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.

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Brexit, EU Trade: Wealth Economic Update April 12, 2019

U.S. and World News

  • brexit-932726508_370The European Union granted Theresa May an extension for the deadline to leave until October 31st during an emergency summit in Brussels on Wednesday. Some say, that her days are numbered as Prime Minister of the U.K as attempts to leave the European Union with a deal has been a circus. JPMorgan economist Malcolm Barr stated that “A six-month period is clearly enough for the Conservative party to contemplate a change in leadership while still allowing some time for the incoming PM to seek to negotiate with the EU”. The remaining possible scenarios are “No Brexit”, Theresa May’s deal is approved and she resigns from office, the deal fails again and an election is called, or perhaps the worst scenario, there is a “No-deal Brexit”. Goldman Sachs currently has a 10 percent probability of a no-deal Brexit.
  • As the conclusion of the trade war between the United States and China nears, the Trump administration is beginning to start another one with the European Union. U.S. Trade Representative Robert Lighthizer is calling for action over a case involving European Union subsidies to Airbus that the World Trade Organization has discovered causes “adverse effects” to U.S. products. The case has been in litigation for 14 years and has caused $11.2 billion in damage to U.S. trade. The United States is set to begin trade talks with the European Commission, who will conduct negotiations on behalf of the 28 EU member countries. Trade negotiations will begin after official approval from EU ministers is given on Monday.


Markets

  • The stock rally continued this week with the exception of the Dow Jones. The S&P 500 rose 0.56% and closed at 2,907. The Dow Jones lost 0.03% and closed at 26,412. Year to date, the S&P is up 16.63% and the Dow Jones is up 13.93%.
  • Yields surged this week once again. The 5 year and 10 year U.S. Treasury Notes are yielding 2.38% and 2.56%, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices rose 1.16% and closed at $63.81 per barrel. Year to date, Oil prices are up 40.52%.
  • The spot price of Gold fell 0.08% this week and closed at $1,290.78 per ounce. Year to date, Gold prices are up 0.65%.

Economic Data

  • Initial jobless claims fell by 8,000 to 196,000 for the week to its lowest level since 1969. The four-week moving average of claims fell by 7,000 to 207,000. Claims fell by 2,000 in California and Texas.
  • The producer price index (PPI) rose by 0.6% versus expectations for an increase of 0.3%, mostly due to rising oil prices. The year-over-year measure came in at 2.2%.
  • PPI ex-food, energy, and trade services was flat versus expectations for a 0.2% increase and the year-over-year rate came in at 2.0%.
  • Factory orders fell by 0.5%, in-line with expectations
  • The consumer price index rose by 0.4%, in-line with expectations and the year-over-year rate came in at 1.9%
  • Core CPI rose by 0.2%, in-line with expectations and the year-over-year rate came in at 2.0%
  • Import prices rose by 0.6% versus expectations for an increase of 0.4%
  • The University of Michigan’s index of consumer sentiment fell 1.5 points to 96.9 in the April preliminary report versus expectations for a reading of 98.2

Fact of the Week

  • There are 30 million job opening in the United States that pay at least $55,000 a year and do not require a bachelor’s degree. (Georgetown University)

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

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Brexit, China Trade: Wealth Economic Update April 5, 2019

U.S. and World News

  • More Brexit uncertainty lies ahead after U.K. lawmakers failed to pass an alternative to the current deal and Theresa May said that she would like to reach across the aisle to try and negotiate with Labour leader Jeremy Corbyn for a softer Brexit deal. This is something that would anger her conservative lawmakers who are against remaining in a customs union with the EU and want a decisive split. On Wednesday, lawmakers voted to pass a draft to prevent a no-deal Brexit in a 313-312 vote. It is uncertain whether the European Union will grant the U.K. another extension and an emergency summit is scheduled for next Wednesday. European Council President Donald Tusk has proposed a flexible 12-month extension to leave the European Union and Theresa May responded by asking for a shorter extension until June 30th.
  • china-943368992_370President Trump met with Chinese Vice Premier Liu He at the White House yesterday as the two sides are reportedly coming close to reaching a deal. Reports have also indicated that the United States will keep tariffs on China until a deal is reached. Chinese Vice Premier Liu He said that the two sides have reached a new consensus on a trade agreement, meanwhile, President Trump stated that no meeting with Chinese President Xi Jinping will take place until a deal is reached and that he could see a deal being made within four weeks.


