Stimulus, Vaccine: O2 Wealth Economic Update, Dec. 31, 2020

U.S. and World News

  • iStock-1253347371$600 stimulus checks from the new COVID Relief bill are currently being distributed to bank accounts, according to Treasury Secretary Mnuchin. Tuesday evening, the Treasury Secretary tweeted that payments to those who have direct deposit would state going out, and some might have received them as early as Tuesday night. Payments will continue to roll out through next week, and payments to those who do not have direct deposit began shipment on Wednesday.
  • In the UK, the COVID-19 vaccine developed by the University of Oxford and AstraZeneca was authorized for emergency use in the county, welcome news for a country that has been hit hard recently by the virus, resulting in strict lockdown measures.

Markets

  • Markets were up heading into the new year. The S&P 500 was up 0.36% and closed at 3,756. The Dow Jones was up 1.35% and closed at 30,606. Year-to-date, the S&P 500 is up 18.05% and the Dow Jones is up 9.41%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.91%, respectively.
  • The spot price of WTI Crude rose this week. Prices were up 0.39% and closed at $48.42 per barrel. Year to date, Oil prices are down -20.07%.
  • The spot price of Gold ticked higher by 0.83% and closed at $1,899.09 per ounce. Year to date, Gold prices are up 25.16%.

Economic Data

  • Pending home sales declined by 2.6% in November, against consensus expectations for an unchanged reading.
  • The S&P/Case-Shiller 20-city home price index increased by 1.6% in October, above consensus expectations.
  • Initial jobless claims declined to 787,000 against expectations for an increase for the week ended December 26.

Fact of the Week

  • Carolina Panthers offensive lineman Russel Okung has become the first player in NFL history to receive payment in digital currency. It was announced that half of Okung’s $13 million base salary from the 2020 season will be paid in bitcoin (Source: USA Today)

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.

Vaccine, Stimulus: O2 Wealth Economic Update, Dec. 18, 2020

U.S. and World News

  • iStock-1266490076_370The Federal Drug Administration advisory panel has confirmed on Thursday that the benefits of approving Moderna’s COVID-19 vaccine outweigh the risks, putting the ball in the FDA’s court for approval, which could come as soon as tomorrow. According to Bloomberg, as of this morning, over 1.1 million people across four countries have been vaccinated. In the United States, the vaccine has been given to health care workers, as public workers on the front lines are first in line. Pfizer has publically expressed its happiness throughout the week with the success of the vaccine rollout, though there have been some scattered reports of supply chain issues. Given the approval from the FDA, Moderna’s vaccine distribution is expected to run smoother, as the vaccine does not require special storage equipment to keep it at extreme cold temperatures.
  • Stimulus negotiations in Washington have made significant progress throughout the week, with both sides having a lot invested, it is anticipated that a deal will be done, however it seems that talks will run into the weekend as differences still remain. The size of the stimulus package, as it stands now, is just under $1 trillion and does not include the major sticking points of state and local aid and liability protections for businesses. It is being reported that the stimulus package will include $600 stimulus checks to individuals and unemployment benefits of $300 a week. The latest complication is a Republican Senator’s demand to terminate the Federal Reserve’s emergency lending program by the end of the year, when it was originally set to expire in the CARES Act.

Markets

  • Markets rallied this week. The S&P 500 rose 1.29% and closed at 3,710. The Dow Jones climbed 0.46% and closed at 30,179. Year-to-date, the S&P 500 is up 16.57% and the Dow Jones is up 7.91%.
  • Yields moved higher and the yield curve steepened this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.38% and 0.94, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 5.24% and closed at $49.01 per barrel. Year to date, Oil prices are down -19.73%.
  • The spot price of Gold rose by 2.18% and closed at $1,880.61 per ounce. Year to date, Gold prices are up 23.94%.

