China, Brexit, EU: Wealth Economic Update May 17, 2019

U.S. and World News

  • china_us-1035146880Earlier this week, China announced new tariffs on $60 billion of American imports in response to the tariff increase by the United States. The Trump administration will subsidize U.S. farmers with $15 billion in aid, in addition to the Department of Agriculture’s $12 billion compensation plan that was put into place last year. President Trump has stated his intention to meet Chinese President Xi Jinping at the G20 summit in June. The United States also has banned China’s Huawei Technologies from buying U.S. technology without special approval and has restricted its equipment from being any part of U.S. telecom networks. Equipment produced by Huawei Technologies, the world’s third largest smartphone maker, is allegedly used by the Chinese to spy, however Huawei has denied those allegations.
  • Brexit drama heats up again after weeks of negotiations between Theresa May and opposition party leader Jeremy Corbyn have closed with Jeremy Corbyn telling the media that his party will oppose the deal. The Conservative Party has been enraged with Theresa May over the past month for negotiating with the Labour Party and Theresa May has finally set a timetable for her departure as prime minister in the beginning of June. Jeremy Corbyn added that the strong probability of Theresa May soon being replaced had contributed to his decision to oppose her deal.
  • As trade negotiations with China have been extended into the foreseeable future, the Trump administration has delayed tariffs on cars and auto part imports from the European Union and Japan for up to six months. In February, the Commerce Department had found that car imports and certain auto parts harm national security, leading to the planned auto tariffs. Agreements have already been made with Canada, Mexico, and Korea, while the European Union and Japan have rejected the idea.


Markets

  • Markets are lower after another volatile week. The S&P 500 fell 0.69% and closed at 2,860. The Dow Jones fell 0.61% and closed at 25,764. Year to date, the S&P is up 14.96% and the Dow Jones is up 11.48%.
  • Yields continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.18% and 2.39, respectively.
  • The spot price of WTI Crude Oil rose this week. Prices climbed 1.67% and closed at $62.69 per barrel. Year to date, Oil prices are up 38.05%.
  • The spot price of Gold fell 0.63% this week and closed at $1,277.97 per ounce. Year to date, Gold prices are down 0.35%.

Economic Data

  • Initial jobless fell to 212,000 this week. The four-week moving average of claims rose by 5,000 to 225,000. Claims rose by 4,000 in California
  • The Philadelphia Fed manufacturing index rose 8.1 points to 16.6 versus expectations for a reading of 9.0
  • Housing starts rose 5.7% to 1,235k versus expectations for a 6.2% increase to 1,209k
  • Building permits rose by 0.6% versus expectations for a 0.1% increase
  • Import prices rose by 0.2% versus expectations for a 0.7% increase
  • Import prices ex-petroleum fell by 0.6% versus expectations for a 0.2% increase
  • Retail sales fell by 0.2% versus expectations for a 0.2% increase
  • Retail sales ex-auto & gas fell by 0.2% versus expectations for a 0.3% increase
  • Industrial production fell by 0.5% versus expectations for an unchanged reading
  • The University of Michigan’s index of consumer sentiment rose by 5.2 points to 102.4 in the preliminary report versus expectations for a reading of 97.2.

Fact of the Week

  • From its closing high of 2946 on April 30th, the S&P 500 has fallen 3.56% to 2859. Since the beginning of the bull market on 3/10/09, the market has had 12 pullbacks of at least 5%, including 6 drops at least 10% and 3 of at least 15%. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann, CFP® – (630) 844-5730 –  rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson, CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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

 

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China, Brexit, Iran: Wealth Economic Update May 11, 2019

