Coronavirus, Russia/Syria: Wealth Economic Update Feb. 21, 2020

U.S. and World News

  • virus-1202030778_370Apple is the first major U.S. company to announce that they will not meet their revenue projections for the current quarter as a result of the coronavirus outbreak, now called COVID-19. China announced that they would consider direct cash infusions and mergers to bail out its airline industry, which is estimated to be hit by losses of $28 billion in 2020. Data releases from China this morning show that Chinese car sales fell by 92% so far in the month of February. As of this morning, there have been more than 76,000 cases, and 2,247 deaths according to the World Health Organization. China had also reported 271 infections among prisoners, raising additional questions about the spread of the virus. Outside of China, there are 1,152 cases across 26 countries, including eight deaths. Coronavirus cases have increased rapidly in South Korea and Iran recently, with the number of cases in South Korea doubling overnight to 204. World health officials announced that there are 18 new cases and four deaths in Iran within just two days. Two clinical trials are currently underway to test treatments for the virus and preliminary results are expected to be released in three weeks.
  • This morning, the United Nations warned that the conflict in northwest Syria could “end in a bloodbath”, calling for a ceasefire. There were reports of civilians fleeing a Russian-led Syrian attack in large numbers, but Russia has denied these reports. Syrian troops have been working to eliminate rebel strongholds in northwest Syria with the help of Russian war planes and has left an estimated 400,000 Syrians dead, millions displaced, and landscapes destroyed. Approximately 1 million people, mostly women and children, have fled these areas seeking asylum north of the Turkish border. The front lines of the offensive, which includes frequent bombardments, is moving very close to areas packed with the displaced civilians. Turkey has indicated that it cannot handle any more refugees and that it will use military power to stop the Syrian offensive.

Markets

  • Markets pulled back this week. The S&P 500 lost 1.22% and closed at 3,338. The Dow Jones fell 1.36% and closed at 28,992. Year-to-date, the S&P is up 3.58% and the Dow Jones is up 1.94%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.32% and 1.47%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 1.95% and closed at $53.34 per barrel. Year to date, Oil prices are down 12.64%.
  • The spot price of Gold rose by 3.77% and closed at $1,643.71 per ounce. Year to date, Gold prices are up 8.33%.

Economic Data

  • Initial jobless claims rose by 4,000 to 210,000 and the four-week moving average of claims fell 3,000 to 209,000. Claims rose by 2,000 in California.
  • The Philadelphia Fed manufacturing index rose by 19.7 to 36.7 versus expectations for a rise of 11.0
  • Housing starts fell by 3.6% to a seasonally-adjusted-annualized rate of 1,567k versus expectations for a decline of 11.2%
  • Building permits rose by 9.2% versus expectations for an increase of 2.1%
  • The producer price index rose by 0.5% and the year-over-year rate rose by 2.1% versus expectations for an increase of 0.1%
  • Existing home sales fell by 1.3% to a seasonally-adjusted-annualized rate of 5.46 million units versus expectations for a decline of 1.8%

Fact of the Week

The House passed HR # 2534 on 12/5/19. The bill explicitly defines and prohibits “insider trading”. There is currently no federal statute that explicitly prohibits “insider trading” ( Source: Insider Trading Prohibition Act)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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Coronavirus, Oil Prices: Wealth Economic Update Feb. 14, 2020

U.S. and World News

  • Researchers across the world are quickly working to develop a vaccine for the coronavirus that has infected more than 64,000 and has killed 1,380, more than double the figures from last week. About 80% of patients infected with the coronavirus show mild symptoms of the common cold, while about 15% end up with a pneumonia and 3% to 5% need intensive care, a World Health Organization official told reporters. Health and Human Services Secretary Alex Azar told CNBC that the American public’s risk of getting infected with the coronavirus is “very low”, but that could change “rapidly”. The primary issue with the coronavirus is the transmissibility, measured by the R0, with a measure of R1 indicating that an infected person would transmit it to one other person throughout the course of the infection. According to a variety of sources, the coronavirus is around an R4, while the common flu is R1.3 and SARS was R2. The virus is expected to negatively affect the Chinese economy in the first quarter as economists are estimating a growth rate around 4%, compared to pre-virus forecasts around 6%.
  • Global oil demand is set to see its first quarterly decline in more than 10 years as a result of the coronavirus and major cities being locked down in China. The International Energy Agency cut its 2020 growth forecast by 365,000 barrels per day to 825,000. Areas other than China have also been affected, with the Mobile World Congress located in Barcelona being canceled this month. Last week, OPEC+ recommended an output cut of 600,000 barrels per day, adding to the existing production cut of 1.7 million barrels per day.

