Brexit vote: Wealth Economic Update October 18, 2019

U.S. and World News

  • brexit-1050622194_370British Prime Minister Boris Johnson is set for a big day tomorrow as parliament is set to vote on a Brexit deal that the Prime Minister agreed on with the European Union on Thursday. Boris Johnson stated that he is “very confident” that the House of Commons will support the deal, which is widely expected to be a historically close vote and will determine whether there will be a deal or not before the October 31st deadline. The Northern Irish Democratic Unionist Party (DUP) stated that they are unable to support the deal as it stands, casting doubts over the passage of the deal tomorrow. If the MP’s reject the deal tomorrow, it is still possible that a vote on a “no-deal Brexit” could pass, but that is unlikely given historical votes on the this motion. The likely outcome if the Brexit deal is voted down tomorrow is that the United Kingdom will ask the European Union for another extension.


Markets

  • Markets were mixed this week after corporate earnings and Chinese economic data. The S&P 500 rose 0.55% and closed at 2,986. The Dow Jones fell 0.13% and closed at 26,770. Year-to-date, the S&P is up 20.96% and the Dow Jones is up 16.90%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.56% and 1.75%, respectively.
  • The spot price of WTI Crude moved lower this week this week. Prices fell 1.83% and closed at $53.70 per barrel. Year to date, Oil prices are up 18.26%.
  • The spot price of Gold rose by 0.11% and closed at $1,490.67 per ounce. Year to date, Gold prices are up 16.23%.

Economic Data

  • Initial jobless claims rose by 4,000 to 214,000 and the four-week moving average rose by 1,000 to 215,000. Claims increased by 5,000 in California.
  • The level of housing starts fell 9.4% to 1,256k versus expectations for a reading of 1,320k
  • Building permits fell by 2.7% versus expectations for a decline of 5.3%
  • Retail sales fell 0.3% versus expectations for an increase of 0.3%
  • Core retail sales remained unchanged versus expectations for a 0.3% increase
  • Industrial production fell by 0.4% versus expectations for a decline of 0.2%

Fact of the Week

  • In 2008, China’s economy was smaller than the economy of Japan ($4.5 Trillion vs $4.9 Trillion). In 2019, China’s economy is nearly triple that of Japan’s economy ($14.2 Trillion vs $5.2 Trillion)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

China negotiations, California blackouts: Wealth Economic Update October 11, 2019

U.S. and World News

  • china-1053768454_370Ahead of scheduled trade negotiations today with Chinese Vice Premier Liu He, the Trump administration has added 28 Chinese entities to an export blacklist as a consequence of Beijing’s repression of Muslim minorities. The Trump administration stated that this move is completely unrelated to trade negotiations and it will prevent the blacklisted companies from buying American components without government approval. China quickly responded by saying it would take countermeasures, “urging the U.S. side to immediately correct its mistake.” and announced a plan to restrict visas for U.S. nationals with ties to anti-China groups. The Chinese delegation arrived in Washington yesterday where negotiations began and President Trump announced that talks went “very well”. After the meeting at the White House, President Trump told the press that the U.S. and China have “come to a substantial phase 1 deal”. In exchange for the cancelation of the United States planned increase in tariffs on Chinese goods on October 15th, China has agreed to increase purchases of U.S. agriculture goods from $8 billion to $40-$50 billion and has agreed to be more transparent with regard to their currency.
  • California’s largest utility company PG&E took preventative measures and cut power to 700,000 households ahead of a string of days with 40 mile per hour winds that have sparked wildfires in the past. Late last night, a wildfire started in the San Fernando Valley area, just north of Los Angeles that is responsible for two deaths, covers 823 acres and is 10% contained. Approximately 100,000 people have been ordered to evacuate their homes and over 25 homes have been damaged so far. Water dropping helicopters worked to help extinguish the fire throughout the night and were accompanied by planes early this morning. Investigators say that they know how the Sandalwood Fire started, but they continue to look for any possible criminal activity.