U.S. and World News

  • china-1053768454_370On Sunday night, just days before a Chinese trade delegation would depart for Washington to wrap up 18 months of trade negotiations, President Trump tweeted that tariffs on $200 billion of Chinese goods would rise to 25% from 10% by the end of the week, accusing China of “reneging” on its trade promises. President Trump also shared his intention to impose a 25% tariff on the remaining $325 billion of Chinese goods that aren’t currently taxed, making virtually all Chinese exports to the United States subject to a 25% tariff. The Chinese trade delegation led by Vice Premier Liu He did travel to the White House on Thursday for negotiations that ended earlier today, and the 10% tariff rate on $200 billion in Chinese goods did increase to 25% at midnight last night. China’s Commerce Ministry has announced that they will be taking countermeasures against the tariff increase, but that specifically has not yet been revealed. There have been numerous statements from officials of both countries regarding trade talk progress or lack thereof while markets respond in volatile fashion and struggle for direction, however, the only things we actually know to be true at this point is the fact that there is no done deal, and the tariff rate on $200 billion of Chinese goods has risen to 25% from 10%.
  • British Prime Minister Theresa May’s future has once again, been called into question as members of the committee are talking about a rule change that would allow another no-confidence vote to oust her. Currently, the Prime Minister is protected by a rule that does not allow more than one no-confidence vote within 12 months of the previous one that occurred in December. Committee members are growing frustrated that a timetable for Theresa May’s departure has not been set out. Both parties experienced losses in last week’s elections and a new offer is on the table, a deal that would result in a customs union-type arrangement lasting until 2022, Britain’s next general election. At that point in time, it would be decided whether to move toward a full customs union or a deal that would allow Britain to make trade deals with other countries.
  • After American sanctions on Iran have begun to cripple their economy, President Trump has offered to meet and negotiate with Iran’s leadership team about giving up their nuclear program, which was quickly rejected. The United States deployed the Abraham Lincoln carrier through Egypt’s Suez Canal and B-52 bombers to the U.S. base in Qatar yesterday as a warning to Iran. Iran’s leader, Ayatollah Tabatabai-Nejad responded by saying “Their billion dollar fleet can be destroyed with one missile” and “if they attempt any move, they will face dozens of missiles”.


Markets

  • Markets experienced volatility as a result of trade drama with China and finished the week lower. The S&P 500 fell 2.10% and closed at 2,881. The Dow Jones fell 1.96% and closed at 25,942. Year to date, the S&P is up 15.74% and the Dow Jones is up 12.15%.
  • Yields fell this week as investors fled to bonds. The 5 year and 10 year U.S. Treasury Notes are yielding 2.26% and 2.47, respectively.
  • The spot price of WTI Crude Oil ended the week relatively unchanged. Prices fell 0.37% and closed at $61.71 per barrel. Year to date, Oil prices are up 35.90%.
  • The spot price of Gold rose 0.54% this week and closed at $1,286.05 per ounce. Year to date, Gold prices are up 0.28%.

Economic Data

  • Initial jobless fell to 228,000 this week. The four-week moving average of claims rose by 7,000 to 220,000. Claims rose by 11,000 in New York and by 2,000 in Illinois.
  • The producer price index (PPI) rose by 0.2% versus expectations for a 0.3% increase
    PPI ex-food and energy rose by 0.1% versus expectations for a 0.2% increase
  • The trade deficit rose to $50.0 billion, as expected
  • Wholesale inventories fell by 0.1% versus expectations for no change
  • The consumer price index (CPI) rose by 0.32% versus expectations for a 0.4% increase and the year-over-year rate came in at 2.0% versus expectations for 2.1%
  • Core CPI rose by 0.14% versus expectations for a 0.2% increase and the year-over-year rate came in at 2.07%, in-line with expectations

Fact of the Week

  • Sell in May? Since 1989, the 6 month period beginning November 1st has outperformed the 6 month period beginning May 1st 19 out of 30 times. Total return for the 6 month periods starting November 1st were +731%, while total returns for the 6 month periods starting May 1st were only +119% over the 30 year period. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann, CFP® – (630) 844-5730 –  rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson, CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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.

 

Iran Oil: Wealth Economic Update May 3, 2019

U.S. and World News

  • oil-509843570The sanctions imposed on Iran by the United States in November have cut Iran’s oil exports by roughly 1 million barrels per day, and after Thursday’s waivers have expired to some of Iran’s biggest customers, exports are expected to fall by another several hundred thousand barrels per day. At a time of heightened tensions, Iran’s oil minister warned that OPEC is “likely to collapse” due to unilateralism by certain members. Iran appears to be referring to Saudi Arabia’s and the United Arab Emirates’ cooperation with the United States in offsetting the reduction in supply of oil to stabilize prices, and causing substantial economic damage to Iran. Iranian Oil Minister Bijan Zangeneh told an Iranian news agency that “Iran is an OPEC member just for its interests and if certain OPEC members want to threaten and endanger Iran, Iran will not refrain from responding to them”. The next OPEC meeting is scheduled for June 25-26 in Vienna, where the members will decide whether to keep in place an oil supply limit that was established in January.


