Brexit, Boeing: Wealth Economic Update Mar. 29, 2019

U.S. and World News

  • brexit-1027266560Two years ago today, the United Kingdom asked the European Union for a divorce and today is the day that Brexit was finally supposed to transpire, however, many questions remain about how the whole thing will shake out. The new deadline is now two weeks away and lawmakers are left scrambling to pass a deal to avoid the “no-deal” Brexit, an outcome that no one wants. Theresa May also announced this week that she would resign if the deal was approved in a last ditch effort to save her deal, but was answered by Northern Ireland’s Democratic Unionist Party promising to continue to reject her deal. The withdrawal agreement that was voted on today was rejected, as expected, meaning the hard deadline for Brexit is April 12th. Following the vote today, European Council President Donald Tusk announced a summit for April 10th, raising more questions about the possibility of another extension.
  • Boeing held a briefing for about 200 pilots and representatives this week describing in detail the software changes that control a system designed to prevent a mid-flight stall. Boeing publically revealed the updates to the 737 MAX software and stated that the update would give pilots more control over the MCAS system and make it less likely to be set off by faulty data. FAA regulators were questioned by lawmakers on Capitol Hill this week about the oversight of the aviation industry and how the MCAS system was tested.


Markets

  • Stocks jumped higher this week. The S&P 500 rose 1.23% and closed at 2,834. The Dow Jones gained  1.67% and closed at 25,929. Year to date, the S&P is up 13.63% and the Dow Jones is up 11.79%.
  • Yields continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.23% and 2.40%, respectively.
  • The spot price of WTI Crude Oil surged this week. Prices rose 2.24% and closed at $60.14 per barrel. Year to date, Oil prices are up 32.44%.
  • The spot price of Gold lost 1.63% this week and closed at $1,292.23 per ounce. Year to date, Gold prices are up 0.76%.

Economic Data

  • Initial jobless claims fell by 5,000 to 211,000 for the week. The four-week moving average of claims fell by 3,000 to 217,000. The decline in claims was broad based.
  • The third estimate of Q4 GDP came in at 2.2% versus expectations for 2.6%
  • Personal Consumption rose by 2.5% in Q4 versus expectations for a 2.6% increase
  • Housing starts fell by 8.7% in February versus expectations for a decline of 0.8%
  • Building permits fell by 1.6% versus expectations for a decline of 1.3%
  • The Conference Board index of consumer confidence fell by 7.3 points to 124.1 in March versus expectations for a reading of 132.5
  • The trade deficit fell by more than expected to $51.1 billion in January versus expectations for a reading of -$57.0 billion
  • Pending home sales fell by 1% in February versus expectations for a decline of 0.5%
  • The January core PCE index increased by 0.06% versus expectations for 0.2%
  • Personal income increased 0.2% versus expectations for an increase of 0.3%
  • Personal spending rose by 0.1% in January versus expectations for a 0.3%
  • The University of Michigan’s index of consumer sentiment rose by 0.6 points to 98.4 versus expectations for a reading of 97.8

Fact of the Week

  • 3 of the top 4 occupations projected to create the greatest number of new jobs nationwide between 2016-2026 are in the health care industry–personal care aides(+777,600 new jobs), registered nurses(+438,100 new jobs) and home health aides(+431,200 new jobs) (source: Department of Labor).

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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Brexit, France protests: Wealth Economic Update Mar. 22, 2019

U.S. and World News

  • British Prime Minister Theresa May planned on bringing her Brexit agreement to parliament on Tuesday for a third time before House Speaker John Bercow blocked it, claiming that the deal must change significantly before it is brought back to parliament. Theresa May moved forward to negotiate with the European Union on an extension of Article 50 which would either buy her more time to gain support for her Brexit deal, or delay the inevitable. The European Union agreed to grant the United Kingdom an extension to negotiate an exit that would be contingent upon Theresa May’s ability to secure a deal by next week. If Theresa May secures a Brexit deal by next week, the deadline would be extended until May 22nd, however, if a withdrawal agreement is not reached, the deadline would only be extended until April 12th. The European Union is preparing for a no-deal Brexit and Goldman Sachs has cut the chances of the Brexit deal being ratified to 50% from 60% and increased the probability of a “no-deal” Brexit to 15% from 5%.
  • paris-153507216_370After the French national debates over government policy ended last weekend, 10,000 “Yellow Vest” protestors took to the streets for the 18th weekend, bringing violence and anger. Nearly 100 businesses on the Champs-Elysees were vandalized or torched. Finance Minister Bruno Le Maire stated in late February that the protests have shaved 0.2% off of economic growth. Starting this Saturday, “Yellow Vest” protestors will be banned in the hardest hit neighborhoods and France is forcing its banks to raise capital buffers to protect against any economic downturns.


