Wealth Management Weekly Update January 21, 2014

iStock_000012809706XSmallU.S. and World News

  • Senate leaders have been unable to come to an agreement over extending benefits for the long-term unemployed, primarily due to differences over financing the aid and how long the extension should last. It not appears likely that the Senate will not revisit the issue until late this month.
  • Both the House and Senate have approved the $1.01 trillion budget to finance the government through September 30th. The 1,582 page proposal eases some automatic spending reductions and will now go to President Obama for his approval. Congress will now turn its attention to the $16.7 trillion debt limit that is about six weeks away from being breached.
  • According to a report from the Department of Health and Human Services, only 30% of the people who have bought insurance under Obamacare are 34 years old or younger, while over one third are 55 or older. This could be a problem because the success of the Affordable Care Act hinges on signing up enough “young invincibles” who would need less care, in order to help pay for the sick and elderly. The White House had been banking on at least 40% of those who enroll being under 34 and if the numbers don’t balance out as needed, premiums could rise substantially.

Markets

  • Stock markets were mixed this week as the S&P 500 ended the week down by 0.18%, closing at 1,839 and the Dow Jones gained 0.15%, closing at 16,458. So far in 2014, the S&P and Dow are down 0.52% and 0.71% respectively.
  • Treasury yields continued to fall with week. The 5 year and 10 year treasury now yielding 1.63% and 2.82% respectively.
  • The spot price of WTI Crude Oil rose this week by 1.49%, closing at $94.10 per barrel. Oil prices are down 4.39% in 2014.
  • The spot price of Gold rose a bit this week, gaining 0.59% and closing at $1,253.94 per ounce. Year to date, Gold prices are up 4.35%.

Economic Data

  • Initial jobless claims declined from last week to 326,000 vs. consensus estimates of 328,000. The four week moving average for claims fell by 14,000 to 335,000. The Labor Department noted that there was nothing unusual in the data this week as we exit the holiday season.
  • The Headline Consumer Price Index (measure of inflation) rose 0.3% last month, in line with expectations with a 2.1% increase in energy prices boosting the figure. Over the past 12 months, inflation has increased by 1.5%, a very subdued rate.
  • The number of foreclosure filings last year dropped to the lowest level since 2007, declining by 26% to 1.36 million properties. The figure is less than half of the peak year of 2010 when 2.9 million properties were foreclosed. The states with the highest foreclosure rates in 2013 were Florida, Nevada, Illinois, Maryland and Ohio.

Fact of the Week

  • 40 years ago this month, President Richard Nixon declared that “in 1980, the US will not be dependent on any other country for the energy we need.” Of the 18.6 million barrels per day of petroleum products that Americans consumed last year, 7.4 million barrels (or 40%) were imported.

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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