Markets

  • Markets ended the week relatively unchanged from last week. The S&P 500 rose 0.22% and closed at 2,946. The Dow Jones fell 0.14% and closed at 26,505. Year to date, the S&P is up 18.21% and the Dow Jones is up 14.37%.
  • Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.32% and 2.53, respectively.
  • The spot price of WTI Crude Oil dropped this week. Prices fell 2.27% and closed at $61.68 per barrel. Year to date, Oil prices are up 35.83%.
  • The spot price of Gold fell 0.55% this week and closed at $1,279.11 per ounce. Year to date, Gold prices are down 0.26%.

Economic Data

  • Initial jobless remained unchanged at 230,000 for the week. The four-week moving average of claims rose by 7,000 to 213,000. Claims rose by 7,000 in New York, 5,000 in New Jersey, and by 2,000 in Pennsylvania.
  • Nonfarm productivity rose by 3.6% versus expectations for a 2.4% increase
  • The core PCE index rose by 0.06% versus expectations for a 0.1% increase and the year-over-year rate fell to 1.55% versus expectations for 1.70%
  • Personal income rose by 0.1% versus expectations for a 0.4% increase
  • Personal spending rose by 0.9% versus expectations for a 0.7% increase
  • The Conference Board index of consumer confidence rose by 5.0 points to 129.2 versus expectations for a reading of 126.8
  • Pending home sales rose by 3.8% versus expectations for a 1.5% increase
  • Private sector employment rose by 275,000 versus expectations for a 180,000 increase
  • The ISM manufacturing index fell 2.5 points to 52.8 versus expectations for a reading of 55.0
  • The ISM non-manufacturing index fell 0.6 points to 55.5 versus expectations for a reading of 57.0
  • Construction spending fell by 0.9% versus expectations for a flat reading
  • Factory orders rose by 1.9% versus expectations for a 1.6% increase
  • Nonfarm payrolls rose by 263,000 versus expectations for a 190,000 increase
  • The unemployment rate fell to 3.6% versus expectations for a reading of 3.8%
  • Average hourly earnings rose 0.2% versus expectations for a 0.3% increase and the year-over-year rate remained stable at 3.2%

Fact of the Week

  • On Wednesday 5/01/19, the USA began its 119th month of an economic expansion. The average length of all 33 expansions in the country since 1854 (not counting the current expansion) is 58 months(source: National Bureau of Economic Research).

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann, CFP® – (630) 844-5730 –  rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson, CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

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

 

Brexit, California Wildfires: Wealth Economic Update Nov. 17, 2018

U.S. and World News

  • The British pound had a volatile week as uncertainty around the outcome of a Brexit deal rose higher. Theresa May has lost transport minister Jo Johnson and Brexit Secretary Dominic Raab within the past week and risks further resignations of pro-EU ministers. There was a Cabinet meeting held this week in an attempt to gain support on an agreement with a focus on the controversial Irish border. The deal would force Britain to abide by European rules and would make it very difficult for Britain to negotiate trade deals with other countries. Citing Brexiteer sources, Telegraph Chief Political Correspondent Christopher Hope tweeted “The threshold of 48 letters of no confidence in Theresa May will be passed today. They are expecting a no confidence vote in the PM on Tuesday”.

  • The death toll has climbed to 65 and over 600 people are missing in the deadliest wildfire in California state history. The two major fires are the Camp Fire, just north of Sacramento, which is 45% contained and the Woolsey Fire, just outside of Los Angeles, which is 69% contained. The state of California is also battling very serious air quality issues as a result of the fire, with the smoke continuing to flow southwest. The California utility company PG&E’s faulty power lines are believed to have started the fire.


Markets

  • Stocks retreated this week from last week’s gains. The S&P 500 fell 1.54% and closed at 2,736. The Dow Jones dropped 2.15% and closed at 25,413. Year to date, the S&P is up 4.12% and the Dow Jones is up 4.84%.
  • Yields dropped sharply from last week and the yield curve steepened. The 5 year and 10 year U.S. Treasury Notes are yielding 2.88% and 3.07%, respectively.
  • The spot price of WTI Crude Oil continued falling this week, shedding another 5.63% and closing at $56.80 per barrel. Year to date, Oil prices are down 5.51%.
  • The spot price of Gold rose 0.99% this week and closed at $1,221.59 per ounce. Year to date, Gold prices are down 6.23%.

