Italy, China tariffs, North Korea: Wealth Economic Update June 4, 2018

U.S. and World News

  • italy-469253936_360Italian President Sergio Mattarella blocked the formation of an anti-establishment government earlier this week, sparking fears of a snap election and roiling European markets. The left-wing 5-Star Movement and the right-wing League tried to appoint economist and anti-European Union politician Paolo Savona as finance minister. The two eventually formed an agreement to form a new coalition government, appointing economics professor Giovanni Tria as finance minister. Italy’s departure from the European Union remains a possibility in the future as the 5-Star Movement and the League both want to leave the European Union.
  • Washington has moved forward with its proposal of 25% tariffs on $50 billion of Chinese goods and restrictions on Chinese investment in U.S. high-tech industries. The United States has also announced import tariffs on steel and aluminum from the European Union, Mexico, and Canada, which will be met with retaliatory tariffs on various U.S. goods including jeans, bourbon, motorcycles, whiskey, orange juice, metals, and other food products. Canada is challenging the U.S. tariffs under NAFTA Chapter 20 and the dispute settlement process through the World Trade Organization, which threatens the success of NAFTA negotiations.
  • President Trump stated that a summit with North Korean leader Kim Jon Un will take place, as previously scheduled, on June 12th in Singapore after a high level official from North Korea visited the White House today for the first time since 2000. The goal of the summit will be to rid North Korea of its nuclear arms, and what will be provided in exchange is up for negotiation. President Trump stated that he expects a number of summits to take place before all of the issues are settled.

Markets

  • The markets ended mixed this week. The S&P 500 gained 0.54% this week and closed at 2,734.62. The Dow Jones fell 0.38% and closed at 24,635.21. Year to date, the S&P is up 3.12% and the Dow Jones is up 0.69%.
  • Yields also experienced above average volatility this week and ended the week slightly lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.75% and 2.90%, respectively.
  • The spot price of WTI Crude Oil fell another 3.26% this week and closed at $65.67 per barrel. Year to date, Oil prices are up 9.25%.
  • The spot price of Gold fell by 0.66% this week, closing at $1,293.77 per ounce. Year to date, Gold prices are down -0.70%.

Economic Data

  • Initial jobless claims fell 13,000 this week to 2221,000. The largest declines were in California and Kentucky. The four-week moving average moved higher by 2,000 to 222,000. The pace of layoffs still remains very low.
  • Personal income rose 0.3% in April, meeting expectations• Consumer spending rose 0.6% in April, exceeding expectations of a 0.3% increase.
  • Consumer confidence rose to 128.0 in May, matching expectations.
  • Pending home sales fell 1.3% in April versus expectations of a 0.4% increase. The decline was led by sales in the Midwest region.
  • Nonfarm payroll growth rose by 223,000 in May versus expectations of a 190,000 increase. Job gains were led by the retail, construction, and leisure and hospitality sectors.
    • The unemployment rate ticked lower to 3.8% from 3.9%.
    • The labor force participation rate fell to 62.7%
    • Average hourly earnings increased 0.30% in May versus expectations of a 0.20% increase and the year-over-year rate increased to 2.7%.

Fact of the Week

  • 58 publicly-held US companies produced at least $1 billion of sales per week in 2017, up from 39 companies that accomplished that level of weekly sales in 2007. Just 1 domestic company generated more than $1 billion of sales per day during 2017 (source: Fortune).

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

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China, Trade, Korea: Wealth Economic Update May 25, 2018

U.S. and World News

  • cars-695675608_400Another round of trade negotiations will take place from June 2nd until June 4th as a U.S. delegation travels to China. China has pledged to reduce the import tariff on passenger vehicles to 15% from 25%. Another factor has been added to the trade negotiations after President Trump has announced an investigation under section 232 of the Trade Expansion Act of 1962 which would allow the president to restrict imports or levy tariffs on foreign goods that excessively displace domestic goods or cause substantial unemployment. China responded by expressing their opposition to the abuse of national security clauses, but will firmly defend their rights and interests.
  • President Trump canceled the planned June 12th meeting in Singapore between himself and Kim Jong-Un yesterday after a nasty war of words took place over its nuclear weapons program. This morning, foreign journalists watched as North Korea blew up tunnels leading to its nuclear facilities and President Trump expressed optimism about the summit between the two leaders taking place in the near future. North Korea remains under extremely tough international sanctions to pressure the country to end its nuclear weapons program.

