China, Brexit: Wealth Economic Update November 29, 2019

U.S. and World News

  • Increased optimism of a Phase One trade deal between the U.S. and China helped to bring major averages higher in the holiday-shortened week, including a 100th new record high for the Dow Jones under the Trump Presidency. Aiding this optimism was China announcing increased penalties on violations of intellectual property rights. Data out of China showing industrial profits declining -9.9% in the last year may also lend to China’s desire to speed up this Phase One process. However, the human rights situation in Hong Kong could potentially jeopardize this progress. President Trump has signed into law Congressional legislation supporting Hong Kong’s anti-government protestors, prompting Beijing to say it would take ‘firm counter-measures’ and that attempts to interfere would be doomed to fail.
  • england-957174246_370Sporting a comfortable lead in the poll ahead of the opposition Labour Party, Boris Johnson laid out his Tory agenda ahead of the December 12th In it he pledges to bring back his Brexit Deal to parliament before Christmas and ruled out any further delays. Johnson has also promised no new taxes, contrary to his opponent Jeremy Corbyn who has proposed additional taxes to fund a major expansion of the U.K.

Markets

  • Markets rose this week on continued optimism over trade. The S&P 500 gained 04% and closed at 3,141. The Dow Jones rose 0.75% and closed at 28,051. Year-to-date, the S&P is up 27.63% and the Dow Jones is up 23.05%.
  • Yields were little changed this week. The 5 year and 10 year U.S. Treasury Notes are yielding 63% and 1.78%, respectively.
  • The spot price of WTI Crude dipped this week. Prices fell 07% and closed at $55.42 per barrel. Year to date, Oil prices are up 22.04%.
  • The spot price of Gold rose by 55% and closed at $1,463.93 per ounce. Year to date, Gold prices are up 14.15%.

Economic Data

  • Initial jobless claims declined by 15,000 to 213,000 and the four-week moving average fell by 1,000 to 220,000. Claims decreased by 4,000 in Illinois and 3,000 in California but rose by 4,000 in Texas and 2,000 in New York.
  • Third Quarter real GDP was revised up by 0.2% to 2.1% in the BEA’s second estimate. This was above expectations but the details were softer as rising inventories contributed most of the upward revision.
  • New home sales declined by -0.7% in October, slightly better than expectations. New sales decreased in the South (-15,000) and Northeast (-6,000), but rose in the West (+13,000) and Midwest (+3,000).
  • The Case-Shiller home price index rose 0.4% for September, beating expectations of 0.3%. Prices rose in 17 of 20 cities with Seattle (+0.8%), Los Angeles (+0.7%) and Phoenix (+0.6%) posting the largest increases. Home prices have risen 2.1% over the last 12 months as measured by Case-Shiller.

Fact of the Week

  • The combined size of the world’s economies as measured by gross domestic product totals $106 trillion. The combined debt of the world’s economies is $255 trillion, or 240% of the worlds’s GDP. Debt includes government debt, household debt and borrowing by non-financial companies. (Source: Institute of International Finance)

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

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