Economic Data

  • Initial jobless claims rose by 2,000 to 216,000 this week. The four-week moving average of claims rose by 1,000 to 215,000. Claims increased by 2,000 in New York and fell by 3,000 in Michigan, 2,000 in North Carolina, and 2,000 in California.
  • Retail sales rose by 0.8% in October versus expectations for a 0.5% increase. This was led by sales at gas stations.
    • Retail sales ex-autos rose 0.7% versus expectations for a 0.5% increase.
    • Retail sales ex-auto & gas rose by 0.3% versus expectations for a 0.4% increase.
  •  Import prices rose by 0.5% in October versus expectations for a 0.1% increase.
    •  Import prices-ex petroleum rose by 0.2% versus expectations for a flat reading.
  •  The Philadelphia Fed manufacturing index fell by 9.3 points to 12.9 in November versus expectations for a reading of 20.0.
  •  The Empire State manufacturing index increased by 2.2 points to 23.3 in November versus expectations for a reading of 20.0.
  •  The consumer price index (CPI) rose by 0.33% in October, meeting expectations. The increase was driven by higher energy prices. The year-over-year rate came in a 2.53%, also meeting expectations.
    •  Core CPI rose by 0.19% in October, meeting expectations. The year-over-year rate came in at 2.15%, also meeting expectations.
  •  Industrial production rose by 0.1% in October versus expectations for a 0.2% increase.
  •  Manufacturing production rose by 0.3% in October versus expectations for a 0.2% increase.

Fact of the Week

  • As of October 31, the US was producing 11.2 million barrels of crude oil a day, while importing 7.3 million barrels. US oil production has risen substantially from October 2016, when the US produced only 8.5 million barrels and imported 9 million. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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

Iran, Midterm Elections: Wealth Economic Update Nov. 9, 2018

U.S. and World News

  • On Monday, sanctions on Iran imposed by the United States that target the oil, banking and transportations sectors have taken affect. The sanctions were imposed as a means to end Iran’s nuclear program. Eight countries were given temporary exemptions, allowing them to continue to import Iranian petroleum. This will buy time for Iran to continue to negotiate their missile and nuclear programs with the United States, however, Iran is taking a tough stance on the sanctions. Iranian President Hassan Rouhani stated that Iran will “sell its oil and break sanctions” and that “This is an economic war against Iran, but we are prepared to resist any pressure”.
  • In a widely expected outcome, the 2018 midterm election resulted in the Democrats gaining control of the House of Representatives while the Republicans retained control of the Senate. In two closely watched, key races, Republican Ron DeSantis defeated Tallahassee Democratic Mayor Andrew Gillum for Governor of Florida and Republican Ted Cruz was able to keep his Texas Senate seat after defeating Beto O’Rourke. Also, 29-year-old Democrat Alexandria Ocasio-Cortez became the youngest women ever elected to Congress after her victory in New York’s 14th district.


Markets

  • Stocks continued their climb higher this week, despite the declines seen today. The S&P 500 rose 2.21% and closed at 2,781. The Dow Jones gained 3.00% and closed at 25,989. Year to date, the S&P is up 5.72% and the Dow Jones is up 7.10%.
  • Yields ended the week mostly unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 3.04% and 3.18%, respectively.
  • The spot price of WTI Crude Oil slid into a bear market this week, losing another 5.26% and closing at $59.82 per barrel. Year to date, Oil prices are down 0.48%.
  • The spot price of Gold fell 1.91% this week and closed at $1,209.35 per ounce. Year to date, Gold prices are down 7.17%.

Economic Data

  • Initial jobless claims fell by 1,000 to 214,000 this week. The four-week moving average of claims did not change and remained at 214,000. Claims fell by 5,000 in Illinois and by 3,000 in Missouri.
  • The ISM non-manufacturing index declined by 1.3 points to 60.3 versus expectations for a reading of 59.0.
  • The producer price index (PPI) increased by 0.6% month-over-month in October versus expectations for a 0.2% increase. The year-over-year figure rose by 2.9%. 
    • PPI excluding food, energy, and trade services rose by 0.2% month-over-month, in-line with expectations. The year-over-year figure rose by 2.8%.
  • The University of Michigan’s index of consumer sentiment fell by 0.3 points to 98.3 in the November preliminary reading versus expectations for a reading of 98.0.
  • Wholesale inventories rose by 0.4% for September versus expectations for a 0.3% increase.

