U.S. and World News
- The Trump administration is willing to move forward on a trade agreement with Mexico, excluding Canada, if Canada does not agree to grant the United States access to its dairy market. This has been a very important point for the United States throughout the negotiation process. President Trump also threatened to impose a 25% tariff on cars imported from Canada, as the administration continues to further pressure Canada. So far, Canada is not calling the bluff, and U.S. Trade Representative Robert Lighthizer expressed a negative view on current negotiations with Canada. Congress members stated that there would be very little support for a deal that excluded Canada.
Oil prices skyrocketed as United States sanctions on Iran are set to begin on November 4th and OPEC has agreed to keep oil production at its current levels rather than pump more. The United States promised that the oil market would be sufficiently supplied in time for the sanctions to begin. OPEC’s decision against increasing supply could force the United States to release oil from the Strategic Petroleum Reserve to keep oil prices under control.
Markets
- Stocks pulled back this week while the S&P 500 finished its strongest quarter since December of 2013. The S&P 500 fell 0.51% and closed at 2,914. The Dow Jones lost 1.07% and closed at 26,458. Year to date, the S&P is up 10.47% and the Dow Jones is up 8.73%.
- Yields finished the week almost unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.95% and 3.06%, respectively.
- The spot price of WTI Crude Oil continued its surge higher another 3.90% this week to close at $73.54 per barrel. Year to date, Oil prices are up 22.34%.
- The spot price of Gold fell 0.71% this week, and closed at $1,191.53 per ounce. Year to date, Gold prices are down 8.54%.
Economic Data
- Initial jobless claims rose by 12,000 to 214,000 this week. The four-week moving average of claims remained unchanged at 206,000. Claims rose by 10,000 in North Carolina, 7,000 in Kentucky, and 3,000 in South Carolina and California.
- Durable goods orders rose by 4.5% in August, exceeding expectations of a 2% increase. This increase reflected a 13% increase in transportation equipment.
- Durable goods orders ex-transportation rose by 0.1% versus expectations of 0.4%.
- The Conference Board index of consumer confidence rose to 138.4 in September versus expectations of a 132.1 reading. This is the highest level since 2000.
- Sales of new single-family homes rose by 3.5% in August to a seasonally-adjusted annualized rate of 629,000 versus expectations of 630,000. The prior three months were revised down by a net 40,000. The largest increase was in the Northeast region.
- The core PCE price index ex-food and energy rose by 0.4% month-over-month in August versus expectations of 0.1%.
- Personal income rose by 0.3% in August versus expectations of 0.4%
- Personal spending rose by 0.3% in August, in line with expectations
- The University of Michigan’s index of consumer sentiment fell to 100.1 in the August final reading versus expectations of a 100.6 reading.
- The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to 2-2.25% at the September meeting. Jerome Powell indicated that the FOMC would continue with gradual rate hikes and did not refer to the current monetary policy as “accommodative”, which is what it was previously referred too.
Fact of the Week
- Of 2,000 American’s surveyed, 48% thought that the market was flat over the last 10 years, while 18% thought the market was down the last 10 years. As of last Friday, September 21st, the S&P 500 had returned 163.42% on a total return basis , or 10.16% annualized. (Source: Betterment, Bloomberg)
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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South Korean President Moon stated that during a three-day summit with Kim Jong Un this week, the North Korean leader expressed interest in having a second summit with Donald Trump in the near future to speed up denuclearization. Moon also said that Kim is now open to inspections at North Korea’s last existing facility for underground tests in Punggye-ri, where he previously would not allow inspections. The United States demands that North Korea accomplishes a “verifiable, irreversible, dismantlement” of its nuclear program before the U.S. satisfies their demand of an end to the war.
Hurricane Florence, a Category 1 hurricane, made landfall this morning on the North Carolina coast bringing sustained winds of 90 miles per hour and a life-threatening storm surge. The slow moving storm is expected hang over the Carolinas this weekend and drop catastrophic amounts of rain causing a lot of flooding. The power was knocked out in nearly 500,000 homes and hundreds were rescued this morning as the storm made landfall.
On Wednesday, Western Japan was hit with the most powerful typhoon that the country has seen in 25 years. Typhoon Jebi hit the city of Osaka with sustained winds of 100 miles per hour killing 11 people, injuring 470, and leaving over a million homes without power. Kansai Airport, a major airport for the tourist cities of Osaka, Kyoto, and Kobe still remains closed after vicious waves sent a large tanker into a bridge connecting the airport to the mainland. It is not yet known when the damaged and flooded airport will be reopened, raising concerns about the impact on tourism and the economy. On Thursday, Northern Japan was hit with a strong earthquake, closing another major airport. 22 were killed, 38 were missing, and roughly 3 million homes were without power after the earthquake.