China tariffs, Manafort, Cohen, Hurricane Lane: Wealth Economic Update Aug. 24, 2018

U.S. and World News

  • The amount of tariffs imposed by both the United States and China have now totaled a combined $100 billion each on a variety of products after the planned $16 billion round of United States tariffs kicked in on Chinese products this week and were immediately answered with reciprocity by China. U.S-China trade talks ended on Thursday after making no progress and China stating that they will continue to hit back at the United States as more U.S tariffs are imposed.
  • gavel-827092426_370On Tuesday, Donald Trump’s former campaign manager Paul Manafort was found guilty on eight financial related crimes. Five of the crimes were for tax fraud, two for bank fraud, and one for failing to disclose a foreign bank account. As a result, Paul Manafort faces years in prison. President Trump’s former attorney Michael Cohen plead guilty on eight counts of crimes similar to Manaforts and also admitted to paying off an adult film actress and a former Playboy model so that they would not spread the story of their alleged affairs with Trump.
  • Hurricane Lane, a Category 2 slow moving storm, has already dumped over 30 inches of rain on Hawaii’s Big Island as it makes its way north towards Maui and turns west towards Oahu. Police warned all tourists to leave Waikiki Beach and so far, about 1,500 people are in emergency shelters. Hawaii was last hit by a major storm in 1992.


Markets

  • • Stocks rose again this week, reaching record levels last seen in January. The S&P 500 rose by 0.88% and closed at 2,875, an ALL TIME HIGH. The Dow Jones increased by 0.51% and closed at 25,790. Year to date, the S&P is up 8.80% and the Dow Jones is up 5.84%.
  • Yields declined this week and the curve flattened further. The 5 year and 10 year U.S. Treasury Notes are yielding 2.72% and 2.81%, respectively.
  • The spot price of WTI Crude Oil rebounded this week, gaining 5.21% and closing at $68.61 per barrel. Year to date, Oil prices are up 14.14%.
  • The spot price of Gold gained 1.83% this week, and closed at $1,205.89 per ounce. Year to date, Gold prices are down 7.44%.

Economic Data

  • Initial jobless claims fell by 2,000 to 210,000 this week. The four-week moving average of claims moved down by 2,000 to 214,000. Claims rose by 3,000 in California and fell by 2,000 in Michigan. The pace of layoffs remains very low.
  • Existing home sales fell 0.7% month-over-month in July to a seasonally adjusted annualized figure of 5.34 million units against expectations of a 0.4% increase. Sales were the weakest in the Northeast region.
  • Sales of new single-family homes fell 1.7% in July to a seasonally-adjusted annualized rate of 627,000 units versus consensus expectations of 645,000. The previous three months were revised lower by a net 13,000. July sales fell sharpest in the Northeast region.


Fact of the Week

  • This week marked the longest bull market in history, after the market bottomed on March 9th, 2009. Or did it? The S&P 500 saw drawdowns in 2011 and 2015 in which over 60% of stocks were down at least 20%, with the 2011 instance seeing only a -19.4% in the headline index, not meeting the somewhat arbitrary -20% threshold. Meanwhile, Small Cap stocks as measured by the Russell 2000 experienced declines of -30.7% and -27.1% in 2011 and 2015 respectively. So is this really the longest bull market in history? (Source: Strategas)

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

Visit Old Second Wealth Management

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