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

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