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

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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

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China, Congress, Wall, Budget: Wealth Economic Update Jan. 4, 2019

U.S. and World News

  • great_wall-899508826President Trump said that he had a “very good call” with Chinese President Xi Jinping on Saturday regarding trade and that “big progress” was being made. Earlier this week, China released disappointing manufacturing data that showed a contracting Manufacturing Purchasing Managers Index, rather than growing. However, Chinese Services Purchasing Managers Index jumped to a six-month high. This morning, China’s commerce ministry announced that vice-ministerial-level trade discussions will be held with the United States on January 7-8 in Beijing. The meeting is a continuation of an ongoing effort to reach a deal on trade during a 90-day truce period that postponed additional tariffs until March 1st.
  • Democrats had officially taken control of the House on Thursday and have found themselves at an impasse with Congress and President Trump on funding the government, which has now been partially shut down for 14 days. President Trump has stated that he will not sign a bill that does not include $5 billion for a wall along the southern border, something that the Democrats strongly oppose. The Democrats have passed a funding package that would reopen the government and the Department of Homeland Security until February 8th, but would not satisfy the President’s demand. Bipartisan congressional leaders are meeting today at the White House to continue negotiations.


Markets

  • Stocks continued climbing higher in yet another volatile week. The S&P 500 rose 1.90% and closed at 2,532. The Dow Jones increased 1.65% and closed at 23,433. Year to date, the S&P is up 1.03% and the Dow Jones is up 0.50%.
  • Yields fell further this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.50% and 2.67%, respectively.
  • The spot price of WTI Crude Oil rebounded this week. Prices jumped 6.57% and closed at $48.31 per barrel. Year to date, Oil prices are up 6.39%.
  • The spot price of Gold rose 0.42% this week and closed at $1,286.05 per ounce. Year to date, Gold prices are up 0.28%.

Economic Data

  • Initial jobless claims rose by 10,000 to 231,000 for the week. The four-week moving average of claims rose by 1,000 to 219,000. Claims rose by 2,000 in Connecticut and fell by 2,000 in California and North Carolina.
  • Private sector employment rose by 271,000 in December versus expectations for a 180,000 increase.
  • The ISM manufacturing index fell 5.2 points to 54.1 in December versus expectations for a reading of 57.5. This is the largest one-month decline in ten years.
  • Nonfarm payrolls rose by 312,000 in December, far exceeding expectations of 195,000. Prior months were revised up by a net 58,000.
    • The unemployment rate rose 0.2% to 3.9% due to a higher labor participation rate.
    • Average hourly earnings rose by 0.4% in December versus expectations for a 0.3% increase and the year-over-year rate rose to 3.2%, a cycle high.

Fact of the Week

  • This weekend’s playoff matchup between the Chicago Bears and the Philadelphia Eagles will be the fourth time the teams have meet in the post season. Previous match-ups include the infamous “Fog Bowl” on New Year’s 1988, and the Eagles hold a 1-2 series advantage over the Bears. The teams will face off at Soldier Field at 3:40pm on Sunday.

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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Budget, Govt Shutdown, Wall: Wealth Economic Update Dec. 31, 2018

U.S. and World News

  • wall-813556790The U.S. federal government will remain closed until after the new year as negotiations over a budget deal have made no progress. According to the Department of Agriculture, the new $12 billion trade aid relief package that includes government payments to farmers will be temporarily suspended as the federal shutdown continues. Also, some economic data figures normally published by the U.S. Commerce Department will not be published during this time. Negotiations for a budget deal remain at a standstill as President Trump refuses to budge on a deal without border security funding, while Democrats continue to strongly oppose funding a wall. Democrats will assume control of the House on January 3rd and have discussed plans for a budget deal, however, none of these plans include $5 billion for a border wall.


Markets

  • Stocks rebounded sharply this week after last week’s declines. The S&P 500 rose 2.89% and closed at 2,486. The Dow Jones jumped 2.75% and closed at 23,062. Year to date, the S&P is down 5.02% and the Dow Jones is down 4.39%.
  • Yields continued their declines this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.56% and 2.72%, respectively.
  • The spot price of WTI Crude Oil fell further this week. Prices fell 1.12% and closed at $45.08 per barrel. Year to date, Oil prices are down 25.00%.
  • The spot price of Gold rose 1.76% this week and closed at $1,279.07 per ounce. Year to date, Gold prices are down 1.82%.

