Brexit, China Trade: Wealth Economic Update April 5, 2019

U.S. and World News

  • More Brexit uncertainty lies ahead after U.K. lawmakers failed to pass an alternative to the current deal and Theresa May said that she would like to reach across the aisle to try and negotiate with Labour leader Jeremy Corbyn for a softer Brexit deal. This is something that would anger her conservative lawmakers who are against remaining in a customs union with the EU and want a decisive split. On Wednesday, lawmakers voted to pass a draft to prevent a no-deal Brexit in a 313-312 vote. It is uncertain whether the European Union will grant the U.K. another extension and an emergency summit is scheduled for next Wednesday. European Council President Donald Tusk has proposed a flexible 12-month extension to leave the European Union and Theresa May responded by asking for a shorter extension until June 30th.
  • china-943368992_370President Trump met with Chinese Vice Premier Liu He at the White House yesterday as the two sides are reportedly coming close to reaching a deal. Reports have also indicated that the United States will keep tariffs on China until a deal is reached. Chinese Vice Premier Liu He said that the two sides have reached a new consensus on a trade agreement, meanwhile, President Trump stated that no meeting with Chinese President Xi Jinping will take place until a deal is reached and that he could see a deal being made within four weeks.


Markets

  • Stocks surged this week. The S&P 500 rose 2.09% and closed at 2,893. The Dow Jones gained 1.95% and closed at 26,425. Year to date, the S&P is up 15.99% and the Dow Jones is up 13.97%.
  • Yields rebounded sharply this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.31% and 2.50%, respectively.
  • The spot price of WTI Crude Oil jumped much higher this week. Prices rose 5.19% and closed at $63.26 per barrel. Year to date, Oil prices are up 39.31%.
  • The spot price of Gold lost 0.05% this week and closed at $11,291.76 per ounce. Year to date, Gold prices are up 0.72%.

Economic Data

  • Initial jobless claims fell by 10,000 to 202,000 for the week. The four-week moving average of claims fell by 4,000 to 214,000. Claims fell by 2,000 in New Jersey.
  • Retail sales fell by 0.2% in February versus expectations of an increase of 0.2%
  • Retail sales core/control fell by 0.2% versus expectations for an increase of 0.3%
  • The ISM manufacturing index rose by 1.1 points to 55.3 in March versus expectations for a reading of 54.5
  • Construction spending rose 1.0% in February versus expectations for a decline of 0.2%
  • New orders for durable goods fell by 1.6% in February versus expectations for a decline of 1.8%
  • Private sector employment rose by 129k in March versus expectations for a rise of 175k
  • ISM non-manufacturing fell by 3.6 points to 56.1 in March versus expectations for a reading of 58.0
  • Nonfarm payrolls rose by 196k in March versus expectations for a rise of 177k
  • The unemployment rate remained at 3.8%, as expected
  • Average hourly earnings rose by 0.1% versus expectations for a rise of 0.3%

Fact of the Week

  • The S&P 500 gained 13.6% in the first quarter. The average 1st quarter return for the index over the last 25 years has been 1.7%, and 9.6% for the entire year over the last 50 years. 88% of stocks in the index ended the first quarter higher than its 2018 year end price. (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 – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava – (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.

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Brexit, Boeing: Wealth Economic Update Mar. 29, 2019

U.S. and World News

  • brexit-1027266560Two years ago today, the United Kingdom asked the European Union for a divorce and today is the day that Brexit was finally supposed to transpire, however, many questions remain about how the whole thing will shake out. The new deadline is now two weeks away and lawmakers are left scrambling to pass a deal to avoid the “no-deal” Brexit, an outcome that no one wants. Theresa May also announced this week that she would resign if the deal was approved in a last ditch effort to save her deal, but was answered by Northern Ireland’s Democratic Unionist Party promising to continue to reject her deal. The withdrawal agreement that was voted on today was rejected, as expected, meaning the hard deadline for Brexit is April 12th. Following the vote today, European Council President Donald Tusk announced a summit for April 10th, raising more questions about the possibility of another extension.
  • Boeing held a briefing for about 200 pilots and representatives this week describing in detail the software changes that control a system designed to prevent a mid-flight stall. Boeing publically revealed the updates to the 737 MAX software and stated that the update would give pilots more control over the MCAS system and make it less likely to be set off by faulty data. FAA regulators were questioned by lawmakers on Capitol Hill this week about the oversight of the aviation industry and how the MCAS system was tested.


Markets

  • Stocks jumped higher this week. The S&P 500 rose 1.23% and closed at 2,834. The Dow Jones gained  1.67% and closed at 25,929. Year to date, the S&P is up 13.63% and the Dow Jones is up 11.79%.
  • Yields continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.23% and 2.40%, respectively.
  • The spot price of WTI Crude Oil surged this week. Prices rose 2.24% and closed at $60.14 per barrel. Year to date, Oil prices are up 32.44%.
  • The spot price of Gold lost 1.63% this week and closed at $1,292.23 per ounce. Year to date, Gold prices are up 0.76%.

