IL Coronavirus, China: O2 Wealth Economic Update, May 29, 2020

U.S. and World News

  • salon-1223523705_370Today the state of Illinois transitions to Phase 3 of Governor J.B. Pritzker’s reopening plan, while Chicago Mayor Lori Lightfoot has the city of Chicago on hold until June 3rd. Outdoor dining at restaurants and bars, hair salons, and non-essential retail businesses are set to reopen with capacity limitations, social distancing, and enhanced sanitary requirements. In addition to businesses reopening, people may begin gathering in groups of up to 10 people. Illinois is expected to move to Phase 4 of the five-phase plan in late June given all of the requirements are met. In New York, five regions are looking enter Phase 2 of their plan, while New York City is on hold until further notice. All 50 states in America are now at least partially reopened and the COVID-19 test positivity rate continues to decline.
  • Political tensions are rising between the United States and China as a result of the controversial national security law that was approved this week. Secretary of State Mike Pompeo stated that “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given the facts on the ground.” President Trump held a press conference today announcing that certain foreign Chinese nationals would be suspended from entering the United States and that Chinese officials responsible for the Hong Kong bill would be sanctioned. Additionally, the administration will begin eliminating policy exemptions granted to Hong Kong, as a result of their lack of autonomy from China. President Trump also announced that he is terminating the relationship between the United States and the World Health Organization, claiming that they are “China centric”.

Markets

  • Markets rose significantly again this week. The S&P 500 jumped 3.04% and closed at 3,044. The Dow Jones rose 3.85% and closed at 25,383. Year-to-date, the S&P 500 is down -5.00% and the Dow Jones is down -10.06%.
  • Yields declined this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.65%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 5.53% and closed at $35.09 per barrel. Year to date, Oil prices are down -42.53%.
  • The spot price of Gold fell -0.14% and closed at $1,732.23 per ounce. Year to date, Gold prices are up 14.17%.

Economic Data

  • Initial jobless claims fell by 315,000 to 2.1 million and the four-week moving average of claims fell by 436,000 to 2.6 million. Claims rose by 17,000 in Pennsylvania, 15,000 in Virginia, and by 14,000 in Kentucky. Claims fell by 48,000 in Florida, 43,000 in New York, and by 34,000 in California.
  • New orders for durable goods fell by -17.2% versus expectations for a -19.0% decline
  • Durable goods orders ex-transports fell by -7.4% versus expectations for a decline of -15.0%
  • Personal consumption fell -6.8% versus expectations for a decline of -7.5%
  • Personal income rose by 10.5% versus expectations for a decline of -5.9%
  • Personal spending fell by -13.6% versus expectations for a decline of -12.8%
  • The Conference Board index of consumer confidence rose by 0.9 points to 86.8 versus expectations for a reading of 87.0
  • Sales of new single-family homes rose by 0.6% to a seasonally-adjusted-annualized rate of 623,000 units versus expectations for a reading of 480,000 units.
  • Pending home sales fell -21.8% versus expectations for a decline of -17.3%
  • First-quarter real GDP growth was revised down to -5.0% versus expectations for a reading of -4.8%
  • The PCE price index fell by -0.5% versus expectations for a decline of -0.6% and the year-over-year rate rose by 0.5%, in-line with expectations
  • The core PCE price index fell by 0.4% versus expectations for decline of -0.3% and the year-over-year rate rose by 1.0% versus expectations for an increase of 1.1%
  • Wholesale inventories rose by 0.4% versus expectations for a -0.7% decline
  • The University of Michigan’s index of consumer sentiment fell by 1.4 points to 72.3 versus expectations for a reading of 74.0

Fact of the Week

  • Since bottoming on March 23rd, the S&P 500 gained 32.6% over the next 43 days through 5/20. It was the second best 43 day period for the index in that last 30 years, behind the 37.8% that the S&P 500 gained from 3/09/09 – 5/08/09 (BTN Research).

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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