Economic Data

  • Initial jobless claims decreased by 1,000 to 216,000 for the week ended December 22nd from an upwardly revised 217,000. The four-week moving average of claims fell by 5,000 to 218,000. Claims rose by 4,000 in New Jersey and by 2,000 in California but fell by 2,000 in Michigan and Texas.
  • The Conference Board index of consumer confidence fell 8.3 points to 128.1 in December versus expectations for a reading of 133.5.
  • The FHFA house price index rose by 0.3% in October, in-line with expectations. The year-over-year rate declined to 5.7% from 6.1%.
  • Pending home sales fell by 0.7% in November, versus expectations for a 1.0% increase.

Fact of the Week

  •  On Wednesday, the Dow Jones Industrial Average closed up 1086 points, a daily change of 4.98%. While it was the largest one day return in terms of points, it doesn’t even rank in the top 20 all time of daily percentage gains for the Dow Jones.

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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Stock Markets, Govt Shutdown: Wealth Economic Update Dec. 21, 2018

U.S. and World News

  • stocks-1023759644_370Equity markets continued their extended slide this week which is largely being attributed to the actions and commentary coming from the Federal Reserve. As mostly expected, the Fed raised interest rates another 0.25% this week, the fourth rate hike of 2018. Markets appear to take issue with comments made in the post-meeting press conference in which Fed Chair Jerome Powell downplayed the implications of market volatility and said that runoff of the Fed’s balance sheet is on ‘auto-pilot’. Despite taking projected rate hikes for 2019 down from 3 to 2, many fear the comments are indicative of a Fed that is steadfast in its plan to continue to raise rates regardless of the data both domestically and globally. For further information on the market action as of late, please see the note Old Second Wealth Management Comments on Market Volatility sent on December 20.
  • Also weighing on markets is an impending government shutdown, which is scheduled to take place unless an agreement is reached by midnight Friday. President Trump has refused to sign a stop-gap spending bill and threatened that the shutdown would last “for a very long time” unless there are provisions for funding the border wall along the Mexican border, something that Democrats appear unwilling to budge on. Government shutdowns have historically not been market moving events, but this time around it appears to be adding extra uncertainty to a market that is already dealing with very poor sentiment.


Markets

  • Stocks fell further this week amid global uncertainty, Federal Reserve concerns and a looming government shutdown with major averages suffering their worst weekly declines in 10 years. The S&P 500 fell 7.03% and closed at 2,417. The Dow Jones dropped 6.87% and closed at 22,445. Year to date, the S&P is down 7.64% and the Dow Jones is down 6.89%.
  • Bonds rallied this week with yields dropping along with stock prices. The 5 year and 10 year U.S. Treasury Notes are yielding 2.63% and 2.79%, respectively.
  • The spot price of WTI Crude Oil continued its precipitous slide this week on forecasts of record U.S. and Russian output combined with the sharp selloff in the equity markets. Prices fell 11.81% and closed at $45.39 per barrel. Year to date, Oil prices are down 24.48%.
  • The spot price of Gold rose 1.37% this week and closed at $1,255.84 per ounce. Year to date, Gold prices are down 3.59%.

Economic Data

  • Initial jobless claims increased by 8,000 to 214,000 this week. The four-week moving average of claims fell by 3,000 to 222,000. Claims rose by 2,000 each in Pennsylvania, California, and New York.
  • Existing home sales increased 1.9% in the month of November, beating expectations of a -0.4% decline. Sales rose in the Northeast (+7.2%), Midwest (+5.5%), and South (+2.3%) and declined in the West (-6.3%).
  • The PCE Price Index (measure of inflation) rose by 0.06% in November, slightly higher than expectations of flat prices. Over the last 12 months, the headline PCE index has risen 1.8%.
    • The Core PCE Price Index (excludes food and energy prices) rose 0.15% in November, a bit below expectations of 0.2%. Over the last 12 month, Core PCE prices have risen 1.9%.

Fact of the Week

  • Last year, there were twice as many home owners created as were created in the previous 10 years combined. The number of U.S. homeowners grew by 1.8 million in the 12 months ending 6/30/2018, double the 900,000 new homeowners over the 10 year period ending 6/30/2017. (Source: Census Bureau)

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 Tariffs, Brexit: Wealth Economic Update Dec. 14, 2018

U.S. and World News

  • Trade tensions with China have eased after some constructive talks between Chinese Vice Premier Liu He, Treasury Secretary Steven Mnuchin, and Trade Representative Robert Lighthizer earlier this week. China has begun purchasing soybeans from the United States again and has announced that the retaliatory tariffs put on U.S. autos will be suspended until March 1st. The tariff rate on autos exported to China will now be reduced from 40% to 15%. March 1st remains the deadline for the trade truce established between President Trump and Chinese President Xi Jinping in Buenos Aires on December 1st. The recent development is a sign that the arrest of Huawei CFO Meng Wanzhou has not derailed trade negotiations.
  • Theresa May delayed the House of Commons vote on her Brexit deal earlier this week, as it was expected to fail with near certainty. As a result of the delay, 48 Conservative lawmakers called for her ouster. Theresa May then when on to survive the no-confidence vote and travel to Brussels to hear the European Union’s concerns regarding the deal. The Irish backstop, which is the plan to prevent a hard border in Northern Ireland, continues to be the point of disagreement. Theresa May’s own members of parliament are concerned that the Irish Backstop could keep the United Kingdom tied to the European Union’s policies and would prevent them from making trade deals.


