Wealth Management Weekly Update December 16, 2013

U.S. and World News

  • iStock_000003379334XSmallHouse and Senate negotiators surprisingly announced they have reached a budget agreement, well before the mid-January deadline. The agreement sets spending levels for the next two years and replaces some of the automatic budget cuts that had been put in place by the sequester. Both sides had motivation to get a deal done early with Republicans still repairing the damage the October shutdown did for the party’s polling numbers and the Democrats looking to take attention away from the botched implementation of Obamacare. The House has passed the bill and it will now move to the Senate for voting next week.
  • The World Trade Organization has agreed to a new trade pact after the latest round of talks that have been going on since 2001. Once adopted, the deal should speed up customs procedures, and make trade easier, faster and cheaper. The agreement is designed to cut the cost of trade by 10-15%, which could add $400 billion to $1 trillion to the global economy and create 21 million jobs.

Markets

  • The stock market made a slight decline for the week, as it was down 1.65%, closing at 1775. The Dow Jones Industrial Average was also down 1.65% to close at 15,755. The S&P and the Dow respectively are up 24.48% and 20.23% year to date.
  • Treasury yields rose this week based on better economic data. The 5 year and 10 year treasury are now yielding 1.53% and 2.87% respectively.
  • The spot price of WTI Crude Oil fell this week with prices declining by 1.20% and closing at $96.48 per barrel. Year to date, oil is now up 3.53%.
  • The spot price of Gold rose a bit this week, coming up 1.96% and closing at $1,238.69 per ounce. Gold is now down 26.06% this year.

Economic Data

  • Initial jobless claims rose quite a bit from last week to 368,000 vs. consensus estimates of 320,000. The four week moving average for claims rose to 329,000. The Labor Department noted that while no states estimated claims, seasonal adjustment around the holidays may be affecting claims numbers.
  • The health of corporate pension funds has rebounded to cover 96% of future obligations, up from 77% last year making it’s the strongest recovery since 1986. Public pension funds are also turning things around a bit, with financing levels climbing to 76% from 66% last year. The recovery has been boosted by strong stock markets and rising interest rates.

Fact of the Week

  • The total outstanding balance of student loans reached $1.027 trillion as of September 30th. The delinquency rate (defined as at least 90 days late and weighted by amount owed) is at 11.8%, where it used to be just 6% in 2003.

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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