits rose by +0.3% versus the expectation of an increase of +0.6%.
  • The Empire manufacturing index declined by 2 to 24.3, a decrease slightly less than expected.

Fact of the Week

The S&P 500 is a cap-weighted index, i.e., the largest capitalized stocks carry a disproportionate impact on the index’s performance calculation. As of the close of trading on Friday 5/14/21, the 5 largest stocks in the index carries the same weighting as the smallest 323 stocks (source; S&P).

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Vaccine, Unemployment: O2 Wealth Economic Update, May 7, 2021

U.S. and World News

  • iStock-1301962683_370On Wednesday, the Biden Administration announced its support to waive patent protections on Covid-19 vaccines in an effort to help boost production and distribution around the world. The move comes in response to the surge in coronavirus infections in countries that have struggled to obtain as well as distribute vaccines. Head of the World Health Organization Tedros Adhanom Ghebreyesus applauded the announcement stating this will be a monumental movement in the fight against Covid-19. The Pharmaceutical Research and Manufacturers of America held opposing feelings expressing this step will undermine their global response to the pandemic and compromise safety. The waiver is far from approved, however, as it must receive approval by the consensus at the World Trade Organization which contains 164 members.
  • The April jobs report was released Friday morning with disappointing results compared to high expectations. A total of 266,000 jobs were added in a month economists forecasted America to add 1 million jobs. This is not an indication that the job market is in trouble however. Although the forecast was a big miss, there are other solid factors that analysts say is proof that improvements are continuing. One factor analysts have pointed to is that jobless claims dropped below 500,000, a new low during the pandemic. Other factors analysts have attributed to the low job number are the extended unemployment benefits continuing to September and the hesitation to enter the workforce due to Covid concerns.
    • Please note from last week’s newsletter: the Biden Administration proposal for a tax-rate increase on long-term capital gains are for those earning $1 million or more per year. The current top tax rate on long-term capital gains would increase from 20% to 39.6%.

Markets

  • Markets were up this week. The S&P 500 rose by 1.26% and closed at 4,232.60 The Dow Jones also increased by 2.72% and closed at 34,777.76. Year-to-date, the S&P 500 is up 13.20% and the Dow Jones is up 14.27%
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.77% and 1.58%, respectively.
  • The spot price of WTI Crude increased this week. Prices rose by 2.00% and closed at $64.85 per barrel. Year to date, Oil prices are up 33.66%.
  • The spot price of Gold rose by 3.50% and closed at $1,831.11 per ounce. Year to date, Gold prices are down -3.56%.

Economic Data

  • Initial jobless claims declined larger than expected by 92,000 to 498,000 for the week ending May 1 versus expectation of a smaller decline to 530,000.
  • Unemployment rate increased 0.1pp to 6.1% versus the expectation of a decrease to 5.5%.
  • Average hourly earnings rose significantly by 0.7% versus expectation of a flat reading.
  • Nonfarm payroll growth slowed sharply to 266k versus the expectation of growth to 1,000k.
  • The ISM manufacturing index decreased by 4 points to 60.7 versus an expectation of a slight increase to 65.2.
  • Construction spending increased by 0.2% versus the expectation of a larger increase of 1.8%.
  • Factory orders increased by 1.1% versus the expectation of a 1.3% increase.
  • Private sector employment in the ADP report rose by 742k versus the expectation of an 850k gain.
  • The ISM services index decreased by 1.0 point to 62.7 versus the expectation of a slight increase to 64.0.
  • Nonfarm productivity rose by 5.4% for Q1 versus expectation of a 4.2% increase.
  • Wholesale inventories rose 1.3% versus the expectation of a rise to 1.4%.

Fact of the Week

The PGA began on 01/01/2021 a “Player Impact Program” that pays $40 million per year to the top 10 golfers based on “fan and sponsor engagement.” The top-rated golfer earns $8 million (source: PGA).

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Retail spending, Vaccine recall: O2 Wealth Economic Update, Apr. 16, 2021