Economic Data

  • Initial jobless claims rose to 885,000 and the 4-week moving average rose by 34,000 to 813,000.
  • Industrial production rose by 0.4% versus expectations for an increase of 0.3%
  • Import prices rose by 0.1% versus expectations for an increase of 0.3%
  • Import prices ex-petroleum was flat for the month versus expectations for an increase of 0.2%
  • Retail sales fell by -1.1% versus expectations for a decline of -0.3%
  • Retail sales core/control fell by -0.5% versus expectations for an increase of 0.2%
  • Business inventories rose by 0.7% versus expectations for an increase of 0.6%
  • The level of housing starts rose by 1.2% to a seasonally-adjusted-annualized-rate of 1.547 million units versus expectations for an increase of 0.3%
  • Building permits rose by 6.2% versus expectations for an increase of 1.0%

Fact of the Week

  • The total rounds of golf played by Americans is projected to increase by 50 million rounds in 2020, the largest year-over-year growth in 23 years. In 1997, spurred on by the appeal of a then 21-year old Tiger Woods, the number of rounds increased by 63 million rounds (source: National Golf Foundation).

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.

Brexit, Vaccine: O2 Wealth Economic Update, Dec. 11, 2020

U.S. and World News

  • iStock-1177313859_370Brexit negotiations have made no progress while the December 31st deadline is only weeks away, increasing expectations that the United Kingdom will leave the European Union without a deal potentially resulting in major supply chain disruptions throughout Europe. The “no deal” scenario would include the U.K. leaving the European Union without a comprehensive trade deal covering the $1 trillion in annual bilateral trade. Among the issues of disagreement involve the U.K. seeking independence regarding climate, specifically fishing rights, as well as labor standards. The European Union, however, does not want to give up a certain level of judicial oversight of the U.K. Prime Minister Boris Johnson and President of the European Commission Ursula Von Der Leyen both warned that the probability of a “no deal” is high and have pointed to Sunday as a deadline for negotiators.
  • The Pfizer/BioNTech mRNA COVID vaccine was approved by a Food and Drug Administration Advisory panel for emergency use on Thursday, paving the way for vaccinations in the United States to begin. The committee voted on whether the benefits of the vaccine outweigh the risks for use in individuals 16 years of age and older, and it passed 17-4, while one voter abstained. Once the vaccine is ultimately approved by the FDA, the first batches will likely be given to healthcare workers, while certain categories of Americans next in line is being debated.

Markets

  • Markets fell lower this week. The S&P 500 dropped -0.95% and closed at 3,663. The Dow Jones lost -0.54% and closed at 30,046. Year-to-date, the S&P 500 is up 15.39% and the Dow Jones is up 7.70%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.89, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 0.69% and closed at $46.58 per barrel. Year to date, Oil prices are down -23.71%.
  • The spot price of Gold rose by 0.01% and closed at $1,839.07 per ounce. Year to date, Gold prices are up 21.21%.

Economic Data

  • Initial jobless claims jumped to 853,000 and the 4-week moving average rose by 36,000 to 776,000.
  • The consumer price index (CPI) rose by 0.2% versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.2% versus expectations for an increase of 1.1%
  • The Core CPI index rose by 0.2% versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.7% versus expectations for an increase of 1.5%
  • The producer price index (PPI) rose by 0.1%, in-line with expectations
  • PPI ex-food, energy and trade services rose by 0.1% versus expectations for an increase of 0.2%
  • Nonfarm productivity was revised lower by 0.3% to 4.6% for the third quarter versus expectations for it to remain unchanged at 4.9%
  • Job openings increased by 158,000 to 6.652 million versus expectations for a reading of 6.494 million
  • Wholesale inventories rose by 1.1% versus expectations for an increase of 0.9%
  • The University of Michigan’s index of consumer sentiment rose by 4.5 points to 81.4 versus expectations for a reading of 76.0

Fact of the Week

  • Small American businesses, defined as having less than 500 employees, are responsible for 44% of US economic activity (source: US Small Business Administration – Office of Advocacy).

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.