Markets

  • Markets continued higher this week. The S&P 500 gained 1.65% and closed at 3,380. The Dow Jones rose 1.17% and closed at 29.398. Year-to-date, the S&P is up 4.86% and the Dow Jones is up 3.34%.
  • Yields were relatively unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.42% and 1.59%, respectively.
  • The spot price of WTI Crude rebounded this week. Prices rose 3.74% and closed at $52.20 per barrel. Year to date, Oil prices are down 14.51%.
  • The spot price of Gold rose by 0.87% and closed at $1,584.06 per ounce. Year to date, Gold prices are up 4.40%.

Economic Data

  • Initial jobless claims rose by 2,000 to 205,000 and the four-week moving average of claims fell remained unchanged at 212,000. Claims did not increase or decrease by more than 1,000 in any particular state.
  • The consumer price index (CPI) rose by 0.2%, in-line with expectations and the year-over-year rate rose by 2.5%, versus expectations for an increase of 2.4%
  • Core CPI rose by 0.2%, in-line with expectations and the year-over-year rate rose by 2.3% versus expectations for an increase of 2.2%
  • Retail sales rose by 0.3%, in-line with expectations
  • Core retail sales rose by 0.1%, versus expectations for a rise of 0.3%
  • Industrial production fell by 0.3% in January versus expectations for a decline of 0.2%
  • The University of Michigan’s index of consumer sentiment rose by 1.1 points to 100.9 in the preliminary report versus expectations for a reading of 99.5

Fact of the Week

  • Fidelity announced that a record 441,000 retirement accounts on that they manage have balances of $1 Million or more, an all-time high. The average retirement account at fidelity has a balance of $112,300. (Source: CNBC)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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China virus, Boeing: Wealth Economic Update January 31, 2020

U.S. and World News

  • Wall Street sold off to end the week and month, as investors grew increasingly fearful about the potential global economic impact of China’s spreading coronavirus. Worries were exacerbated by increasing reports of worldwide cases, with 9800 confirmed cases and 200 people dead. Delta, United and American Airlines are suspending U.S.-China flights, and the U.S. Centers for Disease Control and Prevention saying it would quarantine Americans evacuated from Wuhan, the epicenter of the outbreak.
  • iStock-1159624289After more than three years of economic uncertainty, political division and missed deadlines, the U.K. is set to leave the EU at the stroke of midnight Brussels time. A potentially volatile new chapter lies ahead: London and Brussels will try to hash out a trade deal by the end of the year as Britain enters a transition phase. On the eve of Brexit, the Bank of England opted to leave interest rates on hold at 0.75%, citing a pickup in business activity since the election of Boris Johnson and defying some market speculation that a cut was in the cards.
  • Five Katyusha rockets were fired at the fortified Green Zone in Baghdad last night, one directly hitting the U.S. Embassy building. The rare direct targeting of the compound wounded three people, adding to the bearish market turn being seen around the world. News reports also suggested that Iraqi security forces in Baghdad killed an anti-government protester, adding to the months-long civil unrest that has seen the death of 500 people since Oct. 1.

Markets

  • Markets pulled back again this week over concerns about the coronavirus. The S&P 500 lost 2.1% and closed at 3,225. The Dow Jones fell 2.5% and closed at 28,256. Year-to-date, the S&P is about flat, down 0.04% and the Dow Jones is down 0.9%.
  • Yields fell noticeably this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.31% and 1.42%, respectively.
  • The spot price of WTI Crude fell this week. Prices fell 4.8% and closed at $51.59 per barrel. Year to date, Oil prices are down 15.5%.
  • The spot price of Gold rose by 1.1% and closed at $1,589.16 per ounce. Year to date, Gold prices are up 4.7%.