Markets

  • Markets are higher after a volatile week. The S&P 500 rose 0.66% and closed at 2,970. The Dow Jones rose 0.93% and closed at 26,817. Year-to-date, the S&P is up 20.30% and the Dow Jones is up 17.05%.
  • Yields rebounded sharply this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.55% and 1.73%, respectively.
  • The spot price of WTI Crude rose after an Iranian tanker near Saudi Arabia was attacked. Prices rose 3.77% and closed at $54.80 per barrel. Year to date, Oil prices are up 20.68%.
  • The spot price of Gold fell by 1.09% and closed at $1,488.24 per ounce. Year to date, Gold prices are up 16.04%.

Economic Data

  • Initial jobless claims fell by 10,000 to 210,000 and the four-week moving average rose by 1,000 to 214,000. Claims fell by 4,000 in Michigan, 3,000 in California, and 2,000 in Ohio.
  • The consumer price index (CPI) remained unchanged versus expectations for a 0.1% increase and the year-over-year rate rose by 1.7% versus expectations for a 1.8% increase
  • Core CPI rose by 0.1% versus expectations for a 0.2% increase and the year-over-year rate rose by 2.4%, in-line with expectations
  • The producer price index (PPI) fell by 0.3% versus expectations for a 0.1% increase
  • Wholesale inventories rose by 0.2% versus expectations for a 0.4% increase
  • The University of Michigan’s index of consumer sentiment rose 2.8 points to 96.0 versus expectations for a reading of 92.0

Fact of the Week

  • At the beginning of the bull market that started on 3/10/09, the total market cap of all US stocks was $7.6 trillion. At the end of the third quarter (09/30/19) the total market cap of US stocks was $32.3 trillion. The S&P 500 makes up 80% of the total market cap of US stocks. (Source: Wilshire, BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

Oil, Brexit, Fed market funding: Wealth Economic Update September 20, 2019

U.S. and World News

  • oil-1090135110_370Weekend drone strikes on the heart of the Saudi oil industry forced the kingdom to shut down half its crude production, amounting to a loss of 5.7M barrels a day, or roughly 5% of the world’s daily production of crude oil. Yemen’s Iranian-aligned Houthi rebels claimed credit for the attack, saying they sent 10 drones to strike at important Aramco facilities, including the world’s largest oil processing plant and a major oil field. The disruption sent WTI futures as much as 15.5% higher overnight to $63.34, the biggest intraday percentage gain since June 22, 1998, while President Trump authorized a release of crude from the Strategic Petroleum Reserve, as necessary. For the global oil market, the 5.7M bpd Saudi halt is the single worst sudden disruption ever, surpassing the loss following the Invasion of Kuwait and Iranian Revolution.
  • The stakes couldn’t be higher given the current Brexit turmoil as Britain’s highest court begins hearing arguments today on whether the government’s decision to suspend Parliament was lawful (judges in England and Scotland previously came to contrasting conclusions). Boris Johnson argues that he asked the Queen to prorogue the lower house in order to introduce a new legislative agenda, but critics accuse him of attempting to stymie debate and push through a no-deal Brexit before an Oct. 31 deadline.
  • Policymakers have been thrown another unexpected curveball as cash available to banks for their short-term funding needs all but dried up on Monday and Tuesday. That forced the New York Fed to make an emergency injection of more than $50B, its first since the financial crisis, to bring down key short-term rates that had spiked to as high as 10%. Fed traders will be back this morning to restore calm by offering another $75B of cash to the market.


Markets

  • Markets receded slightly this week. The S&P 500 was down 0.5% and closed at 2992.03. The Dow Jones fell by 1.05% and closed at 26,935.07. Year-to-date, the S&P is up 21.04% and the Dow Jones is up 17.49%.
  • Yields came back down after a pop last week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.6% and 1.715%, respectively.
  • The spot price of WTI Crude soared after the attack in Saudi Arabia. Prices rose 5.9% and closed at $58.09 per barrel. Year to date, Oil prices are up 27.92%.
  • The spot price of Gold gained 1.87% and closed at $1,516.29 per ounce. Year to date, Gold prices are up 18.23%.

