China, EU Trade: Wealth Economic Update April 19, 2019

U.S. and World News

  • HONG_KONG-803226558_370United States and Chinese trade officials are set to have two more face-to-face meetings in the next few weeks that could lead to a trade deal being signed in late May. On April 4th, President Trump stated that it might be four weeks before a deal is made and then two more weeks to finalize it. The “trade truce” that was put in place at the beginning of the year, when the United States canceled a planned increase in the tariff rate on $200 billion of Chinese goods from 10% to 25%, negotiations have made significant headway. One issue that the United States has struggled with is the demand for China to implement major change to the level of power that the state has in the economy, and China’s denial of any wrongdoing. Protection of intellectual property is another issue that the United States continues to battle for, as currently any foreign company to China must provide their technology. Meanwhile, the European Union has agreed to start trade talks with the United States on industrial goods, however, France will remain on the sidelines after a French official stated that “France is opposed to the initiation of any trade negotiations with countries outside the Paris climate agreement.” At the heart of the issue of trade between the United States and Europe are subsidies for Airbus and Boeing by their respective governments and the fact that Airbus has received $18 billion in subsidies that the World Trade Organization had deemed illegal.


Markets

  • Markets rose higher again this week. The S&P 500 rose 0.60% and closed at 2,905. The Dow Jones rose 1.63% and closed at 26,560. Year to date, the S&P is up 16.55% and the Dow Jones is up 14.61%.
  • Yields did not change from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.37% and 2.56%, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices rose 0.17% and closed at $64.00 per barrel. Year to date, Oil prices are up 40.94%.
  • The spot price of Gold fell 1.13% this week and closed at $1,275.82 per ounce. Year to date, Gold prices are down 0.65%.

Economic Data

  • Initial jobless claims fell by 5,000 to 192,000 for the week. The four-week moving average of claims fell by 6,000 to 201,000. Claims fell by 4,000 in New York, 3,000 in California, and by 2,000 in Tennessee.
  • Retail sales rose by 1.6% versus expectations for a 1.0% increase
  • Retail sales ex-auto & gas rose by 0.9% versus expectations for a 0.4% increase
  • Industrial production fell by 0.1% versus expectations for a 0.2% increase
  • The trade deficit fell to -$49.4 billion versus expectations for a level of -$53.4 billion
  • Wholesale inventories rose by 0.2% versus expectations for a 0.3% increase
  • Business inventories rose by 0.3%, in-line with expectations
  • Housing starts fell by 0.3% versus expectations for a 5.4% increase
  • Building permits fell by 1.7% versus expectations for a 0.7% increase

Fact of the Week

  • The average cost of 1-year of college at an average 4-year public institution(including tuition, fees, room and board) has tripled over the last 22 years, rising from $7,142 for academic year 1996-97 to $21,370 during academic year 2018-19 (source: College Board).

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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, EU Trade: Wealth Economic Update April 12, 2019

U.S. and World News

  • brexit-932726508_370The European Union granted Theresa May an extension for the deadline to leave until October 31st during an emergency summit in Brussels on Wednesday. Some say, that her days are numbered as Prime Minister of the U.K as attempts to leave the European Union with a deal has been a circus. JPMorgan economist Malcolm Barr stated that “A six-month period is clearly enough for the Conservative party to contemplate a change in leadership while still allowing some time for the incoming PM to seek to negotiate with the EU”. The remaining possible scenarios are “No Brexit”, Theresa May’s deal is approved and she resigns from office, the deal fails again and an election is called, or perhaps the worst scenario, there is a “No-deal Brexit”. Goldman Sachs currently has a 10 percent probability of a no-deal Brexit.
  • As the conclusion of the trade war between the United States and China nears, the Trump administration is beginning to start another one with the European Union. U.S. Trade Representative Robert Lighthizer is calling for action over a case involving European Union subsidies to Airbus that the World Trade Organization has discovered causes “adverse effects” to U.S. products. The case has been in litigation for 14 years and has caused $11.2 billion in damage to U.S. trade. The United States is set to begin trade talks with the European Commission, who will conduct negotiations on behalf of the 28 EU member countries. Trade negotiations will begin after official approval from EU ministers is given on Monday.


Markets

  • The stock rally continued this week with the exception of the Dow Jones. The S&P 500 rose 0.56% and closed at 2,907. The Dow Jones lost 0.03% and closed at 26,412. Year to date, the S&P is up 16.63% and the Dow Jones is up 13.93%.
  • Yields surged this week once again. The 5 year and 10 year U.S. Treasury Notes are yielding 2.38% and 2.56%, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices rose 1.16% and closed at $63.81 per barrel. Year to date, Oil prices are up 40.52%.
  • The spot price of Gold fell 0.08% this week and closed at $1,290.78 per ounce. Year to date, Gold prices are up 0.65%.