Markets

  • Stocks rose further this week before falling after the FOMC meeting. The S&P 500 lost 0.75% and closed at 2,801. The Dow Jones fell further, led by Nike and Boeing, declining 1.34% and closing at 25,502. Year to date, the S&P is up 12.25% and the Dow Jones is up 9.97%.
  • Yields saw dramatic declines this week after Fed Chairman Jerome Powell signaled slower than expected interest rate increases. The 5 year and 10 year U.S. Treasury Notes are yielding 2.24% and 2.44%, respectively.
  • The spot price of WTI Crude Oil ended the week flat. Prices rose 0.03% and closed at $58.84 per barrel. Year to date, Oil prices are up 29.57%.
  • The spot price of Gold rose 0.83% this week and closed at $1,313.18 per ounce. Year to date, Gold prices are up 2.39%.

Economic Data

  • Initial jobless claims fell by 9,000 to 221,000 for the week. The four-week moving average of claims increased by 1,000 to 225,000. Claims fell by 3,000 in Illinois and Oregon and by 2,000 in Pennsylvania.
  • Factory orders rose 0.1% in January versus expectations for a 0.3% increase.
  • Philadelphia Fed manufacturing index rose to 13.7 versus expectations for a reading of 4.8.
  • Existing home sales rose by 11.8% in February to a seasonally adjusted annualized rate of 5.51 million units versus expectations for a 3.2% increase.
  • Wholesale inventories rose 1.2% versus expectations for a 0.1% increase.

Fact of the Week

  • American taxpayers pay an estimated 84% of federal income taxes that would be collected if all tax returns were 100% honest when completing their tax returns. The United States 84% “voluntary compliance rate” (VCR) is relatively good compared to Germany and Italy, who have VCR’s of 68% and 62% respectively. (Source: Internal Revenue Service, The Atlantic)

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.

Boeing, Brexit, Venezuela: Wealth Economic Update Mar. 15, 2019

U.S. and World News

  • boeing-172946037On Sunday, an Ethiopian Airlines flight transporting 157 people on a Boeing 737 MAX 8 crashed during takeoff, killing all passengers on board. The incident occurred less than five months after another Boeing 737 MAX 8 crashed in Indonesia killing 189 people and investigators have drawn similarities between the two crashes, especially since both took place during the take-off phase. Immediately following the crash, several countries grounded the aircraft and placed a ban on the 737 MAX 8 from flying into and out of the country. On Wednesday, Boeing announced that they would temporarily suspend the entire fleet “out of an abundance of caution and in order to reassure the flying public of the aircraft’s safety”. Boeing is expected to perform a software update on the entire fleet in mid-April.
  • The U.K. parliament rejected Prime Minister Theresa May’s withdrawal accord on Tuesday as expected. It is now clear that the U.K. will likely not leave the European Union by March 29th and Prime Minister Theresa May will be asking for an extension after a no-deal Brexit has also been rejected. The European Union must unanimously approve an extension, which would be in their best interests. Theresa May plans to bring her Brexit deal, which was already rejected twice, to parliament for one more vote before meeting with the European Union on March 21st.
  • Self-declared interim president Juan Guaido of Venezuela has announced a “state of national emergency” as a result of ongoing power outages throughout the country. At least 15 people have died and the private sector continues to lose hundreds of millions of dollars as a result of the blackouts. Current President Nicolas Maduro is blaming the United States for the power outages. State owned PDVSA and its joint venture partners are struggling to produce oil and the government is now said to be rationing electricity in an effort to supply power to the Jose oil export terminal, a major source of revenue for Venezuela.


Markets

  • Stocks picked up steam again having a very strong week. The S&P 500 jumped 2.95% and closed at 2,822. The Dow Jones rose higher, but was held lower by Boeing, gaining 1.64% and closing at 25,849. Year to date, the S&P is up 13.09% and the Dow Jones is up 11.45%.
  • Yields continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.40% and 2.59%, respectively.
  • The spot price of WTI Crude Oil rose much higher this week. Prices rose 4.14% and closed at $58.39 per barrel. Year to date, Oil prices are up 28.58%.
  • The spot price of Gold rose 0.32% this week and closed at $1,302.40 per ounce. Year to date, Gold prices are up 1.55%.

