Wealth Management Weekly Update March 22, 2013

U.S. and World News

  • Economic crisis has hit the small island Eurozone nation of Cyprus this week as the country’s massive banking system (compared to the size of the country) is insolvent. Seeking a bailout from the European Central Bank, Cyprus has been pressed to come up with a solution that would be acceptable for all parties involved. One option that has since been shot down is a one-time tax on the country’s deposit accounts, which are largely made up of money that wealthy Russians have invested there as a sort of off shore tax haven similar to the Cayman Islands. This proposal has been met with protests, long lines at Cyprus ATMs and fears of bank runs in other struggling European countries. The European Central Bank has set a deadline of Monday for Cyprus to devise a satisfactory bailout deal or else emergency funding to the country’s banks will be cut off.
  • A government funding bill that would finance the government through the end of September and put off fears of a government shutdown passed easily through the Senate and House this week. The bill awaits Presidential approval and will most certainly be signed. The package includes the $85 billion in sequestration cuts, but allows the Pentagon more leeway to decide on where to cut spending.
  • The Federal Open Market Committee met this week and remains committed to its $85 billion per month quantitative easing program. Statements from the Fed said that the economy has returned to moderate growth even as fiscal policy has become more restrictive (higher taxes).

 

Markets

  • Markets largely shrugged off the news in Cyprus this week with the S&P 500 Index down by 0.3% closing at 1,557. The Dow Jones Industrial Average ended the week with a small loss of 0.1% and closed at 14,512. Equity markets paused this week but still have had impressive 2013 returns; the S&P and the Dow are up 9.2% and 10.8% respectively year to date.
  • Treasury yields fell this week as the 5 year and 10 year treasury finished the week at 0.80% and 1.92% respectively.
  • The spot price of WTI Crude Oil was flat this week, closing at $93.74 per barrel. So far in 2013 oil prices have risen 0.6%.
  • The spot price of Gold was higher for the week rising 1.0% closing at $1608.05/ounce. Year to date in 2013, gold is down 4.0%.

 

Economic Data

  • Weekly Initial Jobless Claims rose this week by 4,000 and came in lower than expected at 336,000 vs. consensus expectations of 340,000. The 4-week moving average of jobless claims decreased to 340,000, and this figure continues to improve upon its lowest level since February 2008.
  • Contraction in Eurozone manufacturing activity deepened unexpectedly this month with the region’s PMI falling to 46.6 from 47.9 in February. With even German manufacturing activity shrinking, the fear is that the economic downturn in Europe is gaining pace and could intensify in the coming months.

Fact of the Week

  • The New York Stock Exchange lists more than 8,500 individual securities, trading an average of 2.4 billion shares per day, having a collective market value of approximately $12 trillion.

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

Visit Old Second Wealth Management

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