 

 

Markets

  • The markets rose slightly higher this week. The S&P 500 gained 0.33% this week and closed at 2,721.33. The Dow Jones rose 0.18% and closed at 24,753.09. Year to date, the S&P is up 2.57% and the Dow Jones is up 1.07%.
  • Yields dropped significantly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.77% and 2.93%, respectively.
  • The spot price of WTI Crude Oil plummeted 5.31% this week and closed at $67.58 per barrel. Year to date, Oil prices are up 12.43%.
  • The spot price of Gold increased by 0.62%, closing at $1,301.09 per ounce. Year to date, Gold prices are down -0.13%.

Economic Data

  • Initial jobless claims rose 11,000 once again this week to 234,000, a seven-week high. The largest increases were in California and Pennsylvania. The four-week moving average moved higher by 6,000 to 220,000. The pace of layoffs still remains very low.jobless claims rose 11,000 once again this week to 234,000, a seven-week high. The largest increases were in California and Pennsylvania. The four-week moving average moved higher by 6,000 to 220,000. The pace of layoffs still remains very low.
  • Sales of new single family homes declined by 1.5% in April to a seasonally adjusted rate of 662,000 units, below expectations of 680,000. The prior 3 months were revised lower by a net 41,000.
  • New orders for durable goods declined by 1.7% in April versus expectations of a 1.3% drop led by defense aircraft orders.
    • Durable goods ex-transports rose 0.9% versus expectations of a 0.5% increase.
  • Core capital goods rose 1.0% in April, exceeding expectations of a 0.7% increase.
  • The University of Michigan index of consumer sentiment fell by 0.8 points versus expectations of an unchanged reading.

Fact of the Week

  • In 1954, economist Armen Alchian was able to figure out the secret materials being used to create the hydrogen bomb. While working at RAND, Alchian observed the stock performance of many different marterials companies, and noticed that the Lithium Corp. of America had significantly outperformed other material names in the six months leading up to the successful test of the H-bomb. Alchian wrote an internal memo at RAND announcing his discovery, and was told to withdraw the memo two days after its publication. (Source: Library of Economics and Liberty)

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

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Korea, Iran: Wealth Economic Update May 21, 2018

U.S. and World News

  • radiation-856884068_380After witnessing ongoing joint military drills between South Korea and the United States, North Korea has cancelled planned discussions with South Korea and threatened to cancel the scheduled meeting with the United States on June 12th. Kim Jong-un expressed displeasure with having to unilaterally abandon its nuclear program. Vice Foreign Minister Kim Kye-gwan stated “If the U.S. is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue and cannot but reconsider our proceeding to the North Korea-U.S. summit”. The United States has stated that it continues to plan for the scheduled meeting on June 12th.
  • UAE Energy Minister Suhail bin Mohammed al-Mazroui stated that OPEC has the ability to produce enough oil to cushion oil prices if the United States re-imposes sanctions on Iran. The Energy Minister told reporters that OPEC is familiar with situations like these and there is no reason to worry about supply. The IEA cut its global demand growth for oil to 1.4 million barrels per day in 2018, lower than a previous estimate of 1.5 million barrels per day.

Markets

  • The markets ended the week slightly lower. The S&P 500 fell 47% this week and closed at 2,712.97. The Dow Jones lost 0.36% and closed at 24,715.09. Year to date, the S&P is up 2.24% and the Dow Jones is up 0.89%.
  • Yields moved higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 89% and 3.06%, respectively.
  • The spot price of WTI Crude Oil rose 89% this week and closed at $71.33 per barrel. Year to date, Oil prices are up 18.66%.
  • The spot price of Gold decreased by 05%, closing at $1,292.29 per ounce. Year to date, Gold prices are down -0.81%.

