Brexit, China Tariffs, Ukraine: Wealth Economic Update Dec. 1, 2018

U.S. and World News

  • iStock-815062310The House of Commons will vote on Theresa May’s new Brexit withdrawal agreement on December 11th, which calls for London to follow many of the European bloc’s rules in an effort to keep trade agreements intact. Meanwhile, people in the “Remain” group are hopeful that the European Union’s top court will determine that the U.K. can unilaterally cancel Brexit after it has been completed. European Union Brexit negotiator Michel Barnier has advised Britain that this agreement is “the only one possible”.
  • President Trump has threatened to raise tariffs to 25% from 10% on $200 billion of Chinese goods effective January 1st and institute tariffs on $267 billion more Chinese imports that would include iPhones and laptops. The announcement preludes the G20 summit in Argentina taking place this weekend that will be attended by President Trump, Xi Jinping. President Trump and the Chinese President are expected to have a dinner meeting on Saturday night to discuss trade.
  • Tensions are rising between Vladimir Putin and Ukraine after Russia captured and fired upon three Ukrainian navy vessels that had entered the Kerch strait near Crimea last weekend. Russia is now planning to deploy more surface-to-air missile systems to the area. Ukraine is calling for NATO to deploy warships to the sea of Azov, between the two countries.


Markets

  • Stocks rebounded this week. The S&P 500 gained 4.91% and closed at 2,760.16. The Dow Jones rose 5.52% and closed at 25,538.46. Year to date, the S&P is up 5.10% and the Dow Jones is up 5.54%.
  • Yields dropped again from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.82% and 2.99%, respectively.
  • The spot price of WTI Crude Oil rose slightly this week, up 0.36% and closing at $50.60 per barrel. Year to date, Oil prices are down 16.17%.
  • The spot price of Gold fell 0.07% this week and closed at $1,222.12 per ounce. Year to date, Gold prices are down 6.19%.

Economic Data

  • Initial jobless claims rose by 10,000 to 234,000 this week. The four-week moving average of claims rose by 4,000 to 223,000. Claims rose by 5,000 in New York, 3,000 in Pennsylvania, and 2,000 in Georgia.
  • The core PCE price index ex-food and energy rose by 0.10% month-over-month in October versus expectations for a 0.2%. The year-over-year rate fell 0.2% to 1.8% versus expectations for 1.9%.
  • Personal income rose by 0.5% month-over-month in October versus expectations for a 0.4% increase.
  • Consumer spending rose by 0.6% in October versus expectations for a 0.4% increase.
  • Pending home sales fell by 2.6% in October versus expectations for a 0.5% increase. Declines were led by the West region.
  • Sales of new single-family homes fell by 8.9% in October to a seasonally-adjusted annualized rate of 544k versus expectations of 575k. This is the lowest level since March 2016.
  • Second-quarter GDP growth was unrevised and remained at 3.5% versus expectations for a revision to 3.6%.
    • The October goods trade deficit increased by $1.2 billion to $77.2 billion, versus expectations for a reading of $77.0 billion.
    • Wholesale inventories rose 0.7% in October versus expectations for a 0.4% increase.
  • The Conference Board index of consumer confidence fell 2.2 points to 135.7 in November, in-line with expectations.

Fact of the Week

  • Outstanding student loan debt in the US doubled from $360 million to $720 billion from 3/31/05 to 12/31/09. It double again to $1.44 trillion as of 9/30/18.

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

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Brexit, China Tariffs, CA Wildfires, Saudis: Wealth Economic Update Nov. 23, 2018

U.S. and World News

  • Brexiteers had warned of “Judgement Day,” but opponents of British Prime Minister Theresa May are reportedly six letters short of the 48 threshold needed to trigger a no confidence vote on her leadership. May said on Sunday that toppling her would risk delaying Brexit and she would not let talk of the challenge distract her from getting the support of the U.K. business community ahead of a critical week of Brexit negotiations.

