China deal, Brexit: Wealth Economic Update Feb. 22, 2019

U.S. and World News

  • china_us_trade-1026713438_370With one week left until the March 1st deadline for the temporary trade truce between the United States and China, negotiators have drawn up memorandums of understanding on forced technology transfer, cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade. This is the most progress that has been made on trade since the 7-month trade negotiations have begun. President Trump stated earlier this week that he would consider pushing back the March 1st deadline and that it is not a “magical date”. Today, President Trump is scheduled to meet with Chinese Vice Premier Liu He at the Oval Office where they will attempt to come to a deal. Some sources have said today that President Trump and Chinese President Xi Jinping could have a summit in Mar-a-Lago in late March, raising expectations for an extended deadline.
  • British Prime Minister Theresa May traveled to Brussels earlier this week in an attempt to resolve the Brexit impasse as European Union officials say that they will not reopen the divorce deal. The issue creating the impasse is whether there will be a hard border around Ireland or not. At this point, Great Britain is at a high risk of leaving the European Union without a deal on March 29th and also risks a credit rating downgrade. There is speculation that Theresa May will ask for a three-month delay to the Brexit deadline. It is in both parties interest to make a deal before May 23-26, otherwise the United Kingdom would have to participate in the European Union’s elections.


Markets

  • Stocks rose again this week, extending the rally off of the Christmas Eve low. The S&P 500 rose 0.65% and closed at 2,793. The Dow Jones gained 0.59% and closed at 26,032. Year to date, the S&P is up 11.73% and the Dow Jones is up 12.00%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.47% and 2.65%, respectively.
  • The spot price of WTI Crude Oil rose dramatically this week. Prices jumped 10.00% and closed at $57.08 per barrel. Year to date, Oil prices are up 25.70%.
  • The spot price of Gold rose 0.52% this week and closed at $1,329.40 per ounce. Year to date, Gold prices are up 3.66%.

Economic Data

  • Initial jobless claims fell by 23,000 to 216,000 for the week. The four-week moving average of claims rose by 4,000 to 232,000. Claims fell by 5,000 in New York, 4,000 in Wisconsin, and 3,000 in California, Michigan, and Pennsylvania.
  • New orders for durable goods rose by 1.2% in December versus expectations for a 1.7% increase.
  • Durable goods ex-transportation rose by 0.1% in December versus expectations for a 0.3% increase.
  • Core capital goods orders fell by 0.7% in December versus expectations for a 0.2% increase.
  • Existing home sales fell by 1.2% in January versus expectations for a 0.2% increase. The decline was led by single family homes in the West and Midwest regions.

Fact of the Week

  • In a recent survey, 63% of respondents believed that the “upper income people pay too little” in taxes. The top 5% of US tax payers account for 35% of adjusted gross income nationwide and pay 58% of all federal income taxes. (Source: Politico, Morning Consult, Internal Revenue Service)

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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100 Years of Enriching Our Communities

Rich Gartlemann Bio PictureRich Gartelmann, CFP®
Executive Vice President and Head of Wealth Management

This year marks a milestone for our wealth management group: 100 years of offering the services and guidance that family legacies are built on. The services we offer, and the sophistication of the advice you receive, have changed dramatically over that time. What started out as an offering of traditional trust services has evolved to cover more than just the needs of the wealthy few. Today, we offer services that help people of all ages and financial circumstances build and sustain their wealth over their lifetimes and often well beyond.

What Are Trust Services, Anyway?
While these days, we—along with most banks and financial companies—use the broader and more accurate term of “wealth management” to describe what we do, providing traditional trust services remains fundamental to that.

Trust services involve more than just managing money and providing investment recommendations. Our role in our clients’ lives, or those of their loved ones, is defined by a legal agreement: a trust document. That role is legally binding and may include holding and accounting for assets as a fiduciary, managing an estate’s assets after a client’s death and providing heirs (including charities) with a steady income stream.

In many cases, we serve as the trustee of an estate, or co-trustee with a family member, and oversee the distribution or sale of assets—from homes, boats and securities to farmland, family businesses and paintings. Depending on an agreement, or sometimes by court order, we may be asked to perform as a legal guardian for those clients who no longer feel confident they can manage their finances alone or those unable to make sound decisions for themselves. In these cases, we make sure bills are being paid on time and service providers are engaged when needed.

The services we provide each client or family are customized to their situation and needs as well as the directions outlined in their trust agreement. Taking on such a big role within a family requires us to be unbiased and focused on the best interests of all involved. It also requires us to function as fiduciaries. That means, legally, we can’t put our company or our individual career interests above those of our clients. Nor, have we. Trust services literally require a high level of trust in your wealth managers. In that respect, nothing much has changed over the past 100 years.

What Has Changed
The biggest change since we added the “& Trust” to our name in 1919 is the degree to which technology has enabled us to do so much more for so many more clients, their families and even their companies.

