Coronavirus uptick: O2 Wealth Economic Update, July 17, 2020

U.S. and World News

  • iStock-1218500852Due to the uptick in coronavirus cases, a growing number of U.S. states and localities have mandated the use of masks and face coverings while in public. Georgia Governor Brian Kemp is suing Atlanta Mayor Keisha Lance Bottoms over the city’s mask mandate – which is punishable by a fine or up to six months in jail – claiming the measure is more restrictive than a state order that “strongly encourages face coverings” but does not require them. On the corporate side of things, Walmart, Kroger and Target announced Wednesday that they would will require customers to put on a mask or face covering inside stores.
  • “What we really need are drugs that, when given early, can prevent a symptomatic person from requiring hospitalization or very dramatically diminish the time that they’re symptomatic,” Dr. Anthony Fauci told Mark Zuckerberg during a Facebook Live interview. Looking for a treatment, he expects results for a clinical trial on monoclonal antibodies by late summer or early fall. The laboratory-produced proteins – described as “precise bullets” that can be developed from antibodies from other people who’ve been infected by COVID-19 – are hoped to be used to treat sick coronavirus patients as well as for prophylaxis.

Markets

  • Markets rose again this week. The S&P 500 jumped 1.27% and closed at 3,224. The Dow Jones rose 2.32% and closed at 26,671. Year-to-date, the S&P 500 is up 0.88% and the Dow Jones is down -5.3%.
  • Interests rates were fell slightly from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.28% and 0.62%, respectively.
  • The spot price of WTI Crude oil inched higher this week. Prices rose 0.12% and closed at $40.60 per barrel. Year to date, Oil prices are down -33.51%.
  • The spot price of Gold rose 0.69% and closed at $1,811.04 per ounce. Year to date, Gold prices are up 19.36%.

Economic Data

  • Business inventories declined by 2.3% in May
  • Retail sales increased 7.5% month over month in June.
  • The Philadelphia Fed manufacturing index fell by 3.4 points, better than concensus estimates for a larger decline.
  • Initial Jobless claims fell by 10,000 to 1.3 million in the week of July 11.
  • Industrial production increase by 5.4% in June, mostly lead by a large increase in automobile manufacturing.
  • CPI rose by 0.24% month over month in June.

Fact of the Week

  • Then market cap weighted performance of the top 5 stocks in the S&P500 (Microsoft, Apple, Amazon, Facebook, Google) has been +32% year to date. The performance of the remaining 495 stocks in the index has been -7.7% year to date. (Source: Strategas)

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.

Hurricane season, Libya: O2 Wealth Economic Update, July 10, 2020

U.S. and World News

  • iStock-692343236_370Hurricane season in 2020 has started with the earliest 6th named storm on record set to make landfall in the Northeastern U.S. tonight. Tropical Storm Fay is sustaining winds around 50 mph as of this morning and is expected to bring 2 to 4 inches of rain with some isolated areas expecting to see 7 inches. Tropical Storm Warnings are currently in effect for New Jersey, New York, and Connecticut as the Northeast prepares for flash flooding throughout the night. The storm gained structure and transformed into a Tropical Storm this morning and the potential exists for it to become a Category 1 hurricane which is defined by sustained winds of at least 75 mph.
  • Tensions in Libya escalated further this week after Turkey announced that they will be holding large scale naval exercises off the Libyan coast in anticipation of war in the eastern Mediterranean. One day later, the Egyptian media announced that the Egyptian Army will host their own military drills near the western Libyan border. Turkey has been stepping up its military efforts in Libya recently in support of the government, which is currently battling a civil war. Egypt supports the opposing party in Libya, and this is the first show of force by the Egyptian Army since Turkey began intervening.

Markets

  • Markets rallied this week. The S&P 500 spiked 1.79% and closed at 3,185. The Dow Jones rose 0.98% and closed at 26,075. Year-to-date, the S&P 500 is down -0.38% and the Dow Jones is down -7.44%.
  • Interests rates were unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.63%, respectively.
  • The spot price of WTI Crude oil fell slightly this week. Prices fell -0.37% and closed at $40.50 per barrel. Year to date, Oil prices are down -33.67%.
  • The spot price of Gold rose 1.31% and closed at $1,799.18 per ounce. Year to date, Gold prices are up 18.58%.

Economic Data

  • Initial jobless claims fell by 99,000 to 1.3 million and the four-week moving average of claims fell by 63,000 to 1.4 million. Claims fell by 37,000 in New York, 23,000 in Florida, and by 12,000 in Oklahoma. Claims rose by 39,000 in Texas, 30,000 in California, and by 4,000 in Connecticut.
  • The ISM non-manufacturing index rose by 11.7 points to 57.1 versus expectations for a reading of 50.2
  • Wholesale inventories fell -1.2%, in-line with expectations
  • The producer price index (PPI) fell by -0.2% versus expectations for an increase of 0.4% and the year-over-year rate fell by -0.8%
  • PPI ex-food, energy and trade services rose by 0.3% versus expectations for an increase of 0.1% and the year-over-year rate was flat

Fact of the Week

The money used by the Federal Reserve in its lending programs and asset-buying programs was “digitally created” by the Fed, i.e., the Fed does not technically “print” money (it does not have a printing press) but rather it creates money with the press of a button on a keyboard.  The Fed is forecasted to create$5 trillion of new money between March 2020 and December 2020 (source: Federal Reserve)

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.