Economic Data

  • Real GDP rose by 2.1% in the fourth quarter, one tenth above expectations.
  • Initial jobless claims declined to 216k, roughly as expected, and continuing claims fell by 44k further to 1,703k.
  • New home sales decreased by 0.4% to 696k in December, and the levels of home sales in prior months were revised down.
  • Pending home sales fell 4.9% in December, mirroring the pullback in new homes sales and perhaps influenced by storms in the South region.

Fact of the Week

  • Only 1 out of every 222 individual tax returns (0.45%) was subject to an audit during the US government’s fiscal year that ended 9/30/19. (source: Internal Revenue Service)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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China virus, Boeing: Wealth Economic Update January 24, 2020

U.S. and World News

  • virus-471263802It is shaping up to be one of the most dreadfully memorable Lunar New Year holidays in China, a holiday that is similar in significance to Christmas in the United States. There was a massive outbreak of a deadly disease called coronavirus during the busiest travel season of the year, prompting China to quarantine 16 cities or roughly 46 million people and canceling Lunar New Year events. So far, roughly 900 people have been affected and 26 people have died with the disease having spread to other areas in the Asia Pacific Region and two confirmed cases in the United States. The coronavirus is reminiscent of the SARS virus that affected China in 2003 and shaved 0.8% off of GDP growth. China has sent military aid to the city of Wuhan, where the virus originated, as the city’s hospitals have run out of supplies. Goldman Sachs predicted that the virus would cause a demand shock in oil prices as a result of the travel restrictions and quarantines. The World Health Organization announced on Thursday that is was “still too early” to call the virus an international public health emergency.
  • Boeing is reportedly close to agreeing to a two-year credit line with Citigroup that could be as high as $10 billion. The line of credit is believed to be the company’s estimate for costs and compensation related to the 737 MAX’s crashes and grounding. Boeing announced this week that they do not expect approval for the 737 MAX to fly again until mid-2020, however, the FAA announced today that approval could come before mid-year. The new CEO of the company announced that they would not be cutting the dividend as a result of the grounding and that production for the aircraft will begin again months before it returns to service.

Markets

  • Markets pulled back this week over concerns about the corona virus. The S&P 500 lost 1.01% and closed at 3,295. The Dow Jones fell 1.20% and closed at 28,990. Year-to-date, the S&P is up 2.10% and the Dow Jones is up 1.68%.
  • Yields fell this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.51% and 1.68%, respectively.
  • The spot price of WTI Crude fell this week. Prices fell 7.15% and closed at $54.37 per barrel. Year to date, Oil prices are down 10.96%.
  • The spot price of Gold rose by 0.86% and closed at $1,570.69 per ounce. Year to date, Gold prices are up 3.52%.

Economic Data

  • Initial jobless claims rose by 6,000 to 211,000 and the four-week moving average fell by 4,000 to 213,000. Claims fell by 4,000 in New York.
  • Existing home sales rose by 3.6% to a seasonally-adjusted-annualized rate of 5.54 million units versus expectations for a 1.5% increase

Fact of the Week

40% of Americans can’t afford a $1,000 emergency (source: Bankrate).

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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Iran, Australia fires: Wealth Economic Update January 10, 2020

U.S. and World News

  • On Monday evening, Iran carried out its retaliatory response to last week’s assassination of their military leader in the form of a missile attack on a military base in Iraq housing U.S. troops. The White House said that Iran launched 16 ballistic missiles at the facility and that no U.S. troops were killed in the attack. President Trump stated that Iran appears to be standing down and that the United States “will immediately impose additional punishing economic sanctions on the Iranian regime” in response to Iranian aggression. This morning, Secretary of State Mike Pompeo and Secretary of Treasury Steve Mnuchin announced new sanctions on Iran that include penalties on some senior leaders. The new sanctions will target Iran’s steel, construction, manufacturing, textiles, and mining industries and will aim to prevent other nations from trading with the country. Foreign Minister Mohammad Javad Zarif stated that the strikes concluded Iran’s response to the killing of Soleimani.
  • australia1195174769_370Australia is urging approximately 250,000 people to evacuate as a result of the bushfires that have already burned 25.5 million acres and killed 27 people. The bushfires in Australia have burnt more land than this years’ fires in Brazil, California, and Indonesia combined. Westpac estimated that the total losses related to the bushfires would total about $3.44 billion and would result in a 0.2%-0.5% negative impact on GDP. During the past 10 days, about 2,000 homes have been destroyed in New South Wales and firefighters from the United States and Canada have traveled to Australia to help battle the fires.

