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.

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