Markets

  • Stocks fell further this week amid global uncertainty. The S&P 500 fell 1.22% and closed at 2,600. The Dow Jones declined 1.17% and closed at 24,101. Year to date, the S&P is down 0.81% and the Dow Jones is down 0.20%.
  • Yields rebounded slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.73% and 2.89%, respectively.
  • The spot price of WTI Crude Oil erased its gains from last week, losing 2.79% and closing at $51.14 per barrel. Year to date, Oil prices are down 14.92%.
  • The spot price of Gold fell 0.87% this week and closed at $1,238.47 per ounce. Year to date, Gold prices are down 4.94%.

Economic Data

  • Initial jobless claims fell by 27,000 to 206,000 this week. The four-week moving average of claims fell by 4,000 to 225,000. Claims fell by 5,000 in Pennsylvania, 3,000 in California, 3,000 in Texas, and 2,000 in Georgia.
  • Import prices fell by 1.6% in November month-over-month versus expectations for a decline of 1.0%.
  • Import prices ex-petroleum fell by 0.3% in November versus expectations for a 0.1% decline.
  • The producer price index (PPI) rose by 0.1% in November month-over-month versus expectations for no change.
  • PPI ex-food and energy rose by 0.3% in November versus expectations for a 0.1% increase.
  • The consumer price index (CPI) rose by 0.02% in November versus expectations for no change. The year-over-year rate came in at 2.18%, in-line with expectations.
  • Core CPI rose by 0.21% in November, in-line with expectations. The year-over-year rate came in at 2.21%, in-line with expectations.
  • Retail sales rose by 0.2% month-over-month in November versus expectations for a 0.1% increase.
  • Retail sales core/control rose by 0.9% in November versus expectations for a 0.4% increase.
  • Industrial production rose by 0.6% in November versus expectations for a 0.3% increase.

Fact of the Week

  • 30 years ago (1988), the Chinese economy was just 6% of the U.S. economy. 10 years ago (2008), the Chinese economy grew to 31% of the U.S. economy. Today, the Chinese economy is 63% the size of our economy. (Source: Trading Economics)

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 Tariffs, Gas Prices/Canada: Wealth Economic Update Dec. 7, 2018

U.S. and World News

  • china-943639230_370.jpgFollowing the meeting in Buenos Aires between President Trump and President Xi Jinping of China, President Trump agreed to delay a planned increase in the tariff rate on $200 billion of Chinese goods by 90 days while China agreed to begin purchasing agricultural, energy, and industrial commodities from the United States. The deal was initially met with skepticism by markets, however, China has begun preparations to begin importing soybeans and liquefied natural gas. Yesterday, the CFO of Chinese company Huawei was arrested for a violation of United States sanctions that prohibit doing business with Iran. The incident is not estimated to have any effect on trade negotiations between the United States and China.
  • In an effort to combat rapidly falling oil prices, Canada has unexpectedly announced an output cut of 325 thousand barrels per day, setting the precedent for other major oil producing nations to follow suit. Later in the week, Saudi Energy Minister Khalid al-Falih stated that no OPEC deal was a real risk, just before Russia and OPEC members were to meet to discuss further production cuts. After Thursday’s summit concluded with no deal, OPEC met again to agree on 1.2 million barrels per day of production cuts. The deal is viewed as a victory United States oil producers as they are able to enjoy rising oil prices without having to cut production.


Markets

  • In another volatile week, stocks reversed course and headed sharply lower. The S&P 500 plummeted 4.55% and closed at 2,633. The Dow Jones lost 4.44% and closed at 24,389. Year to date, the S&P is up 0.40% and the Dow Jones is up 0.95%.
  • Yields continued their slide this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.70% and 2.86%, respectively.
  • The spot price of WTI Crude Oil rose higher this week, gaining 2.75% and closing at $52.33 per barrel. Year to date, Oil prices are down 12.94%.
  • The spot price of Gold rose 1.46% this week and closed at $1,248.60 per ounce. Year to date, Gold prices are down 4.16%.

Economic Data

  • Initial jobless claims fell by 4,000 to 231,000 this week. The four-week moving average of claims rose by 4,000 to 228,000. Claims rose by 4,000 in California, 2,000 in Illinois, 2,000 in Iowa, 2,000 in Texas, and 2,000 in Wisconsin.

