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

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