Interest Rates, Brexit: Wealth Economic Update Mar. 20, 2017

U.S. and World News

  • In a highly anticipated move, the Federal Reserve raised the Fed Funds Rate by 0.25% this week. Despite being the second rate hike in three months, the Committee remained committed to a gradual pace of rate hikes going forward. The Fed projects two more interest rate hikes in 2017, though there are differing views among the members. There was one dissent, Neel Kashkari, who supported not raising at this meeting and taking a wait and see approach. Finally, it was noted by Fed Chair Janet Yellen that the size of the Fed’s balance sheet (which stands at $4.5 trillion) was discussed at the meeting, but no decisions were made in regard to reducing it over time.
  • British Prime Minister Theresa May secured permission to trigger Article 50 which would officially mark the beginning of Brexit negotiations between the nation and its European Union counterparts. Having received the go-ahead from Parliament, May has said that she will invoke Article 50 by the end month. It’s expected that the negotiation process will last at least two years before Britain is officially able to leave the EU.

Markets

  • Markets closed the week moderately higher. The S&P 500 gained 0.28% and closed at 2,378. The Dow Jones followed suit by inching up 0.08% and closing at 20,915. Year to date, the S&P is up 6.71% and the Dow is up 6.45%.
  • Despite a 0.25% rate hike in the Fed Funds Rate, interest rates fell this week as the projected pace of future hikes was not accelerated. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.02% and 2.50%, respectively.
  • The spot price of WTI Crude Oil stabilized this week and gained 0.47% this week, closing at $48.72 per barrel. Year to date, Oil prices have fallen 9.31%.
  • The spot price of Gold increased by 2.04% this week, closing at $1,229.26 per ounce. Year to date, Gold prices are up 7.13%.

Economic Data

  • Initial jobless claims edged 2,000 lower from last week, coming in at 241,000. The Labor Department noted no special factors in the data. The four week moving average for claims remained at 237,000 which is a near a 40-year low.
  • Retail sales increased 0.1% in February, in line with expectations. Sales excluding autos and gasoline increased 0.2%. Delayed tax refunds appeared to bring down several Retail categories.
  • The Consumer Price Index (measure of inflation) increased 0.1% in February, slightly beating expectations for flat prices. Over the last 12 months, CPI has increased 2.7%.
    • Core CPI (excludes food and energy) rose 0.2% for February, in line with expectations. Core prices have risen 2.2% over the last year.
  • Housing starts increased by 3.0% in February, beating expectations of 1.1%. The details of the report were also favorable, as the less volatile single family starts increased by 6.5% to the highest level since October 2007 while multi-family starts decreased 3.7%.

Fact of the Week

  • The S&P 500 has now gone 108 consecutive trading days without suffering at least a 1% decline over any single trading day. That’s the longest stretch that the S&P has gone without a 1% drop since it had a run of 105 trading days without one that ended on December 15, 1995. (Source: By The Numbers Research)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

NKorea/Japan, Healthcare: Wealth Economic Update Mar. 10, 2017

U.S. and World News

  • Global tensions are rising in the wake of North Korea firing four ballistic missiles into nearby waters over the weekend. Three of those missiles landed in Japan’s exclusive economic zone, causing the country to move to the highest possible alert level. Japanese Prime Minister Shinzo Abe declared, “This clearly shows North Korea has entered a new stage of threat.” Fearing a rapid escalation, China has called upon North Korea to stop its nuclear and missile tests and for South Korea and the U.S. to cease their joint military drills in the area.
  • Republican leaders in Congress unveiled their plan to repeal and replace Obamacare this week. Along with the end of the health insurance mandates, the proposal would restructure the Medicaid program and create a new tax credit tied to a person’s age and income for those who cannot get insurance through their employer. President Trump is “proud to endorse” the plan and called for its speedy passage despite some opposition within the Republican Party.

Markets

  • Markets fell a bit this week. The S&P 500 lost 0.40% and closed at 2,373. The Dow Jones followed suit by dipping 0.40% and closing at 20,903. Year to date, the S&P is up 6.41% and the Dow is up 6.36%.
  • Interest rates rose quite a bit this week as odds of a Fed rate hike next week have all but hit 100%. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.10% and 2.58%, respectively.
  • The spot price of WTI Crude Oil plunged 9.38% this week, closing at $48.33 per barrel. Year to date, Oil prices have fallen 10.03%.
  • The spot price of Gold decreased by 2.43% this week, closing at $1,204.74 per ounce. Year to date, Gold prices are up 4.99%.

Economic Data

  • Initial jobless claims bounced 20,000 higher from last week, coming in at 243,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 237,000 which is a near a 40-year low.
  • The February jobs report showed an increase of 235,000 new jobs created in the month, better than expectations of 200,000. The prior two months’ figures were revised up by a combined 8,000 which brings the three month average for job gains to 209,000 per month. The report was generally very positive, one blemish however was the 26,000 retail jobs lost during the month, continuing that sector’s recent struggles.
    • The headline unemployment rate ticked down to 4.7%, in line with expectations. The 0.1% decrease in the unemployment rate occurred despite a 0.1% increase in the labor force participation rate to 63.0%.
    • Average hourly earnings rose 0.2% in February, below forecasts of 0.3%. Over the last 12 months, wages have increased 2.8%.

