Wealth Management Weekly Update May 3, 2013

Natural GasU.S. and World News

  • This week President Obama signaled his support for increasing the U.S.’s exports of natural gas, saying that the country will likely be a net seller of liquid natural gas by 2020. The Department of Energy is assessing applications for 20 projects to export gas to nations with which the U.S. doesn’t have a free trade agreement.
  • In an effort to end tax-free shopping on the internet, the Senate passed a bill that would empower states to impose sales taxes for purchases made online. The measure now goes on to the House, where anti-tax sentiment among many Republicans may make the bill more difficult to push through.

 

Markets

  • Stock markets extended their rallies with the S&P 500 Index gaining 1.2%, closing at 1,634. The Dow Jones Industrial Average also rose and was up 1.0% to close at 15,118. Adding this week’s gains, the S&P and the Dow are up 14.6% and 15.4% respectively year to date.
  • Treasury yields rose substantially again this week, as the 5 year and 10 year treasury finished the week at 0.82% and 1.89% respectively.
  • The spot price of WTI Crude Oil edged higher this week, rising by 0.4%, closing at $95.86 per barrel. On the year, oil prices are up 2.5%.
  • The spot price of Gold dropped by 1.6% this week, closing at $1446.87/ounce. Continuing its slide, gold is down 13.6% for the year.

 

Economic Data

  • Weekly Initial Jobless Claims continued their improvement and fell by 1,000 this week and came in lower than expected at 323,000 vs. consensus expectations of 335,000. This is the lowest level of claims since January 2008. The 4-week moving average of jobless claims moved down to 337,000. The Labor Department noted that there was nothing unusual in the claims data so this is being viewed as another very positive report.
  • While fears of widespread defaults in the municipal bond market have so far proven overblown, Moody’s rating agency says that a disturbing trend in the space seems to be developing. Although, only five defaults were recorded in 2012, that’s more than four times the average yearly rate from 1970 to 2007. Perhaps the most notable thing about last year’s defaults is that three of them were general government defaults as opposed to just defaults on bonds tied to specific projects.

Fact of the Week

  • A very popular investment theory is the strategy of “sell in May and go away.” Whatever the rationale behind it (whether its seasonal patterns of earnings or Fat Cat Wall Street traders spending the summer months at their vacation homes in The Hamptons), the data backs up this tactic. Since 1990, S&P 500 returns from the months November to April have beaten returns from the months May to October in 17 of 23 years. Collectively, the index in the six months ending April 30th is up 473% vs. a 37% gain for the six months ending October 31st.

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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