U.S. and World News

  • iStock-1006638822_370U.S. shoppers boosted retail spending by nearly 10% in March, as a result of the federal-stimulus check, warmer weather, and a reopening economy. Retail sales jumped about 9.8% last month, becoming the largest monthly gain since May 2020. Shoppers spent more across several categories, where restaurants and bars are in the top registering double-digits gains in sales. Due to the past lockdown, consumers were not able to spend as much in restaurants and bars, which is the main reason why the entrainment industry reported double digits sales in March. Moreover, going down the list, clothing, electronics and sporting goods increased at physical and online stores. In more positive news, March industrial production increased while unemployment decreased thanks to positive outlook of the economy and reopening of businesses. Interesting enough, due to the reopening and the amount of American’s getting vaccinated debit and credit card’s expending graphs completely turned around compared to March 2020. In March 2020, the top 3 expenses in a credit and debit card were Groceries, and home improvement. Now, March 2021, those two are in the bottom of the list with Airlines, Gas, and Clothing being the top 3 most expenses in American’s credit and debit cards.
  • On Tuesday, Johnson & Johnson’s COVID-19 vaccine rollout was recommended to be stopped by the FDA after 6 out of nearly 7 million recipients developed dangerous blood clots. Although many people agreed with the decision, other people believed it shouldn’t have been stopped as only a very small group of people suffered from the previously mentioned side effect. Alex Tabarrok, an economist at George Mason University had another perspective, he said “ It’s very clear that the dangers of COVID are much larger than the dangers of the J&J vaccines” who also added at the end “I worry that the public will confuse a pause to mean that the FDA thinks people shouldn’t take the J&J vaccine”. The rollout paused have bigger impacts in the process of getting American’s vaccinated by the middle of summer. This decision not only obligated many test centers to shut down for the week as the vaccine they were providing was J&J, which ultimately slows down the process as thousands of American’s now have to reschedule at another test center where J&J isn’t provided, but could also send the wrong message to American’s as Alex Tabarrok mentioned. In addition, the University of Cambridge supported indirectly Alex’s comment by saying “the virus is a much bigger risk than blood clots”. Moreover they said “In every 100,000 people in their 40s with low exposure to the virus, the vaccine will cause blood clots in 0.5 while preventing COVID-19 virus serious enough to require intensive care in six others”

Markets

  • Markets increased this week. The S&P 500 rose by 1.38% and closed at 4,185.74. The Dow Jones rose by 1.18% and closed at 34,200.12. Year-to-date, the S&P 500 is up 11.87% and the Dow Jones is up 12.28%
  • Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.83% and 1.58%, respectively.
  • The spot price of WTI Crude increased this week. Prices rose by 6.41% and closed at $63.12 per barrel. Year to date, Oil prices are up 30.09%.
  • The spot price of Gold rose by 1.84% and closed at $1,775.90 per ounce. Year to date, Gold prices are down -6.47%.

Economic Data

  • Initial jobless claims declined by 193,000 to 576,000 for the week ended April 10, much larger decline than expected.
  • The Empire manufacturing index increased by 8.9pt to +26.3 in April, well above expectations.
  • March core CPI rose by 0.34% month-over-month, beating consensus and boosting the year over year rate +1.6%.
  • March CPI rose +0.62% month over month beating expectations of +0.5%
  • Import prices increased above expectations +1.2% month over month vs median forecast of +0.9%. Year over year, import prices increased by +6.9%
  • Import prices ex-petroleum rose +0.9% month over month for March, beating expectations by 0.5%. Year over year, pries increased +4.1%
  • Retail sales increased by +9.8% month over month in March, 4.0pp above expectations.
  • Key retail control measures increased by +6.9%, 0.3pp below expectations
  • Retail sales core/control increased +6.9% month over month for March, just below expectations of +7.2%
  • The Philadelphia Fed manufacturing index increase by 5.7pt to 50.2 in April from a downwardly revised March value and above expectations for a slight decrease.
  • Trade deficit rose to -$71.1bn versus expectations of a balance of -$70.3bn.

Fact of the Week

  • Just 1 in 39 homeowners (2.5%) was at least 3 months behind in paying their monthly mortgage as of 12/31/20. However 1 in 5 renters (20.5%) was at least 3 months behind in paying their monthly rent as of 12/31/20 (source: Consumer Financial Protection Bureau)

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Yamilet Suarez – (630) 844-8633 ysuarez@oldsecond.com
Amy Lynch – (630) 844-8633 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.