Today, through River Street Advisors, we offer financial planning and investments services to help you build your wealth, along with our traditional wealth management services. We also help many business owners in our communities offer retirement plans to their employees so they can save and build for their own futures.

Manage over 1,000 accounts. With a market value over 1 Billion dollars.

Helping people at the most personal level of their lives plan for and live out their futures—and then see future generations do the same–is what wealth management is all about. As a group, we look forward to being part of the continuum of wealth managers that will be doing just that for the next 100 years.

For more information on how we can help you shape your future and family legacy, visit us here or call 630-906-2000. We can’t wait to talk to you about the plans you have.

River Street Advisors, LLC, a wholly owned subsidiary of Old Second National Bank is a registered investment adviser and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s investment portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.

Not insured by the FDIC nor any govt agency; Not a deposit or other obligation of, or guaranteed by, the depository financial institution; Subject to investment risks, including possible loss of principal amount invested.

China deal, Border wall: Wealth Economic Update Feb. 15, 2019

U.S. and World News

  • Trade negotiations with China continue to grow increasingly optimistic after a week of constructive talks between the United States and China. Chinese President Xi Jinping has announced that negotiations will resume in Washington next week and President Trump suggested that he would consider pushing back the March 1st deadline if progress was being made. U.S. trade negotiator Robert Lighthizer said “We feel that we have to make headway on some very, very important and very difficult issues” and that he was “hopeful” of progress. As it stands, if no deal is made before March 1st, tariffs on $200 billion of Chinese goods would be raised to 25%. China’s trade surplus with the United States fell 42% to $27.3 billion last month, the lowest since May 2018.
  • iStock-173950266_370The White house has reached a tentative budget agreement that includes a $1.38 billion border security deal that would prevent another government shutdown. The compromise detailed funds for 55 new miles of barriers along the border in Texas and passed the House 300 to 128 and the Senate 83 to 16. After signing the deal, President Trump hosted a televised announcement in the Rose Garden where he stated that he would sign a declaration of a national emergency at the border. This would give the government access to billions of dollars to fund the construction of the full border wall.


Markets

  • Stocks extended the rally with a very strong week. The S&P 500 jumped 2.56% and closed at 2,776. The Dow Jones rose 3.20% and closed at 25,883. Year to date, the S&P is up 11.00% and the Dow Jones is up 11.35%.
  • Yields rose this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.49% and 2.66%, respectively.
  • The spot price of WTI Crude Oil rose sharply this week. Prices jumped 5.84% and closed at $55.80 per barrel. Year to date, Oil prices are up 22.88%.
  • The spot price of Gold rose 0.62% this week and closed at $1,322.49 per ounce. Year to date, Gold prices are up 3.12%.

Economic Data

  • Initial jobless claims rose by 4,000 to 239,000 for the week. The four-week moving average of claims rose by 7,000 to 232,000. Claims rose in Washington by 4,000 and in New York by 2,000.
  • Retail sales plunged 1.2% in December versus expectations for a gain of 0.1%.
  • Core retail sales fell by 1.7% versus expectations for a 0.4% gain.
  • The producer price index (PPI) fell by 0.1% in January versus expectations for an increase of 0.1%. This was led by declines in energy and food.
  • The consumer price index (CPI) was flat in January versus expectations for a 0.1% increase.
  • The core CPI measure rose 0.2%, in-line with expectations.
  • Industrial production fell by 0.6% in January versus expectations for a 0.1%. increase.
  • Manufacturing production fell by 0.9% in January versus expectations for a flat reading.
  • The University of Michigan’s index of consumer sentiment came in at 95.5 in February versus expectations for a reading of 93.7.

Fact of the Week

  • On the day that Janet Yellen was sworn in as Fed Chair (2/03/14), the S&P 500 was down 2.3%(total return), the worst trading day for the index in 2014. On the day that Jerome Powell was sworn in as Fed Chair (2/05/18), the S&P 500 was down 4.1%(total return), the worst trading day for the index in 2018 (source: BTN Research).

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.

China deal, Venezuela protests: Wealth Economic Update Feb. 8, 2019

U.S. and World News

  • As the March 1st deadline for a trade truce between the United States and China approaches, the chances for a trade deal to be made are growing much smaller. White House Economic Advisor Larry Kudlow stated this week that a “pretty sizable distance” remains between the two sides. President Trump followed up on Larry Kudlow’s comment by announcing that he will not be meeting with Chinese President Xi Jinping before March 1st. These comments from the White House have arisen following a few weeks of renewed optimism over trade negotiations, changing the tone ahead of the deadline. President Trump is set to sign an executive order next week that would ban Chinese telecom equipment from United States wireless networks in an effort to combat cyber threats.
  • CARACAS-500750930Western nations continue to push for the resignation of socialist leader Nicolas Maduro of Venezuela as hundreds of thousands of protestors blanketed the streets of Caracas last weekend. The protestors are in support of self-proclaimed President Juan Guaido. The United States has announced that military intervention in Venezuela is an option and have placed extreme sanctions on the country and the state owned oil firm PDVSA, whose 2026 maturity debt is now trading at 23.75 cents on the dollar. The new sanctions have crippled the liquidity on Venezuelan sovereign debt and has caused JPMorgan to consider removing the securities from its popular emerging-market bond indexes. This action would force the largest holders of Venezuelan sovereign debt to sell in a market where it is unclear if there is any buying interest for the securities.


