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

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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

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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

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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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Stock Market, Shutdown, North Korea: Wealth Economic Update Feb. 12, 2018

U.S. and World News

  • stock_market-533891962_370After a long period of calm markets, the U.S equity market posted its first correction (10% loss) in two years amid concerns over rising interest rates, an overheating economy, and complex leveraged funds driven by algorithms used to speculate on volatility. International stock indexes followed suit and are now about 10% off their highs.
  • The government briefly shut down late Thursday night following a failure to reach an agreement on a new budget deal, but was reopened early this morning after a major fiscal spending bill was passed. The bill includes an extension to the debt ceiling, a two-year increase in spending on military and domestic programs by $300 billion, and an additional $90 billion to help aid the disasters that occurred in 2017, extend the Children’s Health Insurance Program, and fight the opioid crisis. House Speaker Paul Ryan stated this morning, “Ultimately, neither side got everything it wanted in this agreement, but we reached a bipartisan compromise that puts the safety and well-being of the American people first.”
  • Vice President Mike Pence stated that “The United States of America will soon unveil the toughest and most aggressive round of economic sanctions on North Korea ever” as North Korea continues its nuclear and ballistic missile program despite numerous threats to terminate it. The Vice President did not give any details regarding the planned sanctions, but it is likely that they will target Chinese businesses that do business with North Korea.

Markets

  • In the most volatile week that we have seen in 2 years, the market has dipped into correction territory. The S&P 500 fell 5.10% and closed at 2,619. The Dow Jones followed suit by also plummeting 5.10% and closing at 24,191. Year to date, the S&P is down 1.83% and the Dow Jones is down 1.90%.
  • After trading in a wide range throughout the week, the 5 year and 10 year U.S. Treasury Notes are now yielding 2.54% and 2.85%, respectively.
  • The spot price of WTI Crude Oil fell 9.52% this week, closing at $59.22 per barrel. Year to date, Oil prices are down 1.48%.
  • The spot price of Gold decreased by 1.36% this week, closing at $1,315.21 per ounce. Year to date, Gold prices are up 1.00%.

Economic Data

  • Initial jobless claims fell 9,000 from last week, coming in at 221,000 vs. consensus estimates of a slight increase. The decline is largely attributed to a 6,000 decline in Missouri. The four week moving average for claims now stands at 225,000.
  • The trade balance came in at -$53.1 billion in December versus consensus expectations of -$52.1 billion.
  • Wholesale inventory growth increased 0.4% in December versus consensus expectations of a 0.2% increase.

Fact of the Week

  • The stock market, on average, has a correction every 357 days, or about once a year. (Source: Deutsche Bank)
  • Based on research conducted on the Dow between 1945 and 2013, the average correction (which worked out to 13.3%) lasted a mere 71.6 trading days, or about 14 calendar weeks. (Source: MarketWatch)

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

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DACA, Shutdown: Wealth Economic Update Jan. 26, 2018

U.S. and World News

  • worker-614128222_400The shutdown of the U.S. government lasted all of 3 days as Congress voted to reopen the government and provide funding through February 8th. Senate Democrats reluctantly voted to adopt a short-term spending bill to fund government operations without first addressing the fate of young undocumented immigrants in the DACA program. With another government shutdown on the horizon, President Trump will release a “legislative framework” on immigration issues next week that he believes “represents a compromise that members of both parties can support.” This would include “four agreed upon pillars”, “securing the border and closing legal loopholes, ending extended family chain migration, canceling the visa lottery and providing a permanent solution on DACA.”

Markets

  • Markets had yet another week of strong gains. The S&P rose 2.23%, closing at a new All-Time High of 2,872. The Dow Jones gained 2.09% for the week, also closing at a new All-Time High of 26,617. Since the beginning of 2018, the S&P is up 7.54% and the Dow is up 7.77%.
  • Interest rates were little changed from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.47% and 2.66%, respectively.
  • The spot price of WTI Crude Oil climbed by 4.48% this week, closing at $66.21 per barrel. Oil has started 2018 with a gain of 9.58%.
  • The spot price of Gold rose by 1.44%, closing at $1,350.97 per ounce. In 2018, gold prices are up 3.70%.

Economic Data

  • Initial jobless claims rose 17,000 from last week, coming in at 233,000, in line with expectations. The largest increases were in Michigan (+4k) and Wisconsin (+3k). The four week moving average for claims fell to 240,000.
  • The first estimate of 4th quarter 2017 real GDP showed 2.6% annualized growth, below expectations of 3.0%. Much of the miss was due to net exports which reflected the strength in goods imports during the quarter. For the entirety of 2017, real GDP of the U.S. grew 2.3%.

