2 Tropical Storms, COVID: O2 Wealth Economic Update, August 21, 2020

U.S. and World News

  • weather-1180882223Two tropical depressions are being watched closely as computer models show a high probability of one making landfall in Texas and one making landfall in Florida on Monday. University of Miami meteorologist Brian McNoldy stated that “We could actually have Laura and Marco sharing the Gulf of Mexico on Monday, and both making U.S. landfalls on Monday”. The National Hurricane center is forecasting that both tropical systems will develop into mild hurricanes. If computer models and forecasts are correct, it would mark the first time in history that two hurricanes move through the Gulf of Mexico.
  • The latest U.S. COVID-19 data updates suggest that the second wave of the virus, particularly in the Sun Belt region, is subsiding. California and Florida saw a sharp decline in hospitalizations yesterday with Florida’s positivity rate coming in at under 10% for the second day in a row. Robert Redfield, head of the CDC, stated that infections in the southern-states are slowing and that the deaths should start to fall over the next week. Meanwhile, Notre Dame and the Univeristy of Pittsburgh are among several schools that have announced that effective immediately, all in-person classes will be suspended after coronavirus outbreaks at the campuses.

Markets

  • Markets continued to rally this week. The S&P 500 rose 0.77% and closed at 3,397. The Dow Jones rose 0.09% and closed at 27,930. Year-to-date, the S&P 500 is up 6.46% and the Dow Jones is down -0.59%.
  • Interests rates moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.27% and 0.63%, respectively.
  • The spot price of WTI Crude oil fell this week. Prices fell -0.14% and closed at $42.25 per barrel. Year to date, Oil prices are down -30.81%.
  • The spot price of Gold dropped -0.31% and closed at $1,939.09 per ounce. Year to date, Gold prices are up 27.81%.

Economic Data

  • Initial jobless claims increased by 135,000 to 1.1 million and the four-week moving average of claims increased by 51,000 to 942,000 million. Claims rose by18,000 in New York, 16,000 in California, and by 15,000 in Texas. Claims fell by 5,000 in Michigan.
  • The level of housing starts rose by 22.6% to a seasonally-adjusted-annualized-rate of 1.496 million versus expectations for an increase of 5.0%
  • Building permits rose by 18.8% versus expectations for an increase of 5.4%
  • Existing home sales rose by 24.7% to a seasonally-adjusted-annualized-rate of 5.86 million units versus expectations for an increase of 14.6%

Fact of the Week

  • Thursday marked 100 days since the March 23rd lows we saw in the market. The last 100 days have been the best performing 100 day period in market history, with the S&P 500 returning 50.8% over the period. The previous best was the 100 day period ending 7/30/2009, when the market returned 45.9% (Source: Strategas Research Partners)

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.

Middle East Peace Deal, China Trade: O2 Wealth Economic Update, August 14, 2020

U.S. and World News

  • dubai-467829216_370Yesterday, a historic diplomacy deal was agreed too between the United States, Israel, and the United Arab Emirates (UAE). The agreement marks a significant step towards peace in the Middle East and a path towards economic growth and technological innovation between the two countries. Israel and the UAE plan to sign bilateral agreements in the near future for investment, tourism, direct flights, security, telecommunications, technology, energy, healthcare, and more. Israel has also agreed to suspend its planned annexation of areas in the West Bank. Israel, the UAE, and the United States plan to work together on the expansion of diplomacy, trade, and security cooperation in the Middle East, while also sharing a common view of the threats that exist in the region.
  • Representatives from the United States and China were set to hold a video conference tomorrow for a review of the Phase 1 trade deal, until late this morning when it was announced that the meeting will be rescheduled. As part of the agreement, China agreed to purchase an additional $200 billion in goods compared to 2017, a level that was originally seen as unrealistic and that it remains far from achieving. The goal seems even more far-fetched now as a result of a significant global economic setback. Tensions have been rising between the two countries for a variety of reasons, one of them being recent U.S. actions on Chinese tech companies such as bans on TikTok and WeChat that are set to go into effect in September. Other issues that are expected to be discussed when the meeting takes place is Chinese communications firm Huawei and China’s new national security law for Hong Kong.