Economic Data

  • Existing home sales rose by 1.3% to a seasonally adjusted annualized rate of 5.49 million units in the August report, against consensus expectations for a 0.7% decline. August home sales rose for both single-family units (+1.2%) and condos and co-ops (+1.7%). Sales increased in three of four regions, led by the Northeast (+7.6%), and followed by the Midwest (+3.1%) and South (+0.9%). Sales declined in the West (-3.4%).
  • The level of housing starts increased to 1,364k in August above expectations for a more moderate increase. Single-family starts increased by 4.4% while the volatile multi-family category increased by 32.8%. August housing starts increased in three out of four regions, led by the Northeast (+30.5%), and followed by the Midwest (+15.4%) and South (+14.9%). Housing starts were flat in the West.
  • Building permits increased 7.7%, above expectations, with a 4.5% increase in single-family permits alongside a 13.3% increase in multi-family permits. Permits increased in the Northeast (+26.9%), Midwest (+14.5%), and South (+11.0%), and declined in the West (-7.8%).
  • Industrial production rose by 0.6% in August, against consensus expectations for a smaller increase. Manufacturing production rose by 0.5%, driven by a 0.6% increase in ex-auto manufacturing and offset by a 1.0% decline in auto manufacturing. The capex-sensitive business equipment category rebounded 1.0%. The utilities component, an input into consumption in the GDP accounts, rose 0.6% further, after rising 3.7% in July. Industrial production growth in July was revised up by 0.1pp to -0.1%.

Fact of the Week

  • The median household income (adjusted for inflation) was the highest ever recorded in the USA at $63,179. It was the third consecutive year (2016-2018) that the USA has produced an all time high in adjusted median household income. Prior to 2016, the record high was set in 1999. (Source: Federal Reserve Bank of St. Louis)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

China tariffs, Brexit: Wealth Economic Update August 24, 2019

U.S. and World News

  • Early this morning, China announced its plan to impose retaliatory tariffs on $75 billion of American goods including soybeans, automobiles, and oil as a response to the Trump administrations planned additional tariffs on Chinese imports. The new retaliatory tariffs are scheduled to take effect on September 1st and December 15th, the same schedule as the United States 10% tariff on $300 billion of Chinese goods goes into effect. This new set of retaliatory tariffs targets U.S. farms and factories, bringing the total tariff on U.S. automobile exports to 50%. The announcement comes as the G7 summit takes place in France and the Federal Reserve meeting in Jackson Hole Wyoming, two critical meetings where the trade war with China will be discussed.
  • British Prime Minister Boris Johnson traveled to Germany and France this week to continue to push his message that Brexit will not be stopped, with or without negotiations. Boris Johnson also wrote a letter to European Council President Donald Tusk stating the the Irish backstop plan is “unviable” and must be removed, hinting that if it were, it could lead to a Brexit deal being approved by parliament before the Brexit deadline. Brexiteers believe that the Irish backstop poses a threat to the independence of the U.K. from the European Union post-Brexit as the U.K. would be restricted from making trade deals with other countries. The European Union has stated that the Irish backstop is necessary for the free movement of goods, services, and people.


Markets

  • Markets plummeted this week as the trade war with China has ramped up again. The S&P 500 fell 1.42% and closed at 2,847. The Dow Jones declined by 0.98% and closed at 25,629. Year-to-date, the S&P is up 15.07% and the Dow Jones is up 11.64%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.41% and 1.53%, respectively.
  • The spot price of WTI Crude fell this week. Prices declined 1.72% and closed at $53.87 per barrel. Year to date, Oil prices are up 18.63%.
  • The spot price of Gold rose 0.82% and closed at $1,525.91 per ounce. Year to date, Gold prices are up 18.98%.

Economic Data

  • Initial jobless claims fell by 12,000 to 209,000. The four week moving average of claims rose by 1,000 to 215,000. Claims fell by 6,000 in California.
  • Existing home sales rose by 2.5% to a seasonally adjusted annualized rate of 5.42 million, in-line with expectations
  • Sales of new single-family homes fell by 12.8% to a seasonally adjusted annualized rate of 635k units versus expectations of 647k units

Fact of the Week

  • The bond market (as measured by the Bloomberg Barclays Aggregate bond index) has had a negative total return just 3 of the last 40 years. Those years were 1994, 1999, 2013. The year to date total return of the Bloomberg Barclays Aggregate ETF (AGG) as of close 8/22 is 8.14%. (Source: Bloomberg)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

Leveling Up Retirement Savings With 401ks

Yamilet Suarez
Assistant Vice President/Wealth Advisor

35% of private sector workers over the age of 22 don’t work for a company that offers a plan.*

Yamilet Suarez, Assistant Vice President/Wealth AdvisorWhether you’re excited about your first day of full-time employment or starting to count the years to your last, your retirement savings plan should be on your mind. It’s the key to ensuring whatever comes your way later in life, you’ll have the money available to pay for it, even though you’re no longer working.