Economic Data

  • Initial jobless claims rose 11,000 to 222,000 for the week. The largest increases were in Missouri, Kentucky, and California. The four-week moving average moved lower 3,000 to 213,000. The pace of layoffs still remains very low.
  • The Philadelphia Fed manufacturing index rose by 11.2 points in May to 34.4 versus expectations of 21.0.
    • The  new orders component rose 22.2 points to 40.6 to the highest level since 1973.
  • Housing starts fell by 3.7% in April to a seasonally adjusted rate of 1,287k which was below expectations of a -0.7% decline. The decline was led by the multi-family category while single family homes moved higher by 0.1%.
    • The largest  declines were in the Northeast and Midwest , reflecting unseasonable weather.
  • Building permits fell 1.8% in April to an annualized rate of 1,352k in April compared to expectations of a 2.1% decline.
  • Industrial production rose 0.7% in April versus expectations of a 0.6% increase. Industrial production was led by utilities and mining output in April.
  • Retail sales rose by 0.3% in April, matching expectations. The figure was led higher by an increase at gas stations.
    • Retail sales ex-autos rose 0.3% in April versus expectations of a 0.5% increase.

Fact of the Week

  • The royal wedding between Prince Harry and Meghan Markle is estimated to cost around $45.8 million. This is well over 1000 times the cost of the average marriage in the US and UK at $34,000. Almost all of the $45.8 million budget is for security, which is estimated to cost $43 million. (Source: Business Insider)

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

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Iran, CA Solar Homes, Korean Hostages: Wealth Economic Update May 11, 2018

U.S. and World News

  • The United States has withdrawn from the nuclear deal with Iran, sending the price of crude oil up over 3% to $71 a barrel. President Trump announced that he will impose the “highest level” of sanctions on Iran starting August 6th which would include restrictions on exports of airplanes and parts, dollar transactions, trade in gold and other metals, sovereign debt and the auto industry. On November 4th, additional sanctions will include a ban on oil purchases and transactions with the central bank. The withdrawal from the deal has been condemned by European countries, particularly France whose Foreign Minister said European companies should not have to pay for the US decision. Iran is now calling on Airbus, a plane manufacturer based in Europe, to continue to sell it planes.
  • solar-687096836_370California has voted unanimously to require that nearly all new homes and residential buildings smaller than four stories built after January 1st 2020 have solar panels. This is estimated to add between $8,000 and $12,000 to building a home. The CEC also estimated that mortgages will increase on average by $40 per month and savings on utility bills will be $80 per month.
  • Three Americans that were held as prisoners in North Korea for months were returned to the United States this week with Secretary of State Mike Pompeo. The meeting between President Trump and Kim Jong Un will take place on June 12th in Singapore. The location of Singapore symbolizes the desire to no longer utilize South Korea as an intermediary between the United States and North Korea, and also is a big step for Kim Jong Un to gain credibility as a leader.

Markets

  • AThe markets surged higher this week. The S&P 500, rose 2.49% this week and closed at 2,727.72. The Dow Jones rose 2.51% and closed at 24,831.17. Year to date, the S&P is up 2.71% and the Dow Jones is up 1.26%.
  • Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.84% and 2.97%, respectively.
  • The spot price of WTI Crude Oil rose this week by 1.23% and closed at $70.58 per barrel. Year to date, Oil prices are up 17.42%.
  • The spot price of Gold rose this week by 0.35%, closing at $1,319.04 per ounce. Year to date, Gold prices are up 1.25%.

Economic Data

  • Initial jobless claims were flat at 211,000 for the week. The largest increase was in Ohio and the largest decline was in Wisconsin. The four-week moving average moved down 5,000 to 216,000, a 49 year low. The pace of layoffs still remains very low.
  • The consumer price index (CPI) rose 0.22% in April versus expectations of a 0.3% increase and the year-over-year rate remains unchanged at 2.1%. The increase was led by a rise in energy prices.
    • Core CPI (ex-food and energy) rose 0.1% in April versus expectations of a 0.2% increase.
  • The producer price index (PPI) rose 0.1% in April, below expectations of a 0.2% rise. The figure was held lower due to a 1.1% decline in food prices.
    • PPI ex-food and energy rose 0.2% in April, in line with expectations.
  • In the University of Michigan’s index of consumer sentiment May preliminary report, the index was unchanged at 98.8 versus expectations of a modest decline.