Vaccines, Caribbean Volcano: O2 Wealth Economic Update, Apr. 10, 2021

U.S. and World News

  • President Biden announced Tuesday for states to make all adults eligible for the vaccine on April 19th , two-weeks sooner than the original May 1st goal. He has expressed optimism about the pace of the vaccinations, but he warned Americans we are not out of the woods yet in regards to the pandemic. Currently, a third of the population has received at least one dose of a Covid-19 vaccination, and one in five Americans are now fully vaccinated.
  • iStock-481425457_370Friday morning, the La Soufriere volcano erupted on the Caribbean island of St. Vincent, making roughly 16,000 people required to evacuate their homes. Erouscilla Joseph, director of the University of the West Indies’ Seismic Research Center, has warned more explosions could occur as it is impossible to predict whether any potential explosions would be bigger or smaller than the first one. Two Royal Caribbean cruise ships and two Carnival cruise ships arrived after the explosions to help those that ad to evacuate their homes. The volcano last erupted in 1979.
  • President Biden has signed an executive order Friday to form a commission of experts to study reforms to the United States Supreme Court. The commission will include legal scholars, former federal judges, lawyers and reform advocates with a purpose to “provide analysis of the principal arguments in the contemporary public debate for and against Supreme Court reform”. The size of the bench has been set at nine since the late 19th century, with Supreme Court justices appointed for life, unless they elect to retire. Currently, the US Constitution gives Congress the authority to determine how to organize the court. The group has been directed to issue a report within six months on its findings.

Markets

  • Markets increased this week. The S&P 500 rose by 2.75% and closed at 4128.80. The Dow Jones rose by 1.99% and closed at 33,800.60. Year-to-date, the S&P 500 is up 10.35% and the Dow Jones is up 10.98%
  • Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.86% and 1.66%, respectively.
  • The spot price of WTI Crude dropped this week. Prices fell by -3.47% and closed at $59.32 per barrel. Year to date, Oil prices are up 22.26%.
  • The spot price of Gold rose by 0.87% and closed at $1,743.88 per ounce. Year to date, Gold prices are down -8.15%.

Economic Data

  • Initial jobless claims rose to 744,000 and the four-week moving average of claims increased by 3,000 to 724,000. Claims increased by 44,000 in California, 20,000 in New York, and by 3,000 in New Mexico. Claims decreased by 14,000 in Alabama, 11,000 in Ohio, and by 8,000 in Georgia.
  • Wholesale inventories rose 0.6% versus expectations of an increase of 0.5%.
  • The PPI rose by 1.0% versus expectations of an increase of 0.5%.
  • ISM services index increased by 8.4 to 63.7 versus expectations of 59.
  • Factory orders decreased by -0.8% versus expectations of a decrease of -0.1%.
  • Trade deficit rose to -$71.1bn versus expectations of a balance of -$70.3bn.

Fact of the Week

  • The 17.8 million college students who enrolled in the fall of 2020 were split 41% male and 59% female. 17.8 million students are down just 2.5% from the 18.2 million students who enrolled in the fall of 2019 (source: National Student Clearinghouse Research Center).

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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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@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.

Infrastructure Plan, Suez Canal Cleared: O2 Wealth Economic Update, Apr. 2, 2021

U.S. and World News

  • On Wednesday President Biden unveiled a $2.3 trillion infrastructure plan. The $2.3 trillion plan will be focused on fixing roads and bridges, internet access broadband expansion, and research and development funding boost. As expected, this plan will be funded with higher corporate taxes increasing to 28% from the current 21% and be paid for approximately 15 years. The infrastructure plan, which requires congressional approval, will be modernizing 20,000 miles of roadway with new building of 500,000 electric-vehicle charging stations, as well as investing billions of dollars in domestic semiconductor manufacturing. The infrastructure plan is the first of a two part economic plan that will focus on child care, healthcare and education. Although yet not ran through congress, this plan is expected to be announced and released in April 2021, with an expected cost of $3 trillion and $4 trillion over a decade between the two plans.
  • suez-469758536_370Following with last week’s newsletter story, the Suez Canal has been freed and the Ever Given refloated after 6 days and more than 300 ships waiting to cross through the canal in Egypt. There was work needed to be done in the sand, where engineers were utilizing conventional earthmoving equipment working on shore. In addition, work was also needed to be done under water, where tugboats and dredgers were working on a daily basis. Dredgers are ships equipped with machines to remove underwater sand and sediment. On the other hand, 14 tugboats were used to pull and nudge the Ever Given away from the canal walls. Lastly, as many people are saying “the moon, the earth, and the sun helped”. According to the Associated Press, the full moon offers spring tides, which are higher and lower than average. Also, gravity affected tides during the straight-line alignment of the Earth, the moon, and the sun. The spring high tides added a few inches of water inside the canal, making removal easier.