  • “We put tariffs on $250B in Chinese goods, and we could more than double that number,” Vice President Mike Pence told the APEC summit, stating the “U.S. will not change course until China changes its ways.” The warning follows remarks made by President Trump that helped the Dow close higher on Friday. The U.S. “may not” need to impose more tariffs after China sent over measures it was willing to take to resolve trade tensions, he said, adding that “we’ll probably get to the four or five big things that were left off” the list.

  • The current wildfires in California could pressure insurers operating in the state given underwriting losses have the potential to approach around $6.8B. “They are not permitted to take all the given year’s losses and cram them into next year’s rates,” California Insurance Commissioner Dave Jones told CNBC. A state ordinance instead spreads repayment of property and casualty insurance payouts over the next twenty years

  • President Trump has called the CIA assessment blaming Saudi Crown Prince Mohammed bin Salman for the killing of Saudi journalist Jamal Khashoggi “very premature” and said he will receive a complete report of the case on Tuesday. Saudi Arabia plays an important role in the oil markets, counters Iran’s influence in the region, and President Trump has repeatedly said he doesn’t want to harm U.S. defense contractors by blocking U.S. arms sales to the kingdom.


Markets

  • Stocks retreated again this week. The S&P 500 fell 3.76% and closed at 2,632.56. The Dow Jones dropped 4.39% and closed at 24,285. Year to date, the S&P is up 0.26% and the Dow Jones is up 0.32.
  • Yields dropped slightly from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.87% and 3.04%, respectively.
  • The spot price of WTI Crude Oil fell sharply this week, losing another 11.10% and closing at $50.39 per barrel. Year to date, Oil prices are down 16.17%.
  • The spot price of Gold rose 0.05% this week and closed at $1,223.93 per ounce. Year to date, Gold prices are down 6.06%.

Economic Data

  • Housing starts increased 1.5% in October to 1,228k, and September starts were revised up 9k to 1,210k. The composition of the report was somewhat softer, as the volatile multi-family category increased 10.3% but single-family starts declined 1.8%. Housing starts declined in the Northeast (-34.1%) and West (-4.6%), and increased in the Midwest (+32.9%) and in the South (+4.7%), where there is potential scope for further recovery as the rebound from Hurricane Florence was likely offset by a drag from Hurricane Michael..
  • Existing home sales increased 1.4% month-over-month in October to a seasonally adjusted annualized rate of 5.22 million units, above expectations and the first increase in 6 months. October home sales increased among single-family units (+0.9%) and among condos and co-ops (+5.3%). Sales rose in the West (+2.8%), South (+1.9%), and Northeast (+1.5%) regions and declined in the Midwest (-0.8%).
  • The University of Michigan’s index of consumer sentiment declined 0.8pt to 97.5 in the final November report from the preliminary report. The survey’s current conditions (-0.9pt to 112.3) and expectations (-0.6pt to 88.1) components both moved down from their preliminary readings. The report’s measure of 5- to 10- year inflation expectations remained unchanged at 2.6%.
  • In the week ended November 17, initial jobless claims increased by 3k to 224k—the highest level since June—against expectations for a decrease. The four-week moving average of claims increased by 2k to 219k. Jobless claims increased by 3k in California and Texas, and by 2k in Illinois. Claims declined by 2k in New York. Nationwide continuing claims—the number of persons receiving benefits through standard programs—declined 2k to 1,668k in the previous week. The insured unemployment rate remained unchanged on a rounded basis at 1.2%.

Fact of the Week

  • The S&P 500 has gone 46 trading days (as of 11/23) since it last closed at an all-time high. Since a record close on 3/28/13, the longest that the S&P 500 has gone between record closes is 286 trading days, between 5/21/15 and 7/11/16. (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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Brexit, Saudi relations: Wealth Economic Update Oct. 19, 2018

