Hong Kong, Coronavirus, Biden: O2 Wealth Economic Update, Jan. 22, 2021

U.S. and World News

  • hong-1131642972The city of Hong Kong has announced a lockdown that will begin at midnight local time as a result of 61 new coronavirus cases. The lockdown will include about 150 residential buildings in the Yau Tsim Mong district and will be enforced by almost 2,000 “disciplined services officers”. The 7.5 million people living in these residential buildings will be restricted from leaving the area until the lockdown is lifted. There have been scattered reports that China has been enforcing localized lockdowns in several areas with outbreaks, as it tries to protect the city of Beijing. China has pointed to the imports of frozen foods as the reason the that the virus was brought into the country.
  • Following Inauguration Day, President Joe Biden is moving forward with a series of executive orders. Joe Biden signed an executive order on Thursday instructing U.S government agencies to use the Defense Production Act to increase supplies of COVID tests, N95 masks, and vaccine syringes, citing the lack of critical supplies to fight the pandemic. The Biden administration is planning for an order that would require people to wear masks in airports and on planes which is similar to the order that was signed on Wednesday requiring people to wear masks on all federal properties. President Biden is also pushing for schools to open in the first 100 days of his presidency.

Markets

  • Markets rebounded sharply this week. The S&P 500 jumped 1.96% and closed at 3,841. The Dow Jones rose 0.63% and closed at 30,814. Year-to-date, the S&P 500 is up 2.35% and the Dow Jones is up 1.37%.
  • Yields are little changed from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.43% and 1.08%, respectively.
  • The spot price of WTI Crude fell this week. Prices were down -0.53% and closed at $52.14 per barrel. Year to date, Oil prices are up 7.22%.
  • The spot price of Gold rose by 1.39% and closed at $1,853.82 per ounce. Year to date, Gold prices are down -2.35%.
    Economic Data
  • Initial jobless claims fell to 900,000 and the four-week moving average rose by 23,000 to 848,000
  • The level of housing starts rose by 5.8% to seasonally-adjusted-annualized-rate of 1.70 million units versus expectations for a reading of 1.56 million
  • Building permits rose by 4.5% versus expectations for a decline of -1.7%
  • Existing home sales rose by 0.7% to a seasonally-adjusted-annualized-rate of 6.76 million units versus expectations for a decline of -1.9%

Fact of the Week

  • Through 9/30/20, 65% of the mortgages that were originated in the United States YTD were refis of existing mortgages (source: Inside Mortgage Finance).

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

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Stimulus, Biden, Impeachment: O2 Wealth Economic Update, Jan. 15, 2021

U.S. and World News

  • iStock-1216448609On Thursday evening, President-elect Joe Biden revealed his proposal for a $1.9 trillion fiscal relief package. The proposed spending includes $1,400 stimulus payments to all Americans, an extension of expanded unemployment benefits through September of 2021 that would include an additional $400 a week, $370 billion of aid to state and local governments, and $190 billion for public health funding. Additionally, an increase of the federal minimum wage to $15/hour has been included in the bill which has been strictly opposed by Senate Republicans. Due to the overwhelming size of the relief bill and the inclusion of a minimum wage hike, it is expected that the fiscal relief bill will face opposition in the Senate, where 10 Republican votes will be required.
  • The U.S. House of Representatives voted to impeach President Donald Trump for the second time this year following the event that took place at the Capitol on January 6th. The article of impeachment accuses President Trump of “willfully inciting violence against the government of the United States”, referring to his tweets in the days following up to January 6th and his rally that he held in Washington on that day. President Trump was subsequently removed and/or suspended from most all popular social media platforms. Speaker of the House Nancy Pelosi announced today that she plans to send the impeachment to the Senate sometime next week, as President-elect Joe Biden is scheduled to be officially sworn into office on Wednesday, January 20th.

Markets

  • Markets fell this week. The S&P 500 lost -1.46% and closed at 3,768. The Dow Jones fell -0.91% and closed at 30,814. Year-to-date, the S&P 500 is up 0.38% and the Dow Jones is up 0.73%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.45% and 1.09%, respectively.
  • The spot price of WTI Crude fell this week. Prices were down -0.13% and closed at $52.17 per barrel. Year to date, Oil prices are up 7.52%.
  • The spot price of Gold fell by -1.22% and closed at $1,826.49 per ounce. Year to date, Gold prices are down -3.79%.

