Iran, Midterm Elections: Wealth Economic Update Nov. 9, 2018

U.S. and World News

  • On Monday, sanctions on Iran imposed by the United States that target the oil, banking and transportations sectors have taken affect. The sanctions were imposed as a means to end Iran’s nuclear program. Eight countries were given temporary exemptions, allowing them to continue to import Iranian petroleum. This will buy time for Iran to continue to negotiate their missile and nuclear programs with the United States, however, Iran is taking a tough stance on the sanctions. Iranian President Hassan Rouhani stated that Iran will “sell its oil and break sanctions” and that “This is an economic war against Iran, but we are prepared to resist any pressure”.
  • In a widely expected outcome, the 2018 midterm election resulted in the Democrats gaining control of the House of Representatives while the Republicans retained control of the Senate. In two closely watched, key races, Republican Ron DeSantis defeated Tallahassee Democratic Mayor Andrew Gillum for Governor of Florida and Republican Ted Cruz was able to keep his Texas Senate seat after defeating Beto O’Rourke. Also, 29-year-old Democrat Alexandria Ocasio-Cortez became the youngest women ever elected to Congress after her victory in New York’s 14th district.


Markets

  • Stocks continued their climb higher this week, despite the declines seen today. The S&P 500 rose 2.21% and closed at 2,781. The Dow Jones gained 3.00% and closed at 25,989. Year to date, the S&P is up 5.72% and the Dow Jones is up 7.10%.
  • Yields ended the week mostly unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 3.04% and 3.18%, respectively.
  • The spot price of WTI Crude Oil slid into a bear market this week, losing another 5.26% and closing at $59.82 per barrel. Year to date, Oil prices are down 0.48%.
  • The spot price of Gold fell 1.91% this week and closed at $1,209.35 per ounce. Year to date, Gold prices are down 7.17%.

Economic Data

  • Initial jobless claims fell by 1,000 to 214,000 this week. The four-week moving average of claims did not change and remained at 214,000. Claims fell by 5,000 in Illinois and by 3,000 in Missouri.
  • The ISM non-manufacturing index declined by 1.3 points to 60.3 versus expectations for a reading of 59.0.
  • The producer price index (PPI) increased by 0.6% month-over-month in October versus expectations for a 0.2% increase. The year-over-year figure rose by 2.9%. 
    • PPI excluding food, energy, and trade services rose by 0.2% month-over-month, in-line with expectations. The year-over-year figure rose by 2.8%.
  • The University of Michigan’s index of consumer sentiment fell by 0.3 points to 98.3 in the November preliminary reading versus expectations for a reading of 98.0.
  • Wholesale inventories rose by 0.4% for September versus expectations for a 0.3% increase.

Fact of the Week

  • Tuesday’s Midterm elections saw Democrats taking control of the house while Republicans bolstered their control of the senate. Historically, returns in the S&P 500 under a Republican President, Republican Senate, and Democratic House are 10.8% annualized. (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
Mike Cava – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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