Fact of the Week

  • Tuesday’s Midterm elections saw Democrats taking control of the house while Republicans bolstered their control of the senate. Historically, returns in the S&P 500 under a Republican President, Republican Senate, and Democratic House are 10.8% annualized. (Source: Strategas)

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.

Mexico/Canada trade, Oil prices: Wealth Economic Update Sept. 28, 2018

U.S. and World News

  • The Trump administration is willing to move forward on a trade agreement with Mexico, excluding Canada, if Canada does not agree to grant the United States access to its dairy market. This has been a very important point for the United States throughout the negotiation process. President Trump also threatened to impose a 25% tariff on cars imported from Canada, as the administration continues to further pressure Canada. So far, Canada is not calling the bluff, and U.S. Trade Representative Robert Lighthizer expressed a negative view on current negotiations with Canada. Congress members stated that there would be very little support for a deal that excluded Canada.
  • oil-859021152_370Oil prices skyrocketed as United States sanctions on Iran are set to begin on November 4th and OPEC has agreed to keep oil production at its current levels rather than pump more. The United States promised that the oil market would be sufficiently supplied in time for the sanctions to begin. OPEC’s decision against increasing supply could force the United States to release oil from the Strategic Petroleum Reserve to keep oil prices under control.


Markets

  • Stocks pulled back this week while the S&P 500 finished its strongest quarter since December of 2013. The S&P 500 fell 0.51% and closed at 2,914. The Dow Jones lost 1.07% and closed at 26,458. Year to date, the S&P is up 10.47% and the Dow Jones is up 8.73%.
  • Yields finished the week almost unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.95% and 3.06%, respectively.
  • The spot price of WTI Crude Oil continued its surge higher another 3.90% this week to close at $73.54 per barrel. Year to date, Oil prices are up 22.34%.
  • The spot price of Gold fell 0.71% this week, and closed at $1,191.53 per ounce. Year to date, Gold prices are down 8.54%.

Economic Data

  • Initial jobless claims rose by 12,000 to 214,000 this week. The four-week moving average of claims remained unchanged at 206,000. Claims rose by 10,000 in North Carolina, 7,000 in Kentucky, and 3,000 in South Carolina and California.
  • Durable goods orders rose by 4.5% in August, exceeding expectations of a 2% increase. This increase reflected a 13% increase in transportation equipment.
    • Durable goods orders ex-transportation rose by 0.1% versus expectations of 0.4%.
  • The Conference Board index of consumer confidence rose to 138.4 in September versus expectations of a 132.1 reading. This is the highest level since 2000.
  • Sales of new single-family homes rose by 3.5% in August to a seasonally-adjusted annualized rate of 629,000 versus expectations of 630,000. The prior three months were revised down by a net 40,000. The largest increase was in the Northeast region.
  • The core PCE price index ex-food and energy rose by 0.4% month-over-month in August versus expectations of 0.1%.
    • Personal income rose by 0.3% in August versus expectations of 0.4%
    • Personal spending rose by 0.3% in August, in line with expectations
  • The University of Michigan’s index of consumer sentiment fell to 100.1 in the August final reading versus expectations of a 100.6 reading.
  • The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate to 2-2.25% at the September meeting. Jerome Powell indicated that the FOMC would continue with gradual rate hikes and did not refer to the current monetary policy as “accommodative”, which is what it was previously referred too.


Fact of the Week

  • Of 2,000 American’s surveyed, 48% thought that the market was flat over the last 10 years, while 18% thought the market was down the last 10 years. As of last Friday, September 21st, the S&P 500 had returned 163.42% on a total return basis , or 10.16% annualized. (Source: Betterment, 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

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.

Iran, California wildfires, Turkey tariffs: Wealth Economic Update Aug. 10, 2018

U.S. and World News

  • The first round of sanctions on Iran by the United States has taken effect which includes a restriction on sales of the U.S Dollar to Iran’s government, trade restrictions on precious metals and industrial metals, and a ban on the purchase of Iranian sovereign debt. These new measures are expected to lead to higher prices on almost everything for Iranians. On November 5th, more severe sanctions will take effect if Iran fails to comply with U.S orders. These measures will entail an obstruction of Iran’s oil exports and tough sanctions on shipping.
  • wildfires-157384116California’s largest-ever wildfire has grown to the size of Los Angeles as dry weather, high winds, and location have made it very difficult to contain. President Trump has declared a “major disaster” in California, ordering federal funding to assist in containing the fire. The fire that currently spans over 470 square miles has burned through 283,800 acres is not expected to be fully contained by firefighters until September.
  • President Trump announced that the United States will double the tariff rate on steel and aluminum imported from Turkey, sending the Turkish lira down 20% against the U.S Dollar. This sparked a global market selloff as Turkey is in debt to many different banks. President Erdogan told Turks to sell all U.S Dollars that they own in an attempt to stabilize the plummeting Turkish currency.