Economic Data

  • Initial jobless claims rose to 965,000 and the four-week moving average rose by 18,000 to 834,000
  • Import prices rose by 0.9% versus expectations for an increase of 0.7%
  • Import prices ex-petroleum rose by 0.4% versus expectations for an increase of 0.1%
  • The Consumer Price Index (CPI) rose by 0.4%, in-line with expectations and the year-over-year rate rose by 1.4% versus expectations for an increase of 1.3%
  • The core CPI index rose by 0.1%, in-line with expectations and the year-over-year rate rose by 1.6%, in-line with expectations
  • Retail sales fell by -0.7% versus expectations for a flat reading
  • Core retail sales fell by -1.9% versus expectations for an increase of 0.1%
  • The Producer Price Index (PPI) rose by 0.3% versus expectations for an increase of 0.4%
  • PPI ex-food, energy, and trade services rose by 0.4% versus expectations for an increase of 0.2%
  • Industrial production rose by 1.6% versus expectations for an increase of 0.5%
  • Business inventories rose by 0.5%, in-line with expectations
  • The University of Michigan’s index of consumer sentiment fell by 1.5 points to 79.2 versus expectations for a reading of 79.5

Fact of the Week

  • More new brokerage accounts (an estimated 10 million) were opened during calendar year 2020 than in any other year in US history (source: JMP Securities).

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

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Vaccine, Stimulus: O2 Wealth Economic Update, Jan. 8, 2021

U.S. and World News

  • iStock-1266494637The year 2020 ended with the United States remaining far behind its goal of 20 million vaccinations, sitting at just 6.25 million vaccinated. There has been criticism of the Trump administrations strategy of withholding 50% of the available supply, so that they can then distribute the second wave of doses for the second round of vaccinations that is needed for immunity. Further, the FDA has backed this up by stating that there is no evidence that immunity can develop with just a single dose, and that both are needed. President Elect Joe Biden stated his intention to accelerate the distribution of the vaccine, releasing every available dose when he takes office. While this strategy will certainly speed up the process of distribution, it will not solve the issue that hospitals currently have with government regulations recently put in place. New York Governor Andrew Cuomo and New York City May Bill de Blasio have had their trouble as they argue the effectiveness of Cuomo’s penalties for New York hospitals missing vaccination targets.
  • As a result of the Georgia run-off election, Democrats are now set to control the senate in the coming weeks with Vice President Elect Kamala Harris being the tie-breaker. The Democratic sweep has led to expectations of potential trillions in new stimulus, until this afternoon when Democratic Senator Joe Manchin III poured cold water on that potential after he said that he would “absolutely not” support a new round of stimulus checks. With the new composition of the Senate, Joe Biden and Majority Leader Chuck Schumer cannot afford to lose one Democratic vote to pass legislation. Shortly after the Senator’s statement, he issued a follow-up statement that he would evaluate Joe Biden’s aid plan when the time comes, adding further confusion to expectations.

Markets

  • Markets continued rallying in the first week of the year 2021. The S&P 500 surged 2.48% and closed at 3,825. The Dow Jones rose 2.31% and closed at 31,098. Year-to-date, the S&P 500 is up 2.48% and the Dow Jones is up 2.31%.
  • Yields rose sharply higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.48% and 1.11%, respectively.
  • The spot price of WTI Crude rose this week. Prices were up 8.43% and closed at $52.61 per barrel. Year to date, Oil prices are up 8.43%.
  • The spot price of Gold fell by -2.70% and closed at $1,847.49 per ounce. Year to date, Gold prices are down -2.70%.