Fact of the Week

  • The individual stock that was the top performing stock within the S&P 500 YTD through 4/30/18 with a gain of +62.8% was also ranked as the #1 stock within the index for all of calendar year 2013 and again in calendar year 2015. But the stock was also ranked #430 in 2014 and #278 in 2016 (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, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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Korea, Macron: Wealth Economic Update Apr. 27, 2018

U.S. and World News

  • korea_handshake-824604454_360The leaders of North and South Korea announced this morning that they would end the war that has lasted nearly 70 years and that they would begin pursuing “complete denuclearization” of the peninsula after holding a historic summit at the border. This marked the first time that a North Korean leader set foot in South Korea since 1953. The two leaders also agreed on potentially having high-level talks and negotiations with the United States and China.
  • President Trump met with French President Emanuel Macron earlier this week to discuss foreign policy issues. Following the meeting, Emanuel Macron stated that he believes that President Trump will scrap the Iran nuclear deal before the May 12th deadline, citing the president’s strong negative feelings about the deal. The Iran deal consists of billions of dollars in sanctions imposed on Iran being removed in exchange for an agreement to cease its nuclear program.

Markets

  • After another volatile week in the markets, the indices are almost unchanged from last week. The S&P 500, in a very rare occurrence, returned 0.00% this week and closed at 2,669.91. The Dow Jones fell 0.62% and closed at 24,311.19. Year to date, the S&P is up 0.45% and the Dow Jones is down 1.01%.
  • Yields were also unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.80% and 2.96%, respectively, the same exact level as last Friday’s close.
  • The spot price of WTI Crude Oil moved lower this week by 0.53% and closed at $68.04 per barrel. Year to date, Oil prices are up 13.19%.
  • The spot price of Gold fell this week by 0.98%, closing at $1,323.33 per ounce. Year to date, Gold prices are up 1.58%.

Economic Data

  • Initial jobless claims declined 24,000 to 209,000 for the week. The largest declines were in New Jersey, Pennsylvania, and Ohio. The four-week moving average moved down 2,000 to 229,000. The pace of layoffs still remains very low.
  • New durable goods orders increased by 2.6% in March exceeding expectations of a 1.6% increase. The increase was largely influenced by the 44.5% increase in non-defense aircraft orders. N
    • New durable goods order ex-transportations was flat for the month of March compared to expectations of a 0.5% increase.
  • Wholesale inventories rose by 0.5% in March missing expectations of a 0.7% increase. The figure was held lower by a decline in retail inventories of -0.4%.
    Real GDP rose by 2.3% in the first quarter of 2018 versus expectations of a 2.0% increase.

    • Consumption growth slowed to 1.1% versus 4.0% in quarter four.
    • Housing investment came in at -3.5% versus expectations of a 0.1% increase.
    • Government spending came in at -1.4% versus expectations of a 2.5% increase.
    • Nonresidential structures rose 12.3% versus expectations of a 7.0% increase.
  • The University of Michigan’s index of consumer sentiment rose 1.0 point to 98.8 in April versus expectations of 98.0.
  • Existing home sales rose 1.1% in March to a seasonally adjusted rate of 5.60 million units exceeding expectations of a 0.2% increase.
  • Consumer confidence rose to 128.7 in April exceeding expectations of 126.0.

Fact of the Week

  • Amazon closed today at $1572.96, after reaching an all-time high during trading at $1633.26. Amazon’s first close in 1997 was $1.96, on a split-adjusted basis. If you have invested $10,000 at the first closing price, your investment would be worth $8,023,507.24 as of close today. (Source: Money.net)

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, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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North Korea, Japan, Cuba: Wealth Economic Update Apr. 20, 2018

U.S. and World News

  • KOREA-652900206_360Japan’s Shinzo Abe traveled to Mar-a-Lago to meet with President Trump on Tuesday to discuss trade and a planned summit with North Korean leader Kim Jong-un. Japan wanted to discuss the United States renewed interest in re-entering the Trans-Pacific Partnership (TPP) and the possibility of Japan’s inclusion in the exemption of steel and aluminum tariffs with other United States allies. Japan was also concerned that they may have been excluded from nuclear negotiations with North Korea after President Trump made a decision to meet with Kim Jong-un without first conferring with Shinzo Abe. The two-day summit concluded with no deal being reached on the TPP, no exemption for Japan on the steel and aluminum tariffs, and a stronger agreement between the two leaders on North Korea.
  • After more than 60 years of Castro leadership in Cuba, Miguel Diaz-Canel was elected the next president of Cuba, a widely expected result. On Thursday, Raul Castro announced that he is stepping down and Diaz-Canel was elected after 603 out of the 604-member National Assembly had approved of him. Raul Castro will remain head of the country’s Communist Party until the next scheduled party congress in 2021. Miguel Diaz-Canel stated that he will reform the economy to improve the communication between the government and the people while preserving Cuba’s communist system.