Starting Early Offers A Big Advantage

Saving early and often can you speed along the road to financial independence thanks to compounding returns over time. Even if you are only saving the equivalent of your monthly latte budget early on, over time you’ll be able to build a nice nest egg without feeling like you scrimped to save for it. Delaying and trying to get your savings back on track when you are older, takes much larger deposits since you have less time to save making it a much rougher road.

401Ks Supercharge Savings

While saving on your own gets results, saving money using a retirement account can significantly amplify any deposits you make. Retirement contribution plans, like the 401k plans offered by many companies, are tax-advantaged accounts.
With traditional 401k plans, the money you put into the account is not counted as ordinary income, so it’s not taxed. This lowers your overall tax bill for each year you contribute. The amount you contribute also grows on a tax-deferred basis until the money is withdrawn, which can help your balances grow faster. When you do make withdrawals, they’ll be taxed as if they are ordinary income. Since many people have a lower tax rate in retirement than when they were working, this adds to the advantage.

The Roth Difference

Roth 401ks are a little different from traditional 401ks. Contributions to Roth accounts are made with after-tax dollars. So, your contributions offer no immediate tax advantage. However, at retirement, once the Roth 401k is rolled over to a Roth IRA, and that Roth IRA is opened for five years, no taxes are due on your accumulated savings or after that…ever…making this type of account very attractive. It is highly recommended to open and maintain a ROTH IRA account aside from your employer-sponsored ROTH 401k. By doing this, the five-year time clock is started much earlier.

Six Tips for 401K Retirement Savings Success

To get the most out of your retirement savings plan, here are some useful tips.

  1. Not all 401k plans are created equally. Get as much information from your employer as you can before investing.
  2. Say “yes” to matching. If your employer offers to match your contributions, save at least enough to earn the maximum contribution each year. It’s like free money, something you receive in addition to your salary and any bonuses.
  3. It’s okay to set and forget it. Many people really aren’t into managing investment portfolios, so most employer plans offer target-date funds. These funds allow you to select a date near your planned retirement date, whether that is in 35 years or three. The money you invest is managed in a way appropriate for your timeframe. You don’t have to make any additional decisions.
  4. Just ask. If there is something you don’t understand, ask for help. After all, it’s your money. Most employer plans have a contact person you can talk to. And, if you want a second opinion, stop by the bank, we are happy to help.
  5. Keep your eye on the prize. Retirement is a long way off, what happens in the markets or to the economy during a single day, week or even a year, is like noise when you’re investing for 15-35 years from now.
  6. Start gradually. Get used to saving by starting with an amount that is comfortable. As you earn raises or bonuses, siphon off a portion of them toward retirement. Once you are on your way, sit down with a wealth advisor to determine what you do need to save to achieve your goals.

If you lack access to a retirement account at work, work for yourself or own a business that is too small to support a 401k plan, come in and talk to us. There are several tax-advantaged accounts you can consider to help boost your retirement savings. We’re always happy to talk you through your options. Contact me at 630-844-8633.

*This is an outbound link that will take you away from the WordPress blog. Before you go, we want to let you know that you are accessing a resource that includes data not hosted on our website. This service has been provided for your convenience only. It does not imply that Old Second Bank endorses or sponsors the information you will be viewing. We also cannot guarantee its accuracy or that your privacy will be maintained should you choose to disclose any personal information while on the linked site. Also, please be aware that the products and services offered on third-party sites, including investment and insurance products, are not products of Old Second Bank and may not be insured by the FDIC.