Markets

  • Markets extended the rally this week. The S&P 500 gained 0.98% and closed at 3,265. The Dow Jones rose 0.67% and closed at 28,824. Year-to-date, the S&P 500 is up 1.13% and the Dow Jones is up 1.05%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.63% and 1.82%, respectively.
  • The spot price of WTI Crude plummeted this week on easing fears of Iran conflict. Prices dropped 6.17% and closed at $59.16 per barrel. Year-to-date, oil prices are down 3.11%.
  • The spot price of Gold rose by 0.56% and closed at $1,560.86 per ounce. Year-to-date, the price of gold is up 2.87%.

Economic Data

  • Initial jobless claims fell by 9,000 to 214,000 and the four-week moving average fell by 10,000 to 224,000. Claims fell by 3,000 in Illinois and by 2,000 in Tennessee, Pennsylvania, Ohio, New Jersey, and Michigan.
  • The ISM non-manufacturing index rose 1.1 points to 55.0 versus expectations for a reading of 54.5
  • Factory orders fell 0.7% versus expectations for a decline of 0.8%
  • Private sector employment in the ADP rose by 202,000 versus expectations for an increase of 160,000
  • Nonfarm payrolls rose 145,000 in December versus expectations for an increase of 160,000
  • The unemployment rate remained at 3.5%, in-line with expectations
  • Average hourly earnings rose by 0.1% versus expectations for an increase of 0.3% and the year-over-year rate came in at 2.9%

Fact of the Week

  • Between 7/01/18 and 7/01/19, the Census Bureau estimated that the US population grew from 326.688 million to 328.240 million, an increase of just +0.48%, i.e., less than 1/2 of 1% growth rate between 2018-2019. That’s the lowest year-over-year growth rate in the United States since 1918 or 101 years earlier (source: Census Bureau)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

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Iran, airstrike: Wealth Economic Update January 3, 2020

U.S. and World News

  • us_iran-1089424782_370The leader of Iran’s elite Quds military force, Qassem Soleimani was killed Thursday night near Baghdad International Airport in an airstrike ordered by President Trump. Soleimani was one of the most powerful Islamic Republic figures and has been blamed for the deaths of hundreds of Americans, including the attack on December 27th that killed an American defense contractor. The Pentagon stated that Soleimani was actively developing plans to attack American diplomats and service members in Iraq and throughout the region. Iran’s foreign minister Javad Zarif stated that the attack was “extremely dangerous and a foolish escalation” and Iran’s Defense Minister Amir Hatami has vowed to take “crushing revenge” for Soleimani’s assassination. The attack has consequently angered Iraq as well, a United States ally, as they were not warned of the attack against Iran on their soil. The Quds Force was labeled a foreign terrorist organization in April of 2019 when Secretary of State Mike Pompeo announced that “With this designation, we are sending a clear signal, a clear message to Iran’s leaders, including Qassem Soleimani and his band of thugs, that the United States is bringing all pressure to bear to stop the regime’s outlaw behavior.” Before the airstrike, Iranian protestors attacked the U.S. Embassy in Baghdad to protest a retaliatory U.S. attack on Sunday that killed two-dozen members of an Iranian backed group.

