Europe COVID, Wildfires: O2 Wealth Economic Update, Sept. 25, 2020

U.S. and World News

  • iStock-1206774789_370Fears of another lockdown grips Great Britain amid record levels of new daily cases of coronavirus. Similar to March and April, the U.K. is seeing a run on supermarkets which led to large grocery chain Tesco to place limits on customers to 3 items each of flour, dried pasta, toilet paper, baby wipes, and anti-bacterial wipes. Surging new daily cases of coronavirus and hospitalizations are sweeping across Europe with Spain, France, and Poland all experiencing similar situations to the U.K. This morning, Madrid imposed a local lockdown of more than 1 million people following Marseille’s decision to close bars and restaurants earlier in the week. Poland is expected to announce new restrictions next week as a result of rising new daily cases and hospitalizations. New York City announced that health inspectors will enter private schools in Brooklyn and Queens to ensure that personnel are complying with mask and social distancing requirements after both areas have experienced outbreaks. Florida Governor Ron DeSantis announced today that Florida will move to “Phase 3”, which involves lifting all restrictions on bars and restaurants that were limited to 50% capacity. The new “Phase 3” stage also prevents local governments from closing businesses and enforcing social distancing without an economic and health justification.
  • In California, over 8,000 wildfires have burned over 3.6 million acres throughout the state so far this year and there are currently roughly 17,500 firefighters battling 25 major wildfires. Since August 15th, 26 people have died as a result of the wildfires and about 7,000 structures have been destroyed. Red flag warnings are in effect from Saturday through Monday as temperatures of over 100 degrees are expected in some areas along with gusty winds, increasing the risk of wildfires. Five of the wildfires currently burning in California are among the list of the largest wildfires in state history. The August Complex is the largest wildfire, and is about 45% contained and responsible for burning around 860,000 acres.

Markets

  • Markets continued trending lower this week. The S&P 500 fell -0.61% and closed at 3,298. The Dow Jones dropped -1.75% and closed at 27,175. Year-to-date, the S&P 500 is up 3.53% and the Dow Jones is down -3.07%.
  • Interests rates fell this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.26% and 0.65%, respectively.
  • The spot price of WTI Crude oil fell this week. Prices fell -2.98% and closed at $40.09 per barrel. Year to date, Oil prices are down -34.34%.
  • The spot price of Gold dropped -4.53% and closed at $1,862.56 per ounce. Year to date, Gold prices are up 22.76%.

Economic Data

  • Initial jobless claims rose by 4,000 to 870,000 and the four-week moving average of claims fell by 35,000 to 878,000. Claims fell by 6,000 in Michigan, 5,000 in Illinois, and by 4,000 in Florida. Claims rose by 9,000 in New York, 6,000 in Georgia, and by 4,000 in Massachusetts.
  • Existing home sales rose by 2.4% to a seasonally-adjusted-annualized rate of 6.0 million units, in-line with expectations
  • The FHFA house price index rose by 1.0% versus expectations for an increase of 0.5%
  • Sales of new single-family homes rose by 4.8% to a seasonally-adjusted-annualized rate of 1.01 million versus expectations for a decline of -1.2%
  • New orders for durable goods rose by 0.4% versus expectations for an increase of 1.5%
  • Durable goods ex-transports rose by 0.4% versus expectations for an increase of 1.0%
  • Core capital goods orders rose by 1.8% versus expectations for an increase of 1.0%
  • Core capital goods shipments rose by 1.5% versus expectations for an increase of 0.8%

Fact of the Week

  • After adjusting numerical data from the past for the impact of inflation, the median household income in 2019 ($68,703) is the highest ever recorded in the USA and is the 4th consecutive year (2016-2019) that produced an all-time inflation-adjusted record. Before 2016, the peak for median household income was $62,641 set in 1999 (source: Federal Reserve Bank of St. Louis).

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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