Brexit calls for resignation, China trade: Wealth Economic Update May 24, 2019

U.S. and World News

  • iStock-1057358690British Prime Minister Theresa May’s last ditch effort to deliver Brexit through a deal filled with compromises with the Labour Party has failed as calls for her resignation only grew louder. The U.K. participated in European elections this week, putting a sour taste into the mouths of British politicians who had originally planned to watch this event from the sidelines. Results of the European Union elections will be announced after 10P.M on Sunday and British Conservatives are expected to suffer a dramatic defeat. Theresa May has announced that she will resign on June 7th and stated that “It is and will always remain a matter of deep regret to me that I have not been able to deliver Brexit”. The British Pound has fallen substantially amid all of the uncertainty and the process to elect a new leader will begin next week.
  • Chinese President Xi Jinping tone has shifted in regards to the trade war with the United States when he stated on Monday that China is embarking on a “new Long March, and we must start all over again!”. In addition, a propaganda song, titled “Trade War” about the U.S.-China trade war has gone viral in China. Reports say that China is exploring a retaliation move in response to the Huawei ban that will likely include cutting natural gas purchases from the United States. The Trump administration has announced a $16 billion trade aid program for American farmers who have been hurt by the trade war. Soybean farmers have been impacted the most as the value of soybean exports to China fell 74% in 2018.


Markets

  • Markets continued to fall this week. The S&P 500 fell 1.14% and closed at 2,826. The Dow Jones fell 0.63% and closed at 25,586. Year to date, the S&P is up 13.66% and the Dow Jones is up 10.78%.
  • Yields also fell further this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.12% and 2.32, respectively.
  • The spot price of WTI Crude oil plummeted this week. Prices dropped 6.34% and closed at $58.93 per barrel. Year to date, Oil prices are up 29.77%.
  • The spot price of Gold rose 0.56% this week and closed at $1,284.69 per ounce. Year to date, Gold prices are up 0.17%.

Economic Data

  • Initial jobless fell to 211,000 this week. The four-week moving average of claims fell by 5,000 to 220,000. Claims fell by 2,000 in California and Illinois.
  • Existing home sales fell 0.4% to a seasonally adjusted rate of 5.19 million units versus expectations for a 2.7% increase
  • Sales of new single-family homes fell by 6.9% in April to a seasonally-adjusted annualized rate of 673k units versus expectations for 675k units
  • Durable goods orders fell by 2.1% versus expectations for a decline of 2.0%
  • Durable goods orders ex-transport was unchanged versus expectations for a 0.1% increase
  • Core capital goods orders fell 0.9% versus expectations for a 0.3% decline

Fact of the Week

  • It would cost about $334 per person per year in Illinois to cover the funding costs for the 5 state pension funds. Illinois law current requires that the pensions funds be 90% funded by 2045. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

China, Brexit, EU: Wealth Economic Update May 17, 2019

U.S. and World News

  • china_us-1035146880Earlier this week, China announced new tariffs on $60 billion of American imports in response to the tariff increase by the United States. The Trump administration will subsidize U.S. farmers with $15 billion in aid, in addition to the Department of Agriculture’s $12 billion compensation plan that was put into place last year. President Trump has stated his intention to meet Chinese President Xi Jinping at the G20 summit in June. The United States also has banned China’s Huawei Technologies from buying U.S. technology without special approval and has restricted its equipment from being any part of U.S. telecom networks. Equipment produced by Huawei Technologies, the world’s third largest smartphone maker, is allegedly used by the Chinese to spy, however Huawei has denied those allegations.
  • Brexit drama heats up again after weeks of negotiations between Theresa May and opposition party leader Jeremy Corbyn have closed with Jeremy Corbyn telling the media that his party will oppose the deal. The Conservative Party has been enraged with Theresa May over the past month for negotiating with the Labour Party and Theresa May has finally set a timetable for her departure as prime minister in the beginning of June. Jeremy Corbyn added that the strong probability of Theresa May soon being replaced had contributed to his decision to oppose her deal.
  • As trade negotiations with China have been extended into the foreseeable future, the Trump administration has delayed tariffs on cars and auto part imports from the European Union and Japan for up to six months. In February, the Commerce Department had found that car imports and certain auto parts harm national security, leading to the planned auto tariffs. Agreements have already been made with Canada, Mexico, and Korea, while the European Union and Japan have rejected the idea.