U.S. and World News

  • Brexit negotiations have been a story of two steps forward, one step back and the discussion over the Irish border situation has been a roadblock for reaching a deal. Businesses, consumers, and investors have become increasingly concerned that more delays will only result in unresolved differences. European Union Chief Negotiator Michel Barnier stated that “A Brexit deal with the U.K. is 90% done” while debates continue over the Irish border and Theresa May attempts to create yet another delay and extend the post-Brexit transition period until 2021.
  • saudi-629324102_370Tensions rose rapidly this week between the United States and Saudi Arabia amidst the unexplained sudden disappearance of an American journalist. Secretary of State Mike Pompeo traveled to Saudi Arabia to meet with King Salman bin Abdulaziz earlier this week to discuss the issue, at which time the King denied allegations that Saudi Arabia orchestrated the disappearance of the American journalist. Reports surfaced during the week stating that Khashoggi was killed as a result of an interrogation that went wrong. President Trump stated that he wants to get to the bottom of what actually happened and if Saudi Arabia is found responsible, that the American response would be “very severe”. Saudi Arabia has shared interests with the United States that include containing Iran and sharing defense contracts.


Markets

  • Stocks were relatively unchanged from last week after another very volatile week. The S&P 500 rose 0.05% and closed at 2,768. The Dow Jones rose by 0.45% and closed at 25,444. Year to date, the S&P is up 5.10% and the Dow Jones is up 4.73%.
  • Yields climbed higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 3.05% and 3.19%, respectively.
  • The spot price of WTI Crude Oil continued its slide this week, losing 2.89% and closing at $69.28 per barrel. Year to date, Oil prices are up 15.26%.
  • The spot price of Gold rose 0.08% this week, and closed at $1,226.75 per ounce. Year to date, Gold prices are down 5.84%.

Economic Data

  • Initial jobless claims fell by 5,000 to 210,000 this week. The four-week moving average of claims increased by 2,000 to 212,000. Claims fell by 4,000 in North Carolina, and by 8,000 in Kentucky.
  • The Philadelphia Fed manufacturing index fell by 0.7 points to 22.2 for October versus expectations for a reading of 20.0.
  • Retail sales rose 0.1% month-over-month in September versus expectations for a 0.6% increase. The weaker than expected figure reflects lower sales at gas stations.
    • Retail sales core/control (ex-autos, gasoline, and building materials) increased 0.5% month-over-month in September versus expectations for a 0.4% increase.
  • Job openings increased to 7,136k in August versus expectations for 6,900k.

Fact of the Week

  • In 2008, Japan’s economy was larger that China’s economy ($4.9 trillion vs $4.5 trillion). China’s $12 trillion economy is now more than double that of Japan, who’s economy is $5 trillion. (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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Brexit, Hurricane Michael: Wealth Economic Update Oct. 12, 2018

U.S. and World News

  • Former British Prime Minister Tony Blair stated that there is a 50-50 chance of reaching another Brexit referendum as it is doubtful that Theresa May will secure a majority vote for a divorce deal with only six months until the deadline. Many issues remain unresolved before the deadline, including trade issues, security issues, regulatory uncertainty, and whether there will be a border separating Ireland. Japanese Prime Minister Shinzo Abe stated that Britain will be welcome to join the Trans-Pacific Partnership after it leaves the European Union, allowing it to retain its “global strength”.
  • hurricane-1035765586_370Rescuers have begun searching for survivors after Hurricane Michael flattened towns along the coast of the Florida panhandle. The hurricane made landfall early afternoon on Wednesday in Mexico Beach, Florida as a strong Category 4 storm with sustained winds of 155 miles per hour and knocked out power in about 1.5 million homes and businesses in the Southeast region. The storm is responsible for 12 deaths across Florida, Georgia, North Carolina, and Virginia and that number is expected to rise according to FEMA Administrator Brock Long. Offshore oil rigs in the Gulf were evacuated as the hurricane approached Florida, cutting oil production by over 40% and natural gas output by 33%.