Markets

  • Stocks surged this week. The S&P 500 rose 2.09% and closed at 2,893. The Dow Jones gained 1.95% and closed at 26,425. Year to date, the S&P is up 15.99% and the Dow Jones is up 13.97%.
  • Yields rebounded sharply this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.31% and 2.50%, respectively.
  • The spot price of WTI Crude Oil jumped much higher this week. Prices rose 5.19% and closed at $63.26 per barrel. Year to date, Oil prices are up 39.31%.
  • The spot price of Gold lost 0.05% this week and closed at $11,291.76 per ounce. Year to date, Gold prices are up 0.72%.

Economic Data

  • Initial jobless claims fell by 10,000 to 202,000 for the week. The four-week moving average of claims fell by 4,000 to 214,000. Claims fell by 2,000 in New Jersey.
  • Retail sales fell by 0.2% in February versus expectations of an increase of 0.2%
  • Retail sales core/control fell by 0.2% versus expectations for an increase of 0.3%
  • The ISM manufacturing index rose by 1.1 points to 55.3 in March versus expectations for a reading of 54.5
  • Construction spending rose 1.0% in February versus expectations for a decline of 0.2%
  • New orders for durable goods fell by 1.6% in February versus expectations for a decline of 1.8%
  • Private sector employment rose by 129k in March versus expectations for a rise of 175k
  • ISM non-manufacturing fell by 3.6 points to 56.1 in March versus expectations for a reading of 58.0
  • Nonfarm payrolls rose by 196k in March versus expectations for a rise of 177k
  • The unemployment rate remained at 3.8%, as expected
  • Average hourly earnings rose by 0.1% versus expectations for a rise of 0.3%

Fact of the Week

  • The S&P 500 gained 13.6% in the first quarter. The average 1st quarter return for the index over the last 25 years has been 1.7%, and 9.6% for the entire year over the last 50 years. 88% of stocks in the index ended the first quarter higher than its 2018 year end price. (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
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 – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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China, Brexit, Venezuela: Wealth Economic Update Mar. 2, 2019

U.S. and World News

  • china_us-1035146880Earlier this week, President Trump extended the March 1st trade truce deadline between the United States and China, citing “substantial trade progress”. If the deadline had not been extended, the tariff rate on $200 billion in Chinese products would have been increased to 25% from 15%. Chinese equities soared over 5% on the news into bull market territory. U.S. Trade Representative Robert Lighthizer stated that it’s too early to draw conclusions on a trade deal between the two countries and that even if a deal was made, the United States would need to maintain the threat of tariffs.
  • In an effort to stop Britain from leaving the European Union without a deal, British Prime Minister Theresa May has pushed back a vote on her next Brexit deal to as late as March 12, about two and a half weeks before Britain leaves the European Union. European parliament had created rules that requires the U.K. financial services industry to abide by European Union standards after Brexit in order to keep control of market access. The U.K.’s main opposition Labour Party is also committed to having a second Brexit referendum, surprising doubters.
  • The United States is continuing to find new ways to aid economically devastated Venezuela after last weekend’s attempt to send aid resulted in two people killed and 300 people wounded. The U.S. is working with Venezuelan opposition leader Juan Guaido to pressure Nicolas Maduro to step down by means of sanctions. Vice President Mike Pence is calling on allies to freeze assets of state-owned oil company PDVSA. As a response, Venezuela is now exporting crude from India and Europe instead of the United States, however, this is predicted by analysts to be ineffective in generating profits.