Markets

  • Markets are lower after another volatile week. The S&P 500 fell 0.69% and closed at 2,860. The Dow Jones fell 0.61% and closed at 25,764. Year to date, the S&P is up 14.96% and the Dow Jones is up 11.48%.
  • Yields continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.18% and 2.39, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices climbed 1.67% and closed at $62.69 per barrel. Year to date, Oil prices are up 38.05%.
  • The spot price of Gold fell 0.63% this week and closed at $1,277.97 per ounce. Year to date, Gold prices are down 0.35%.

Economic Data

  • Initial jobless fell to 212,000 this week. The four-week moving average of claims rose by 5,000 to 225,000. Claims rose by 4,000 in California
  • The Philadelphia Fed manufacturing index rose 8.1 points to 16.6 versus expectations for a reading of 9.0
  • Housing starts rose 5.7% to 1,235k versus expectations for a 6.2% increase to 1,209k
  • Building permits rose by 0.6% versus expectations for a 0.1% increase
  • Import prices rose by 0.2% versus expectations for a 0.7% increase
  • Import prices ex-petroleum fell by 0.6% versus expectations for a 0.2% increase
  • Retail sales fell by 0.2% versus expectations for a 0.2% increase
  • Retail sales ex-auto & gas fell by 0.2% versus expectations for a 0.3% increase
  • Industrial production fell by 0.5% versus expectations for an unchanged reading
  • The University of Michigan’s index of consumer sentiment rose by 5.2 points to 102.4 in the preliminary report versus expectations for a reading of 97.2.

Fact of the Week

  • From its closing high of 2946 on April 30th, the S&P 500 has fallen 3.56% to 2859. Since the beginning of the bull market on 3/10/09, the market has had 12 pullbacks of at least 5%, including 6 drops at least 10% and 3 of at least 15%. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

China, Brexit, Iran: Wealth Economic Update May 11, 2019

U.S. and World News

  • china-1053768454_370On Sunday night, just days before a Chinese trade delegation would depart for Washington to wrap up 18 months of trade negotiations, President Trump tweeted that tariffs on $200 billion of Chinese goods would rise to 25% from 10% by the end of the week, accusing China of “reneging” on its trade promises. President Trump also shared his intention to impose a 25% tariff on the remaining $325 billion of Chinese goods that aren’t currently taxed, making virtually all Chinese exports to the United States subject to a 25% tariff. The Chinese trade delegation led by Vice Premier Liu He did travel to the White House on Thursday for negotiations that ended earlier today, and the 10% tariff rate on $200 billion in Chinese goods did increase to 25% at midnight last night. China’s Commerce Ministry has announced that they will be taking countermeasures against the tariff increase, but that specifically has not yet been revealed. There have been numerous statements from officials of both countries regarding trade talk progress or lack thereof while markets respond in volatile fashion and struggle for direction, however, the only things we actually know to be true at this point is the fact that there is no done deal, and the tariff rate on $200 billion of Chinese goods has risen to 25% from 10%.
  • British Prime Minister Theresa May’s future has once again, been called into question as members of the committee are talking about a rule change that would allow another no-confidence vote to oust her. Currently, the Prime Minister is protected by a rule that does not allow more than one no-confidence vote within 12 months of the previous one that occurred in December. Committee members are growing frustrated that a timetable for Theresa May’s departure has not been set out. Both parties experienced losses in last week’s elections and a new offer is on the table, a deal that would result in a customs union-type arrangement lasting until 2022, Britain’s next general election. At that point in time, it would be decided whether to move toward a full customs union or a deal that would allow Britain to make trade deals with other countries.
  • After American sanctions on Iran have begun to cripple their economy, President Trump has offered to meet and negotiate with Iran’s leadership team about giving up their nuclear program, which was quickly rejected. The United States deployed the Abraham Lincoln carrier through Egypt’s Suez Canal and B-52 bombers to the U.S. base in Qatar yesterday as a warning to Iran. Iran’s leader, Ayatollah Tabatabai-Nejad responded by saying “Their billion dollar fleet can be destroyed with one missile” and “if they attempt any move, they will face dozens of missiles”.


