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.

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