Markets

  • The markets finished higher this week. The S&P 500 rose 0.54% and closed at 2,670.14. The Dow Jones rose 0.46% and closed at 24,462.94. Year to date, the S&P is up 0.45% and the Dow Jones is down 0.40%.
  • Yields moved much higher for yet another week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.80% and 2.96%, respectively. The 10-year Treasury yield hit its highest level since 2014.
  • The spot price of WTI Crude Oil rose again this week by 1.15% and closed at $68.10 per barrel. Year to date, Oil prices are up 13.29%.
  • The spot price of Gold fell this week by 0.76%, closing at $1,335.96 per ounce. Year to date, Gold prices are up 2.55%.

Economic Data

  • Initial jobless claims declined 1,000 to 232,000 for the week. The largest declines were in New Jersey, Pennsylvania, and Ohio. The four-week moving average moved up 1,000 to 231,000. The pace of layoffs still remains very low.
  • The Philadelphia Fed manufacturing index moved higher by 0.9 points to 23.2 vs consensus expectations of 21.0. The increase was led by the employment component and the average workweek component.
  • Retail sales increased by 0.6% in March versus expectations of a 0.4% increase. The increase was led by auto sales and slightly held back by falling gasoline prices.
    • Retail sales ex-autos increased 0.2% versus a median forecast of 0.2%
    • Retail sales ex-autos, gasoline, and building materials increased 0.4% versus a median forecast of 0.4%
  • Housing starts rose 1.9% in March to 1,319k, short of expectations of a 2.5% increase. The rise was driven by multi-family starts.
    • Building permits rose by 2.5% month-over-month in March to an annualized rate of 1,354k compared to a median forecast of an unchanged month-over-month figure.

Fact of the Week

  • Marijuana sales in Colorado generated $506 million in tax revenue for the state, through June 2017. In 2014, the first year it was legalized, the state generated $76 million in tax revenue from marijuana, nearly double the $42 million that was generated from alcohol sales in the state. The deficit in Illinois is $148 billion as of 4/20/18. (CNN Money, US Debt Clock).

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, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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China, Korea, Tariffs: Wealth Economic Update Apr. 2, 2018

U.S. and World News

  • semiconductor-179653150_360The Trump administration sent a letter with specific requests to help reduce China’s trade surplus with the U.S. to Chinese economic overseer Liu He. These requests include a tariff cut on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China’s financial sector by American companies. A list of retaliatory tariffs on a large number of major imports to China are to be announced soon.
  • After revising its six-year-old bilateral trade deal with the U.S., South Korea is next to escape President Trump’s metal tariffs.  Seoul will double its import quota for American-made cars and decrease the amount of steel sent to the United States. South Korea will also allow the United States to keep the 25% tariffs on pickup trucks in place for 20 more years.
  • In more than a decade North and South Korea will hold their first Summit on April 27th, after Kim Jong-un pledged his commitment to denuclearization.  The summit will be on the southern side of the Demilitarized Zone.
  • During a  meeting with President Xi in Beijing, Kim Jung-un agreed to denuclearize the Korean peninsula.  Since he assumed power in 2011, this is Kim’s first known trip abroad.  It is believed by analysts as preparation for upcoming summits with South Korea and the U.S.  Kim is scheduled to meet President Trump sometime in May.

Markets

  • The markets rebounded this week. The S&P 500 gained 05% and closed at 2,640.87. The Dow Jones followed suit by also gaining 2.42% and closed at 24,103.11. Year to date, the S&P is down 0.75% and the Dow Jones is down 1.95%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 56% and 2.74%, respectively.
  • The spot price of WTI Crude Oil decreased by 43% this week, closing at $64.94 per barrel. Year to date, Oil prices are up 8.04%.
  • The spot price of Gold fell this week by 62%, closing at $1,325.48 per ounce. Year to date, Gold prices are up 1.74%.