Markets

  • Markets experienced volatility as a result of trade drama with China and finished the week lower. The S&P 500 fell 2.10% and closed at 2,881. The Dow Jones fell 1.96% and closed at 25,942. Year to date, the S&P is up 15.74% and the Dow Jones is up 12.15%.
  • Yields fell this week as investors fled to bonds. The 5 year and 10 year U.S. Treasury Notes are yielding 2.26% and 2.47, respectively.
  • The spot price of WTI Crude Oil ended the week relatively unchanged. Prices fell 0.37% and closed at $61.71 per barrel. Year to date, Oil prices are up 35.90%.
  • The spot price of Gold rose 0.54% this week and closed at $1,286.05 per ounce. Year to date, Gold prices are up 0.28%.

Economic Data

  • Initial jobless fell to 228,000 this week. The four-week moving average of claims rose by 7,000 to 220,000. Claims rose by 11,000 in New York and by 2,000 in Illinois.
  • The producer price index (PPI) rose by 0.2% versus expectations for a 0.3% increase
    PPI ex-food and energy rose by 0.1% versus expectations for a 0.2% increase
  • The trade deficit rose to $50.0 billion, as expected
  • Wholesale inventories fell by 0.1% versus expectations for no change
  • The consumer price index (CPI) rose by 0.32% versus expectations for a 0.4% increase and the year-over-year rate came in at 2.0% versus expectations for 2.1%
  • Core CPI rose by 0.14% versus expectations for a 0.2% increase and the year-over-year rate came in at 2.07%, in-line with expectations

Fact of the Week

  • Sell in May? Since 1989, the 6 month period beginning November 1st has outperformed the 6 month period beginning May 1st 19 out of 30 times. Total return for the 6 month periods starting November 1st were +731%, while total returns for the 6 month periods starting May 1st were only +119% over the 30 year period. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

Iran Oil: Wealth Economic Update May 3, 2019

U.S. and World News

  • oil-509843570The sanctions imposed on Iran by the United States in November have cut Iran’s oil exports by roughly 1 million barrels per day, and after Thursday’s waivers have expired to some of Iran’s biggest customers, exports are expected to fall by another several hundred thousand barrels per day. At a time of heightened tensions, Iran’s oil minister warned that OPEC is “likely to collapse” due to unilateralism by certain members. Iran appears to be referring to Saudi Arabia’s and the United Arab Emirates’ cooperation with the United States in offsetting the reduction in supply of oil to stabilize prices, and causing substantial economic damage to Iran. Iranian Oil Minister Bijan Zangeneh told an Iranian news agency that “Iran is an OPEC member just for its interests and if certain OPEC members want to threaten and endanger Iran, Iran will not refrain from responding to them”. The next OPEC meeting is scheduled for June 25-26 in Vienna, where the members will decide whether to keep in place an oil supply limit that was established in January.


Markets

  • Markets ended the week relatively unchanged from last week. The S&P 500 rose 0.22% and closed at 2,946. The Dow Jones fell 0.14% and closed at 26,505. Year to date, the S&P is up 18.21% and the Dow Jones is up 14.37%.
  • Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.32% and 2.53, respectively.
  • The spot price of WTI Crude Oil dropped this week. Prices fell 2.27% and closed at $61.68 per barrel. Year to date, Oil prices are up 35.83%.
  • The spot price of Gold fell 0.55% this week and closed at $1,279.11 per ounce. Year to date, Gold prices are down 0.26%.

