5 Things to Consider When Deciding If a Wealth Advisor Is Right for You

Rich Gartelmann, CFP®, Senior Vice President/Senior Investment Officer—Wealth Management

Rich Gartlemann Bio PictureChoosing an investment advisor, like so many things in life, is all about finding a comfortable fit. If the relationship is going to work, you have to be comfortable not only with the person, but the company they represent and the approach they take to making recommendations and decisions regarding your future.

Taking Measure
Here are five things to keep in mind when evaluating an advisor to determine if they are a good match for you.

  1. Who does more talking in the meeting? Your meetings, especially the first meeting, should mainly be about you, not an advisor’s services and products. The advisor should be focused on listening to you talk about your goals for your money, your attitudes toward risk and your current needs. Only then can they know what services and products they should be discussing with you.
  2. How are they paid? When it comes to fees, it shouldn’t be about finding the lowest fee option but about finding the advisory relationship that provides you with the greatest value. That value should be a combination of good advice, a full range of services and the potential for achieving the long-term results you seek. For instance, wealth management departments like ours are fee based.
  3. How responsive is their approach to change? Automated advisor platforms are becoming more and more popular. They are certainly more economical. But, they are programed based on averages and logic. Your life is probably not average. It’s likely to be highly dynamic with unexpected events and expenses. When life doesn’t go as planned, it helps to be able to talk to a person who can advise you on how to make adjustments while keeping you on track for your reaching your goals.
  4. What are their qualifications? Many wealth managers—ours included—have earned the Certified Financial Planner (CFP®) designation. The designation is awarded after the completion of a rigorous certification process. To retain the certification, CFP®s have to meet ongoing education requirements. But, before handing your personal information over to anyone, no matter how many designations they have after their name, you should still follow a “trust but verify” policy. Find out if they have ever been disciplined for unethical or unlawful behavior. The Financial Industry Regulatory Authority (FINRA) makes checking backgrounds easy through its online source, BrokerCheck. You can also look up registered investment advisers—those registered with the SEC or the state’s regulatory authorities here.
  5. Are they willing to provide a preview? To get a feel for what your experience would be like if you were a client, ask the advisor about how often and under what circumstances you’ll hear from them. Also, ask how they communicate—is it by phone, email or will they text you for a quicker response? Then, request referrals from current clients and talk to them about what they like and wish would improve about their relationship.

In the end, hiring an advisor is a lot like hiring an employee—their qualifications, attitude and work ethic need to match yours for a long and successful relationship to flourish.

For more information on how we approach and deliver wealth management services, visit us here or call 630-906-2000. We can’t wait to talk to you about what we can do for you today.

July Fed Meeting: Wealth Economic Update Aug 22, 2016

U.S. and World News

  • Minutes from the July Federal Reserve meeting were released this week and showed that the Committee continues to be patient regarding further interest rate increases. Several members noted that inflation continued to be low and saw little risk of waiting for inflation data to firm up before taking further tightening action. Committee members also noted that while markets rebounded from the surprising Brexit vote, they continued to see a variety of risks overseas.
  • China_Great_Wall_340China’s State Council has approved the launch of the Shenzhen-Hong Kong Stock Connect, which will serve as a trading link between the two area’s stock markets. It will be operational in about four months and will be similar to the existing Shanghai-Hong Kong link that was launched in late 2014. It is expected that this new agreement will further open up China’s market to outside investors.
  • In a live broadcast, suspended Brazilian President Dilma Rousseff said that, “Impeachment without a crime, if consummated, would be a coup.” Rousseff also called for early elections in an attempt to unite the country that is currently in recession. Rousseff was suspended in May on accusations that she doctored government fiscal accounts in order to get re-elected in 2014. It’s widely expected that she will be impeached and permanently removed from office later this month.