Markets

  • Markets rose again this week. The S&P 500 rose 0.69% and closed at 3,373. The Dow Jones rose 1.87% and closed at 27,931. Year-to-date, the S&P 500 is up 5.65% and the Dow Jones is down -0.68%.
  • Interests rates spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.71%, respectively.
  • The spot price of WTI Crude oil rose this week. Prices rose 2.26% and closed at $42.17 per barrel. Year to date, Oil prices are down -30.97%.
  • The spot price of Gold dropped -4.44% and closed at $1,945.21 per ounce. Year to date, Gold prices are up 28.20%.

Economic Data

  • Initial jobless claims fell by 228,000 to 963,000 and the four-week moving average of claims fell by 158,000 to 872,000 million. Claims fell by 34,000 in New York, 25,000 in Florida, and by 23,000 in California. Claims rose by 7,000 in Nevada and by 4,000 in Kansas.
  • Job openings rose by 518,000 to 5.889 million versus expectations for 5.3 million
  • The producer price index (PPI) rose by 0.6% versus expectations for an increase of 0.3%
  • Core PPI rose by 0.3% versus expectations for an increase of 0.2%
  • The consumer price index (CPI) rose 0.6% versus expectations for an increase of 0.3% and the year-over-year rate rose 1.0% versus expectations for an increase of 0.7%
  • Core CPI rose by 0.6% versus expectations for an increase of 0.2% and the year-over-year rate rose by 1.6% versus expectations for an increase of 1.1%
  • Retail sales rose by 1.2% versus expectations for an increase of 2.1%
  • Core retail sales rose by 1.4% versus expectations for an increase of 0.8%
  • Nonfarm productivity rose by 7.3% versus expectations for an increase of 1.5%
  • The University of Michigan’s index of consumer sentiment rose by 0.3 points to 72.8 in its preliminary reading versus expectations for a reading of 72.0
  • Industrial production rose by 3.0%, in-line with expectations
  • Business inventories fell by -1.1%, in-line with expectations

Fact of the Week

  • Thursday marked 100 days since the March 23rd lows we saw in the market. The last 100 days have been the best performing 100 day period in market history, with the S&P 500 returning 50.8% over the period. The previous best was the 100 day period ending 7/30/2009, when the market returned 45.9% (Source: Strategas Research Partners)

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.

Wealth Management Economic Update September 2, 2014

U.S. and World News

  • The hostilities between Ukraine and Russia continued this week on reports of Russian tanks, artillery and infantry being passed over the border of eastern Ukraine. This follows an in-person meeting between Ukrainian President Petro Poroshenko and Russia’s Vladimir Putin which failed to yield any substantial progress between the two nations as Putin claimed that it is ultimately up to Kiev to work out conditions for a ceasefire with separatist rebels. The United States and European Union are now considering another round of sanctions on Russia based on NATO reports that well over 1,000 Russian troops have breached the border. Despite the recent escalation, President Obama has ruled out military intervention in the region.
  • drone_000030705766_330The U.S. is preparing to expand its military air campaign beyond Iraq. This week, President Obama authorized surveillance flights to gather intelligence on Islamic State (formerly ISIS) targets in Syria. A decision to launch air strikes in Syria has not been made yet as the drones being utilized are just collecting information at this time.

Markets

  • Markets were positive this week despite continued geopolitical turmoil. The S&P 500 closed at a new All-Time High on Friday, gaining 0.79% this week and closing at 2,003. The Dow Jones Industrial Average gained 0.63% and closed at 17,098. Year to date, the S&P is up 9.87% and the Dow is up 4.84%
  • Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.63% and 2.35%, respectively.
  • The spot price of WTI Crude Oil rose by 2.33% this week, closing at $95.84 per barrel. Year to date, Oil prices have increased 1.96%.
  • The spot price of Gold increased by 0.49% this week, closing at $1287.32 per ounce. Year to date, Gold prices are up 7.13%.