Markets

  • Stocks plunged this week following last week’s declines. The S&P 500 fell 4.06% and closed at 2,767. The Dow Jones declined by 4.17% and closed at 25,340. Year to date, the S&P is up 5.06% and the Dow Jones is up 4.27%.
  • Yields pulled back this week after rising rapidly last week. The 5 year and 10 year U.S. Treasury Notes are yielding 3.02% and 3.17%, respectively.
  • The spot price of WTI Crude Oil also fell dramatically, losing 3.81% this week to close at $71.51 per barrel. Year to date, Oil prices are up 18.97%.
  • The spot price of Gold rose 1.20% this week, and closed at $1,218.04 per ounce. Year to date, Gold prices are down 6.51%.

Economic Data

  • Initial jobless claims increased by 7,000 to 214,000 this week. The four-week moving average of claims increased by 3,000 to 210,000. Claims rose by 7,000 in Kentucky, and by 4,000 in North Carolina.
  • The consumer price index (CPI) rose by 0.06% in September versus expectations for a 0.2% increase. The weaker figure was driven by lower energy prices. The year-over-year rate came in at 2.27% versus 2.4% expected.
    • Core CPI rose by 0.12% in September versus expectations of a 0.2% increase. The year-over-year rate in Core CPI remains at 2.2%.
  • The producer price index (PPI) increased by 0.2% in September, in-line with expectations.
    • PPI ex-food and energy rose by 0.2% in September, in-line with expectations.
  • Import prices rose by 0.5% in September month-over-month versus expectations for a 0.2% increase. The higher than expected reading was led by the foods, feeds, and beverages category.
  • The University of Michigan’s index of consumer sentiment declined 1.1 points to 99.0 in the October preliminary reading against expectations for a reading of 100.5.

Fact of the Week

  • A greater percentage of Millennials have all of their pre-tax retirement money invested in cash and bonds (20%) than those that have all of their pre-tax retirement money invested in stocks (19%). 2,593 Millennials (ages 20-36 in 2017) were surveyed in the 4th quarter 2017 (source: Transamerica Retirement Survey).

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

Visit Old Second Wealth Management

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NAFTA, Italy, EU: Wealth Economic Update Oct. 5, 2018

U.S. and World News

  • cow-184614299_370On Sunday night, the United States and Canada reached an agreement for the revised North American Free Trade Agreement just before the deadline of October 1st. The new agreement that includes Mexico will be called the U.S.-Mexico-Canada Agreement or USMCA. Canada agreed to open its dairy market to the United States while the United States agreed to keep the dispute-resolution process in the deal which would provide Canada protection from potential tariffs imposed by the United States. President Trump calls the deal the “most important deal we’ve ever made by far” and stated that he is skeptical of congress passing the deal as a result of political motives.
  • Italy has given into pressure put on by the European Central Bank and reduced its growth forecasts. The Euro fell dramatically and the Italian 10-year yield hit a four-year high as the second largest debt laden European country was closely reaching an October 15th deadline for submitting its final budget deal. The new growth forecast for this year was cut to 1.2% from a previous estimate of 1.5% and the budget deficit target was assumed at 2.4% of GDP for 2019, 2.1% for 2020, and 1.8% for 2021. Italy’s stock market declined this morning as a result of the lower growth forecasts.


Markets

  • Stocks continued their slide this week. The S&P 500 fell 0.95% and closed at 2,886. The Dow Jones declined by 0.36% and closed at 26,447. Year to date, the S&P is up 9.44% and the Dow Jones is up 8.73%.
  • Yields rallied dramatically this week, spooking the domestic stock market. The 5 year and 10 year U.S. Treasury Notes are yielding 3.07% and 3.23%, respectively.
  • The spot price of WTI Crude Oil finished the week higher again, gaining another 1.49% this week to close at $74.34 per barrel. Year to date, Oil prices are up 23.67%.
  • The spot price of Gold rose 1.08% this week, and closed at $1,203.77 per ounce. Year to date, Gold prices are down 7.60%.