Markets

  • Stocks marched higher again this week. The S&P 500 rose 0.45% and closed at 2,804. The Dow Jones gained 0.07% and closed at 26,026. Year to date, the S&P is up 12.24% and the Dow Jones is up 12.08%.
  • Yields spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.56% and 2.75%, respectively.
  • The spot price of WTI Crude Oil declined this week. Prices fell 2.65% and closed at $55.74 per barrel. Year to date, Oil prices are up 22.75%.
  • The spot price of Gold fell 2.70% this week and closed at $1,293.44 per ounce. Year to date, Gold prices are up 0.85%.

Economic Data

  • Initial jobless claims rose by 9,000 to 225,000 for the week. The four-week moving average of claims fell by 7,000 to 229,000. Claims rose by 5,000 in Kentucky, 4,000 in New York, and fell by 3,000 in Washington.
  • Real GDP rose by 2.6% in the 4th quarter versus expectations of a 2.2% increase. The rise was driven by a surprise in personal consumption led by autos and financial services, offsetting the weak December retail sales figure.
  • Personal income fell 0.1% in January versus expectations for a 0.3% increase, but rose by 1.0% in December.
  • Personal spending fell by 0.5% in December versus expectations for a 0.3% decrease.
  • Wholesale inventories rose by 1.1% in December versus expectations for a 0.4% increase.
  • Housing starts fell by 11.2% in December versus expectations for a 0.1% drop. The drop was led by the multi-family category in the West and Midwest regions.
  • The Conference Board index of consumer confidence rose by 9.7 points to 131.4 in February versus expectations for a reading of 124.9.
  • Pending home sales rose by 4.6% in January versus expectations for a 1.0% increase.
  • Factory orders rose by 0.1% in December versus expectations for a 0.6% increase.
  • The University of Michigan’s index of consumer sentiment fell 1.7 points to 93.8 in February versus expectations for a reading of 95.9.

Fact of the Week

  • 69% of 1,017 adults surveyed in January 2019 believe that they will be “financially better off in 1 year,” a result that is 2 percentage pointsless than the all-time record of 71%recorded in March 1998. This survey has been conducted since August 1977. The 1998 record was achieved during a stretch for the S&P 500 that produced annual returns of at least +20% (total return) for 5 consecutive years(1995-1999) (source: Gallup).

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
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 – (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.

China deal, Brexit: Wealth Economic Update Feb. 22, 2019

U.S. and World News

  • china_us_trade-1026713438_370With one week left until the March 1st deadline for the temporary trade truce between the United States and China, negotiators have drawn up memorandums of understanding on forced technology transfer, cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade. This is the most progress that has been made on trade since the 7-month trade negotiations have begun. President Trump stated earlier this week that he would consider pushing back the March 1st deadline and that it is not a “magical date”. Today, President Trump is scheduled to meet with Chinese Vice Premier Liu He at the Oval Office where they will attempt to come to a deal. Some sources have said today that President Trump and Chinese President Xi Jinping could have a summit in Mar-a-Lago in late March, raising expectations for an extended deadline.
  • British Prime Minister Theresa May traveled to Brussels earlier this week in an attempt to resolve the Brexit impasse as European Union officials say that they will not reopen the divorce deal. The issue creating the impasse is whether there will be a hard border around Ireland or not. At this point, Great Britain is at a high risk of leaving the European Union without a deal on March 29th and also risks a credit rating downgrade. There is speculation that Theresa May will ask for a three-month delay to the Brexit deadline. It is in both parties interest to make a deal before May 23-26, otherwise the United Kingdom would have to participate in the European Union’s elections.


Markets

  • Stocks rose again this week, extending the rally off of the Christmas Eve low. The S&P 500 rose 0.65% and closed at 2,793. The Dow Jones gained 0.59% and closed at 26,032. Year to date, the S&P is up 11.73% and the Dow Jones is up 12.00%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.47% and 2.65%, respectively.
  • The spot price of WTI Crude Oil rose dramatically this week. Prices jumped 10.00% and closed at $57.08 per barrel. Year to date, Oil prices are up 25.70%.
  • The spot price of Gold rose 0.52% this week and closed at $1,329.40 per ounce. Year to date, Gold prices are up 3.66%.