Markets

  • Markets finished the first week of the new decade on a higher note. The S&P 500 gained 0.45% and closed at 3,235. The Dow Jones rose 0.65% and closed at 28,635. The S&P rose 31.21% and the Dow Jones rose 25.09% in 2019.
  • Yields fell this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.59% and 1.79%, respectively.
  • The spot price of WTI Crude jumped this week amid renewed tensions in the Middle East. Prices rose 2.11% and closed at $63.02 per barrel. Oil prices rose 38.78% in 2019.
  • The spot price of Gold rose by 2.65% and closed at $1,550.64 per ounce. The price of gold rose 20.91% in 2019.

Economic Data

  • Initial jobless claims fell by 2,000 to 222,000 and the four-week moving average rose by 4,000 to 233,000. Claims rose by 2,000 in New York and fell by 6,000 in California
  • Pending home sales rose 1.2% versus expectations for an increase of 1.4%
  • The Conference Board index of consumer confidence fell 0.3 points to 126.5 versus expectations for a reading of 128.5

Fact of the Week

  • The SECURE Act was signed into law on December 20th 2019 and as a result:
    • There is now a 10-year distribution cap for non-spousal beneficiaries
    • The required age to begin required-minimum-distributions was raised to 72 from 70 1/2
    • Contributions to IRA’s will be allowed to continue after the age of 70 1/2

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

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China, Brexit: Wealth Economic Update November 29, 2019

U.S. and World News

  • Increased optimism of a Phase One trade deal between the U.S. and China helped to bring major averages higher in the holiday-shortened week, including a 100th new record high for the Dow Jones under the Trump Presidency. Aiding this optimism was China announcing increased penalties on violations of intellectual property rights. Data out of China showing industrial profits declining -9.9% in the last year may also lend to China’s desire to speed up this Phase One process. However, the human rights situation in Hong Kong could potentially jeopardize this progress. President Trump has signed into law Congressional legislation supporting Hong Kong’s anti-government protestors, prompting Beijing to say it would take ‘firm counter-measures’ and that attempts to interfere would be doomed to fail.
  • england-957174246_370Sporting a comfortable lead in the poll ahead of the opposition Labour Party, Boris Johnson laid out his Tory agenda ahead of the December 12th In it he pledges to bring back his Brexit Deal to parliament before Christmas and ruled out any further delays. Johnson has also promised no new taxes, contrary to his opponent Jeremy Corbyn who has proposed additional taxes to fund a major expansion of the U.K.

Markets

  • Markets rose this week on continued optimism over trade. The S&P 500 gained 04% and closed at 3,141. The Dow Jones rose 0.75% and closed at 28,051. Year-to-date, the S&P is up 27.63% and the Dow Jones is up 23.05%.
  • Yields were little changed this week. The 5 year and 10 year U.S. Treasury Notes are yielding 63% and 1.78%, respectively.
  • The spot price of WTI Crude dipped this week. Prices fell 07% and closed at $55.42 per barrel. Year to date, Oil prices are up 22.04%.
  • The spot price of Gold rose by 55% and closed at $1,463.93 per ounce. Year to date, Gold prices are up 14.15%.

Economic Data

  • Initial jobless claims declined by 15,000 to 213,000 and the four-week moving average fell by 1,000 to 220,000. Claims decreased by 4,000 in Illinois and 3,000 in California but rose by 4,000 in Texas and 2,000 in New York.
  • Third Quarter real GDP was revised up by 0.2% to 2.1% in the BEA’s second estimate. This was above expectations but the details were softer as rising inventories contributed most of the upward revision.
  • New home sales declined by -0.7% in October, slightly better than expectations. New sales decreased in the South (-15,000) and Northeast (-6,000), but rose in the West (+13,000) and Midwest (+3,000).
  • The Case-Shiller home price index rose 0.4% for September, beating expectations of 0.3%. Prices rose in 17 of 20 cities with Seattle (+0.8%), Los Angeles (+0.7%) and Phoenix (+0.6%) posting the largest increases. Home prices have risen 2.1% over the last 12 months as measured by Case-Shiller.