Economic Data

  • Initial jobless claims fell by 7,000 to 207,000 this week. The four-week moving average of claims remained unchanged at 207,000. Claims fell by 6,000 in North Carolina, rebounding this week after Hurricane Florence.
  • The ISM manufacturing index fell 1.5 points to 59.8 in September versus expectations for a reading of 60.0.
  • The ISM non-manufacturing index rose by 3.1 points to 61.6 in September versus expectations for a reading of 58.0.
  • Construction spending rose by 0.1% month-over-month in August versus expectations for a 0.4% increase. Private residential construction was weaker in August.
  • Private sector employment rose by 230,000 in September month-over-month versus expectations for a 184,000 gain. This was led by professional and business services.
  • Nonfarm payrolls rose by 134,000 in September month-over-month versus expectations of an increase of 185,000.
    • The Bureau of Labor Statistics noted that Hurricane Florence had an estimated impact of around 50,000-60,000 jobs. The figure was also affected by the number of employees not at work due to weather.
    • These estimates would result in an actual figure of about 190,000
    • The unemployment rate declined to 3.7% versus 3.8% expected
    • Average hourly earnings rose 0.3% month-over-month, in-line with expectations.

Fact of the Week

  • The Small Business Optimism Index reached its all-time high in August, surpassing the mark set in July 1983. The index measures small business owners expectations for hiring, business growth, and profitability. (Source: National Federation of Independent Businesses)

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

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.

EU tariffs, Iran, Greek fire: Wealth Economic Update July 30, 2018

U.S. and World News

  • soybeans-802349002_370The United States and the European Union have agreed to work towards “zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods.” Additionally, the European Union will import more soybeans and liquefied natural gas from the United States. Earlier in June, a 25% tariff on steel and a 10% tariff on aluminum imported from the European Union was put in place by the United States, and soon after, the European Union imposed retaliatory tariffs on the United States. The planned 20% tariff on cars imported from Europe was put on hold this week as the two sides work towards zero tariffs.
  • Tensions with Iran continue to rise as Iran struggles with sanctions imposed by the United States. The United States will sanction any country that purchases Persian crude oil. Iran has threatened to halt all oil shipments through the Strait of Hormuz if the United States continues to pressure its oil exports. The Strait of Hormuz is an area where 30% of all seaborne-traded crude oil is carried and blocking it could send oil prices up near $90 per barrel.
  • In a city just northeast of Athens, Greece, a fire broke out that has killed at least 82 people and is said to be the worst in decades for the country. Public Order Minister Nikos Toskas stated “We have serious indications and significant findings of criminal activity concerning arson.” Satellite image analysis indicated that the fire broke out in multiple places within a short time frame. The fire tore through seaside resorts and vacation residences in an area popular for tourism.


Markets

  • Stocks rose higher this week. The S&P 500 increased by 0.61% and closed at 2,819. The Dow Jones rose 1.57% and closed at 25,451. Year to date, the S&P is up 6.51% and the Dow Jones is up 4.20%.
  • Yields also spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.84% and 2.96%, respectively.
  • The spot price of WTI Crude Oil rose this week amidst higher tensions in the Mideast, gaining 1.07% and closing at $68.99 per barrel. Year to date, Oil prices are up 14.77%.
  • The spot price of Gold decreased 0.51% this week, closing at $1,223.24 per ounce. Year to date, Gold prices are down 6.11%.

Economic Data

  • Initial jobless claims rose by 9,000 to 217,000 this week. The four-week moving average of claims moved down by 3,000 to 218,000. Jobless claims rose by 4,000 in Kentucky, and 3,000 in Michigan.
  • Durable goods orders increased by 1.0% in June versus consensus expectations of a 3.0% increase, reflecting a decline in defense orders.
    • Durable goods ex-transports rose 0.4% in June versus expectations of a 0.5% increase.
  • Wholesale inventories were flat in June versus expectations of a 0.3% increase.
  • Existing home sales fell 0.6% month-over-month in June to a seasonally adjusted rate of 5.38 million units. Expectations were for a 0.2% increase.
  • Sales of new single-family homes fell 5.3% in June to a seasonally adjusted rate of 631k units, below expectations of 668k units. The decline was led by the Midwest region.
  • Real GDP rose by 4.1% in the second quarter, the fastest pace since 2014. Consensus expectations were for 4.2%. The strong quarter was led by stronger-than-expected growth in consumption and business investment.
    • Q1 GDP was revised up by 0.2% to 2.2%
  • The University of Michigan’s index of consumer sentiment increased by 0.8 points to 97.9 in July against expectations of a flat reading.


