TikTok, China, Stimulus: O2 Wealth Economic Update, August 7, 2020

U.S. and World News

  • President Trump signed a pair of executive orders targeting TikTok and WeChat. The action references national security concerns and (starting in 45 days) bars any transactions with the apps’ China-based owners – ByteDance and Tencent Holdings. While TikTok said it will pursue all remedies available, including American courts, it also faces a Sept. 15 deadline before its services are banned in the U.S.
  • Talks broke down between Democrats and the White house over a new stimulus deal, after closed door talks between Republicans and Democrats came to a stand still. Democrats offered to cut their previously $3.4 trillion deal down to $2.4 trillion, asking republicans to come up from their $1 Trillion dollar package. Republicans refused, and Secretary Mnuchin called the $2.4 trillion price tag a “non-starter”.

Markets

  • Markets were higher this week. The S&P 500 surged 2.49% and closed at 3,351. The Dow Jones gained 3.88% and closed at 27,433. Year-to-date, the S&P 500 is up 4.92% and the Dow Jones is down -2.5%.
  • Interests rates rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.23% and 0.56%, respectively.
  • The spot price of WTI Crude oil rose this week. Prices rose 2.3% and closed at $41.22 per barrel. Year to date, Oil prices are down -32.49%.
  • The spot price of Gold rose 3.02% and closed at $2,035.55 per ounce. Year to date, Gold prices are up 34.16%.

Economic Data

  • Factory orders increased 6.2% in June, above expectations.
  • Initial jobless fell by 249k to 1.186 million, versus median forcast of 1.4 million.
  • Nonfarm payrolls rose 1.8 million, well above the expected 1.5 million.
  • Average hourly earnings increase 0.2% in July, better than the expectation for a continued decline.

Fact of the Week

  • Patrick Mahomes made headlines last week the Kansas City Royals announced he had become a part owner in an undisclosed deal. Mahomes, aged 24, had just signed a record setting contract with the Kansas City Chiefs for $503 million. However, Mahomes is not the youngest team owner in the nation. That title belongs to Serena Williams 2 year old daughter Alexis, who was listed as part of a 30 person ownership group for LA’s new National Women’s Soccer League Team (Source: Yahoo Sports)

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.

Coronavirus, Unemployment Benefits: O2 Wealth Economic Update, July 31, 2020

U.S. and World News

  • virus-1210596217_370New cases of the coronavirus were reported in China this week, with the mainland reporting 105 new cases on Thursday and 123 new cases on Friday. Hong Kong’s chief executive Carrie Lam announced yesterday that fall elections originally scheduled for September 6th would be postponed as the third wave is resulting in record new daily case figures. United Kingdom’s Prime Minister Boris Johnson ordered an extension of the partial lockdown throughout northern Great Britain for at least two weeks as Europe continues to see rising daily cases. The remainder of the MLB season has been called into question after nearly 20 Miami Marlins players and staff, at least two Phillies staff, and a number of Cardinals players tested positive for coronavirus, resulting in numerous cancelations.
  • As the enhanced unemployment benefits are set to expire today, pressure is mounting in Washington for an agreement on a new stimulus bill to replace American’s lost income. Currently, the Republicans stimulus plan is valued at approximately $1 trillion while the Democrats plan is valued at about $3.5 trillion. Both sides are in favor of moratorium evictions and an additional direct stimulus payment to all Americans, however, Republicans want to cut the unemployment benefits to a portion of lost wages while Democrats are seeking to keep it unchanged. Other issues that remain unresolved are funds for states and local governments and liability protections. Negotiations are set to continue throughout the weekend with the hopes that a deal will be struck by Sunday evening.

Markets

  • Markets were mostly higher this week. The S&P 500 surged 1.75% and closed at 3,271. The Dow Jones lost -0.15% and closed at 26,428. Year-to-date, the S&P 500 is up 2.38% and the Dow Jones is down -6.14%.
  • Interests rates fell lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.22% and 0.54%, respectively.
  • The spot price of WTI Crude oil rose fell week. Prices declined -2.18% and closed at $40.39 per barrel. Year to date, Oil prices are down -33.85%.
  • The spot price of Gold rose 3.82% and closed at $1,974.75 per ounce. Year to date, Gold prices are up 30.15%.

Economic Data

  • Initial jobless claims rose by 12,000 to 1.434 million and the four-week moving average of claims fell by 171,000 to 1.206 million. Claims fell by 25,000 in California, 13,000 in Florida, 11,000 in Louisiana, and by 7,000 in Texas. Claims rose by 17,000 in New York, 16,000 in Virginia, 8,000 in Nevada, and by 7,000 in Michigan.
  • Real GDP fell by -32.9% in the second quarter versus expectations for a decline of           -34.5%
  • Personal consumption fell by -34.6% versus expectations for a decline of -34.5%
  • The Core PCE inflation index fell by 1.1% versus expectations for a decline of 0.9%
  • The PCE price index rose by 0.4%, in-line with expectations and the year-over-year rate rose 0.8% versus expectations for an increase of 0.9%
  • The Core PCE price index rose by 0.2%, in-line with expectations and the year-over-year rate rose by 1.0%, in-line with expectations
  • New orders for durable goods rose by 7.3% versus expectations for an increase of 6.9%
  • Durable goods orders ex-transports rose by 3.3% versus expectations for an increase of 3.6%
  • Core capital goods orders rose by 3.3% versus expectations for an increase of 2.2%
  • Core capital goods shipments rose by 3.4% versus expectations for an increase of 2.4%
  • The Conference Board index of consumer confidence fell by 5.7 points to 92.6 versus expectations for a reading of 95.0
  • The University of Michigan’s index of consumer sentiment fell by 0.7 points to 72.5 versus expectations for a reading of 72.9
  • Retail inventories fell by -2.6% versus expectations for a decline of -2.7%
  • Wholesale inventories fell by -2.0% versus expectations for a decline of -0.5%
  • Pending home sales rose by 16.6% versus expectations for an increase of 15.0%
  • Personal income fell by -1.1% versus expectations for a decline of -0.6%
  • Personal spending rose by 5.6% versus expectations for an increase of 5.2%

Fact of the Week

In both Florida and Texas, general sales tax revenue makes up at least 60% of their total tax revenue collected, the highest percentages in the nation. General sales tax revenue makes up just 12% of Vermont’s total tax revenue. Neither Florida nor Texas has a state income tax (source: Census Bureau).

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.