Economic Data

  • Initial jobless claims dropped to a new 49-year low of 215,000, a decrease of 12,000. The largest decreases were in California, New York, New Jersey, and Virginia. The four-week moving average remained stable at 225,000.
  • GDP grew to 2.9% reflecting a moderately faster pace of consumption growth.
  • Merchant Wholesale inventories rose 1.1% in February.
  • Pending home sales are up 3.1% in February which is slightly more than expected.  Sales were led by the Northeast and the South regions.  Pending home sales are still 4.1% lower than a year ago.

Fact of the Week

  • American oil producers have pumped at least 10 million barrels a day of crude oil for the last 7 weeks, hitting 10.407 million barrels per day or the week ending Friday 3/16/18.  The last time US oil producers hit 10 million barrels a day of crude oil was in 1970. (source: Energy Information Administration).

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, VP – (630) 906-5467 ejgorenz@oldsecond.com

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Steel, North Korea: Wealth Economic Update Mar. 9, 2018

U.S. and World News

  • After more than 100 House Republicans had signed a letter to President Trump objecting the proposed steel and aluminum tariffs, the President signed an order imposing a 25% tariff on steel and a 10% tariff on aluminum excluding Canada and Mexico. Canada, the United States biggest source of aluminum and steel, threatened to reciprocate the trade tariffs if they were included. The order was much less aggressive than originally intended after some drama in the White House which included Chief Economic Advisor Gary Cohn resigning over a dispute with President Trump over the planned tariffs. The order also includes the potential for other nations to be reduced to a lower rate down the road.
  • north_korea-672521128_360North Korean leader Kim Jong-un has invited President Trump to meet and discuss denuclearization on the heels of some of the toughest sanctions placed on North Korea by the United States. Kim Jong-un stated that North Korea would suspend missile tests while talks are ongoing. President Trump responded by saying he would meet by May and the time and place of the meeting is to be determined.

Markets

  • Markets surged higher this week. The S&P 500 soared 59% and closed at 2,786.57. The Dow Jones also rose higher by 3.01% and closing at 25,335.74. Year to date, the S&P is up 4.62% and the Dow Jones is up 3.01%.
  • Yields held relatively steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 65% and 2.90%, respectively.
  • The spot price of WTI Crude Oil rose 39% this week, closing at $62.10 per barrel. Year to date, Oil prices are up 2.81%.
  • The spot price of Gold was unchanged for the week increasing by just 06% this week, closing at $1,323.58 per ounce. Year to date, Gold prices are up 1.60%.

Economic Data

  • Initial jobless claims increased 21,000 from last week, coming in at 231,000. The four-week moving average moved up to 223,000. Layoffs remain at a very low pace and continue to fall further.
  • Nonfarm payrolls rose 313,000 in the month of February, soaring past consensus expectations of 108,000.
  • Average hourly earnings rose 0.1% which was lower than the consensus estimates of 0.2%. Previous months were revised lower, bringing the year-over-year rate down to 2.6% from 2.9%.
  • The unemployment rate remained at 4.1%.

Fact of the Week

  • There are currently 1,510 cryptocurrencies in the world with a market capitalization of 392 billion. About 1,000 users control 40% of the cryptocurrency. (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
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@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.

Budget, Infrastructure: Wealth Economic Update Feb. 19, 2018

U.S. and World News

  • traffic-637694576_400President Trump released a detailed outline of his long-awaited infrastructure proposal. The major aspects of the proposal are similar to the framework that had been leaked a few weeks ago. The overall amount of federal funding for the proposal would be $200 billion and this would be combined with private funding for a total package of $1.5 trillion spread over several years. There are four broad segments addressed in the proposal: Infrastructure Incentives Program (transportation, water/sewer), Rural Infrastructure Program (broadband, electrical power), Transformative Projects Program (commercially viable projects with high risk/reward), and Infrastructure Financing Programs (additional funding and broader eligibility). In addition, President Trump is calling for a $0.25/gallon hike to the federal gas tax in order to fund the federal portion that will upgrade roads, bridges and public works. The proposal faces strong challenges before it can be enacted due to the 60 votes needed to pass it in the Senate and a current lack of bipartisan consensus about the appropriate structure for federal infrastructure funds.