Fact of the Week

  • Janet Yellen’s 4 years as Federal Reserve Chair ends next Wednesday January 31st with her 32nd and final meeting. During Yellen’s term, the central bank implemented 5 rate hikes and began reversing the $4 trillion of bond purchases made from 2008-2014 during “Quantitative Easing”, which was started by her predecessor Ben Bernanke. President Trump’s nominee Jerome Powell is poised to take over as Fed Chair next month after being confirmed by the Senate this week.

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

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Spending Bill, Shutdown: Wealth Economic Update Jan. 19, 2018

U.S. and World News

  • debate_664944046_370If lawmakers in the senate do not agree on a spending bill by 12:01 A.M Saturday, the government will shut down for the first time since October of 2013. There was a meeting held today between Democratic Leader Charles Schumer and President Trump at the White House, however no deal has been reached. Democratic leaders are strongly against the bill because it does not protect illegal immigrants who arrived in the United States as children from deportation. House Budget Director Mick Mulvaney stated that the odds of a government shutdown are 50-50 and preparations by the administration are being made. The top percentage of furloughed workers during the event of a government shutdown would be from the Department of Housing and Urban Development (HUD), the Environmental Protection Agency (EPA), and the Department of Education.

Markets

  • Markets had yet another week of gains. The S&P rose 1.23%, closing at a new All-Time High of 2,810. The Dow Jones gained 1.12% for the week, also closing at a new All-Time High of  26,072.
  • Interest rates also increased this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.45% and 2.66%, respectively.
  • The spot price of WTI Crude Oil fell by 1.23% this week, closing at $63.51 per barrel.
  • The spot price of Gold edged lower by 0.39%, closing at $1,332.48 per ounce.

Economic Data

  • Initial jobless claims fell 41,000 from last week, coming in at a 45-year low of 220,000, far below expectations. The largest declines were in California (-5k), Pennsylvania (-5k), Michigan (-4k) and Illinois (-3k). The four week moving average for claims fell to 245,000.
  • Housing starts declined 8.2% month-over-month in December to 1192k, missing expectations of a 1.7% decline. The prior two months were revised up by a net 7k. The 11.8% drop in single-family starts largely attributed to the overall broad based decline.
  • Building permits were down 0.1% in November, exceeding expectations. The multifamily category declined by 3.9% while the single family category rose 1.8% driven by permits in the northeast (+43%).
  • The University of Michigan’s index of consumer sentiment fell 1.5 points to 94.4 to a six-month low in the January preliminary report.

Fact of the Week

  • There has not been a government shutdown when one party controls the government since Carter was President in the 1970’s. (Source: Strategas Research Partners)has not been a government shutdown when one party controls the government since Carter was President in the 1970’s. (Source: Strategas Research Partners)
  • Each week of government shutdown would reduce Q1 GDP by 0.2% (quarter-over-quarter annualized), but this would be reversed in the subsequent quarter. (Source: Goldman Sachs)

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.

 

Oil price soar: Wealth Economic Update Oct 3, 2016

U.S. and World News

  • oil_440The price of oil soared this week reflecting a new cap on oil production of 32.5 million – 33 million barrels a day agreed upon by OPEC. That is a 750,000 barrel a day drop from August and the first time oil output has been capped since the financial crisis. This came as a surprise after most of the past OPEC meetings have resulted in no deal which also leads to some skepticism of the current deal.
  • In order to defend U.S. personnel overseas from the possibility of being sued by citizens of other countries, Barrack Obama has vetoed a bill that would allow Saudi Arabia to be sued for involvement in the September 11th terrorist attacks. The White House and Saudi Arabia have been lobbying to override the veto, but the effort did not pass congress.
  • After there were an insufficient amount of votes to pass a funding bill that would avoid a federal government shutdown, congress sent President Obama a bill to continue government operations until December 9th and $1.1 billion in long-delayed funding to help fight the Zika virus. Also included in the bill is $500 million to help restore Louisiana after they have endured mass flooding, and to assist the water crisis in Flint, Michigan.

Markets

  • This week the S&P 500 rose 0.20% and closed at 2,168. The Dow Jones rose 0.26% and closed at 18,308. So far in 2016, the S&P is up 7.73% and the Dow is up 7.10%.
  • Interest rates edged down slightly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.15% and 1.60%, respectively.
  • The spot price of WTI Crude Oil was up 7.87% this week to close at $47.98 per barrel. WTI Crude is up 10.78% in 2016.
  • The spot price of Gold declined 1.54% this week, closing at $1,317 per ounce. Year to date, gold prices are up 24.12%.

