Coronavirus, Essential Heroes, Reopening: O2 Wealth Economic Update, May 15, 2020

U.S. and World News

  • essential-1215136769_370The U.S. House of Representatives will vote today on the latest stimulus bill, called the Heroes Act. This round of relief would include another $1,200 stimulus check to all Americans, $200 billion in additional funding for essential workers, and a six-month extension of the enhanced unemployment program. The $3 trillion of additional stimulus would also include funding to state and local governments, among other things. The bill is not expected to pass the Senate however, as it has been met with criticism by Republicans who believe that further stimulus is not necessary at this time. The White House responded to rumors that another stimulus check would be issued to Americans with a statement that said “As President Trump has said, we are going to ensure that we take care of all Americans so that we emerge from this challenge healthy, stronger, and with economic prosperity, which is why the White House is focused on pro-growth, middle class tax and regulatory relief.”
  • The U.S. Centers for Disease Control and Prevention issued new guidance this week with regards to businesses reopening. States that have already begun reopening, have done so without guidance from the CDC and have seen low traffic as widespread fear about the virus persists. The guidelines require bars and restaurants to encourage social distancing, space out tables, and other restrictions while transportations services should limit routes that travel through higher risk areas. The responsibility for the timing of reopening businesses will be left to the state governments, who will be encouraged to follow the guidelines issued by the CDC.

Markets

  • Markets fell this week as tensions with China have risen. The S&P 500 fell -2.20% and closed at 2,864. The Dow Jones dropped -2.60% and closed at 23,685. Year-to-date, the S&P 500 is down -10.70% and the Dow Jones is down -16.30%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.31% and 0.64%, respectively.
  • The spot price of WTI Crude spiked higher this week. Prices rose 19.50% and closed at $29.56 per barrel. Year to date, Oil prices are down -51.60%.
  • The spot price of Gold rose 2.40% and closed at $1,743.64 per ounce. Year to date, Gold prices are up 14.90%.

Economic Data

  • Initial jobless claims fell by 195,000 to 3.0 million and the four-week moving average of claims fell by 564,000 to 3.6 million. Claims rose by 59,000 in New York, 50,000 in Wisconsin, and by 42,000 in Florida. Claims fell by 108,000 in Texas, 100,000 in California, and by 62,000 in Oklahoma.
  • The consumer price index (CPI) fell by 0.8%, in-line with expectations and the year-over-year rate rose by 0.3% versus expectations for an increase of 0.4%
  • The core consumer price index (CPI) fell by 0.4% versus expectations for a decline of 0.2% and the year-over-year rate rose by 1.4% versus expectations for an increase of 1.7%
  • The producer price index (PPI) fell by 1.3% versus expectations for a 0.5% decrease
  • The core measure of the producer price index fell by 0.9% versus expectations for a decline of 0.1%
  • Retail sales fell by 16.4% versus expectations for a decline of 12.0%
  • Core retail sales fell by 15.3% versus expectations for a decline of 5.0%
  • The Empire manufacturing index came in at -48.5 versus expectations for a reading of -60.0
  • Industrial production fell by 11.2% versus expectations for a decline of 12.0%
  • The University of Michigan’s index of consumer sentiment rose 1.9 points to 73.7 versus expectations for a reading of 68.0

Fact of the Week

  • The average interest rate on a 30-year fixed rate mortgage was 3.23% as of 4/30/20, a record low for a statistic that has been tracked since 1991 (source: Freddie Mac)

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 CFA®, CFP® – (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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