     

  • Private sector employment rose by 179,000 in November versus expectations for a 195,000 gain.

     

  • The trade deficit rose $0.9 billion to -$55.5 billion in October versus expectations for a reading of $-55 billion.

     

  • The ISM manufacturing index rose by 1.6 points to 59.3 in November versus expectations for a reading of 57.5.

     

  • The ISM non-manufacturing index rose by 0.4 points to 60.7 versus expectations for a reading of 59.0.

     

  • Factory orders fell by 2.1% month-over-month in October versus expectations for a 2.0% decline.

     

  • Construction spending fell by 0.1% in October versus expectations for an increase of 0.4%.

     

  • Nonfarm payrolls rose by 155,000 in November month-over-month versus expectations for an increase of 198,000. The lower-than-expected reading was led by slower growth in construction, leisure, and hospitality.

     

    • The unemployment rate held steady at 3.7%, in-line with expectations.

       

    • The labor force participation rate remained at 62.9%

       

    • Average hourly earnings rose by 0.2% month-over-month in November versus expectations for an increase of 0.3%.

Fact of the Week

  • Credit card debt in the US peaked in May 2008 before the global real estate crisis at $1.02 trillion. It then hit a low of $832 billion in April 2011. As of August 2018, US credit card debt climbed back to a record level of $1.04 trillion. (Source: Federal Reserve)

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 tariffs, Gasoline: Wealth Economic Update July 23, 2018

U.S. and World News

  • Trade talks with China have stalled after the United States imposed $34 billion worth of tariffs on the country earlier this month. An additional $16 billion is being targeted after the initial $34 billion was met with reciprocity by China almost immediately. President Trump stated in an interview with CNBC this morning that he is ready to go to $500 billion worth of tariffs on Chinese goods if needed. Chinese stocks are down almost 30% since peaking in January amidst the ongoing trade tensions. The European Union is considering retaliatory tariffs on United States coal, pharmaceuticals, and chemical products if restrictions are imposed on European cars. President Trump stated this week that a trade deal with Mexico is currently being negotiated and that a separate one would be crafted with Canada following that.
  • gasoline-504794324The price of WTI Crude oil fell back below $70/barrel this week after Saudi Arabia has begun supplying at least two Asian countries with additional cargoes. Meanwhile, the Trump administration is attempting to lower gas prices before the November elections and is considering using its Strategic Petroleum Reserve. The state of Texas is on its way to becoming the world’s number 3 oil producer behind Russia and Saudi Arabia as the cost of drilling has declined dramatically. Approximately 5.6 million barrels per day is expected to be produced from the Permian Basin and Eagle Ford oilfields alone by 2019.


Markets

  • Stocks finished the week slightly higher. The S&P 500 increased by 0.40% and closed at 2,802. The Dow Jones rose 0.20% and closed at 25,058. Year to date, the S&P is up 5.87% and the Dow Jones is up 2.59%.
  • Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.77% and 2.90%, respectively.
  • The spot price of WTI Crude Oil fell this week once again, losing 0.77% and closing at $70.46 per barrel. Year to date, Oil prices are up 17.22%.
  • The spot price of Gold decreased 1.07% this week, closing at $1,230.97 per ounce. Year to date, Gold prices are down 5.51%.


Economic Data

  • Initial jobless claims fell by 8,000 to 207,000 this week. The four-week moving average of claims moved down by 2,000 to 221,000. Jobless claims fell by 2,000 in Florida, New Jersey, Oregon, and Tennessee and fell by 4,000 in New York.
  • The Philadelphia Fed manufacturing index rose by 5.8 points in July to 25.7 exceeding consensus estimates of 21.5.
  • Housing starts fell by 12.3% in June to 1,173k versus expectations of a 2.2% decline. The June weakness was led by the mult-family category declining by 19.8% during the month.
  • Building permits fell by 2.2% to an annualized rate of 1,273k in June versus expectations of a 2.2% increase.
  • Industrial production rose by 0.6% in June versus consensus expectations of a 0.5 increase. The increase was led by motor vehicle output.
  • Retail Sales increased by 0.5% month-over-month in June meeting expectations. The increase was led by gas stations and auto dealerships.
    • Core Retail Sales ex-autos came in a 0.2% in June versus expectations of a 0.4% increase. Clothing and departing store figures came in lighter than expected.


Fact of the Week

  • On 7/01/18, the price of a barrel of oil was $74.15 while the average price of a gallon of gasoline was $2.85. On 7/01/17 (1 year ago), the price of a barrel of oil was $46.04 while the average price of a gallon of gasoline was $2.24 (source: NYMEX, AAA).

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

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