China, Congress, Wall, Budget: Wealth Economic Update Jan. 4, 2019

U.S. and World News

  • great_wall-899508826President Trump said that he had a “very good call” with Chinese President Xi Jinping on Saturday regarding trade and that “big progress” was being made. Earlier this week, China released disappointing manufacturing data that showed a contracting Manufacturing Purchasing Managers Index, rather than growing. However, Chinese Services Purchasing Managers Index jumped to a six-month high. This morning, China’s commerce ministry announced that vice-ministerial-level trade discussions will be held with the United States on January 7-8 in Beijing. The meeting is a continuation of an ongoing effort to reach a deal on trade during a 90-day truce period that postponed additional tariffs until March 1st.
  • Democrats had officially taken control of the House on Thursday and have found themselves at an impasse with Congress and President Trump on funding the government, which has now been partially shut down for 14 days. President Trump has stated that he will not sign a bill that does not include $5 billion for a wall along the southern border, something that the Democrats strongly oppose. The Democrats have passed a funding package that would reopen the government and the Department of Homeland Security until February 8th, but would not satisfy the President’s demand. Bipartisan congressional leaders are meeting today at the White House to continue negotiations.


Markets

  • Stocks continued climbing higher in yet another volatile week. The S&P 500 rose 1.90% and closed at 2,532. The Dow Jones increased 1.65% and closed at 23,433. Year to date, the S&P is up 1.03% and the Dow Jones is up 0.50%.
  • Yields fell further this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.50% and 2.67%, respectively.
  • The spot price of WTI Crude Oil rebounded this week. Prices jumped 6.57% and closed at $48.31 per barrel. Year to date, Oil prices are up 6.39%.
  • The spot price of Gold rose 0.42% this week and closed at $1,286.05 per ounce. Year to date, Gold prices are up 0.28%.

Economic Data

  • Initial jobless claims rose by 10,000 to 231,000 for the week. The four-week moving average of claims rose by 1,000 to 219,000. Claims rose by 2,000 in Connecticut and fell by 2,000 in California and North Carolina.
  • Private sector employment rose by 271,000 in December versus expectations for a 180,000 increase.
  • The ISM manufacturing index fell 5.2 points to 54.1 in December versus expectations for a reading of 57.5. This is the largest one-month decline in ten years.
  • Nonfarm payrolls rose by 312,000 in December, far exceeding expectations of 195,000. Prior months were revised up by a net 58,000.
    • The unemployment rate rose 0.2% to 3.9% due to a higher labor participation rate.
    • Average hourly earnings rose by 0.4% in December versus expectations for a 0.3% increase and the year-over-year rate rose to 3.2%, a cycle high.

Fact of the Week

  • This weekend’s playoff matchup between the Chicago Bears and the Philadelphia Eagles will be the fourth time the teams have meet in the post season. Previous match-ups include the infamous “Fog Bowl” on New Year’s 1988, and the Eagles hold a 1-2 series advantage over the Bears. The teams will face off at Soldier Field at 3:40pm on Sunday.

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

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

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