Economic Data

  • Pending home sales fell 2.4% in August. Pending home sales by region were down in the West (-5.3%), the South (-3.2%), and the Midwest (-0.9%) while they were up in the Northeast (+1.3%).
  • New single-family home sales declined by 7.6% in August which was better than consensus expectations for a decline of 8.6%. New home sales by region were a decline in the South (-48k), Northeast (-12k), and Midwest (-2k), and an increase in the West (+12k).
  • Top-line Q2 GDP growth was revised up by 30 basis points to +1.4%, more than consensus estimates. The revision reflected a smaller drag from inventories and trade, and higher business fixed investment than previously estimated.
  • The headline PCE (Personal Consumption Expenditures) price index rose by 0.14% in August and the core PCE index (excluding food and energy) was up 0.18%. This was a lower increase than expected as food an energy prices continued to fall.

Fact of the Week

  • 24% of 1,000 pre-retirees surveyed in the first quarter of 2016 believe they will need to accumulate at least $1 million in order to “live comfortably” during their retirement years, up from 15% in 2005 (source: Employee Benefit Research Institute Retirement Confidence 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
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.

 

Wealth Management Economic Update October 27, 2015

U.S. and World News

  • The People’s Bank of China surprised global markets on Friday by cutting its benchmark lending and deposit rates by 0.25%. The measure was taken to try to stimulate borrowing and spending without squeezing banks’ ability to profit from the spread of the two rates. The PBOC also cut banks’ reserve-requirement ratios by 0.5% to further pump liquidity into the economy. The move by the central bank comes after China reported growth of 6.9% in the 3rd quarter, which while beating estimates of 6.8%, was its slowest pace of growth since the global financial crisis.
  • Gaining over 40% of the popular vote, Justin Trudeau of the Liberal Party has been elected the Prime Minister of Canada, ousting Conservative PM Stephen Harper after nine years in power. Trudeau has pledged to run a large budget deficit over the next three years to invest in infrastructure and try to stimulate Canada’s economy that has suffered from the steep decline of oil prices.
  • At a policy meeting in Malta this week, European Central Bank President Mario Draghi signaled his willingness to increase stimulus to try to spur economic growth in the Eurozone but stopped short of announcing any new policy measures. Draghi said, “We are ready to act if needed…and we are open to the full menu of monetary policy.” Global markets reacted positively to the statements which also caused a significant drop in the euro.Embed from Getty Images

Markets

  • Equity markets continued to advance upwards this week. The S&P 500 ended the week up 2.09%, closing at 2,075. Similarly, the Dow Jones increased 2.56% and closed at 17,647. Year to date, the S&P is up 2.45% and the Dow is up 0.93%.
  • Yields in the Treasury markets moved a bit higher this week. The 10 year Treasury bond now yields 2.09% while the 5 year Treasury bond now yields 1.42%.
  • The spot price of WTI Crude Oil declined this week. Prices fell by 6.33% closing at $44.70 per barrel. In 2015, WTI Oil prices are down 24.81%.
  • The spot price of Gold decreased this week, losing 1.09% and closing at $1,164.45 per ounce. Year to date, gold prices are down 1.68%.

Economic Data

  • Initial jobless claims came in at 259,000 which was an increase from the prior week’s figure of 255,000. The Labor Department noted that there were no special factors that affected the claims figure. The four week moving average for claims now stands at 263,000, which is a new low for this economic cycle.
  • Housing starts increased by 6.5% in September, solidly beating consensus expectations. The gains were largely driven by an 18.3% increase in starts for the more volatile multi-family structures, while single-family starts increased only 0.3%.
  • Existing home sales rose by 4.7% in September, beating consensus expectations. The increase followed a dip in August and was entirely due to purchases of single-family homes, which rose 5.3%. The median price of existing home sales was up 6.6% from a year earlier.

Fact of the Week

  • According to the Bureau of Labor Statistics, the average American worker will hold 9.9 jobs between the ages of 25 and 48, for an average of 2.4 years per job.

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
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
Tamara Wiley, CFP® – (630) 844-3222 twiley@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.

*Image of Japanese Prime Minister Shinzo Abe. Author: 多摩に暇人. License: GNU Free Documentation License, also filed under Creative Commons Attribution-Share Alike 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license. (See, https://commons.wikimedia.org/wiki/File:Shinzo_Abe.jpg).