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.

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