Markets

  • Stocks continued rallying this week before retreating in the second half of the week over concerns of slowing global growth and U.S China trade. The S&P 500 gained 0.11% and closed at 2,708. The Dow Jones increased 0.32% and closed at 25,106. Year to date, the S&P is up 8.24% and the Dow Jones is up 7.90%.
  • Yields declined further this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.44% and 2.63%, respectively.
  • The spot price of WTI Crude Oil dropped this week over concerns of growing supply. Prices fell 4.60% and closed at $52.72 per barrel. Year to date, Oil prices are up 16.10%.
  • The spot price of Gold fell 0.30% this week and closed at $1,314.08 per ounce. Year to date, Gold prices are up 2.46%.

Economic Data

  • Initial jobless claims fell by 19,000 to 234,000 for the week. The four-week moving average of claims rose by 5,000 to 225,000. Claims fell by 3,000 in Florida and New Jersey.
  • Factory orders fell by 0.6% in November versus expectations for a small increase.
  • The ISM non-manufacturing index fell to 56.7 versus expectations for a reading of 57.1.
  • The trade balance for November fell $6.4 billion to -$49.3 billion versus expectations for a reading of -$54.0 billion.

Fact of the Week

  • 27% of millennials surveyed in July 2018 spend more money on coffee per month than they put away and invest for retirement (Source: Lendedu)

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.

China deal, Venezuela oil, Brexit: Wealth Economic Update Feb. 1, 2019

U.S. and World News

  • china-945440206_370President Trump is optimistic that the world’s two largest economies could reach “the biggest deal ever made” and confirmed that a U.S. delegation will visit China in mid-February for a new round of trade talks. The feeling is mutual. China’s trade delegation said the latest negotiations with the U.S. in Washington made “important progress” and focused on three key themes – “trade, structural issues and enforcement.”
  • Despite the rhetoric between Nicolas Maduro and President Trump, U.S. refineries are still buying Venezuelan petroleum. But with the crisis escalating after Washington backed opposition leader Juan Guaido, a new round of sanctions is expected in the coming days. The U.S. on Saturday called on the world to “pick a side” on Venezuela and urged countries to financially disconnect from the Maduro government. “The U.S. has decided to follow the path of stealing Citgo from Venezuela,” President Nicolas Maduro declared after the Trump administration imposed sanctions on its parent company – state-owned oil giant PDVSA. While the sanctions will hit Citgo, the penalties will have a minimal effect on other American refiners, according to Treasury Secretary Steven Mnuchin.
  • In an attempt to break the deadlock over Brexit, Theresa May will seek legally binding changes from the EU regarding the Irish backstop, lawmaker Boris Johnson wrote in The Telegraph, citing senior government sources. “If the PM secures a ‘Freedom Clause’ – for the U.K. to escape the backstop without reference to the bloc – I have no doubt that she will have the whole country full-throatedly behind her.”


Markets

  • • Stocks had a good week following comments from the Fed. The S&P 500 gained 1.62% and closed at 2,706.53. The Dow Jones increased 1.33% and closed at 25,063.89. Year to date, the S&P is up 8.12% and the Dow Jones is up 7.56%.
  • Yields fell again week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.51% and 2.69%, respectively.
  • The spot price of WTI Crude Oil extended its gains this week. Prices rose 6.39% and closed at $55.31 per barrel. Year to date, Oil prices are up 20.98%.
  • The spot price of Gold rose 0.99% this week and closed at $1,318.21 per ounce. Year to date, Gold prices are up 2.79%.

Economic Data

  • Sales of new single-family homes sharply rebounded 16.9% in November to a seasonally-adjusted annualized rate of 657k units, significantly above expectations. November sales increased month-over-month in three of four regions, with the largest increase in the South (+64k) that likely reflected a rebound following Hurricane Michael.
  • The FOMC left the funds rate target range unchanged, as universally expected. The post-meeting statement continued to describe job gains and household spending as “strong” but downgraded its characterization of overall growth to “solid”.
  • The Conference Board index of consumer confidence declined 6.4pt to 120.2 in January, an 18-month low and against consensus expectations for a more modest decrease. The decline reflected a large decrease in the household expectations sub-index (-10.4pt to 87.3) and a small decrease in the household perceptions of present economic conditions sub-index (-0.3pt to 169.6).

Fact of the Week

  • In preparation of the Super Bowl, it is anticipated that Americans will consume 100 million pounds of guacamole. At an average weight of 150 grams per avocado, this equates to over 300 million avocados. (Source: Produce News)

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.