Fact of the Week

  • In a recently conducted British survey, 42% of respondents admit that they are not sure whether you can put an electric car through a car wash. (Source: Go Ultra Low)

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

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Brexit, China tariffs: Wealth Economic Update July 13, 2018

U.S. and World News

  • brexit-583815736_370Brexit was at the center of attention this week as Secretary David Davis and junior Brexit ministers Steve Baker and Suella Braverman have stepped down. The resignations are a result of opposition to Theresa May’s new “soft Brexit” strategy and pose a threat to Theresa May’s ability to gain the backing of parliament as nine months remain before Britain leaves the European Union. The way in which Great Britain will separate from the European Union is to be agreed upon given two strong sided beliefs; one side believes in more freedom from the European Union while the other side wishes to remain closer to the European Union to minimize the risk of damage to the economy. Jeremy Hunt has been appointed as U.K. foreign secretary, a supporter of the “soft Brexit” strategy. President Trump expressed concern that Theresa May’s Brexit strategy may not lead to a free trade deal with the United States.
  • Earlier this week, the United States announced that it would put in place an additional 10% tariff on $200 billion of Chinese goods. China called the move “completely unacceptable” and plans to retaliate. Meanwhile, China’s monthly trade surplus with the United States rose to a record $28.97 billion, underlying the existing problems on trade with China.

Markets

  • Stocks continued their upward path this week. The S&P 500 increased by 1.55% and closed at 2,801. The Dow Jones rose 2.31% and closed at 25,019. Year to date, the S&P is up 5.82% and the Dow Jones is up 2.39%.
  • Yields were unchanged for the week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.72% and 2.82%, respectively.
  • The spot price of WTI Crude Oil fell this week, losing 4.21% and closing at $70.69 per barrel. Year to date, Oil prices are up 17.60%.
  • The spot price of Gold decreased 1.11% this week, closing at $1,241.50 per ounce. Year to date, Gold prices are down 4.71%.

Economic Data

  • Initial jobless claims fell by 18,000 to 214,000 this week. The four-week moving average of claims moved down by 2,000 to 223,000. Jobless claims fell by 4,000 in Kentucky and rose by 2,000 in Oregon.
  • The consumer price index (CPI) rose 0.13% month-over-month in June versus expectations of a 0.2% increase. The lower than expected figure reflects lower energy prices. The year-over-year rate of core inflation rose 0.1% to 2.3%.
  • Import prices fell 0.4% in June month-over-month missing expectations of a 0.1% increase. The decline reflected a drop in food and beverage prices.
  • The University of Michigan’s index of consumer sentiment fell by 1.1 points to 97.1 in the July preliminary report versus expectations of 98.0.
  • The producer price index rose 0.3% in May versus expectations of a 0.2% increase. The rise reflects higher energy prices and higher retailer margins.

Fact of the Week

  • The cost of renting a 26-foot moving truck for a 1-way trip from San Jose, CA to Las Vegas, NV is $1,990 for a July 2018 trip. The cost associated with a trip from Las Vegas to San Jose (the reverse trip) over the same time period is $174. The price disparity is due to a shortage of moving trucks in California caused by an exodus of California residents to other states. (Source: U-Haul)

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

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Kudlow, Japan/EU: Wealth Economic Update Mar. 19, 2018

U.S. and World News

  • economics_telescope-687981332_360CNBC Commentator Larry Kudlow has accepted the role of Chief Economic Advisor to President Trump after the departure of Gary Cohn amidst conflicting opinions on steel and aluminum tariffs. Larry Kudlow will first be tasked with negotiating the issue on tariffs while being particularly tough on China and he stated on Wednesday, “China can expect the U.S. to take a tough stance when it comes to international trade.” Larry Kudlow has been known to dislike tariffs and disagree with the President on this issue, however, after learning of the Canada and Mexico exemptions he has softened his view stating “I must say as somebody who doesn’t like tariffs, I think that China has earned a tough response not only from the United States.”
  • Japan and the European Union have pressured the United States to exempt them from the new steel and aluminum tariffs during a meeting in Brussels on Saturday. This was expected to come up as the United States has left further exemptions up for discussion after signing into law the new tariffs last week. The three countries agreed to take joint steps to combat steel overcapacity and attempt to regulate market prices with stronger subsidy rules.