Economic Data

  • Initial jobless claims fell to 787,000 and the four-week moving average fell by 19,000 to 819,000
  • Construction spending rose by 0.9% versus expectations for an increase of 1.0%
  • The ISM manufacturing index rose by 3.2 points to 60.7 versus expectations for a reading of 56.8
  • The ISM non-manufacturing sector rose by 1.3 points to 57.2 versus expectations for a reading of 54.5
  • Private sector employment in the ADP report fell by -123,000 versus expectations for an increase of 75,000
  • Factory orders rose by 1.0% versus expectations for an increase of 0.7%
  • Wholesale inventories were flat versus expectations for a decline of -0.1%
  • Nonfarm payrolls fell by -140,000 versus expectations for an increase of 50,000
  • The unemployment rate came in at 6.7% versus expectations for a reading of 6.8%
  • Average hourly earnings rose by 0.8% versus expectations for an increase of 0.2%

Fact of the Week

  • The life expectancy at birth of an American baby in 1971, i.e., 50 years ago, was 71.1 years. The life expectancy at birth of an American baby today is 78.7 years. Thus, life expectancy in the United States has increased 7.6 years over the last half century while the full retirement age under social security has only increased by two years, i.e., American life expectancy at birth is increasing at the rate of 1 ½ years every decade (source: Center for Disease Control).

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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Stimulus, Vaccine: O2 Wealth Economic Update, Dec. 31, 2020

U.S. and World News

  • iStock-1253347371$600 stimulus checks from the new COVID Relief bill are currently being distributed to bank accounts, according to Treasury Secretary Mnuchin. Tuesday evening, the Treasury Secretary tweeted that payments to those who have direct deposit would state going out, and some might have received them as early as Tuesday night. Payments will continue to roll out through next week, and payments to those who do not have direct deposit began shipment on Wednesday.
  • In the UK, the COVID-19 vaccine developed by the University of Oxford and AstraZeneca was authorized for emergency use in the county, welcome news for a country that has been hit hard recently by the virus, resulting in strict lockdown measures.

Markets

  • Markets were up heading into the new year. The S&P 500 was up 0.36% and closed at 3,756. The Dow Jones was up 1.35% and closed at 30,606. Year-to-date, the S&P 500 is up 18.05% and the Dow Jones is up 9.41%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.91%, respectively.
  • The spot price of WTI Crude rose this week. Prices were up 0.39% and closed at $48.42 per barrel. Year to date, Oil prices are down -20.07%.
  • The spot price of Gold ticked higher by 0.83% and closed at $1,899.09 per ounce. Year to date, Gold prices are up 25.16%.

Economic Data

  • Pending home sales declined by 2.6% in November, against consensus expectations for an unchanged reading.
  • The S&P/Case-Shiller 20-city home price index increased by 1.6% in October, above consensus expectations.
  • Initial jobless claims declined to 787,000 against expectations for an increase for the week ended December 26.

Fact of the Week

  • Carolina Panthers offensive lineman Russel Okung has become the first player in NFL history to receive payment in digital currency. It was announced that half of Okung’s $13 million base salary from the 2020 season will be paid in bitcoin (Source: USA Today)

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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Vaccine, Stimulus: O2 Wealth Economic Update, Dec. 18, 2020

U.S. and World News

  • iStock-1266490076_370The Federal Drug Administration advisory panel has confirmed on Thursday that the benefits of approving Moderna’s COVID-19 vaccine outweigh the risks, putting the ball in the FDA’s court for approval, which could come as soon as tomorrow. According to Bloomberg, as of this morning, over 1.1 million people across four countries have been vaccinated. In the United States, the vaccine has been given to health care workers, as public workers on the front lines are first in line. Pfizer has publically expressed its happiness throughout the week with the success of the vaccine rollout, though there have been some scattered reports of supply chain issues. Given the approval from the FDA, Moderna’s vaccine distribution is expected to run smoother, as the vaccine does not require special storage equipment to keep it at extreme cold temperatures.
  • Stimulus negotiations in Washington have made significant progress throughout the week, with both sides having a lot invested, it is anticipated that a deal will be done, however it seems that talks will run into the weekend as differences still remain. The size of the stimulus package, as it stands now, is just under $1 trillion and does not include the major sticking points of state and local aid and liability protections for businesses. It is being reported that the stimulus package will include $600 stimulus checks to individuals and unemployment benefits of $300 a week. The latest complication is a Republican Senator’s demand to terminate the Federal Reserve’s emergency lending program by the end of the year, when it was originally set to expire in the CARES Act.

Markets

  • Markets rallied this week. The S&P 500 rose 1.29% and closed at 3,710. The Dow Jones climbed 0.46% and closed at 30,179. Year-to-date, the S&P 500 is up 16.57% and the Dow Jones is up 7.91%.
  • Yields moved higher and the yield curve steepened this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.38% and 0.94, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 5.24% and closed at $49.01 per barrel. Year to date, Oil prices are down -19.73%.
  • The spot price of Gold rose by 2.18% and closed at $1,880.61 per ounce. Year to date, Gold prices are up 23.94%.