Economic Data

  • Initial jobless claims fell by 23,000 to 216,000 for the week. The four-week moving average of claims rose by 4,000 to 232,000. Claims fell by 5,000 in New York, 4,000 in Wisconsin, and 3,000 in California, Michigan, and Pennsylvania.
  • New orders for durable goods rose by 1.2% in December versus expectations for a 1.7% increase.
  • Durable goods ex-transportation rose by 0.1% in December versus expectations for a 0.3% increase.
  • Core capital goods orders fell by 0.7% in December versus expectations for a 0.2% increase.
  • Existing home sales fell by 1.2% in January versus expectations for a 0.2% increase. The decline was led by single family homes in the West and Midwest regions.

Fact of the Week

  • In a recent survey, 63% of respondents believed that the “upper income people pay too little” in taxes. The top 5% of US tax payers account for 35% of adjusted gross income nationwide and pay 58% of all federal income taxes. (Source: Politico, Morning Consult, Internal Revenue Service)

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
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 – (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.

China deal, Border wall: Wealth Economic Update Feb. 15, 2019

U.S. and World News

  • Trade negotiations with China continue to grow increasingly optimistic after a week of constructive talks between the United States and China. Chinese President Xi Jinping has announced that negotiations will resume in Washington next week and President Trump suggested that he would consider pushing back the March 1st deadline if progress was being made. U.S. trade negotiator Robert Lighthizer said “We feel that we have to make headway on some very, very important and very difficult issues” and that he was “hopeful” of progress. As it stands, if no deal is made before March 1st, tariffs on $200 billion of Chinese goods would be raised to 25%. China’s trade surplus with the United States fell 42% to $27.3 billion last month, the lowest since May 2018.
  • iStock-173950266_370The White house has reached a tentative budget agreement that includes a $1.38 billion border security deal that would prevent another government shutdown. The compromise detailed funds for 55 new miles of barriers along the border in Texas and passed the House 300 to 128 and the Senate 83 to 16. After signing the deal, President Trump hosted a televised announcement in the Rose Garden where he stated that he would sign a declaration of a national emergency at the border. This would give the government access to billions of dollars to fund the construction of the full border wall.


Markets

  • Stocks extended the rally with a very strong week. The S&P 500 jumped 2.56% and closed at 2,776. The Dow Jones rose 3.20% and closed at 25,883. Year to date, the S&P is up 11.00% and the Dow Jones is up 11.35%.
  • Yields rose this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.49% and 2.66%, respectively.
  • The spot price of WTI Crude Oil rose sharply this week. Prices jumped 5.84% and closed at $55.80 per barrel. Year to date, Oil prices are up 22.88%.
  • The spot price of Gold rose 0.62% this week and closed at $1,322.49 per ounce. Year to date, Gold prices are up 3.12%.

Economic Data

  • Initial jobless claims rose by 4,000 to 239,000 for the week. The four-week moving average of claims rose by 7,000 to 232,000. Claims rose in Washington by 4,000 and in New York by 2,000.
  • Retail sales plunged 1.2% in December versus expectations for a gain of 0.1%.
  • Core retail sales fell by 1.7% versus expectations for a 0.4% gain.
  • The producer price index (PPI) fell by 0.1% in January versus expectations for an increase of 0.1%. This was led by declines in energy and food.
  • The consumer price index (CPI) was flat in January versus expectations for a 0.1% increase.
  • The core CPI measure rose 0.2%, in-line with expectations.
  • Industrial production fell by 0.6% in January versus expectations for a 0.1%. increase.
  • Manufacturing production fell by 0.9% in January versus expectations for a flat reading.
  • The University of Michigan’s index of consumer sentiment came in at 95.5 in February versus expectations for a reading of 93.7.

Fact of the Week

  • On the day that Janet Yellen was sworn in as Fed Chair (2/03/14), the S&P 500 was down 2.3%(total return), the worst trading day for the index in 2014. On the day that Jerome Powell was sworn in as Fed Chair (2/05/18), the S&P 500 was down 4.1%(total return), the worst trading day for the index in 2018 (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
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 – (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.