Economic Data

  • Initial jobless claims held steady from last week, coming in at 298,000 vs. consensus estimates of 300,000. The level of claims remains near the pre-crisis lows. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 300,000.
  • Several reports on housing data were released this week, showing a mixed but possibly improving picture:
    • New home sales declined by 2.4% in July vs. consensus estimates of a gain of 5.8%.
    • The Case-Shiller home price index declined by 0.2% in June vs. expectations of remaining flat. Over the past year, the home price index has risen 8.1%.
    • Pending home sales rose 3.3% in July vs. expectations of 0.5%. This number, which is based on contract signings instead of closings, is a good leading indicator of existing home sales one to two months in the future.

Fact of the Week

  • According to the Office of Management and Budget, the government is projecting a $525 billion deficit for fiscal year 2014 (the government’s fiscal year ends on September 30). If that amount comes to fruition, this would be the smallest national budget deficit since fiscal 2008.

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Wealth Management Economic Update August 25, 2014

U.S. and World News

  • Middle_East_000038001262_320President Obama says that the U.S. will continue limited airstrikes against Islamic State militants. The efforts have helped Iraqi and Kurdish forces retake the vital Mosul dam and halted the advance of Islamic State on the city of Erbil. News of the recaptured dam has helped to push down oil prices this week.
  • The latest cease-fire in the Gaza Strip has collapsed, after rocket fire from the Palestinians resumed eight hours before the cease-fire was due to expire. Israel responded with airstrikes and ordered its delegates back from Cairo saying they will not negotiate under fire. Egyptian officials have been struggling to mediate during the conflict, striking several temporary cease-fires, but not achieving a permanent truce as of yet.
  • Vladimir Putin is scheduled to meet face to face with Ukrainian President Petro Poroshenko in Belarus on August 26th. Among the issues surely to be discussed will be stabilizing the border situation with Ukraine and addressing Ukraine’s energy concerns. Ukraine’s energy sector is faltering considerably and estimates suggest that coal supplies to electricity producers may run out in about a month due to rail lines that were damaged by pro-Russian separatists.
  • The annual retreat in Jackson Hole, Wyoming where central bankers, finance ministers and academics from all around the world come to discuss global economic issues went on this week without too many market moving headlines. Fed Chairwoman Janet Yellen’s comments noted both a more rapid than expected pace of recent labor market improvements, as well as the still significant level of labor underutilization. She continued to emphasize that future policy decisions will be data driven and that the Fed could raise rates earlier than expected should the data improve more than expected but that it could also raise rates later than expected if labor and inflation data disappoints.

Markets

  • Markets were positive this week despite continued geopolitical turmoil. The S&P 500 closed at a new All-Time High on Thursday but lost ground on Friday, gaining 1.74% this week and closing at 1,988. The Dow Jones Industrial Average gained 2.07% and closed at 17,001. Year to date, the S&P is up 9.00% and the Dow is up 4.16%
  • Interest rates floated back up a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.66% and 2.40%, respectively.
  • The spot price of WTI Crude Oil fell by 1.91% this week, closing at $93.50 per barrel. Year to date, Oil prices have dipped 0.53%.
  • The spot price of Gold decreased by 1.89% this week, closing at $1280.04 per ounce. Year to date, Gold prices are up 6.52%.

Economic Data

  • Initial jobless claims declined from last week, coming in at 298,000 vs. consensus estimates of 303,000. The level of claims is near the pre-crisis lows. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 301,000.
  • Nearly all of the 2nd quarter earnings reports from the S&P 500 have come out with 94% of companies reporting. Overall, 67% of companies exceeded earnings expectations with healthcare and financial stocks beating the highest percentage of the time and telecommunication stocks performing the worst. On the top line, 63% of companies beat revenue expectations, again with healthcare leading the way while telecom and staples lagged.
  • Housing starts rose a stronger than expected 15.7% in July vs. consensus expectations of 8.1%. Both single family and multifamily starts contributed to the gains and left the level of housing starts just shy of the post-recession high seen last November.

Fact of the Week

  • According to a study conducted by Reuters, 40% of people identifying themselves as retired reported that they had stopped working involuntarily. Additionally, 30% of those retired people surveyed said that if the labor market improved and a job became available, they would effectively “unretire” and rejoin the workforce. These findings show that headline unemployment rate isn’t always a representative statistic, as those 30% are currently not counted as being in the workforce but would reenter it if conditions improve.

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management