Economic Data

  • Initial jobless claims rose to 885,000 and the 4-week moving average rose by 34,000 to 813,000.
  • Industrial production rose by 0.4% versus expectations for an increase of 0.3%
  • Import prices rose by 0.1% versus expectations for an increase of 0.3%
  • Import prices ex-petroleum was flat for the month versus expectations for an increase of 0.2%
  • Retail sales fell by -1.1% versus expectations for a decline of -0.3%
  • Retail sales core/control fell by -0.5% versus expectations for an increase of 0.2%
  • Business inventories rose by 0.7% versus expectations for an increase of 0.6%
  • The level of housing starts rose by 1.2% to a seasonally-adjusted-annualized-rate of 1.547 million units versus expectations for an increase of 0.3%
  • Building permits rose by 6.2% versus expectations for an increase of 1.0%

Fact of the Week

  • The total rounds of golf played by Americans is projected to increase by 50 million rounds in 2020, the largest year-over-year growth in 23 years. In 1997, spurred on by the appeal of a then 21-year old Tiger Woods, the number of rounds increased by 63 million rounds (source: National Golf Foundation).

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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Brexit, Vaccine: O2 Wealth Economic Update, Dec. 11, 2020

U.S. and World News

  • iStock-1177313859_370Brexit negotiations have made no progress while the December 31st deadline is only weeks away, increasing expectations that the United Kingdom will leave the European Union without a deal potentially resulting in major supply chain disruptions throughout Europe. The “no deal” scenario would include the U.K. leaving the European Union without a comprehensive trade deal covering the $1 trillion in annual bilateral trade. Among the issues of disagreement involve the U.K. seeking independence regarding climate, specifically fishing rights, as well as labor standards. The European Union, however, does not want to give up a certain level of judicial oversight of the U.K. Prime Minister Boris Johnson and President of the European Commission Ursula Von Der Leyen both warned that the probability of a “no deal” is high and have pointed to Sunday as a deadline for negotiators.
  • The Pfizer/BioNTech mRNA COVID vaccine was approved by a Food and Drug Administration Advisory panel for emergency use on Thursday, paving the way for vaccinations in the United States to begin. The committee voted on whether the benefits of the vaccine outweigh the risks for use in individuals 16 years of age and older, and it passed 17-4, while one voter abstained. Once the vaccine is ultimately approved by the FDA, the first batches will likely be given to healthcare workers, while certain categories of Americans next in line is being debated.

Markets

  • Markets fell lower this week. The S&P 500 dropped -0.95% and closed at 3,663. The Dow Jones lost -0.54% and closed at 30,046. Year-to-date, the S&P 500 is up 15.39% and the Dow Jones is up 7.70%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.89, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 0.69% and closed at $46.58 per barrel. Year to date, Oil prices are down -23.71%.
  • The spot price of Gold rose by 0.01% and closed at $1,839.07 per ounce. Year to date, Gold prices are up 21.21%.

Economic Data

  • Initial jobless claims jumped to 853,000 and the 4-week moving average rose by 36,000 to 776,000.
  • The consumer price index (CPI) rose by 0.2% versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.2% versus expectations for an increase of 1.1%
  • The Core CPI index rose by 0.2% versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.7% versus expectations for an increase of 1.5%
  • The producer price index (PPI) rose by 0.1%, in-line with expectations
  • PPI ex-food, energy and trade services rose by 0.1% versus expectations for an increase of 0.2%
  • Nonfarm productivity was revised lower by 0.3% to 4.6% for the third quarter versus expectations for it to remain unchanged at 4.9%
  • Job openings increased by 158,000 to 6.652 million versus expectations for a reading of 6.494 million
  • Wholesale inventories rose by 1.1% versus expectations for an increase of 0.9%
  • The University of Michigan’s index of consumer sentiment rose by 4.5 points to 81.4 versus expectations for a reading of 76.0

Fact of the Week

  • Small American businesses, defined as having less than 500 employees, are responsible for 44% of US economic activity (source: US Small Business Administration – Office of Advocacy).