Economic Data

  • Initial jobless remained unchanged at 230,000 for the week. The four-week moving average of claims rose by 7,000 to 213,000. Claims rose by 7,000 in New York, 5,000 in New Jersey, and by 2,000 in Pennsylvania.
  • Nonfarm productivity rose by 3.6% versus expectations for a 2.4% increase
  • The core PCE index rose by 0.06% versus expectations for a 0.1% increase and the year-over-year rate fell to 1.55% versus expectations for 1.70%
  • Personal income rose by 0.1% versus expectations for a 0.4% increase
  • Personal spending rose by 0.9% versus expectations for a 0.7% increase
  • The Conference Board index of consumer confidence rose by 5.0 points to 129.2 versus expectations for a reading of 126.8
  • Pending home sales rose by 3.8% versus expectations for a 1.5% increase
  • Private sector employment rose by 275,000 versus expectations for a 180,000 increase
  • The ISM manufacturing index fell 2.5 points to 52.8 versus expectations for a reading of 55.0
  • The ISM non-manufacturing index fell 0.6 points to 55.5 versus expectations for a reading of 57.0
  • Construction spending fell by 0.9% versus expectations for a flat reading
  • Factory orders rose by 1.9% versus expectations for a 1.6% increase
  • Nonfarm payrolls rose by 263,000 versus expectations for a 190,000 increase
  • The unemployment rate fell to 3.6% versus expectations for a reading of 3.8%
  • Average hourly earnings rose 0.2% versus expectations for a 0.3% increase and the year-over-year rate remained stable at 3.2%

Fact of the Week

  • On Wednesday 5/01/19, the USA began its 119th month of an economic expansion. The average length of all 33 expansions in the country since 1854 (not counting the current expansion) is 58 months(source: National Bureau of Economic Research).

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

 

China, EU Trade: Wealth Economic Update April 19, 2019

U.S. and World News

  • HONG_KONG-803226558_370United States and Chinese trade officials are set to have two more face-to-face meetings in the next few weeks that could lead to a trade deal being signed in late May. On April 4th, President Trump stated that it might be four weeks before a deal is made and then two more weeks to finalize it. The “trade truce” that was put in place at the beginning of the year, when the United States canceled a planned increase in the tariff rate on $200 billion of Chinese goods from 10% to 25%, negotiations have made significant headway. One issue that the United States has struggled with is the demand for China to implement major change to the level of power that the state has in the economy, and China’s denial of any wrongdoing. Protection of intellectual property is another issue that the United States continues to battle for, as currently any foreign company to China must provide their technology. Meanwhile, the European Union has agreed to start trade talks with the United States on industrial goods, however, France will remain on the sidelines after a French official stated that “France is opposed to the initiation of any trade negotiations with countries outside the Paris climate agreement.” At the heart of the issue of trade between the United States and Europe are subsidies for Airbus and Boeing by their respective governments and the fact that Airbus has received $18 billion in subsidies that the World Trade Organization had deemed illegal.


Markets

  • Markets rose higher again this week. The S&P 500 rose 0.60% and closed at 2,905. The Dow Jones rose 1.63% and closed at 26,560. Year to date, the S&P is up 16.55% and the Dow Jones is up 14.61%.
  • Yields did not change from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.37% and 2.56%, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices rose 0.17% and closed at $64.00 per barrel. Year to date, Oil prices are up 40.94%.
  • The spot price of Gold fell 1.13% this week and closed at $1,275.82 per ounce. Year to date, Gold prices are down 0.65%.

Economic Data

  • Initial jobless claims fell by 5,000 to 192,000 for the week. The four-week moving average of claims fell by 6,000 to 201,000. Claims fell by 4,000 in New York, 3,000 in California, and by 2,000 in Tennessee.
  • Retail sales rose by 1.6% versus expectations for a 1.0% increase
  • Retail sales ex-auto & gas rose by 0.9% versus expectations for a 0.4% increase
  • Industrial production fell by 0.1% versus expectations for a 0.2% increase
  • The trade deficit fell to -$49.4 billion versus expectations for a level of -$53.4 billion
  • Wholesale inventories rose by 0.2% versus expectations for a 0.3% increase
  • Business inventories rose by 0.3%, in-line with expectations
  • Housing starts fell by 0.3% versus expectations for a 5.4% increase
  • Building permits fell by 1.7% versus expectations for a 0.7% increase

Fact of the Week

  • The average cost of 1-year of college at an average 4-year public institution(including tuition, fees, room and board) has tripled over the last 22 years, rising from $7,142 for academic year 1996-97 to $21,370 during academic year 2018-19 (source: College Board).

Please contact a member of the Wealth Management Department if you have any questions about this information.

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.