Iran, Australia fires: Wealth Economic Update January 10, 2020

U.S. and World News

  • On Monday evening, Iran carried out its retaliatory response to last week’s assassination of their military leader in the form of a missile attack on a military base in Iraq housing U.S. troops. The White House said that Iran launched 16 ballistic missiles at the facility and that no U.S. troops were killed in the attack. President Trump stated that Iran appears to be standing down and that the United States “will immediately impose additional punishing economic sanctions on the Iranian regime” in response to Iranian aggression. This morning, Secretary of State Mike Pompeo and Secretary of Treasury Steve Mnuchin announced new sanctions on Iran that include penalties on some senior leaders. The new sanctions will target Iran’s steel, construction, manufacturing, textiles, and mining industries and will aim to prevent other nations from trading with the country. Foreign Minister Mohammad Javad Zarif stated that the strikes concluded Iran’s response to the killing of Soleimani.
  • australia1195174769_370Australia is urging approximately 250,000 people to evacuate as a result of the bushfires that have already burned 25.5 million acres and killed 27 people. The bushfires in Australia have burnt more land than this years’ fires in Brazil, California, and Indonesia combined. Westpac estimated that the total losses related to the bushfires would total about $3.44 billion and would result in a 0.2%-0.5% negative impact on GDP. During the past 10 days, about 2,000 homes have been destroyed in New South Wales and firefighters from the United States and Canada have traveled to Australia to help battle the fires.

Markets

  • Markets extended the rally this week. The S&P 500 gained 0.98% and closed at 3,265. The Dow Jones rose 0.67% and closed at 28,824. Year-to-date, the S&P 500 is up 1.13% and the Dow Jones is up 1.05%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.63% and 1.82%, respectively.
  • The spot price of WTI Crude plummeted this week on easing fears of Iran conflict. Prices dropped 6.17% and closed at $59.16 per barrel. Year-to-date, oil prices are down 3.11%.
  • The spot price of Gold rose by 0.56% and closed at $1,560.86 per ounce. Year-to-date, the price of gold is up 2.87%.

Economic Data

  • Initial jobless claims fell by 9,000 to 214,000 and the four-week moving average fell by 10,000 to 224,000. Claims fell by 3,000 in Illinois and by 2,000 in Tennessee, Pennsylvania, Ohio, New Jersey, and Michigan.
  • The ISM non-manufacturing index rose 1.1 points to 55.0 versus expectations for a reading of 54.5
  • Factory orders fell 0.7% versus expectations for a decline of 0.8%
  • Private sector employment in the ADP rose by 202,000 versus expectations for an increase of 160,000
  • Nonfarm payrolls rose 145,000 in December versus expectations for an increase of 160,000
  • The unemployment rate remained at 3.5%, in-line with expectations
  • Average hourly earnings rose by 0.1% versus expectations for an increase of 0.3% and the year-over-year rate came in at 2.9%

Fact of the Week

  • Between 7/01/18 and 7/01/19, the Census Bureau estimated that the US population grew from 326.688 million to 328.240 million, an increase of just +0.48%, i.e., less than 1/2 of 1% growth rate between 2018-2019. That’s the lowest year-over-year growth rate in the United States since 1918 or 101 years earlier (source: Census Bureau)

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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