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 CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

Visit Old Second Wealth Management

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Dow tops 30k; Black Friday, Cyber Monday: O2 Wealth Economic Update, Nov. 27, 2020

U.S. and World News

  • The Dow Jones Industrial Average hit and closed above 30,000 on Tuesday for the first time since its inception in 1896. Vaccine sentiment reignited the recovery rally on hope that the economy will soon get back to normal, and was topped off by the GSA clearing the way for a presidential transition process and reports that Janet Yellen could head up the Treasury.
  • iStock-624893634_370The biggest shopping weekend of the year is here, with bargain hunters across the U.S. planning to spend the next few days searching for discounts in stores and online despite the coronavirus pandemic. With rising wages and increasing consumer confidence, U.S. holiday sales are expected to grow between 3.6% and 5.2%, compared with the 4% growth last year, while online sales are seen rising 20% to 30%, according to the National Retail Federation.

Markets

  • Markets gained this week. The S&P 500 rose 2.3% and closed at 3,638. The Dow Jones gained 2.23% and closed at 29,910. Year-to-date, the S&P 500 is up 14.52% and the Dow Jones is up 7.04%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.37% and 0.84, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 7% and closed at $45.39 per barrel. Year to date, Oil prices are down -25.66%.
  • The spot price of Gold fell by -4.49% and closed at $1,786.99 per ounce. Year to date, Gold prices are up 17.78%.

Economic Data

  • Initial jobless claims increased to 778k for the week ended November 21, against expectations for a decline, and the 4-week moving average fell by 4k to 749k.
  • Third-quarter real GDP growth was unrevised at +33.1%, in line with consensus expectations.
  • The Conference Board index of consumer confidence fell by 5.3 points to 96.1 in November, below expectations for a smaller decrease.
  • The FHFA house price index increased by 1.7% in September, above consensus expectations for a more modest increase.

Fact of the Week

  • It took less than four years for the Dow Jones Industrial Average to climb from 20,000 to 30,000 (Jan 2017 – Nov 2020). It took 18 years (1999-2017) for the index to reach 20,000 from 10,000, and 103 years (1896-1999) to reach 10,000 from its original inception (Source: Yahoo Finance)

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 CFA®, CFP® – (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.

COVID: O2 Wealth Economic Update, Nov. 20, 2020

U.S. and World News

  • iStock-1207650868_370The United States reported a record 180,000 new cases of coronavirus yesterday, prompting the CDC to urge Americans to stay home for the Thanksgiving holiday. Also, the level of hospitalizations has doubled in the past two weeks, causing the level of deaths to increase as well. Several individual states throughout the week have put in place additional restrictions that include curfews for non-essential businesses, a ban on gatherings with people outside of your household, and capacity limits for retailers. Additional positive vaccine data rolled in this week from Moderna and Astrazeneca as Pfizer submits its application to the FDA for their emergency-use designation. Dr. Anthony Fauci has expressed concern about skepticism as it relates to vaccines, he told reporters this week that “if we have an effective vaccine and 50% of the population refuses to take it, you still have a considerable public-health challenge”. Pfizer CEO Albert Bourla stated that the first doses of the vaccine could be distributed within hours of approval.
  • On Thursday evening, Treasury Secretary Mnuchin requested that the Federal Reserve let five of the nine credit facilities put in place as part of the CARES act expire on December 31st. Secretary Mnuchin stated that the facilities have “clearly achieved their objective” and bond issuance volumes have returned to their pre-COVID-19 levels. The Federal Reserve issued a statement reading “The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.” Mr. Mnuchin also argued that the funds need to be reallocated to the people that need it, and not to buy bonds, referring to the approximately $455 billion remaining from the CARES Act.

Markets

  • Markets pulled back this week. The S&P 500 fell -0.73% and closed at 3,558. The Dow Jones lost -0.65% and closed at 29,264. Year-to-date, the S&P 500 is up 11.95% and the Dow Jones is up 4.69%.
  • Yields fell this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.37% and 0.83%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 5.03% and closed at $42.15 per barrel. Year to date, Oil prices are down -30.97%.
  • The spot price of Gold fell by -0.89% and closed at $1,872.35 per ounce. Year to date, Gold prices are up 23.40%.

