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

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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

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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

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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

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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

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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.

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

Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.

Brexit, 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

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, 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.