Markets

  • This week the S&P 500 was up 0.06% and closed at 2,184. The Dow Jones rose 0.02% and closed at 18,553. So far in 2016, the S&P is up 8.28% and the Dow is up 8.31%.
  • Interest rates increased this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.16% and 1.58%, respectively.
  • The spot price of WTI Crude Oil gained 9.17% this week to close at $48.57 per barrel. WTI Crude is up 21.27% in 2016.
  • The spot price of Gold rose 0.41% this week, closing at $1,341.47 per ounce. Year to date, gold prices are up 26.42%.

Economic Data

  • Initial jobless claims came in at 262,000, moving down from last week’s reading of 266,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 265,000.
  • The headline Consumer Price Index (measure of inflation) was unchanged in July, in line with forecasts as a decline in energy prices offset moderate gains in other components. Over the last 12 months, headline CPI has risen 0.8%.
    • Core CPI (excludes food and energy prices) showed gains of 0.1% in July, less than the expectation of 0.2%. Over the last year, ‘core’ prices have risen 2.2%.
  • New housing starts increased by 2.1% in July, beating consensus expectations of a -0.8% decline. Single family starts increased 0.5% in the month, while multi-family starts increased by 5.0%.

Fact of the Week

  • Of the households headed by a currently employed individual (i.e, a “working” household), 44% do not have any money invested on a pre-tax basis in a defined contribution plan, e.g., a 401(k) retirement plan. (Source: Government Accountability Office)

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Brazil impeachment trial: Wealth Economic Update Aug 15, 2016

U.S. and World News

  • brazil_17780429_340The Olympic Games have begun in Brazil but that did not stop the country’s Senate from voting to put suspended President Dilma Rousseff on an impeachment trial. Rousseff had been suspended from her post for allegedly illegally financing government spending. The decision to proceed with impeachment hearings could seal her fate and lead to her successor Michel Temer taking the post on a permanent basis as early as this month.
  • Vladimir Putin has promised to respond in kind to what he called Ukraine’s “terror” tactics in the disputed region of Crimea. Fighting between Ukrainian government forces and Russian-backed rebels has intensified once again with two servicemen being killed in clashes in the last week. Putin also threatened to cancel the peace negotiations at next month’s G20 meeting and called the talks “pointless”.
  • On Thursday, in an event that hadn’t occurred since December 31, 1999, the S&P 500, the Dow Jones Industrial Average and the NASDAQ indices all set all-time highs on the same day. This accentuates a strong comeback in equity markets from historically the worst start to a year which saw those same indices decline more than 10% through mid-February.

Markets

  • This week the S&P 500 was up 0.12% and closed at 2,184. The Dow Jones rose 0.33% and closed at 18,576. So far in 2016, the S&P is up 8.21% and the Dow is up 8.29%.
  • Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.10% and 1.51%, respectively.
  • The spot price of WTI Crude Oil gained 6.96% this week to close at $44.71 per barrel. WTI Crude is up 11.64% in 2016.
  • The spot price of Gold was unchanged this week, closing at $1,335.97 per ounce. Year to date, gold prices are up 25.90%.

Economic Data

  • Initial jobless claims came in at 266,000, edging down from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
  • Retail sales were flat in July, missing expectations of a 0.4% acceleration. Solid increases in vehicle and parts sales were offset by lower gas station sales as fuel prices declined. Core retail sales (excludes autos, gasoline and building materials) also showed no gain, underperforming estimates of 0.3%.
  • The University of Michigan consumer sentiment index moved up to 90.4 from 90.0 in the initial August release. This was a bit below expectations of a 91.5 reading. Within the report, consumers’ assessment of current economic conditions declined while their expectations of the future improved.

Fact of the Week

  • Americans spent $3.63 billion less at gas stations in June 2016 compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (Source: Census Bureau).

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Five Reasons You Should Look Into the HARP® Refinancing Program Today

Terri Hanson, Vice President—Residential Lending

Terri HansonThe Home Affordable Refinance Program (HARP) may be easy to brush off, given all the flashing Internet ads that use it as clickbait. But, HARP is a real government program. Better yet, it can result in lower monthly payments—and/or a shorter maturity—for those who qualify.