Markets

  • Markets increased this week. The S&P 500 rose by 1.16% and closed at 4019.87. The Dow Jones rose by 0.2514% and closed at 33,153.21. Year-to-date, the S&P 500 is up 7.40% and the Dow Jones is up 8.83%
  • Yields moved slightly higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.90% and 1.68%, respectively.
  • The spot price of WTI Crude rose this week. Prices increased by 0.99% and closed at $61.30 per barrel. Year to date, Oil prices are up 26.34%.
  • The spot price of Gold fell by -0.15% and closed at $1,729.60 per ounce. Year to date, Gold prices are down -8.90%.
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Economic Data

  • The S&P/Case-Shiller 20-city home price index increased by +1.2% in January month over month in line with expectations, and +11.1% from +10.2% year over year
  • The FHFA house price index increased +1.0% in January month over month, just below expectations of 1.2%. Meanwhile, year over year rate increased +12%
  • The Conference Board index of consumer confidence increased by 19.3pt to 109.7, beating expectations.
  • Core PCE inflation stands at 1.41% year-on-year through February and core CPI stands at 1.28%
  • Private sector employment in the ADP report rose by 517,000 in March month-over-month vs expectations of 550,000
  • Pending home sales declined by -10.6% in February vs expectations for a 3% decline. The year over year rate declined to -2.7% vs +8.8% expectations.
  • The ISM manufacturing index increased by 3.9pt to 64.7 in March vs expectations and to the highest level since 1983
  • Construction spending decreased by -0.8% month-over-month in February, beating expectations of -0.12% and likely reflecting winter storms in the South.
  • Initial jobless claims increased to 719,000 from a downwardly revised level for the week ended March 27
  • The 4-week moving initial jobless claims moving average decreased by 11,000 to 719,000.
  • Nonfarm payroll growth surged to 916,000 in March, well above consensus of about 256,000, resulting in +156,000 net revision to prior months
  • Average hourly earnings declined 0.1% month-over-month, below expectations for a 0.1% increase. Meanwhile, the year-over-year rate fell to +4.2%

Fact of the Week

  • An average American worker has increased his/her productivity by +50% in the last 21 years, i.e., an average worker can complete in 2 hours as of 12/31/2020 the same amount of work that it took him/her 3 hours to finish as of 12/31/1999 (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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@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.

Suez Canal, Gas Prices: O2 Wealth Economic Update, Mar. 26, 2021

U.S. and World News

  • suez-1138476240On Tuesday, a container ship blocked one of the world’s busiest shipping arteries, the Suez Canal. This canal is a key trade route between Asia and Europe, as not only oil and natural gas is transported through it, but also clothing, electronics and heavy machinery. According to the maritime industry trade group Bimco, an average of 39 ships transit the canal which connects the Red Sea with the Mediterranean on a daily basis, and 19,000 vessels crossed the canal in 2020. Due to a dust storm where wind speeds reached 40 knots, the huge “Ever Given” carrying 20,000 containers ran aground, blocking the whole canal both ways. Although Egyptian authorities are working daily trying to dig out the huge vessel to make it partially refloat again, the issue has created concerns to analysts due to the delay in oil shipment. Dredging the “Ever Given” to make it refloat and taking weight off the ship by removing containers, fuel and ballast water, will help to open the canal for the 120 other boats waiting in traffic.
  • Gasoline prices rose to an average of $2.88 a gallon over the past week, according to AAA. As usual, anticipation of high demand for gasoline when summer approaches and U.S. highways start to get crowded, gasoline prices started to see gains. Almost a year ago, May 2020, gasoline prices were at $1.78 due to low demand and lockdowns. However, this summer, there are higher expectations for economic recovery as a result of the quick vaccine rollout. This economic recovery and high energy demand has helped the energy sector to be the top-performing sector in the S&P 500 so far in 2021. Analysts are attempting to forecast the direction of gasoline prices as we approach summer time. Many of them are predicting higher prices as lockdowns end and employees begin to head back to the office.
Markets

  • Markets increased this week. The S&P 500 rose by 1.09% and closed at 3974. The Dow Jones rose by 1.22% and closed at 33,072. Year-to-date, the S&P 500 is up 5.96% and the Dow Jones is up 8.42%
  • Yields moved slightly lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.86% and 1.67%, respectively.
  • The spot price of WTI Crude fell this week. Prices fell -1.88% and closed at $60.70 per barrel. Year to date, Oil prices are up 25.10%.
  • The spot price of Gold fell by -0.58% and closed at $1,732.15 per ounce. Year to date, Gold prices are down -8.77%.

