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.

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