Don’t Assume This Doesn’t Apply to You
If your current conventional mortgage closed prior to May 29, 2009, and is held by either Fannie Mae or Freddie Mac, it pays to see if you qualify for this program. If you checked several years ago, it’s time to check again. The restrictions on HARP loans have changed since the program was first introduced.

To find out the closing date of your loan and to verify which agency holds it, you can use the Loan Lookup tool. Or, you can just call us. We’re happy to look it up for you, whether you originated your current mortgage with us or not.

In addition to the loan date and holder criteria, you qualify for HARP if the following statements are also true:

  • Your home is your primary residence, a second home or an investment property.
  • Your home value has declined, and your loan-to-market value is greater than 80 percent.
  • You’ve had no late payments in the last six months and no more than one late payment in the six months prior to that.

Qualification is the first step, and determining if it makes dollar sense is the next. That’s also something we can help you with. We’ll do the calculation to make sure that after factoring in closing costs, HARP offers a sufficient benefit. We’ll also check to see if there are other programs available that might be better for your situation.

Five Reasons to Refinance Under HARP Now
If you are weighing the hassle of refinancing with just staying with the mortgage you have, here are five reasons why you should take action, now.

  1. Interest rates have fallen since May 29, 2009, which may mean you can refinance at a lower rate and reduce your monthly payments. Remember, even if your mortgage is at a 4 percent level now, with rates currently in the 3 percent area, that could significantly reduce your interest costs over the life of your loan.
  2. Refinancings don’t have to be apples to apples. If you are currently in an adjustable-rate mortgage (ARM) and want to refinance into a 30-year mortgage under this program, you have that option. You can even switch from a 30-year term to a 15-year term. Changing the term may also lower your payment or help you pay the mortgage off sooner.
  3. The program is very forgiving of changed circumstances. If your income is lower than it was when you borrowed, your credit score has fallen, you no longer have any equity in your home, or even if you’ve declared bankruptcy, you may still be able to reduce your monthly payments under this program.
  4. PMI won’t be triggered by a HARP refinancing, even if your current loan-to-value ratio is below 20 percent. If you don’t have to pay PMI currently, you won’t have to under a new HARP mortgage.
  5. The window of opportunity is closing. HARP ends December 31, 2016, and this time it is not going to be extended.

For more information about HARP online or on any of the other types of home loans we offer, click here. To have us determine your qualification and to discuss which financing structure is right for your situation, contact us at 630-466-4843 or email hanson@oldsecond.com. We can’t wait to talk to you about what we can do for you today.

Post-brexit: Wealth Economic Update Aug 8, 2016

U.S. and World News

  • london_big-ben_49186880_340U.K. Prime Minister Theresa has outlined her plan to reshape the British economy for a post-Brexit world. Her goal is to revive industrial productivity growth in the country by encouraging innovation and focusing on sectors and technologies that will give Britain a competitive advantage. Meanwhile, the Bank of England announced more easing measures in a continued effort to spur growth. Benchmark interest rates were cut and the central bank’s bond buying program was expanded and will now include corporate bonds.
  • Japanese Prime Minister Shinzo Abe announced a fresh stimulus package that ranks among the country’s largest since the global financial crisis. The package totals ¥28 trillion ($274 billion) and was approved in response to growing consensus that monetary policy alone won’t be able to revive Japan’s economy. Included in the package that’s expected to lift GDP 1.4% are childcare benefits, $150 handouts to 22 million low income citizens, a loan of ¥10.7 trillion for infrastructure projects and ¥7.5 trillion for direct fiscal spending.
  • India’s upper house of parliament unanimously approved the creation of a national sales tax, nearly a decade after the move was first proposed. This is considered to be the biggest legislative victory for Prime Minister Narendra Modi since he took office in 2014. The tax bill seeks to streamline the country’s fragmented tax system by imposing a single national tax, something businesses have been lobbying for as it would reduce costs and could boost economic growth by 2%. The bill now must be ratified by at least half of all states in India, a process projected to be concluded before the end of the year.