Economic Data

  • Initial jobless claims rose to 742,000 and the four-week moving average of claims fell by 14,000 to 742,000. Claims fell by 22,000 in Illinois, 9,000 in Florida, and by 8,000 in Washington. Claims rose by 32,000 in Louisiana, 10,000 in Massachusetts, and by 6,000 in Texas
  • The Philadelphia Fed manufacturing index fell by 6.0 points to 26.3 versus expectations for a reading of 22.5
  • Retail sales rose by 0.3% versus expectations for an increase of 0.5%
  • Retail sales ex-auto & gas rose by 0.2% versus expectations for an increase of 0.6%
  • Import prices ex-petroleum was flat versus expectations for an increase of 0.3%
  • Industrial production rose by 1.1% versus expectations for an increase of 1.0%
  • Business inventories rose by 0.7% versus expectations for an increase of 0.6%
  • The level of housing starts rose by 4.9% to a seasonally-adjusted-annualized-rate of 1.53 million versus expectations for an increase of 3.2%
  • Existing home sales rose by 4.3% to a seasonally-adjusted-annualized-rate of 6.85 million units versus expectations for a decline of -1.1%

Fact of the Week

  • If a trade bought the SPY ETF at the open and sold it at the close every day since the start of 1993, they would be down 10% over the 27 year period. If, instead, they had purchased the SPY ETF at the beginning of 1993 and reinvested the dividends, they would be up over 1270% (Source; Bespoke Research, Bloomberg).

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 CFA®, CFP® – (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.

Pfizer vaccine, COVID: O2 Wealth Economic Update, Nov. 13, 2020

U.S. and World News

  • vaccine_1205972800_370Pharmaceutical giant Pfizer Inc. and its German biotech partner BioNTech released data Monday morning showing that its vaccine is 90% effective. The effectiveness rate of the Pfizer vaccine is far higher than the 44% effectiveness rate of the flu vaccine and is comparable to the rates seen for Mumps and Chickenpox. Pfizer CEO Albert Bourla told reporters that the trial will be finished by the end of November and is expected to gain emergency-use approval by the end of this year. Dr. Scott Gottlieb stated that the timeline for mass vaccination is late February/early March and that it may not be broadly available until the end of the second quarter/beginning of the third quarter of next year. The distribution of the vaccine is expected to be complex and expensive, as it has a short shelf life and must be stored at -94 degrees Fahrenheit. Dr. Anthony Fauci told reporters that biotech company Moderna’s vaccine might exhibit similar results to Pfizer’s.
  • New daily coronavirus cases in the United States are surging as 150,530 new cases were reported yesterday and the 7-day average in new cases reached 130,000 which is about 100,000 higher than where it was in September. There are currently about 67,000 patients being treated for coronavirus in U.S hospitals, higher than levels seen in April. Yesterday, Chicago Mayor Lori Lightfoot announced a stay-at-home advisory for the city after seeing a record spike in new infections and Illinois Governor J.B. Pritzker announced that the state is on the verge of new shutdowns as well. New York City Mayor Bill De Blasio announced today that schools will close and move to remote learning once a seven-day positivity rate of 3% is breached, the rate is currently at 2.83%. New daily cases across Europe are beginning to peak and turn lower after local lockdowns have been mandated in most countries.

Markets

  • Markets continued to rally this week. The S&P 500 rose 2.16% and closed at 3,585. The Dow Jones spiked 4.19% and closed at 29,479. Year-to-date, the S&P 500 is up 12.77% and the Dow Jones is up 5.37%.
  • Yields rose this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.40% and 0.89%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 8.19% and closed at $40.18 per barrel. Year to date, Oil prices are down -34.20%.
  • The spot price of Gold fell by -3.24% and closed at $1,888.12 per ounce. Year to date, Gold prices are up 24.44%.