China deal, Venezuela protests: Wealth Economic Update Feb. 8, 2019

U.S. and World News

  • As the March 1st deadline for a trade truce between the United States and China approaches, the chances for a trade deal to be made are growing much smaller. White House Economic Advisor Larry Kudlow stated this week that a “pretty sizable distance” remains between the two sides. President Trump followed up on Larry Kudlow’s comment by announcing that he will not be meeting with Chinese President Xi Jinping before March 1st. These comments from the White House have arisen following a few weeks of renewed optimism over trade negotiations, changing the tone ahead of the deadline. President Trump is set to sign an executive order next week that would ban Chinese telecom equipment from United States wireless networks in an effort to combat cyber threats.
  • CARACAS-500750930Western nations continue to push for the resignation of socialist leader Nicolas Maduro of Venezuela as hundreds of thousands of protestors blanketed the streets of Caracas last weekend. The protestors are in support of self-proclaimed President Juan Guaido. The United States has announced that military intervention in Venezuela is an option and have placed extreme sanctions on the country and the state owned oil firm PDVSA, whose 2026 maturity debt is now trading at 23.75 cents on the dollar. The new sanctions have crippled the liquidity on Venezuelan sovereign debt and has caused JPMorgan to consider removing the securities from its popular emerging-market bond indexes. This action would force the largest holders of Venezuelan sovereign debt to sell in a market where it is unclear if there is any buying interest for the securities.


Markets

  • Stocks continued rallying this week before retreating in the second half of the week over concerns of slowing global growth and U.S China trade. The S&P 500 gained 0.11% and closed at 2,708. The Dow Jones increased 0.32% and closed at 25,106. Year to date, the S&P is up 8.24% and the Dow Jones is up 7.90%.
  • Yields declined further this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.44% and 2.63%, respectively.
  • The spot price of WTI Crude Oil dropped this week over concerns of growing supply. Prices fell 4.60% and closed at $52.72 per barrel. Year to date, Oil prices are up 16.10%.
  • The spot price of Gold fell 0.30% this week and closed at $1,314.08 per ounce. Year to date, Gold prices are up 2.46%.

Economic Data

  • Initial jobless claims fell by 19,000 to 234,000 for the week. The four-week moving average of claims rose by 5,000 to 225,000. Claims fell by 3,000 in Florida and New Jersey.
  • Factory orders fell by 0.6% in November versus expectations for a small increase.
  • The ISM non-manufacturing index fell to 56.7 versus expectations for a reading of 57.1.
  • The trade balance for November fell $6.4 billion to -$49.3 billion versus expectations for a reading of -$54.0 billion.

Fact of the Week

  • 27% of millennials surveyed in July 2018 spend more money on coffee per month than they put away and invest for retirement (Source: Lendedu)

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
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 – (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.

China deal, Venezuela oil, Brexit: Wealth Economic Update Feb. 1, 2019

U.S. and World News

  • china-945440206_370President Trump is optimistic that the world’s two largest economies could reach “the biggest deal ever made” and confirmed that a U.S. delegation will visit China in mid-February for a new round of trade talks. The feeling is mutual. China’s trade delegation said the latest negotiations with the U.S. in Washington made “important progress” and focused on three key themes – “trade, structural issues and enforcement.”
  • Despite the rhetoric between Nicolas Maduro and President Trump, U.S. refineries are still buying Venezuelan petroleum. But with the crisis escalating after Washington backed opposition leader Juan Guaido, a new round of sanctions is expected in the coming days. The U.S. on Saturday called on the world to “pick a side” on Venezuela and urged countries to financially disconnect from the Maduro government. “The U.S. has decided to follow the path of stealing Citgo from Venezuela,” President Nicolas Maduro declared after the Trump administration imposed sanctions on its parent company – state-owned oil giant PDVSA. While the sanctions will hit Citgo, the penalties will have a minimal effect on other American refiners, according to Treasury Secretary Steven Mnuchin.
  • In an attempt to break the deadlock over Brexit, Theresa May will seek legally binding changes from the EU regarding the Irish backstop, lawmaker Boris Johnson wrote in The Telegraph, citing senior government sources. “If the PM secures a ‘Freedom Clause’ – for the U.K. to escape the backstop without reference to the bloc – I have no doubt that she will have the whole country full-throatedly behind her.”


