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.

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