Syria, China, Oil: Wealth Economic Update Apr. 13, 2018

U.S. and World News

  • On Sunday, President Bashar Assad of Syria allegedly launched another chemical attack on his people, killing 49 people, including women and children. President Trump stated in a tweet that “President Putin, Russia and Iran are responsible for backing Animal Assad. Big price to pay”. The United States has warned Russia that all options are on the table for a military response in Syria, a move that the United States’ allies fully support. British submarines were ordered to move within striking distance of Syria as the possibility of military response to Syria is imminent. After Russia warned against the plan of the United States and their allies launching a military strike in Syria, this morning, Russia’s foreign minister claimed that the alleged chemical attack was staged by an unknown foreign intelligence agency.
  • President Xi Jinping of China revealed at the Boao Forum for Asia on Monday night that he plans to further open up the China economy, significantly lower import tariffs, and improve the investment environment for foreign companies. This morning, China reported its first trade deficit in over a year amid trade tensions between China and the United States. The falling exports are estimated to be a result of seasonal factors such as the China New Year holiday.
  • The price of Crude oil has risen dramatically as a result of increased tension in the middle east and is having an effect on gasoline prices. The U.S. Energy Information Administration revealed that the average regular retail gas prices reached $2.70/gallon last week; this is the highest level of gasoline prices in three years.

Markets

  • The markets rallied this week as volatility continues. The S&P 500 rose 2.04% and closed at 2,656.30. The Dow Jones rose 1.80% and closed at 24,360.14. Year to date, the S&P is down 0.09% and the Dow Jones is down 0.86%.
  • Yields moved higher again this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.67% and 2.82%, respectively.
  • The spot price of WTI Crude Oil had a big week rising 8.51% and closing at $61.92 per barrel for the week as tensions in the middle east ratchet higher. Year to date, Oil prices are up 12.05%.
  • The spot price of Gold rose slightly higher this week by 0.92%, closing at $1,345.28 per ounce. Year to date, Gold prices are up 3.26%.

Economic Data

  • Initial jobless claims fell 9,000 to 233,000 for the week. The largest declines were in Pennsylvania and New Jersey. The four-week moving average moved up 2,000 to 230,000. The pace of layoffs still remains very low.
  • Import prices were unchanged in March versus expectations of a 0.1% increase. The flat reading in March is a result of a 1.6% drop in fuel prices and a 0.2% increase in import prices ex fuels.
  • The producer price index (PPI) rose 0.3% in March exceeding expectations of a 0.1% gain as the drop in fuel prices was largely offset by an increase in core producer price inflation, food, and trade services.
    • PPI ex-food and energy rose 0.3% in March versus expectations of a 0.2% increase.
    • PPI ex-food and energy and trade services rose 0.4% versus expectations of a 0.2% increase.

     

  • The Consumer Price Index (CPI) fell 0.06% in March exceeding expectations of a drop of 0.09% reflecting a fall in gasoline prices slightly offset by an increase in food prices.
    • Core CPI (ex- food and energy) rose 0.18% in March meeting expectations of a 0.2% increase.
    • The year-over-year Core CPI rate also came in at 2.12% meeting expectations of 2.1%.
  • The University of Michigan’s index of consumer sentiment fell 3.6 points to 97.8 points in the April preliminary report. The drop is related to concerns over the potential impact of proposed trade policies.

Fact of the Week

  • 94.5% of home mortgages (by number, not by dollar) are “current and performing” as of 12/31/2017. Just 2.4% of home mortgages were “seriously delinquent” (defined as 60 days or more past due) as of 12/31/2017 (source: Office of the Comptroller of the Currency).

Please contact a member of the Wealth Management Department if you have any questions about this information.

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, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

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