Markets

  • This week the S&P 500 was up 0.49% and closed at an All-Time High of 2,183. The Dow Jones rose 0.65% and closed at 18,544. So far in 2016, the S&P is up 8.08% and the Dow is up 7.94%.
  • Interest rates popped up this week, particularly following the strong July employment report. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.13% and 1.59%, respectively.
  • The spot price of WTI Crude Oil gained 0.91% this week to close at $41.98 per barrel. WTI Crude is up 4.77% in 2016.
  • The spot price of Gold fell 1.13% this week, closing at $1,336.00 per ounce. Year to date, gold prices are up 25.91%.

Economic Data

  • Initial jobless claims came in at 269,000 which is higher than last week’s reading of 266,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 260,000.
  • The July employment report showed an increase of 255,000 non-farm payrolls, beating expectations of 180,000. The prior two months’ figures were revised up a total of 18,000, bringing the three month average for job gains to 190,000.
    • The headline unemployment rate remained at 4.9%, narrowly missing estimates of 4.8%. The small miss was due to the labor force participation rate rising by 0.1% to 62.8%.
    • Average hourly earnings rose by 0.3% in July, beating expectations of 0.2%. Over the last 12 months, wages are up 2.6%.
  • The PCE Price index (measure of inflation) rose 0.1% in June, lower than expectations of 0.2%. Over the last 12 months, the PCE index is up 0.9%.
    • The Core PCE Price Index (excludes food and energy, the Fed’s preferred measure of inflation) rose 0.1% in June, in line with expectations. Over the last year, core prices are up 1.6%.

Fact of the Week

  • At $25,000, George Washington’s presidential salary represented 2% of the U.S. budget in 1789. If that percentage of pay held today, Barrack Obama would be paid over $67 billion a year. (Source: USA Today)

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Attempted coup: Wealth Economic Update Aug 1, 2016

U.S. and World News

  • turkey_7947841_340Following the attempted military coup earlier this month, Turkish President Tayyip Erdogan is tightening his grip on the country by ordering the closure of over 2,000 private schools, charities and other institutions in his first action since imposing a state of emergency. Also causing alarm among Turkey’s NATO allies was Erdogan shutting down 130 media outlets and his dismissal of over 1,500 military officers as he attempts to regain complete control over the country.
  • The Federal Reserve held its policy meeting this week, leaving interest rates unchanged but altering the language in its statement. The Committee upgraded their assessment of the U.S. labor market, noting that “job gains were strong in June following weak growth in May.” The other key phrase in their statement was, “Near term risks to the economic outlook have diminished.” While this does not make a rate hike imminent, it indicates that the Fed would like to raise rates sometime this year. Kansas City Fed President Esther George dissented, favoring an increase in interest rates at this meeting.

Markets

  • This week the S&P 500 was down 0.05% and closed at 2,174. The Dow Jones fell 0.75% and closed at 18,432. So far in 2016, the S&P is up 7.56% and the Dow is up 7.25%.
  • Interest rates retreated this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.02% and 1.45%, respectively.
  • The spot price of WTI Crude Oil fell 0.62% this week to close at $41.46 per barrel. WTI Crude is up 3.65% in 2016.
  • The spot price of Gold gained 2.16% this week, closing at $1,351.28 per ounce. Year to date, gold prices are up 27.35%.

Economic Data

  • Initial jobless claims came in at 266,000 which is higher than last week’s reading of 253,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 257,000.
  • The Case-Shiller home price index declined by 0.1% in May, missing expectations of a 0.1% increase. Data was mixed across the cities that are part of the index. Over the last 12 months, home prices as measured by Case-Shiller have risen 5.2%.
  • The initial reading of 2nd quarter U.S. GDP showed 1.2% annualized growth, much lower than the consensus estimate of 2.5% annualized growth. This figure will be subject to multiple revisions.