Economic Data

  • Initial jobless claims fell by 5,000 to 211,000 for the week. The four-week moving average of claims fell by 3,000 to 217,000. The decline in claims was broad based.
  • The third estimate of Q4 GDP came in at 2.2% versus expectations for 2.6%
  • Personal Consumption rose by 2.5% in Q4 versus expectations for a 2.6% increase
  • Housing starts fell by 8.7% in February versus expectations for a decline of 0.8%
  • Building permits fell by 1.6% versus expectations for a decline of 1.3%
  • The Conference Board index of consumer confidence fell by 7.3 points to 124.1 in March versus expectations for a reading of 132.5
  • The trade deficit fell by more than expected to $51.1 billion in January versus expectations for a reading of -$57.0 billion
  • Pending home sales fell by 1% in February versus expectations for a decline of 0.5%
  • The January core PCE index increased by 0.06% versus expectations for 0.2%
  • Personal income increased 0.2% versus expectations for an increase of 0.3%
  • Personal spending rose by 0.1% in January versus expectations for a 0.3%
  • The University of Michigan’s index of consumer sentiment rose by 0.6 points to 98.4 versus expectations for a reading of 97.8

Fact of the Week

  • 3 of the top 4 occupations projected to create the greatest number of new jobs nationwide between 2016-2026 are in the health care industry–personal care aides(+777,600 new jobs), registered nurses(+438,100 new jobs) and home health aides(+431,200 new jobs) (source: Department of Labor).

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
Mike Cava – (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.

Brexit, France protests: Wealth Economic Update Mar. 22, 2019

U.S. and World News

  • British Prime Minister Theresa May planned on bringing her Brexit agreement to parliament on Tuesday for a third time before House Speaker John Bercow blocked it, claiming that the deal must change significantly before it is brought back to parliament. Theresa May moved forward to negotiate with the European Union on an extension of Article 50 which would either buy her more time to gain support for her Brexit deal, or delay the inevitable. The European Union agreed to grant the United Kingdom an extension to negotiate an exit that would be contingent upon Theresa May’s ability to secure a deal by next week. If Theresa May secures a Brexit deal by next week, the deadline would be extended until May 22nd, however, if a withdrawal agreement is not reached, the deadline would only be extended until April 12th. The European Union is preparing for a no-deal Brexit and Goldman Sachs has cut the chances of the Brexit deal being ratified to 50% from 60% and increased the probability of a “no-deal” Brexit to 15% from 5%.
  • paris-153507216_370After the French national debates over government policy ended last weekend, 10,000 “Yellow Vest” protestors took to the streets for the 18th weekend, bringing violence and anger. Nearly 100 businesses on the Champs-Elysees were vandalized or torched. Finance Minister Bruno Le Maire stated in late February that the protests have shaved 0.2% off of economic growth. Starting this Saturday, “Yellow Vest” protestors will be banned in the hardest hit neighborhoods and France is forcing its banks to raise capital buffers to protect against any economic downturns.


Markets

  • Stocks rose further this week before falling after the FOMC meeting. The S&P 500 lost 0.75% and closed at 2,801. The Dow Jones fell further, led by Nike and Boeing, declining 1.34% and closing at 25,502. Year to date, the S&P is up 12.25% and the Dow Jones is up 9.97%.
  • Yields saw dramatic declines this week after Fed Chairman Jerome Powell signaled slower than expected interest rate increases. The 5 year and 10 year U.S. Treasury Notes are yielding 2.24% and 2.44%, respectively.
  • The spot price of WTI Crude Oil ended the week flat. Prices rose 0.03% and closed at $58.84 per barrel. Year to date, Oil prices are up 29.57%.
  • The spot price of Gold rose 0.83% this week and closed at $1,313.18 per ounce. Year to date, Gold prices are up 2.39%.

Economic Data

  • Initial jobless claims fell by 9,000 to 221,000 for the week. The four-week moving average of claims increased by 1,000 to 225,000. Claims fell by 3,000 in Illinois and Oregon and by 2,000 in Pennsylvania.
  • Factory orders rose 0.1% in January versus expectations for a 0.3% increase.
  • Philadelphia Fed manufacturing index rose to 13.7 versus expectations for a reading of 4.8.
  • Existing home sales rose by 11.8% in February to a seasonally adjusted annualized rate of 5.51 million units versus expectations for a 3.2% increase.
  • Wholesale inventories rose 1.2% versus expectations for a 0.1% increase.

Fact of the Week

  • American taxpayers pay an estimated 84% of federal income taxes that would be collected if all tax returns were 100% honest when completing their tax returns. The United States 84% “voluntary compliance rate” (VCR) is relatively good compared to Germany and Italy, who have VCR’s of 68% and 62% respectively. (Source: Internal Revenue Service, The Atlantic)

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
Mike Cava – (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.