Brexit, China Tariffs, Ukraine: Wealth Economic Update Dec. 1, 2018

U.S. and World News

  • iStock-815062310The House of Commons will vote on Theresa May’s new Brexit withdrawal agreement on December 11th, which calls for London to follow many of the European bloc’s rules in an effort to keep trade agreements intact. Meanwhile, people in the “Remain” group are hopeful that the European Union’s top court will determine that the U.K. can unilaterally cancel Brexit after it has been completed. European Union Brexit negotiator Michel Barnier has advised Britain that this agreement is “the only one possible”.
  • President Trump has threatened to raise tariffs to 25% from 10% on $200 billion of Chinese goods effective January 1st and institute tariffs on $267 billion more Chinese imports that would include iPhones and laptops. The announcement preludes the G20 summit in Argentina taking place this weekend that will be attended by President Trump, Xi Jinping. President Trump and the Chinese President are expected to have a dinner meeting on Saturday night to discuss trade.
  • Tensions are rising between Vladimir Putin and Ukraine after Russia captured and fired upon three Ukrainian navy vessels that had entered the Kerch strait near Crimea last weekend. Russia is now planning to deploy more surface-to-air missile systems to the area. Ukraine is calling for NATO to deploy warships to the sea of Azov, between the two countries.


Markets

  • Stocks rebounded this week. The S&P 500 gained 4.91% and closed at 2,760.16. The Dow Jones rose 5.52% and closed at 25,538.46. Year to date, the S&P is up 5.10% and the Dow Jones is up 5.54%.
  • Yields dropped again from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.82% and 2.99%, respectively.
  • The spot price of WTI Crude Oil rose slightly this week, up 0.36% and closing at $50.60 per barrel. Year to date, Oil prices are down 16.17%.
  • The spot price of Gold fell 0.07% this week and closed at $1,222.12 per ounce. Year to date, Gold prices are down 6.19%.

Economic Data

  • Initial jobless claims rose by 10,000 to 234,000 this week. The four-week moving average of claims rose by 4,000 to 223,000. Claims rose by 5,000 in New York, 3,000 in Pennsylvania, and 2,000 in Georgia.
  • The core PCE price index ex-food and energy rose by 0.10% month-over-month in October versus expectations for a 0.2%. The year-over-year rate fell 0.2% to 1.8% versus expectations for 1.9%.
  • Personal income rose by 0.5% month-over-month in October versus expectations for a 0.4% increase.
  • Consumer spending rose by 0.6% in October versus expectations for a 0.4% increase.
  • Pending home sales fell by 2.6% in October versus expectations for a 0.5% increase. Declines were led by the West region.
  • Sales of new single-family homes fell by 8.9% in October to a seasonally-adjusted annualized rate of 544k versus expectations of 575k. This is the lowest level since March 2016.
  • Second-quarter GDP growth was unrevised and remained at 3.5% versus expectations for a revision to 3.6%.
    • The October goods trade deficit increased by $1.2 billion to $77.2 billion, versus expectations for a reading of $77.0 billion.
    • Wholesale inventories rose 0.7% in October versus expectations for a 0.4% increase.
  • The Conference Board index of consumer confidence fell 2.2 points to 135.7 in November, in-line with expectations.

Fact of the Week

  • Outstanding student loan debt in the US doubled from $360 million to $720 billion from 3/31/05 to 12/31/09. It double again to $1.44 trillion as of 9/30/18.

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.

Brazil impeachment trial: Wealth Economic Update Aug 15, 2016

U.S. and World News

  • brazil_17780429_340The Olympic Games have begun in Brazil but that did not stop the country’s Senate from voting to put suspended President Dilma Rousseff on an impeachment trial. Rousseff had been suspended from her post for allegedly illegally financing government spending. The decision to proceed with impeachment hearings could seal her fate and lead to her successor Michel Temer taking the post on a permanent basis as early as this month.
  • Vladimir Putin has promised to respond in kind to what he called Ukraine’s “terror” tactics in the disputed region of Crimea. Fighting between Ukrainian government forces and Russian-backed rebels has intensified once again with two servicemen being killed in clashes in the last week. Putin also threatened to cancel the peace negotiations at next month’s G20 meeting and called the talks “pointless”.
  • On Thursday, in an event that hadn’t occurred since December 31, 1999, the S&P 500, the Dow Jones Industrial Average and the NASDAQ indices all set all-time highs on the same day. This accentuates a strong comeback in equity markets from historically the worst start to a year which saw those same indices decline more than 10% through mid-February.

Markets

  • This week the S&P 500 was up 0.12% and closed at 2,184. The Dow Jones rose 0.33% and closed at 18,576. So far in 2016, the S&P is up 8.21% and the Dow is up 8.29%.
  • Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.10% and 1.51%, respectively.
  • The spot price of WTI Crude Oil gained 6.96% this week to close at $44.71 per barrel. WTI Crude is up 11.64% in 2016.
  • The spot price of Gold was unchanged this week, closing at $1,335.97 per ounce. Year to date, gold prices are up 25.90%.

Economic Data

  • Initial jobless claims came in at 266,000, edging down from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
  • Retail sales were flat in July, missing expectations of a 0.4% acceleration. Solid increases in vehicle and parts sales were offset by lower gas station sales as fuel prices declined. Core retail sales (excludes autos, gasoline and building materials) also showed no gain, underperforming estimates of 0.3%.
  • The University of Michigan consumer sentiment index moved up to 90.4 from 90.0 in the initial August release. This was a bit below expectations of a 91.5 reading. Within the report, consumers’ assessment of current economic conditions declined while their expectations of the future improved.

Fact of the Week

  • Americans spent $3.63 billion less at gas stations in June 2016 compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (Source: Census Bureau).

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®, 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.