Economic Data

  • Initial jobless claims fell to 709,000 and the four-week moving average of claims fell by 33,000 to 755,000. Claims fell by 15,000 in Georgia, 9,000 in New Jersey, and by 8,000 in Texas. Claims rose by 10,000 in Washington and by 2,000 in Virginia.
  • The consumer price index (CPI) was flat versus expectations for an increase of 0.1% and the year-over-year rate rose by 1.2% versus expectations for an increase of 1.3%
  • Core CPI was flat versus expectations for an increase of 0.2% and the year-over-year rate rose by 1.6% versus expectations for an increase of 1.7%
  • The producer price index (PPI) rose by 0.3% versus expectations for an increase of 0.2%
  • PPI ex-food and energy rose by 0.1% versus expectations for an increase of 0.2%
  • The University of Michigan’s index of consumer sentiment fell by 4.8 points to 77.0 in the preliminary report versus expectations for a reading of 82.0

Fact of the Week

Chinese state-owned enterprises represented 25% to 28% of the entire Chinese economy over each of the last 20 years (source:Gavekal Research).

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 CFA®, CFP® – (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.

Election 2020, Stimulus Bill: O2 Wealth Economic Update, Nov. 6, 2020

U.S. and World News

  • iStock-1141007609_370The roller coaster ride that is the 2020 presidential election continues today, as absentee ballots in battleground states Nevada, Pennsylvania, Georgia, North Carolina, Alaska, and Arizona are still being counted. Contrary to what the polls suggested, the results on Tuesday night indicated that President Trump was likely to win the election, however as absentee ballots were counted throughout the week, Joe Biden took the lead in several key states. As it stands today, there is a large indication that Joe Biden will win the election, and he is expected to address the nation tonight. This is not without threatened litigation by President Trump, who claims that the election is being stolen due to orchestrated Democrat voter fraud in key battleground states. Also contrary to polling, Republicans have picked up six House of Representatives seats and have lost one Senate seat, pending further results. More clarity on results is expected going into the weekend, but anticipated litigation by the President could lead to some more uncertainty in the longer run.
  • The fate of the next fiscal stimulus bill is being questioned after Senate Majority Leader Mitch McConnell has stated that the upbeat jobs report this morning and the 6.9% unemployment rate “clearly ought to affect the size of any additional stimulus package we do”. Prior to the surprise jobs number and lower-than-expected unemployment figure, Senate Republicans had proposed a $500 billion relief bill, compared to the administrations $1.9 trillion proposal last month. Larry Kudlow also helped pour cold water on the hopes of a large stimulus package after he stated that “we’re not interested in you know two or three trillion” citing the jobs report this morning.

Markets

  • Markets surged this week in the best market week since April. The S&P 500 jumped 7.36% and closed at 3,509. The Dow Jones rose 6.89% and closed at 28,323. Year-to-date, the S&P 500 is up 10.32% and the Dow Jones is up 1.13%.
  • Yields fell slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.36% and 0.82%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 4.52% and closed at $37.41 per barrel. Year to date, Oil prices are down -38.73%.
  • The spot price of Gold rose by 3.93% and closed at $1,952.61 per ounce. Year to date, Gold prices are up 28.69%.

Economic Data

  • Initial jobless claims fell to 751,000 and the four-week moving average of claims fell by 4,000 to 787,000. Claims fell by 9,000 in Massachusetts, 8,000 in Michigan, and by 6,000 in Georgia. Claims rose by 22,000 in Illinois, 3,000 in Kentucky, and by 3,000 in Pennsylvania.
  • Nonfarm productivity rose by 4.9% in the third quarter versus expectations for an increase of 5.6%
  • Unit labor costs fell by -8.9% in the third quarter versus expectations for a decline of -11.0%
  • The ISM manufacturing index rose by 3.9 points to 59.3 versus expectations for a reading of 56.0
  • The ISM non-manufacturing index fell by 1.2 points to 56.6 versus expectations for a reading of 57.5
  • Construction spending rose by 0.3% versus expectations for an increase of 1.0%
  • Wholesale inventories rose by 0.4% versus expectations for a decline of -0.1%
  • Factory orders rose by 1.1% versus expectations for an increase of 1.0%
  • Private sector employment in the ADP report rose by 365,000 versus expectations for an increase of 643,000
  • Nonfarm payrolls rose by 638,000  versus expectations for an increase of 580,000
  • Average hourly earnings rose by 0.1% versus expectations for an increase of 0.2% and the year-over-year rate rose by 4.5%
  • The unemployment rate fell to 6.9% versus expectations for a reading of 7.6%

Fact of the Week

  • The state of Ohio has correctly backed the winner of the US presidential election in each of the last 14 races for the White House, i.e., 1964-2016 (source: USConstitution.net).

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 CFA®, CFP® – (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.