Economic Data

  • Initial jobless claims declined to 684,000 and the four-week moving average decreased by 13,000 to 736,000
  • Existing home sales declined by -6.6% to an annualized rate of 6.22 million units versus expectations for a -3% decline
  • Sales of a new single-family homes decreased by 18.2% last month to a seasonally-adjusted annualized rate of 775,000 units.
  • The Richmond Fed manufacturing index rose to +17 in March, above expectations
  • The current account deficit increased by $7.6bn to $188.5bn in the Q4, up +$2.4bn from $180.9bn
  • New durable goods orders decreased -1.1% month over month vs -1.0% estimate, median forecast +0.5%
  • Core capital goods orders decreased -0.8% month over month vs -0.3% estimate, median forecast +0.5%
  • Durable goods orders ex-transport fell more than expected by -0.9% month over month vs -0.5% expected decrease
  • The PCE price index rose 0.23% month over month vs +0.24 expected, and year over year rate rose 1.55% vs expectations of 1.58%
  • The core PCE price index increased +0.09% month over month vs +0.10% expectation, and the year over year rate increased +1.41% just below expectations of +1.45%
  • Personal income fell by -7.1% last month vs expectations of -7.5%
  • Personal spending fell by -1.0% for February vs expectations of -0.7%
  • GDP rose +4.3% for Q4 vs. +4.1% median forecast
  • Personal consumption increased +2.3% vs +2.4% median forecast
  • The university of Michigan’s index of consumer sentiment increased by 1.9pt to 84.9 in March, following 6.2pt increase in the preliminary reading.

Fact of the Week

  • According to the most recent report from the National Association of Realtors, existing home inventory sits at 1.03 million homes while there are 1.45 million registered real estate agents, meaning there are now over 400,000 more real estate agents in the country than there are homes to sell. (Source: Strategas Research Partners)

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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@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.

Europe Lockdown, Oil, China, Fed Forecast: O2 Wealth Economic Update, Mar. 19, 2021

U.S. and World News

  • New lockdowns have been imposed in Europe in an effort to control the 3rd wave of the coronavirus epidemic. The Lancet journal published a new model on Thursday that displayed vaccinations alone may not be enough to contain the virus. This stresses the need for gradual easing of restrictions rather than a big bang reopening. Testing will also remain the key part of their strategy, as it is estimated that 50% of infections are caused by those who do not know they have Covid-19. Although cases have increased globally, the number of deaths are still declining.
  • iStock-912330026_370Oil prices fell Thursday afternoon due to the weighing fear of dwindling crude demand while stockpiles remain plentiful. The International Energy Agency this week has stated in their latest monthly report that an ample amount of global oil inventories and supplies will remain, which will ease some concern of possible shortages as well as a prolonged increase in gas prices at the pump.
  • On Thursday, top diplomats between the United States and China met in Alaska, the first high-level meeting between the two countries under the Biden administration. The meeting opened in Anchorage, Alaska intended to be a 4-minute photoshoot that ended in a battle of words, muddying the already unstable U.S.-China ties.
  • Fed Chair Jerome Powell held a press conference Wednesday. The Federal Reserve greatly improved its economic forecasts in its March 2021 monetary policy decision but nonetheless indicated that is doesn’t expect to hike interest rates. Powell commented that the recovery is far from complete and the Fed will continue to support the economy for as long as it takes.

Markets

  • Markets dipped slightly this week. The S&P 500 dropped by 0.74% and closed at 3913. The Dow Jones declined 0.45% and closed at 32,628. Year-to-date, the S&P 500 is up 4.53% and the Dow Jones is up 7.09%.
  • Yields continued moving higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.88% and 1.73%, respectively.
  • The spot price of WTI Crude fell this week. Prices fell -6.29% and closed at $61.86 per barrel. Year to date, Oil prices are up 26.67%.
  • The spot price of Gold rose by 0.89% and closed at $1,742.26 per ounce. Year to date, Gold prices are down -8.23%.

Economic Data

  • Initial jobless claims rose to 770,000 and the four-week moving average decreased by 16,000 to 746,000
  • Retail sales fell by -3% versus expectations for a decline of -0.5%
  • Retail sales core/control fell by -3.5% versus expectations for a decline of -0.6%
  • Import prices rose by 1.3% versus expectations for an increase of 1%
  • Import prices ex-petroleum increased by 0.5% versus expectations of a rise of 0.4%
  • Industrial production decreased -2.2% versus expectations for an increase of 0.3%
  • Business inventories rose 0.3% versus expectations of a rise of 0.3%
  • The level of housing starts declined by -10.3% versus expectation of a decrease of -1.3%
  • Building permits fell by -10.8% versus expectations of a decline of -7.2%

Fact of the Week

  • WHAT A COMEBACK – Many American employers have recovered and as of 2/28/21 they have hired back 67% of the 25.4 million jobs that were lost last year during 2 months of March-April 2020 (source: DOL).

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
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@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.