Economic Data

  • Initial jobless claims rose by 6,000 to 229,000 for the week. The four-week moving average of claims fell by 2,000 to 224,000. Claims rose by 5,000 in Illinois and by 2,000 in Ohio and Washington.
  • Import prices rose by 0.6% in February versus expectations for a 0.3% increase.
  • Retail sales rose by 0.2% in January versus expectations for a flat reading. The rise reflected a rise in ex-auto and gas sales.
  • Core retail sales rose by 1.1% versus expectations for a 0.6% increase.
  • The consumer price index (CPI) rose by 0.17%, in-line with expectations. The year-over-year measure rose to 1.50% versus expectations for 1.60%.
  • Core CPI rose by 0.11% versus expectations for a 0.2% increase. The year-over-year measure rose to 2.08% versus expectations for a 2.2% increase.
  • The producer price index (PPI) rose by 0.1% versus expectations for a 0.2% increase.
  • PPI ex-food, energy, and trade services rose by 0.1% versus expectations for a 0.2% increase.
  • Durable goods orders rose by 0.4% versus expectations for a decline of 0.4%.
  • Construction spending rose by 1.3% versus expectations for a 0.5% increase.
  • Sales of new single-family homes fell by 6.9% to a seasonally-adjusted annualized rate of 607k versus an estimate of 622k units.
  • Industrial production rose by 0.1% versus expectations for a 0.4% increase.
  • Manufacturing production fell by 0.4% versus expectations for a 0.1% increase.
  • The University of Michigan’s index of consumer sentiment rose 4 points to 97.8 in the March preliminary report versus expectations for a reading of 95.6.

Fact of the Week

  • The average single-family home in the USA increased in value +5.7% during 2018. Home values in Idaho increased +11.9% (top state) while home values in North Dakota were flat (bottom state) (source: FHFA).

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.

Brexit: Wealth Economic Update Mar. 8, 2019

U.S. and World News

  • brexit-981577448_370British Prime Minister Theresa May traveled to Brussels again this week in a last-ditch effort to gain support from European Union leaders so that Britain can leave independent of European Union rules. Earlier this week Theresa May announced a plan that would provide $1.6 billion in funding to boost economic growth in the more indigent areas of the U.K., some say this is an attempt to buy votes and to pick up any leftover potential supporters that may remain. Theresa May has a chance of getting her Brexit deal passed if the Irish border impasse is resolved, however, this remains a significant impasse. It is predicted that there will be an extension and that Theresa May will have a deal passed by next month. The Prime Minister spoke today, stating that there is a chance that Britain may not leave the European Union at all.


Markets

  • Stocks retreated this week after having the best start to the year since 1991. The S&P 500 fell 2.12% and closed at 2,743. The Dow Jones dropped 2.17% and closed at 25,450. Year to date, the S&P is up 9.87% and the Dow Jones is up 9.66%.
  • Yields plummeted this week as investors piled into bonds. The 5 year and 10 year U.S. Treasury Notes are yielding 2.43% and 2.63%, respectively.
  • The spot price of WTI Crude Oil rose slightly this week. Prices rose 0.32% and closed at $55.98 per barrel. Year to date, Oil prices are up 23.28%.
  • The spot price of Gold rose 0.43% this week and closed at $1,298.95 per ounce. Year to date, Gold prices are up 1.28%.

Economic Data

  • Initial jobless claims fell by 3,000 to 223,000 for the week. The four-week moving average of claims fell by 3,000 to 226,000. Claims fell by 3,000 in Kentucky.
  • Nonfarm productivity rose by 1.9% in the fourth quarter versus expectations for an increase of 1.5%.
  • Construction spending fell by 0.6% in December versus expectations for an increase of 0.1%.
  • The ISM non-manufacturing index rose 3.0 points to 59.7 versus expectations for a reading of 57.4.
  • New home sales rose 3.7% in December to a seasonally-adjusted annualized rate of 621k units versus expectations for 600k units.
  • Private sector employment rose 183,000 in February versus expectations for a gain of 190,000.
  • The trade deficit rose by $9.5 billion to -$59.8 billion in December against expectations for a deficit reading of -$57.9 billion.
  • Nonfarm payrolls rose by 20,000 in February, missing the forecasted 180,000 figure by a wide margin. This was the slowest pace of jobs growth since the 2017 hurricanes.
  • The unemployment rate fell to 3.8%, led by household employment
  • The labor force participation rate remained at 63.2%, the highest level since 2013
  • Average hourly earnings rose by 0.4% versus expectations for a 0.3% increase. The year-over-year rate rose to 3.4%
  • Housing starts rose by 18.6% in January to 1,230k versus expectations for a 10.9% increase to 1,195k. The figure was led by single-family homes in the Northeast region rebounding sharply
  • Building permits rose by 1.4% to 1,345k in January versus expectations for a decline of 2.9%