Markets

  • Stocks pared their gains at the end of this week closing lower. The S&P 500 fell by 0.18% and closed at 2,833. The Dow Jones declined by 0.44% and closed at 25,313. Year to date, the S&P is up 7.16% and the Dow Jones is up 3.79%.
  • Yields were volatile this week, but also ended the week lower as investors piled into bonds. The 5 year and 10 year U.S. Treasury Notes are yielding 2.75% and 2.87%, respectively.
  • The spot price of WTI Crude Oil continued its slide this week, losing 1.11% and closing at $67.73 per barrel. Year to date, Oil prices are up 14.66%.
  • The spot price of Gold fell 0.27% this week, and closed at $1,211.67 per ounce. Year to date, Gold prices are down 6.99%.

Economic Data

  • Initial jobless claims fell by 5,000 to 213,000 this week. The four-week moving average of claims moved down by 1,000 to 214,000. Jobless claims rose by 3,000 in California and fell by 4,000 in Kentucky. The pace of layoffs remains very low.
  • The producer price index (PPI) was flat in July versus expectations of a 0.2% increase reflecting lower food and energy prices as well as lower retail margins.
    • The producer price index ex-food and energy rose 0.1% in July versus expectations for a 0.2% increase.
  • Wholesale inventories rose 0.1% in June versus expectations of no change.
  • The consumer price index (CPI) rose 0.17% month-over-month in July and the year-over-year rate rose 0.1% to 2.4%, the fastest pace in six months. Consensus expectations were for 0.2% month-over-month and 2.3% year-over-year.
    • Core CPI rose 0.24% month-over-month and 2.35% year-over-year versus expectations of 0.2% and 2.3% respectively.


Fact of the Week

  • The number of US homeowners grew 1.8 million in the 12 months ending 6/30/18. That is double the 0.9 million total homeowners added in the decade ending 6/30/17. (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

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.

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.

China tariffs, OPEC: Wealth Economic Update July 6, 2018

U.S. and World News

  • shipping-868192010_370Just after midnight Washington time, a 25% tariff on $34 billion of Chinese goods went into effect as scheduled. Also expected, China hit back with tariffs of the same scale on goods such as soybeans and automobiles. Neither side is showing signs of backing down as the Trump administration is already discussing $16 billion in additional tariffs on Chinese goods. During a rally in Montana on Thursday, President Trump threatened that tariffs on Chinese goods could reach $500 billion, which is almost equal to what the United States imports from China in total. Markets did not react to the tariffs taking affect as investors were aware of the event, however, risk arises from higher prices passed on to companies and consumers.
  • On Saturday, President Trump made an agreement with Saudi Arabia that gives the kingdom a 2 million barrel per day spare capacity output to use if and when necessary, to make up for the lost supply from Iran and Venezuela. OPEC members, particularly Iran, have responded negatively to President Trump’s tweets directed at OPEC. The United States is attempting to stop all allies from importing oil from Iran, while President Trump is directing tweets at OPEC to influence them to lower oil prices. Iranian Revolutionary Guards commander Ismail Kowsari said that Tehran will block oil shipments through the Strait of Hormuz in the Gulf if the U.S. bans Iranian oil sales.

Markets

  • Stocks rebounded this week. The S&P 500 increased by 1.56% and closed at 2,760. The Dow Jones rose 0.82% and closed at 24,456. Year to date, the S&P is up 4.23% and the Dow Jones is up 0.10%.
  • Stocks rebounded this week. The S&P 500 increased by 1.56% and closed at 2,760. The Dow Jones rose 0.82% and closed at 24,456. Year to date, the S&P is up 4.23% and the Dow Jones is up 0.10%.
  • Yields fell slightly this week and the yield curve continued to flatten. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.72% and 2.82%, respectively.
  • The spot price of WTI Crude Oil was relatively calmer, losing 0.39% this week and closing at $73.86 per barrel. Year to date, Oil prices are up 22.87%.
  • The spot price of Gold increased 0.20% this week, closing at $1,255.08 per ounce. Year to date, Gold prices are down 3.66%.