Markets

  • Markets ended the week lower. The S&P 500 lost 20% and closed at 2,752.01. The Dow Jones also fell by 1.51% and closed at 24,946.51. Year to date, the S&P is up 3.37% and the Dow Jones is up 1.46%.
  • Yields were once again relatively unchanged this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 64% and 2.84%, respectively.
  • The spot price of WTI Crude Oil rose 24% this week, closing at $62.19 per barrel. Year to date, Oil prices are up 3.48%.
  • The spot price of Gold was down for the week losing 77%, closing at $1,313.70 per ounce. Year to date, Gold prices are up 0.84%.

Economic Data

  • Initial jobless claims fell by 4,000 from last week, coming in at 226,000. The four-week moving average was unchanged at 222,000. Layoffs remain at a very low pace and continue to fall further.
  • The Consumer Price Index rose by 0.15% in February, slightly below expectations of 0.2%. The rise in February was mostly influenced by rising energy prices and the year-over-year rate remained at 1.8%.
  • The Producer Price Index rose by 0.2% in the month of February driven by core producer price inflation. This was higher than expectations of a 0.1% increase and the year-over-year rate stands at 2.9%.
  • Retail Sales declined by 0.1% in February coming in short of expectations of a 0.3% increase and the previous two months were revised down slightly.
  • Housing starts declined by -7% in February to 1,236, below consensus expectations of a -2.7% decrease. The decline of housing starts in the west largely contributed to the February figure.

 

Fact of the Week

  • Just 2.2% of the banks and savings institutions in the United States hold 83% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/17. There are a total of 5,670 banks and savings institutions holdings $17.4 trillion of deposits as of the end of last year (Source: FDIC).

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, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Brexit, Healthcare: Wealth Economic Update June 23, 2017

U.S. and World News

  • brexit-540371754_360A year after the vote for Britain to leave the European Union, Brexit talks have finally begun in Brussels. EU chief negotiator Michel Barnier will be sitting down with U.K. Brexit Secretary David Davis to work through the details of the anticipated two year separation process. Additionally, Prime Minister Theresa May unveiled an offer to allow at least 3 million EU citizens living in the U.K. to stay after Brexit, an offer that was welcomed by other European heads of state, including German Chancellor Angela Merkel.
  • Senate Republicans released their version of the healthcare reform legislation this week, giving the public their first chance to see what their iteration looks like. The Senate version is similar to the House bill in that both would radically overhaul Medicaid, remove the individual and employer mandates as well as eliminate taxes tied to Obamacare. There are also some differences, for instance, the Senate version would provide subsidies based on income, cost of coverage and age, as opposed to just age as was in the House bill. The nonpartisan Congressional Budget Office is expected to issue its analysis of the bill early next week.

Markets

  • Markets ended the week slightly higher. The S&P 500 rose by 0.22% and closed at 2,438. The Dow Jones increased by 0.05% for the week and closed at 21,395. Year to date, the S&P is up 9.98% and the Dow is up 9.52%.
  • Interest rates held steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.76% and 2.14%, respectively.
  • The spot price of WTI Crude Oil slid 3.78% this week, closing at $43.11 per barrel. Year to date, Oil prices have fallen 19.75%.
  • The spot price of Gold ended the week modestly higher, closing at $1,256.67 per ounce. Year to date, Gold prices are up 9.51%.