Fact of the Week

  • National health care expenditures in the United States during 2016 are projected to reach $3.35 trillion, or $10,346 per person. (Source: Centers for Medicare and Medicaid Services)

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

UK & Germany: Wealth Economic Update July 25, 2016

U.S. and World News

  • U.K. Prime Minister Theresa May made it clear that she would attempt to secure a very close economic relationship with Germany post-Brexit, but German Chancellor Angela Merkel refuses to negotiate until the U.K. invokes Article 50. If negotiations were to start early, it would give the British incentives to delay notification (the official start of the 2 year negotiation process), which would give them an advantage and could lead to the negotiations being dragged out indefinitely.  
  • A three-month state of emergency has been declared by Turkey’s President Erdogan Wednesday night in order to “protect democratic values” by stopping parliament from passing new laws against supporters of last Friday’s coup. President Erdogan has also suspended or detained roughly 50,000 police officers, judges, civil servants, and teachers this week which has provided some stability, but some uncertainty still remains. The Turkish equity index regained some of its losses and Turkey’s central bank cut its overnight lending rate 0.25% to 8.75%.

Markets

  • This week the S&P 500 was up 0.64% and closed at 2,175. The Dow Jones gained 0.35% and closed at 18,571. So far in 2016, the S&P is up 7.61% and the Dow is up 8.05%.
  • The 5 year and 10 year U.S. Treasury Notes are now yielding 1.12% and 1.57%, respectively.
  • The spot price of WTI Crude Oil fell 5.21% this week to close at $44.22 per barrel. WTI Crude is up 4.29% in 2016.
  • The spot price of Gold lost 1.11% this week, closing at $1,322.64 per ounce. Year to date, gold prices are up 24.65%. 

Economic Data

  • Initial jobless claims came in at 253,000 which is slightly lower than last week’s reading. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
  • Existing home sales were up 1.1% in June reaching a post-crisis high versus expectations of a slight decline. This was led by multi-family home sales and homes in the Midwest region.

Fact of the Week

  • The medium square footage of new single family homes built in the United States in 2015 was 2,467 square feet, an increase of 547 square feet over the last 20 years. That’s equivalent to a 23’ x 23’ addition to new homes today when compared to 1995 home construction. Source: Joint Center for Housing Studies of Harvard University.

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

*Image of Theresa May, Photo credit:UK Home Office, via Wikimedia Commons. License: Creative Commons Attribution 2.0 Generic license.. (See, https://commons.wikimedia.org/wiki/File:Theresa_May_2015_(cropped).jpg).

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Banking Leaders: Are They BORN or MADE?

Bob DiCosola, EVP, Human Resource/Training & Development/Risk Management

Robert DiCosola

As an adjunct professor at a local college, I always ask that question as part of the
curriculum for the HR management and business classes I teach. The answer is almost always the same: About 50 percent of the class feels leaders are born, and the other 50 percent believes leaders are made.

That split is actually quite predictable. Experts in this field note that about 15 percent of executives (the top of the bell curve) are born leaders who start out strong and get better over time. Another 15 percent (the bottom of the bell curve) are executives who never want to be leaders or who are never going to be good leaders. The middle of the bell curve (everyone else, or 70 percent of executives) is where the potential to make leaders lies!

A perfect case study for this blog involves my two sons, Joe and Rob. Joe, 22 years old and a recent Audio Engineer grad, is humble, sympathetic, patient, empathetic, a great listener, and a young man of high integrity. Rob, 17 years old and a senior in high school (and drum major in the Batavia marching band this year), is a great communicator, consensus-builder, coach, motivator, problem identifier and problem solver. All of these are outstanding traits for a leader of people. But Joe would rather have a root canal than lead, while Rob naturally leads his peer group like the Pied Piper of Batavia!