Economic Data

  • Initial jobless claims rose by 3,000 to 231,000 this week. The four-week moving average of claims moved up by 3,000 to 225,000. Jobless claims fell by 6,000 in California and rose by 2,000 in Ohio and Massachusetts.
  • Private payrolls increased by 177,000 in June versus expectations of a 190,000 increase. The gains were mostly balanced across sectors.
  • The ISM manufacturing index rose by 1.5 points to 60.2 in June against expectations of 58.5. The increase was led by supplier deliveries.
  • The ISM non-manufacturing index rose by 0.5 points to 59.1 against expectations of 58.3. The report was mostly mixed.
  • Nonfarm payrolls rose by 213,000 in June versus consensus expectations of 195,000, and previous months were revised up by a net 37,000. The positive payrolls figure was led by jobs in the manufacturing sector.
    • The unemployment rate came in at 4.0% versus expectations of 3.8%, this was led higher by a higher labor force participation rate.
    • Average hourly earnings rose by 0.2% in June and the year-over-year rate remained at 2.7%. The consensus estimate was for 0.3% in June.
  • The trade deficit declined to -$43.1 billion in May from -$46.1 billion in April. The decline in the trade balance came from non-petroleum categories.

Fact of the Week

  • The S&P 500 has closed at its calendar year high in the second half of the year (i.e., during the 6 months of July-December) 74% of the time since 1950. In 15 of the last 25 years, the index’s calendar year high has occurred during the month of December. The S&P 500 consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (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

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.

 

China tariffs, Iran: Wealth Economic Update June 29, 2018

U.S. and World News

  • china-468808340_370.jpgChinese stocks made their way into bear market territory this week as trade tensions continue to rise. According to reports, another trade initiative is currently being crafted that would restrict companies with at least 25% Chinese ownership from buying companies involved in industrially significant technology. President Trump tweeted earlier this week that “The U.S. is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the USA.”
  • As the U.S. continues to pressure Iran after pulling out of the Iran Nuclear Deal, the United States has asked its allies to stop importing oil from Iran, or face U.S. sanctions. This new development has sent the price of WTI crude oil over $70 per barrel as OPEC’s third largest producer is put under pressure. Saudi Arabia plans to pump more oil in July than ever before at 11 million barrels per day to respond to the supply gap and rising oil prices.

Markets

  • Stock markets fell again this week. The S&P 500 dropped 1.31% this week and closed at 2,718. The Dow Jones fell 1.26% and closed at 24,271. Year to date, the S&P is up 2.64% and the Dow Jones is down 0.71%.
  • Yields also declined this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.73% and 2.86%, respectively.
  • The spot price of WTI Crude Oil surged 8.36% this week and closed at $74.31 per barrel.. Year to date, Oil prices are up 23.62%.
  • The spot price of Gold decreased 1.39% this week, closing at $1,252.94 per ounce. Year to date, Gold prices are down 3.83%.

Economic Data

  • Initial jobless claims rose by 9,000 to 227,000 this week. The four-week moving average of claims edged up by 1,000 to 222,000. Jobless claims rose by 3,000 in California and Kentucky, and rose by 2,000 in Maryland.
  • The third estimate of first quarter GDP was revised down to 2.0% from 2.2% and the year-over-year rate was unchanged at 2.8%. The downward revision was led by a decline in the consumer spending component, net trade, and inventories.
  • Sales of new single-family homes rose by 6.7% month-over-month in May to a seasonally adjusted rate of 689,000 units, exceeding consensus expectations of 667,000. The rise in new single-family home sales were led by sales in the South.
  • The Conference Board index of consumer confidence fell to 126.4 from 128.8.
  • New orders for durable goods fell by 0.6% in May versus consensus expectations of a 1.0% decline.
  • Wholesale inventories rose by 0.5% in May versus expectations of a 0.2% increase.
  • Pending home sales fell 0.5% in May versus expectations of a 0.5% increase.
  • Personal income rose 0.4% in May, in line with expectations.
  • Personal spending rose 0.2% in May, versus expectations of a 0.4% increase.

Fact of the Week

  • An analysis by the ECB and Dutch central bank found that trading volume during the FIFA World Cup drops roughly 33% during the games from normal levels. Median trading volume was found to be 55% lower on a given exchange when the exchange’s home county was playing. (Source: Seeking Alpha)

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.