Economic Data

  • Initial jobless claims fell by 8,000 to 196,000 for the week to its lowest level since 1969. The four-week moving average of claims fell by 7,000 to 207,000. Claims fell by 2,000 in California and Texas.
  • The producer price index (PPI) rose by 0.6% versus expectations for an increase of 0.3%, mostly due to rising oil prices. The year-over-year measure came in at 2.2%.
  • PPI ex-food, energy, and trade services was flat versus expectations for a 0.2% increase and the year-over-year rate came in at 2.0%.
  • Factory orders fell by 0.5%, in-line with expectations
  • The consumer price index rose by 0.4%, in-line with expectations and the year-over-year rate came in at 1.9%
  • Core CPI rose by 0.2%, in-line with expectations and the year-over-year rate came in at 2.0%
  • Import prices rose by 0.6% versus expectations for an increase of 0.4%
  • The University of Michigan’s index of consumer sentiment fell 1.5 points to 96.9 in the April preliminary report versus expectations for a reading of 98.2

Fact of the Week

  • There are 30 million job opening in the United States that pay at least $55,000 a year and do not require a bachelor’s degree. (Georgetown University)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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, China Trade: Wealth Economic Update April 5, 2019

U.S. and World News

  • More Brexit uncertainty lies ahead after U.K. lawmakers failed to pass an alternative to the current deal and Theresa May said that she would like to reach across the aisle to try and negotiate with Labour leader Jeremy Corbyn for a softer Brexit deal. This is something that would anger her conservative lawmakers who are against remaining in a customs union with the EU and want a decisive split. On Wednesday, lawmakers voted to pass a draft to prevent a no-deal Brexit in a 313-312 vote. It is uncertain whether the European Union will grant the U.K. another extension and an emergency summit is scheduled for next Wednesday. European Council President Donald Tusk has proposed a flexible 12-month extension to leave the European Union and Theresa May responded by asking for a shorter extension until June 30th.
  • china-943368992_370President Trump met with Chinese Vice Premier Liu He at the White House yesterday as the two sides are reportedly coming close to reaching a deal. Reports have also indicated that the United States will keep tariffs on China until a deal is reached. Chinese Vice Premier Liu He said that the two sides have reached a new consensus on a trade agreement, meanwhile, President Trump stated that no meeting with Chinese President Xi Jinping will take place until a deal is reached and that he could see a deal being made within four weeks.


Markets

  • Stocks surged this week. The S&P 500 rose 2.09% and closed at 2,893. The Dow Jones gained 1.95% and closed at 26,425. Year to date, the S&P is up 15.99% and the Dow Jones is up 13.97%.
  • Yields rebounded sharply this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.31% and 2.50%, respectively.
  • The spot price of WTI Crude Oil jumped much higher this week. Prices rose 5.19% and closed at $63.26 per barrel. Year to date, Oil prices are up 39.31%.
  • The spot price of Gold lost 0.05% this week and closed at $11,291.76 per ounce. Year to date, Gold prices are up 0.72%.

Economic Data

  • Initial jobless claims fell by 10,000 to 202,000 for the week. The four-week moving average of claims fell by 4,000 to 214,000. Claims fell by 2,000 in New Jersey.
  • Retail sales fell by 0.2% in February versus expectations of an increase of 0.2%
  • Retail sales core/control fell by 0.2% versus expectations for an increase of 0.3%
  • The ISM manufacturing index rose by 1.1 points to 55.3 in March versus expectations for a reading of 54.5
  • Construction spending rose 1.0% in February versus expectations for a decline of 0.2%
  • New orders for durable goods fell by 1.6% in February versus expectations for a decline of 1.8%
  • Private sector employment rose by 129k in March versus expectations for a rise of 175k
  • ISM non-manufacturing fell by 3.6 points to 56.1 in March versus expectations for a reading of 58.0
  • Nonfarm payrolls rose by 196k in March versus expectations for a rise of 177k
  • The unemployment rate remained at 3.8%, as expected
  • Average hourly earnings rose by 0.1% versus expectations for a rise of 0.3%

Fact of the Week

  • The S&P 500 gained 13.6% in the first quarter. The average 1st quarter return for the index over the last 25 years has been 1.7%, and 9.6% for the entire year over the last 50 years. 88% of stocks in the index ended the first quarter higher than its 2018 year end price. (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.