Vaccine, Stimulus: O2 Wealth Economic Update, Jan. 8, 2021

U.S. and World News

  • iStock-1266494637The year 2020 ended with the United States remaining far behind its goal of 20 million vaccinations, sitting at just 6.25 million vaccinated. There has been criticism of the Trump administrations strategy of withholding 50% of the available supply, so that they can then distribute the second wave of doses for the second round of vaccinations that is needed for immunity. Further, the FDA has backed this up by stating that there is no evidence that immunity can develop with just a single dose, and that both are needed. President Elect Joe Biden stated his intention to accelerate the distribution of the vaccine, releasing every available dose when he takes office. While this strategy will certainly speed up the process of distribution, it will not solve the issue that hospitals currently have with government regulations recently put in place. New York Governor Andrew Cuomo and New York City May Bill de Blasio have had their trouble as they argue the effectiveness of Cuomo’s penalties for New York hospitals missing vaccination targets.
  • As a result of the Georgia run-off election, Democrats are now set to control the senate in the coming weeks with Vice President Elect Kamala Harris being the tie-breaker. The Democratic sweep has led to expectations of potential trillions in new stimulus, until this afternoon when Democratic Senator Joe Manchin III poured cold water on that potential after he said that he would “absolutely not” support a new round of stimulus checks. With the new composition of the Senate, Joe Biden and Majority Leader Chuck Schumer cannot afford to lose one Democratic vote to pass legislation. Shortly after the Senator’s statement, he issued a follow-up statement that he would evaluate Joe Biden’s aid plan when the time comes, adding further confusion to expectations.

Markets

  • Markets continued rallying in the first week of the year 2021. The S&P 500 surged 2.48% and closed at 3,825. The Dow Jones rose 2.31% and closed at 31,098. Year-to-date, the S&P 500 is up 2.48% and the Dow Jones is up 2.31%.
  • Yields rose sharply higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.48% and 1.11%, respectively.
  • The spot price of WTI Crude rose this week. Prices were up 8.43% and closed at $52.61 per barrel. Year to date, Oil prices are up 8.43%.
  • The spot price of Gold fell by -2.70% and closed at $1,847.49 per ounce. Year to date, Gold prices are down -2.70%.

Economic Data

  • Initial jobless claims fell to 787,000 and the four-week moving average fell by 19,000 to 819,000
  • Construction spending rose by 0.9% versus expectations for an increase of 1.0%
  • The ISM manufacturing index rose by 3.2 points to 60.7 versus expectations for a reading of 56.8
  • The ISM non-manufacturing sector rose by 1.3 points to 57.2 versus expectations for a reading of 54.5
  • Private sector employment in the ADP report fell by -123,000 versus expectations for an increase of 75,000
  • Factory orders rose by 1.0% versus expectations for an increase of 0.7%
  • Wholesale inventories were flat versus expectations for a decline of -0.1%
  • Nonfarm payrolls fell by -140,000 versus expectations for an increase of 50,000
  • The unemployment rate came in at 6.7% versus expectations for a reading of 6.8%
  • Average hourly earnings rose by 0.8% versus expectations for an increase of 0.2%

Fact of the Week

  • The life expectancy at birth of an American baby in 1971, i.e., 50 years ago, was 71.1 years. The life expectancy at birth of an American baby today is 78.7 years. Thus, life expectancy in the United States has increased 7.6 years over the last half century while the full retirement age under social security has only increased by two years, i.e., American life expectancy at birth is increasing at the rate of 1 ½ years every decade (source: Center for Disease Control).

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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