Wealth Management Weekly Update January 13, 2014

Janet Yellen


         Janet Yellen*

U.S. and World News

  • Janet Yellen was confirmed as the Chairperson of the Federal Reserve by the Senate this week, making her the first woman to head the central bank. The Senate voted 56-26 in favor of the nomination, although the 26 dissentions marked the highest number of “No” votes for any of the Federal Reserve’s previous leaders.
  • The Senate has passed a procedural motion that would allow them to start debating a proposal to renew benefits for the long-term unemployed by three months at a cost of $6 billion. The benefits expired at the end of December, affecting over 1.3 million people.
  • Leading members of the House and Senate appropriations committees met this week as they seek to reach a deal on how to spend the $1.01 trillion that Congress approved for this fiscal year. Negotiators are working on the final sticking points involving healthcare and military spending, although they only have less than a week to avoid another government shutdown. There have been discussions of a short-term measure that would last only a few days in order to avoid a shutdown.

Markets

  • Stock markets were mixed this week as the S&P 500 ended the week up by 0.63%, closing at 1,842 and the Dow Jones lost 0.15%, closing at 16,437.
  • Treasury yields fell this week on a disappointing employment report that may extend the Fed’s tapering process. The 5 year and 10 year treasury now yielding 1.63% and 2.86% respectively.
  • The spot price of WTI Crude Oil continued to fall this week, dropping by 1.60% and closing at $92.74 per barrel.
  • The spot price of Gold rose a bit this week, gaining 0.77% and closing at $1,246.54 per ounce.

Economic Data

  • Initial jobless claims declined from last week to 330,000 vs. consensus estimates of 335,000. The four week moving average for claims fell to 349,000. The Labor Department noted that there was nothing unusual in the data this week as we exit the holiday season.
  • Monthly non-farm payroll employment only grew by 74,000 in December vs. expectations of 197,000. This was the weakest payroll addition since 2011. Colder than normal weather may have played a role in the disappointment, as construction and leisure employment numbers were significantly worse than expected.
    • The unemployment rate declined to 6.7% from 7.0% in the month. However, most of this drop was due to a 0.2% reduction in the labor force participation rate to 62.8%, the worst level of participation since January 1978.

Fact of the Week

  • The unfunded liability of Chicago’s six pension plans for city workers is $26.8 billion, a total that is nearly eight times the size of the unfunded liability of Detroit’s pension plans. Detroit filed for Chapter 9 bankruptcy protection on July 18th.

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

*Photo of Janet L. Yellen, at 2010 swearing in. Source: Obtained from photo prepared by an officer or employee of the U.S. Government in accord with public domain law. Date: October 4, 2010. Permission by Public Domain (See, http://commons.wikimedia.org/wiki/File:Janet_yellen_swearing_in_2010.jpg).

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