Markets

  • Markets rebounded from last week’s plunge, although trading was still relatively volatile. The S&P 500 gained 4.37% and closed at 2,732. The Dow Jones followed suit by also gaining 4.36% and closing at 25,219. Year to date, the S&P is up 2.45% and the Dow Jones has gained 2.37%.
  • Yields continued their upward trend this week, the 5 year and 10 year U.S. Treasury Notes are now yielding 2.64% and 2.88%, respectively.
  • The spot price of WTI Crude Oil rose 4.04% this week, closing at $61.61 per barrel. Year to date, Oil prices are up 3.11%.
  • The spot price of Gold increased by 2.30% this week, closing at $1,346.96 per ounce. Year to date, Gold prices are up 3.39%.

Economic Data

  • Initial jobless claims increase 7,000 from last week, coming in at 230,000, a bit above consensus estimates of a slight increase. The four week moving average for claims now stands at 229,000.
  • The headline Consumer Price Index (inflation) reading for January increased 0.5%, over expectations of 0.3%. This reflected a 3.0% rise in energy prices. Over the last 12 months, headline prices have risen 2.1%.
    • Core CPI (excludes food and energy) came in at 0.35%, also higher than expectations of 0.2%. Over the last 12 months, Core inflation has been 1.85%.
  • Retail sales declined -0.3% in January, a disappointing figure compared to +0.2% expectations. Excluding autos, retail sales were flat, also below expectations. The largest declines in January were in health and personal care (-1.2%), sporting goods, hobby, book and music (-0.8%), and furniture (-0.4%) retailers.

Fact of the Week

  • The National Retail Federation estimates that more than 55% of the U.S. population celebrated Valentine’s Day this week, and will have spent $19.6 billion on gifts for the holiday.

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
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@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.

 

Stock Market, Shutdown, North Korea: Wealth Economic Update Feb. 12, 2018

U.S. and World News

  • stock_market-533891962_370After a long period of calm markets, the U.S equity market posted its first correction (10% loss) in two years amid concerns over rising interest rates, an overheating economy, and complex leveraged funds driven by algorithms used to speculate on volatility. International stock indexes followed suit and are now about 10% off their highs.
  • The government briefly shut down late Thursday night following a failure to reach an agreement on a new budget deal, but was reopened early this morning after a major fiscal spending bill was passed. The bill includes an extension to the debt ceiling, a two-year increase in spending on military and domestic programs by $300 billion, and an additional $90 billion to help aid the disasters that occurred in 2017, extend the Children’s Health Insurance Program, and fight the opioid crisis. House Speaker Paul Ryan stated this morning, “Ultimately, neither side got everything it wanted in this agreement, but we reached a bipartisan compromise that puts the safety and well-being of the American people first.”
  • Vice President Mike Pence stated that “The United States of America will soon unveil the toughest and most aggressive round of economic sanctions on North Korea ever” as North Korea continues its nuclear and ballistic missile program despite numerous threats to terminate it. The Vice President did not give any details regarding the planned sanctions, but it is likely that they will target Chinese businesses that do business with North Korea.

Markets

  • In the most volatile week that we have seen in 2 years, the market has dipped into correction territory. The S&P 500 fell 5.10% and closed at 2,619. The Dow Jones followed suit by also plummeting 5.10% and closing at 24,191. Year to date, the S&P is down 1.83% and the Dow Jones is down 1.90%.
  • After trading in a wide range throughout the week, the 5 year and 10 year U.S. Treasury Notes are now yielding 2.54% and 2.85%, respectively.
  • The spot price of WTI Crude Oil fell 9.52% this week, closing at $59.22 per barrel. Year to date, Oil prices are down 1.48%.
  • The spot price of Gold decreased by 1.36% this week, closing at $1,315.21 per ounce. Year to date, Gold prices are up 1.00%.

Economic Data

  • Initial jobless claims fell 9,000 from last week, coming in at 221,000 vs. consensus estimates of a slight increase. The decline is largely attributed to a 6,000 decline in Missouri. The four week moving average for claims now stands at 225,000.
  • The trade balance came in at -$53.1 billion in December versus consensus expectations of -$52.1 billion.
  • Wholesale inventory growth increased 0.4% in December versus consensus expectations of a 0.2% increase.

Fact of the Week

  • The stock market, on average, has a correction every 357 days, or about once a year. (Source: Deutsche Bank)
  • Based on research conducted on the Dow between 1945 and 2013, the average correction (which worked out to 13.3%) lasted a mere 71.6 trading days, or about 14 calendar weeks. (Source: MarketWatch)

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
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@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.