Wealth Management Weekly Update September 6, 2013

iStock_000017188309XSmallU.S. and World News

  • Congress is expected to vote next week on the country’s course of action regarding Syria following a week filled with political debate on the issue. President Obama has found stiff opposition to his attempt to obtain congressional authorization for strikes against the Assad regime in Syria. In a press conference at the G20 Summit in St. Petersburg, Russia, Obama admitted that he is facing an uphill battle and will make a televised address about the situation next Tuesday. The President did not rule out the possibility of ordering a strike on Syria anyways if it is not given approval in Congress.  
  • As expected the Bank of Japan voted unanimously to keep its extremely accommodative monetary policy intact as inflation and jobless data paints a more upbeat picture of Japan’s economic prospects. The question now is whether a sales tax hike, designed to help shore up the country’s public debt, will derail the recovery.

 

Markets

  • Stock markets rebounded this week as the S&P 500 Index rose by 1.36%, closing at 1,655. The Dow Jones Industrial Average was up 0.76% to close at 14,922. The S&P and the Dow respectively are up 16.06% and 13.88% year to date.
  • Treasury yields climbed higher this week with the 10 year treasury briefly touching 3% before ending the week at 2.93%. Meanwhile, the 5 year treasury rose too and ended the week at 1.76%.
  • The spot price of WTI Crude Oil increased again this week, rising by 2.44%, closing at $110.28 per barrel. Year to date, oil is up 17.82%.
  • The spot price of Gold paused this week after its recent climb higher, declining by 0.29% and closing at $1,391.22/ounce. Gold is now down 16.96% this year.

 

Economic Data

  • Weekly Initial Jobless Claims fell this week, dropping by 8,000 and coming in at 323,000 vs. expectations of 330,000. The 4-week moving average of jobless claims fell to 329,000, a new post-recession low.
  • The August employment report was a moderate disappointment as payrolls rose by 169,000 vs. expectations of 180,000. Also, the payroll numbers from the last two months were revised downwardly by a combined 74,000 jobs. The unimpressive labor report brings into doubt the timeline for the Fed tapering asset purchases as many believe it may now be pushed off until after September.
    • Meanwhile the unemployment rate fell to 7.3% from 7.4% last month. However, as has largely been the case with any recent fall in the unemployment rate, the cause of the decline was entirely due to a lower labor participation rate. As more and more Americans become discouraged looking for jobs or are satisfied with the unemployment benefits they are receiving and dropped out of the workforce, the labor force participation rate has declined to a new cycle low of 63.2%, the lowest level since 1978.
  • The August ISM manufacturing survey was better than expected with a reading of 55.7 vs. expectations of 54.0 which is the highest reading since June 2011. The forward looking new orders component of the index posted the most surprising gain this month.
  • U.S. light vehicle sales hit 1.5 million units in August to record the best month for the auto industry since May 2007.

Fact of the Week

  • The average single family home nationwide peaked in value on June 30, 2007 and subsequently dropped 21% from that point. Home prices have since rebounded and as of June 30, 2013, the average single family home is now down just 11% from the all-time high value.

 

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 – (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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