Markets

  • • Stocks had a good week following comments from the Fed. The S&P 500 gained 1.62% and closed at 2,706.53. The Dow Jones increased 1.33% and closed at 25,063.89. Year to date, the S&P is up 8.12% and the Dow Jones is up 7.56%.
  • Yields fell again week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.51% and 2.69%, respectively.
  • The spot price of WTI Crude Oil extended its gains this week. Prices rose 6.39% and closed at $55.31 per barrel. Year to date, Oil prices are up 20.98%.
  • The spot price of Gold rose 0.99% this week and closed at $1,318.21 per ounce. Year to date, Gold prices are up 2.79%.

Economic Data

  • Sales of new single-family homes sharply rebounded 16.9% in November to a seasonally-adjusted annualized rate of 657k units, significantly above expectations. November sales increased month-over-month in three of four regions, with the largest increase in the South (+64k) that likely reflected a rebound following Hurricane Michael.
  • The FOMC left the funds rate target range unchanged, as universally expected. The post-meeting statement continued to describe job gains and household spending as “strong” but downgraded its characterization of overall growth to “solid”.
  • The Conference Board index of consumer confidence declined 6.4pt to 120.2 in January, an 18-month low and against consensus expectations for a more modest decrease. The decline reflected a large decrease in the household expectations sub-index (-10.4pt to 87.3) and a small decrease in the household perceptions of present economic conditions sub-index (-0.3pt to 169.6).

Fact of the Week

  • In preparation of the Super Bowl, it is anticipated that Americans will consume 100 million pounds of guacamole. At an average weight of 150 grams per avocado, this equates to over 300 million avocados. (Source: Produce News)

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
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 – (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.

China, Brexit, Shutdown: Wealth Economic Update Jan. 18, 2019

U.S. and World News

  • beijing-482334184_370China’s chief trade negotiator, Vice Premier Liu He, will come to Washington D.C. for the next round of trade talks on January 30-31. The visit comes after some surprisingly negative economic data coming out of China this week that showed sharp contractions in both imports and exports. The poor numbers have led to stimulus measures such as tax cuts by the People’s Bank of China and figure to make it even more pressing for some sort of deal to be struck. The U.S. side isn’t necessarily presenting a unified front however, with Treasury Secretary Steve Mnuchin saying that Washington could ease tariffs on China, while U.S. Trade Representative Robert Lighthizer pushed back on this suggestion and continues to take a hardline stance.
  • British Prime Minister Theresa May submitted a Brexit proposal to Parliament this week which was soundly voted down and prompted a no-confidence motion from the opposition Labour Party. While May was able to survive the no-confidence vote, she now has a Monday deadline to set out her Brexit Plan B. She may be forced budge on certain items to get her opponents on her side, such as keeping closer ties to the European Union or postponing Britain’s separation from the economic bloc. However, with less than 70 days remaining until “Brexit Day”, if the two sides do not come together it becomes more likely that Parliament will take control of the Brexit process.
  • The partial government shutdown carries on through its 28th day, extending the record long impasse. Estimates for the cost of the shutdown have been increased from an initial figure of a -0.1% impact on GDP every two weeks it was in force, to -0.1% every week. The January employment report figures to show job growth being slashed by nearly 500,000 and the headline unemployment rate rising to 4.0% if the situation isn’t resolved quickly.


Markets

  • Stocks rose higher again this week, continuing the bounce off of the Christmas Eve lows. The S&P 500 rose 2.90% and closed at 2,670. The Dow Jones increased 3.01% and closed at 24,706. Year to date, the S&P is up 6.63% and the Dow Jones is up 6.02%.
  • Yields were on the rise this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.62% and 2.78%, respectively.
  • The spot price of WTI Crude Oil rose sharply this week, continuing its recent upward trend. Prices jumped another 4.17% and closed at $53.74 per barrel. Year to date, Oil prices are up 18.28%.
  • The spot price of Gold fell 0.63% this week and closed at $1,282.11 per ounce. Year to date, Gold prices are unchanged.