Fact of the Week

  • The combined size of the world’s economies as measured by gross domestic product totals $106 trillion. The combined debt of the world’s economies is $255 trillion, or 240% of the worlds’s GDP. Debt includes government debt, household debt and borrowing by non-financial companies. (Source: Institute of International Finance)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

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Hong Kong Protests: Wealth Economic Update November 8, 2019

U.S. and World News

  • china-139085922_370On Monday, a 22-year-old Hong Kong student died after falling from a ledge of a car park during a police mission to clear an area during protests, sparking a new round of outrage against Beijing police. Reports say that the 22-year-old was trying to escape tear gas, however the exact reason for his fall are unclear. Additionally, a pro-Beijing lawmaker was stabbed in the street this week by someone impersonating a supporter. As of right now, police say that they were using tear gas to clear an area of protesters and deny any wrongdoing, but the death is creating outrage and a call for investigation by students at the city’s University of Science and Technology. Protests have become increasingly violent as Hong Kong continues to fight for Democracy with Chinese police, even after the controversial extradition bill was withdrawn in September.

Markets

  • Markets rose higher again this week. The S&P 500 gained 0.93% and closed at 3,093, an ALL TIME HIGH. The Dow Jones rose 1.37% and closed at 27,681. Year-to-date, the S&P is up 25.36% and the Dow Jones is up 20.98%.
  • Yields spiked this week amid China trade optimism. The 5 year and 10 year U.S. Treasury Notes are yielding 1.75% and 1.94%, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 2.14% and closed at $57.40 per barrel. Year to date, Oil prices are up 26.40%.
  • The spot price of Gold fell by 3.68% and closed at $1,458.15 per ounce. Year to date, Gold prices are up 13.70%.

Economic Data

  • Initial jobless claims fell by 8,000 to 211,000 and the four-week moving average remained unchanged at 215,000. Claims rose by 2,000 in Illinois and fell by 3,000 in Michigan.
  • Factory orders fell by 0.6% versus expectations for a decline of 0.5%
  • The ISM non-manufacturing index rose by 2.1 points to 54.7 versus expectations for a reading of 53.5
  • The University of Michigan’s index of consumer sentiment rose by 0.2 points to 95.7 versus expectations for a reading of 95.5
  • Wholesale inventories fell by 0.4% versus expectations for a decline of 0.3%

Fact of the Week

37% of 2,003 Americans surveyed in the 1st quarter 2019 had less than $5,000 accumulated in pre-tax retirement accounts (source: Northwestern Mutual Planning & Progress Study).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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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 vote: Wealth Economic Update October 18, 2019

U.S. and World News

  • brexit-1050622194_370British Prime Minister Boris Johnson is set for a big day tomorrow as parliament is set to vote on a Brexit deal that the Prime Minister agreed on with the European Union on Thursday. Boris Johnson stated that he is “very confident” that the House of Commons will support the deal, which is widely expected to be a historically close vote and will determine whether there will be a deal or not before the October 31st deadline. The Northern Irish Democratic Unionist Party (DUP) stated that they are unable to support the deal as it stands, casting doubts over the passage of the deal tomorrow. If the MP’s reject the deal tomorrow, it is still possible that a vote on a “no-deal Brexit” could pass, but that is unlikely given historical votes on the this motion. The likely outcome if the Brexit deal is voted down tomorrow is that the United Kingdom will ask the European Union for another extension.


Markets

  • Markets were mixed this week after corporate earnings and Chinese economic data. The S&P 500 rose 0.55% and closed at 2,986. The Dow Jones fell 0.13% and closed at 26,770. Year-to-date, the S&P is up 20.96% and the Dow Jones is up 16.90%.
  • Yields rose slightly this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.56% and 1.75%, respectively.
  • The spot price of WTI Crude moved lower this week this week. Prices fell 1.83% and closed at $53.70 per barrel. Year to date, Oil prices are up 18.26%.
  • The spot price of Gold rose by 0.11% and closed at $1,490.67 per ounce. Year to date, Gold prices are up 16.23%.