 So Rob is at the top of the bell curve and Joe is at the bottom. What does that mean for the 70 percent?

For those executives who have aspirations to manage and lead, a good place for them to start is to train a laser focus on their company’s core values and. Then they can work to hone the leadership competencies necessary to embodying those values.

At Old Second, our core values drive the competencies we require for potential leaders. They are:

  • Solve It
  • Own It
  • Collaborate
  • Innovate
  • Keep Growing
  • Walk the Talk

The corresponding leadership competencies are to:

  • Support strategic growth goals by being a visionary, strategic planner, as well as a sales/service coach and motivator; a consensus and unity builder; and a manager who understands profitability and is willing to serve as a change agent when needed.
  • Support the image of a trusted community banker by leading through example and acting with integrity, trust, and credibility, while being inclusiveness and demonstrating strong community ties.
  • Support ongoing development vs. stagnation through the continuous development of yourself and staff; offering operational and technical expertise; and serving as an example of a well-rounded banker.

As a senior management team, we strongly believe that respect and leadership are mutually inclusive. We further believe that managers who serve as role models of ethics and integrity and who gain respect through credibility, rather than through intimidation, make the best ambassadors for a community bank.

In discussing career growth with our employees, we always make sure that they understand our overall philosophy:

“Career development is the responsibility of the incumbent; management’s role is to provide the tools and opportunities to make it happen.”

Ultimately, Where Your Career Leads Is Up to You

The question is not whether you are a naturally born leader or not. The question you need to ask yourself is: o you have the drive, focus and perseverance to become one?

It’s of the utmost importance to create your own personal blueprint. Identify and address opportunities for improvement as they arise, while maximizing your strengths. Then, partner with your boss to make what comes next happen!

New British PM: Wealth Economic Update July 18, 2016

U.S. and World News

  • Theresa May, British Prime Minister

    Theresa May, British Prime Minister*

    Just three weeks after the U.K. voted in favor of leaving the European Union, Theresa May took over from David Cameron to become the 54th British Prime Minister. Financial markets appeared to approve of the selection although many analysts have said the implications for the U.K. economy could be much bigger due to uncertainty about her policies. May has wasted no time readying her Brexit team as she has appointed a Chancellor, foreign secretary, a Brexit “Tsar” and a trade negotiator.

  • Staying in the U.K., the Bank of England surprised the market by choosing to hold off on any easing action this week. It was believed that BOE Governor Mark Carney would cut rates 25 basis points or increase its bond buying program in the wake of the Brexit vote in order to ward off a possible recession.

Markets

  • This week the S&P 500 was up 1.51% for the week and closed at 2,162. The Dow Jones gained 2.04% and closed at 18,517. So far in 2016, the S&P is up 6.94% and the Dow is up 7.68%.
  • The 5 year and 10 year U.S. Treasury Notes are now yielding 1.11% and 1.56%, respectively.
  • The spot price of WTI Crude Oil gained 1.17% this week to close at $45.94 per barrel. WTI Crude is up 9.69% in 2016.
  • The spot price of Gold lost 2.21% this week, closing at $1,336.15 per ounce. Year to date, gold prices are up 25.92%.

Economic Data

  • Initial jobless claims came in at 254,000 which was unchanged from last week’s reading. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.2% in June, below estimates of 0.3%. This was boosted by a 1.3% increase in energy prices, although food prices decline -0.1%. Over the last 12 months, headline CPI has risen 1.0%.
    • The Core CPI (excludes food and energy) rose 0.2%, in line with expectations. Rent inflation remained firm, rising 0.3% in the month. Over the last year, core prices have risen 2.3%.
  • Retail sales increased by 0.6% in June, soundly beating estimates of 0.1%. Sales were boosted in part by higher gasoline sales as fuel prices rose.

