Wealth Management Weekly Update January 11, 2013

U.S. and World News

  • President Obama nominated White House Chief of Staff Jack Lew as Treasury Secretary to replace Timothy Geithner who will leave his post on January 25th. Lew is a career government man, outside of a two year stint at Citigroup. He has faced opposition from Republicans as he has been a staunch defender of the entitlement programs that need to be reformed leading up to the coming debt ceiling debates.
  • Japan’s new prime minister, Shinzo Abe, announced a new ¥10.3T ($117B) stimulus plan as he seeks to pull the country’s economy out of deflation. The funds will go towards public works, incentives for corporate investment and aid for small businesses. To fund these projects, Japan will add to its already enormous national debt and sell around ¥5T more bonds.
  • Regulators have eased the Basel bank liquidity rules compared to those that were proposed two years ago. Lenders would be allowed a wider range of assets that qualify as capital buffers and they will be given until 2019, rather than 2015, to implement the new rules.

 Markets

  • The S&P 500 Index inched up by 0.4% this week and closed at 1,472. The Dow Jones Industrial Average also rose on the week, posting a gain of 0.4% and closed at 13,488. For the year 2012, the S&P and Dow were up 14.2% and 8.6% respectively. To start out 2013, the S&P is up 3.2% and the Dow is up 2.9%
  • Yields dipped a bit this week as the 5 year and 10 year treasury finished the week at 0.78% and 1.87% respectively.
  • The spot price of WTI Crude Oil rose this week by 0.5%, closing at $93.66 per barrel. Despite a recent rally in oil prices, they were down 8.6% in 2012. So far in 2013, oil prices are up 2%.
  • The spot price of Gold rose by 0.4% this week and closed at $1,662.85/ounce. Gold tumbled in the latter part of the year and ended up gaining only 4.5% in 2012. Year to date in 2013, gold is down 0.7%.

 Economic Data

  • Weekly Initial Jobless Claims dropped by 1,000 and came in higher than expected at 371,000 vs. consensus expectations of 365,000. The 4-week moving average of jobless claims rose to 365,750, roughly in line with the levels before Superstorm Sandy. The Labor Department noted that there were no special factors distorting claims this week.
  • Alcoa kicked of 4th quarter earnings season this week, reporting earnings that were largely in-line with consensus estimates. Forecasts for earnings this quarter across the stock market are mixed as some Wall Street analysts fear that another slowdown in earnings and sales growth will take place after last quarter’s somewhat disappointing numbers.

Fact of the Week

  • One market indicator, known as the “First Five Days” indicates that 2013 has a good chance of being a good year for stocks. According to the Stock Trader’s Almanac, a positive start during the first five trading days of a given year has a tendency to foreshadow a positive year for the market. In the last 39 ‘First Five Days’ that saw gains, full year gains followed in 33 of those years and a 13.6% average return was realized across all of those 39 years. The Dow Jones was up 1.7% during the first five trading days of 2013, which potentially bodes well for the rest of the year.

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

Rich Gartelmann – (630) 844-5730 rgartelmann@oldsecond.com
Dayle Malone – (630) 906-5489 dmalone@oldsecond.com
Brad Johnson – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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