Economic Data

  • Initial jobless claims fell by 3,000 to 213,000 for the week. The four-week moving average of claims decreased by 1,000 to 221,000. Claims fell by 3,000 in New York and by 2,000 in Connecticut and Pennsylvania.

Fact of the Week

  • If calendar year 2018 GDP growth, which is released on 1/30, is reported above 3%, it will break a 12 year streak of “sub 3%” growth (2006-2017). This is the longest such streak in US history, with the next longest “sub 3%” streak taking place in the 4 your period from 1930-1933 during the Great Depression. (Source: Commerce Department)

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
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 – (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.

China, Brexit, Shutdown: Wealth Economic Update Jan. 11, 2019

U.S. and World News

  • The trade negotiation with China shifted to a more positive tone this week after U.S. Commerce Secretary Wilbur Ross stated that the United States and China could reach a deal that “we could live with”. China’s foreign ministry stated that China has “good faith” to work with the United States to reach a deal. Some meaningful progress was made this week during a prolonged meeting that included China’s purchases of U.S. farm and energy products and expanded access to China’s markets. However, negotiations over forced U.S. technology transfer did not improve. Chinese Vice Premier Liu He is expected to visit the United States in the near future for further negotiations.
  • British Prime Minister Theresa May finds herself in a tough spot in the days leading up to the January 15th vote on her Brexit deal as a result of lawmakers restricting her tax-varying powers in the event of no agreement. The last vote on a Brexit deal was delayed as there was not enough support and things have failed to improve since. The pressure for a deal to be made grows by the day as the March 29th deadline nears.
  • capitol-621851478With no end in sight, the partial government shutdown now ties the record for longest in American history, on its 21st day. Effects of a lengthened government shutdown are forgone pay from millions of federal employees, delayed business permits and visas, delayed IPO’S, and mergers and acquisitions. Withheld pay from federal employees could potentially impact consumer spending, a significant portion of the United States economy. Fitch’s global head of sovereign ratings stated that the United States triple-A credit rating could be in question because of the inability to pass a budget. The two government parties remain at an impasse over President Trump’s request for border wall funding.


Markets

  • • Stocks rose higher again this week as tensions with China have eased and the Fed provided some calming language regarding policy. The S&P 500 rose 2.58% and closed at 2,596. The Dow Jones increased 2.42% and closed at 23,996. Year to date, the S&P is up 3.63% and the Dow Jones is up 2.93%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.53% and 2.70%, respectively.
  • The spot price of WTI Crude Oil rose sharply this week. Prices jumped 6.41% and closed at $51.63 per barrel. Year to date, Oil prices are up 13.70%.
  • The spot price of Gold rose 0.13% this week and closed at $1,287.68 per ounce. Year to date, Gold prices are up 0.40%.

Economic Data

  •  Initial jobless claims fell by 17,000 to 216,000 for the week. The four-week moving average of claims rose by 3,000 to 222,000. Claims fell by 3,000 in California and fell by 2,000 in Florida, Illinois, and New Jersey.
  • The ISM non-manufacturing index fell by 3.1 points to 57.6 versus expectations for a reading of 58.5.
  • The consumer price index (CPI) fell by 0.06% in December, in-line with expectations. The year-over-year rate rose 1.95% versus expectations of a 1.9% increase.
    • Core CPI rose by 0.21% in December, in-line with expectations. The year-over-year rate rose by 2.21% in December, in-line with expectations.

Fact of the Week

  • Today marks the 21st day of the government shutdown, which ties the shutdown spanning December 16, 1995 to January 6th, 1996 under President Bill Clinton as the longest shut down in history. During the ’95-’96 shutdown, the S&P 500 returned 0.156%. As of the close today, the S&P 500 is up 7.54% since the government shutdown at midnight on December 22. (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
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 – (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.