Fact of the Week

  • As of 6/30/2016, there was $11.7 trillion of sovereign debt that carries a negative interest rate (ie. investors loaned governments money with the guarantee that they would be paid back less if they held the bond to maturity). This represents over 30% of the world’s sovereign debt. Countries issuing negative yield debt include Japan, Germany, Sweden, Denmark and Switzerland. (Source: Fitch Ratings)

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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*Image of Theresa May, Photo credit:UK Home Office, via Wikimedia Commons. License: Creative Commons Attribution 2.0 Generic license.. (See, https://commons.wikimedia.org/wiki/File:Theresa_May_2015_(cropped).jpg).

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Brexit aftermath: Wealth Economic Update July 5, 2016

U.S. and World News

  • pont_fawr_bridge_Wales_84636501_340The U.K. now faces the challenge created by its vote to leave the European Union and Chancellor George Osborne cautioned it would not be “plain sailing” in the days and weeks ahead. In the fallout from the shocking vote, there have been rumblings of a “re-do” vote or a renewed independence vote in Scotland, but neither is likely to gain too much traction. The process for the U.K. to leave is will officially begin when Parliament invokes Article 50, the timing of which has yet to be determined. Candidates for the Prime Minister post that David Cameron resigned from are beginning to emerge, though prominent Brexit figurehead and former London Mayor Boris Johnson has dropped out of the running.
  • Puerto Rico today defaulted on $800 million of debt payments it had constitutionally guaranteed to make to general obligation bond holders. These bond holders were supposed to receive priority before the Puerto Rican government paid out anything to state employees like police and teachers, however Governor Garcia Padilla ruled to continue running essential services on the island. This marks the first time that a U.S. state or territory has failed to pay general obligation bonds since the Great Depression. In response, Washington has pushed through a law signed by President Obama that would create a federal oversight board to oversee the restructuring of Puerto Rico’s over $70 billion of additional debt. The plan involves 1 out of every 3 dollars the island earns in revenue being used to pay off creditors.

Markets

  • After falling dramatically again on Monday, markets roared back the remainder of the week and regained most if not all of the post-Brexit losses. The S&P 500 was up 3.27% for the week and closed at 2,103. The Dow Jones gained 3.18% and closed at 17,949. So far in 2016, the S&P is up 4.00% and the Dow is up 4.37%.
  • Interest rates moved lower again this week despite the rally in the equity markets. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.00% and 1.44%, respectively.
  • The spot price of WTI Crude Oil gained 3.48% this week to close at $49.30 per barrel. WTI Crude is up 17.71% in 2016.
  • The spot price of Gold gained 1.95% this week, closing at $1,341.35 per ounce. Year to date, gold prices are up 26.41%.

Economic Data

  • Initial jobless claims came in at 268,000 which was an increase from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 266,750.
  • The Case-Shiller home price index rose 0.5% in April, slightly missing expectations of 0.6%. Prices increased in 16 of the 20 cities represented in the index. Over the last 12 months, home prices as measured by the index have risen 5.4%.
  • The headline PCE Index (measure of inflation) rose by 0.2% in May, in line with consensus expectations. The increase was in part due to a 1.4% rise in energy goods and services prices. Over the last 12 months, headline PCE has increased 0.9%.
  • The Core PCE Index (excludes food and energy, preferred measure of inflation by the Federal Reserve) also increased 0.2% in May and was in line with expectations. Over the last 12 month, Core PCE has risen 1.6%, still well short of the Fed’s 2% inflation target.

Fact of the Week

  • According to the Social Security Trustees 2016 report, the trust fund backing the payment of Social Security benefits would be zero in 2035. A zero trust fund does not mean that Social Security payments would also go to zero, but rather would drop to 77% of their originally promised level (or a 23% cut to benefits). In the 2009 report, the projection had been that that the trust fund would hit zero in 2042.

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 CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.