Economic Data

  • Initial jobless claims rose by 4,000 to 214,000 and the four-week moving average rose by 1,000 to 215,000. Claims increased by 5,000 in California.
  • The level of housing starts fell 9.4% to 1,256k versus expectations for a reading of 1,320k
  • Building permits fell by 2.7% versus expectations for a decline of 5.3%
  • Retail sales fell 0.3% versus expectations for an increase of 0.3%
  • Core retail sales remained unchanged versus expectations for a 0.3% increase
  • Industrial production fell by 0.4% versus expectations for a decline of 0.2%

Fact of the Week

  • In 2008, China’s economy was smaller than the economy of Japan ($4.5 Trillion vs $4.9 Trillion). In 2019, China’s economy is nearly triple that of Japan’s economy ($14.2 Trillion vs $5.2 Trillion)

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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.

China negotiations, California blackouts: Wealth Economic Update October 11, 2019

U.S. and World News

  • china-1053768454_370Ahead of scheduled trade negotiations today with Chinese Vice Premier Liu He, the Trump administration has added 28 Chinese entities to an export blacklist as a consequence of Beijing’s repression of Muslim minorities. The Trump administration stated that this move is completely unrelated to trade negotiations and it will prevent the blacklisted companies from buying American components without government approval. China quickly responded by saying it would take countermeasures, “urging the U.S. side to immediately correct its mistake.” and announced a plan to restrict visas for U.S. nationals with ties to anti-China groups. The Chinese delegation arrived in Washington yesterday where negotiations began and President Trump announced that talks went “very well”. After the meeting at the White House, President Trump told the press that the U.S. and China have “come to a substantial phase 1 deal”. In exchange for the cancelation of the United States planned increase in tariffs on Chinese goods on October 15th, China has agreed to increase purchases of U.S. agriculture goods from $8 billion to $40-$50 billion and has agreed to be more transparent with regard to their currency.
  • California’s largest utility company PG&E took preventative measures and cut power to 700,000 households ahead of a string of days with 40 mile per hour winds that have sparked wildfires in the past. Late last night, a wildfire started in the San Fernando Valley area, just north of Los Angeles that is responsible for two deaths, covers 823 acres and is 10% contained. Approximately 100,000 people have been ordered to evacuate their homes and over 25 homes have been damaged so far. Water dropping helicopters worked to help extinguish the fire throughout the night and were accompanied by planes early this morning. Investigators say that they know how the Sandalwood Fire started, but they continue to look for any possible criminal activity.


Markets

  • Markets are higher after a volatile week. The S&P 500 rose 0.66% and closed at 2,970. The Dow Jones rose 0.93% and closed at 26,817. Year-to-date, the S&P is up 20.30% and the Dow Jones is up 17.05%.
  • Yields rebounded sharply this week. The 5 year and 10 year U.S. Treasury Notes are yielding 1.55% and 1.73%, respectively.
  • The spot price of WTI Crude rose after an Iranian tanker near Saudi Arabia was attacked. Prices rose 3.77% and closed at $54.80 per barrel. Year to date, Oil prices are up 20.68%.
  • The spot price of Gold fell by 1.09% and closed at $1,488.24 per ounce. Year to date, Gold prices are up 16.04%.

Economic Data

  • Initial jobless claims fell by 10,000 to 210,000 and the four-week moving average rose by 1,000 to 214,000. Claims fell by 4,000 in Michigan, 3,000 in California, and 2,000 in Ohio.
  • The consumer price index (CPI) remained unchanged versus expectations for a 0.1% increase and the year-over-year rate rose by 1.7% versus expectations for a 1.8% increase
  • Core CPI rose by 0.1% versus expectations for a 0.2% increase and the year-over-year rate rose by 2.4%, in-line with expectations
  • The producer price index (PPI) fell by 0.3% versus expectations for a 0.1% increase
  • Wholesale inventories rose by 0.2% versus expectations for a 0.4% increase
  • The University of Michigan’s index of consumer sentiment rose 2.8 points to 96.0 versus expectations for a reading of 92.0

Fact of the Week

  • At the beginning of the bull market that started on 3/10/09, the total market cap of all US stocks was $7.6 trillion. At the end of the third quarter (09/30/19) the total market cap of US stocks was $32.3 trillion. The S&P 500 makes up 80% of the total market cap of US stocks. (Source: Wilshire, 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
Mike Cava, CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Jacqueline Runnberg, CFP® – (630) 966-2462 jrunnberg@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.