U.S. and World News
The United States and Mexico have struck a preliminary deal on Monday to replace NAFTA. The deal would remain in force for 16 years, with an evaluation every six years, and is expected to strengthen manufacturing in the United States. The deal includes an obligation by auto manufacturers to manufacture at least 75% of an automobile’s value in the United States, an increase from 62.5%. Also included, was a stipulation that 40-45% of auto components be manufactured by employees earning at least $16 an hour. Negotiations are still ongoing between the United States and Canada after a deal was expected by today, however, the two sides are having trouble coming together on Canada’s dairy market, among other things.
- The United Kingdom and the European Union have extended the deadline from October 18th to the middle of November for wrapping up Brexit terms, signaling to the market that negotiations have been tough. Britain’s exit from the European Union is set for March 29th, and the longer that negotiations continue, the greater the chance that no deal will be made.
Markets
- Stocks ended the week higher once again. The S&P 500 rose by 0.98% and closed at 2,901. The Dow Jones increased by 0.79% and closed at 25,963. Year to date, the S&P is up 9.85% and the Dow Jones is up 6.66%.
- Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.74% and 2.86%, respectively.
- The spot price of WTI Crude Oil continued its sharp rebound this week, gaining 1.73% and closing at $69.91 per barrel. Year to date, Oil prices are up 16.30%.
- The spot price of Gold lost 0.50% this week, and closed at $1,199.33 per ounce. Year to date, Gold prices are down 7.94%.
Economic Data
- Initial jobless claims rose by 3,000 to 213,000 this week. The four-week moving average of claims moved down by 2,000 to 212,000. Claims rose by 2,000 in Michigan, New York, and Pennsylvania, and fell by 2,000 in California. The pace of layoffs remains very low.
- Personal income rose by 0.3% in July month-over-month versus expectations of a 0.4% increase.
- Personal spending increased by 0.4% month-over-month in July, in-line with expectations.
- The core PCE price index ex-food and energy increased 0.16% month-over-month in July and the year-over-year pace rose 0.06% to 1.98%. These figures were in-line with expectations.
- Wholesale inventories rose 0.7% in July versus expectations of a 0.2% increase.
- The Conference Board index of consumer confidence increased to 133.4 versus expectations of 126.6. This is the highest level since the year 2000.
- Second-quarter Real GDP growth was revised up by 0.1% to 4.2% versus expectations of a -0.1% revision to 4.0%.
- Pending home sales fell by 0.7% in July, below expectations of a 0.3% increase. Sales declined in the South and the West, but increased in the Northeast and the Midwest.
Fact of the Week
- In a study of five of the largest U.S. Cities (NYC, Chicago, LA, Washington D.C, and Dallas), it was found that it is cheaper for the average American to take Uber for every trip than it is to own a car. Of the 5 cities, only in Dallas was it cheaper to own a car than to take an Uber. (Source: Kleiner Perkins)
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 – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
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