 Economic Data

  • Initial jobless claims increased by 3,000 from last week, coming in at 241,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims moved up to 245,000.
  • Existing home sales rose 1.1% in May, beating consensus expectations of a -0.4% decline in sales. Sales of single family units rose 1.0%, while sales of multi-family unites increased by 1.6%. By region, existing home sales increased in the Northeast (+6.8%), West (+3.4%), and South (+2.2%), but declined in the Midwest (-5.9%).
    • New home sales increased by 2.9% in May, following a -7.9% decline in April. The result was better than consensus expectations, New home sales increased in the South (+21k), and West (+19k), but declined in the Northeast (-4k) and Midwest (-19k) regions.

Fact of the Week

  • Today (6/23) marks the 1 year anniversary of the historic Brexit vote where U.K. citizens elected to leave the European Union. Markets initially moved to the downside following the surprising result, but quickly rebounded. In the one year since the vote, the United Kingdom’s stock market (FTSE 100) has gained 21.8%, outpacing the overall MSCI European Index (+14.2%) and the S&P 500 (+17.7%). (Returns are stated in local currency)

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
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Brexit: Wealth Economic Update Mar. 31, 2017

U.S. and World News

  • london360The Brexit process has officially begun as British Prime Minister Theresa May has invoked Article 50 of the Lisbon Treaty, formally informing the European Union of its exit from the bloc. The letter of declaration was hand-delivered to EU President Donald Tusk Wednesday and now begins what is estimated to be a two year negotiation process between the UK and all of the remaining 27 European Union member states. This is anticipated to be a difficult and lengthy procedure as agreements must be reached on tough issues such as trade and immigration.
  • Complicating matters in the United Kingdom is the fact that Scottish lawmakers voted 69-59 this week to seek a new referendum on independence within the next two years. This certainly comes as an unwelcome distraction from the Brexit proceedings for British leaders. First Minister of Scotland Nicola Sturgeon declared, “The mandate for a referendum is beyond question, and it would be democratically indefensible – and utterly unsustainable – to attempt to stand in the way of it.”

Markets

  • Markets closed the 1st quarter of 2017 on an up note. The S&P 500 gained 0.82% and closed at 2,363. The Dow Jones was also positive for the week rising 0.32% and closing at 20,597. Year to date, the S&P is up 6.06% and the Dow is up 5.18%.
  • Interest rates continued to decline a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.92% and 2.39%, respectively.
  • The spot price of WTI Crude Oil rose 5.82% this week, closing at $50.76 per barrel. Year to date, Oil prices have fallen 5.51%.
  • The spot price of Gold increased by 0.38% this week, closing at $1,248.24 per ounce. Year to date, Gold prices are up 8.77%.

Economic Data

  • Initial jobless claims declined by 3,000 from last week, coming in at 258,000. The level of claims was likely affected for a second week by Winter Storm Stella. The four week moving average for claims rose to 254,000.
  • 4th Quarter GDP growth was revised up in the 3rd estimate from +1.9% to +2.1%, beating expectations of +2.0%. The main source of the upward revision was real consumer spending, which was revised up to +3.5% from +3.0% previously.
  • The Case-Schiller home price index rose by 0.9% in its latest reading, beating expectations of a 0.7% increase. Prices rose in all 20 cities measured except for Cleveland, with Seattle (+1.7%) and Chicago (+1.3%) seeing the largest increases in the month. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The PCE index (measure of inflation) rose 0.1% in February, in line with consensus expectations. Over the last 12 months, PCE inflation has increased 2.1%, also in line with estimates.
    • Core PCE (excludes food and energy, Fed’s preferred inflation measure) rose 0.2% in February, meeting expectations. Over the last year, Core PCE has risen 1.75%, still below the Fed’s 2% inflation target.

Fact of the Week

  • 25 players will make the opening day rosters of the 30 Major League Baseball teams ahead of the season opening on Sunday night, a total of 750 big league ballplayers. Coming into this season, there have been a total of 18,593 men to appear in at least 1 game at the major league level. (Source: Major League Baseball)

PLAY BALL!!

 

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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.