Fact of the Week

  • Mark Haines famously said on CNBC on March 10th, 2009 “I’m going to step out on a limb here… I think we’re at a market bottom”. After the financial crisis that rocked the market, the stock market reached its lowest point of the recession on March 9th 2009. Since then, the S&P 500 has returned 366.64% on a total return basis, which is 16.65% annualized. (Source: CNBC, Bloomberg)

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, Brexit, Venezuela: Wealth Economic Update Mar. 2, 2019

U.S. and World News

  • china_us-1035146880Earlier this week, President Trump extended the March 1st trade truce deadline between the United States and China, citing “substantial trade progress”. If the deadline had not been extended, the tariff rate on $200 billion in Chinese products would have been increased to 25% from 15%. Chinese equities soared over 5% on the news into bull market territory. U.S. Trade Representative Robert Lighthizer stated that it’s too early to draw conclusions on a trade deal between the two countries and that even if a deal was made, the United States would need to maintain the threat of tariffs.
  • In an effort to stop Britain from leaving the European Union without a deal, British Prime Minister Theresa May has pushed back a vote on her next Brexit deal to as late as March 12, about two and a half weeks before Britain leaves the European Union. European parliament had created rules that requires the U.K. financial services industry to abide by European Union standards after Brexit in order to keep control of market access. The U.K.’s main opposition Labour Party is also committed to having a second Brexit referendum, surprising doubters.
  • The United States is continuing to find new ways to aid economically devastated Venezuela after last weekend’s attempt to send aid resulted in two people killed and 300 people wounded. The U.S. is working with Venezuelan opposition leader Juan Guaido to pressure Nicolas Maduro to step down by means of sanctions. Vice President Mike Pence is calling on allies to freeze assets of state-owned oil company PDVSA. As a response, Venezuela is now exporting crude from India and Europe instead of the United States, however, this is predicted by analysts to be ineffective in generating profits.


Markets

  • Stocks marched higher again this week. The S&P 500 rose 0.45% and closed at 2,804. The Dow Jones gained 0.07% and closed at 26,026. Year to date, the S&P is up 12.24% and the Dow Jones is up 12.08%.
  • Yields spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.56% and 2.75%, respectively.
  • The spot price of WTI Crude Oil declined this week. Prices fell 2.65% and closed at $55.74 per barrel. Year to date, Oil prices are up 22.75%.
  • The spot price of Gold fell 2.70% this week and closed at $1,293.44 per ounce. Year to date, Gold prices are up 0.85%.

Economic Data

  • Initial jobless claims rose by 9,000 to 225,000 for the week. The four-week moving average of claims fell by 7,000 to 229,000. Claims rose by 5,000 in Kentucky, 4,000 in New York, and fell by 3,000 in Washington.
  • Real GDP rose by 2.6% in the 4th quarter versus expectations of a 2.2% increase. The rise was driven by a surprise in personal consumption led by autos and financial services, offsetting the weak December retail sales figure.
  • Personal income fell 0.1% in January versus expectations for a 0.3% increase, but rose by 1.0% in December.
  • Personal spending fell by 0.5% in December versus expectations for a 0.3% decrease.
  • Wholesale inventories rose by 1.1% in December versus expectations for a 0.4% increase.
  • Housing starts fell by 11.2% in December versus expectations for a 0.1% drop. The drop was led by the multi-family category in the West and Midwest regions.
  • The Conference Board index of consumer confidence rose by 9.7 points to 131.4 in February versus expectations for a reading of 124.9.
  • Pending home sales rose by 4.6% in January versus expectations for a 1.0% increase.
  • Factory orders rose by 0.1% in December versus expectations for a 0.6% increase.
  • The University of Michigan’s index of consumer sentiment fell 1.7 points to 93.8 in February versus expectations for a reading of 95.9.

Fact of the Week

  • 69% of 1,017 adults surveyed in January 2019 believe that they will be “financially better off in 1 year,” a result that is 2 percentage pointsless than the all-time record of 71%recorded in March 1998. This survey has been conducted since August 1977. The 1998 record was achieved during a stretch for the S&P 500 that produced annual returns of at least +20% (total return) for 5 consecutive years(1995-1999) (source: Gallup).

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.