Fact of the Week

  • The Standard & Poor’s 500 (S&P 500) index turned 60 years old this week. The index is widely regarded as the most accurate gauge of large American stocks and it is market capitalization weighted as opposed to the Dow, which is weighted by price, or other indexes that have an equal weighting. The S&P 500 is by far the biggest index in the world, with about $2.4 trillion being tracked by it.

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

Trump speech, Fed, Sessions: Wealth Economic Update Mar. 6, 2017

U.S. and World News

  • politician_podium76797371_320President Trump delivered his first address to a joint session of Congress this week and spoke on a number of initiatives that the administration aims to put through. Trump pledged to overhaul the immigration system, improve jobs and wages for Americans, and promised “massive” tax relief to the middle class and tax cuts for businesses. Trump also laid out some general principles for an Obamacare replacement. Details on these items were absent from the address but Trump did say that he plans to ask Congress for $1 trillion in infrastructure investment, guided by the principle “Buy American and Hire American.”
  • The Federal Reserve came more into focus this week as Fed officials have indicated that there is a strong likelihood of a March interest rate hike. San Francisco Fed President John Williams said that an interest rate hike in March will be under “serious consideration” and New York’s William Dudley feels the case for tightening at the next meeting “has become a lot more compelling.” The market is now assigning a 94% chance of a Fed Funds Rate hike in March.
  • Attorney General Jeff Sessions has announced that he will recuse himself from any investigations related to President Trump’s election campaign amid backlash over his testimony about his contacts with Russia. At Sessions’ confirmation hearing, during which he was under oath, he failed to disclose meeting with Russia’s ambassador on multiple occasions when asked about contact with the Russian government during Trump’s campaign.

Markets

  • Markets rose this week following President Trump’s address to Congress. The streak of 55 consecutive trading days without a trading range of +/- 1% in the S&P 500 was broken this week. The S&P 500 gained 0.71% and closed at 2,383. The Dow Jones followed suit by rising 0.94% and closing at 21,006. Year to date, the S&P is up 6.84% and the Dow is up 6.79%.
  • Interest rates rose quite a bit this week following the address to Congress and increased rate hike odds. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.01% and 2.48%, respectively.
  • The spot price of WTI Crude Oil was down 1.39% this week, closing at $53.24 per barrel. Year to date, Oil prices have dipped 0.89%.
  • The spot price of Gold decreased by 1.78% this week, closing at $1,234.76 per ounce. Year to date, Gold prices are up 7.60%.

Economic Data

  • Initial jobless claims fell 19,000 from last week, coming in at 223,000 which is the lowest reading since 1973. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 234,000 which is a new 40-year low.
  • The Case-Shiller home price index rose by 0.9% in its latest reading, slightly beating expectations of a 0.7% increase. Prices rose in all 20 cities covered and the largest monthly increases were seen in Chicago (1.5%), Seattle (1.4%) and Tampa (1.4%). Over the last 12 months, home prices as measured by Case-Shiller have risen 5.6%.
  • The Headline PCE index (measure of inflation) rose 0.4% in January, slightly under expectations of 0.5%. Over the last year, prices as measure by PCE have increased 1.9%.
    • Core PCE (excludes food and energy, preferred inflation measure by the Fed) increased 0.3% in January, in line with expectations. Over the last year, Core PCE has risen 1.7%, still a bit below the Federal Reserve’s 2% target.

 

Fact of the Week

  • Over the last 30 years, the proportion of all US workers that were members of a union has fallen from 17.5% to 10.7%. Looking at just private sector workers, union membership has fallen from 14.0% in 1986 to just 6.4% now. (Source: Bureau of Labor Statistics)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

5 Ways to Benefit from an Annual Mortgage Review

Greg Kuda, Vice President—Residential Lendinggkuda1_600

If you’re like most people, you probably meet with your financial advisor at least once a year to review how changes in your life and in the securities markets could impact your invested assets. However, few people think to request a similar check-in with their loan officer to conduct a review of their mortgage. Yet, periodically ensuring your current loan terms remain in your best interest is an equally smart money management move.

Your Biggest Asset Is Usually Your Largest Expense

With the recent recovery in home values in our area, it’s likely that your home equity has also increased. That rise may enable you to strengthen your overall financial situation or help you realize other financial goals.

For instance, if you bought your home several years ago and took advantage of one of the low-down-payment programs, your home equity may be high enough now that you are no longer required to pay Private Mortgage Insurance (PMI) each month. Being able to eliminate that expense either by having your home re-appraised or through a refinancing can reduce payments by $100 a month or more.

Similarly, if your family is expanding and you are thinking of adding on to your house, buying a vacation property, or your children are fast-approaching college age and you are looking for money to help pay for college, it could be more affordable to access your home equity through a second mortgage or by refinancing than through other financing arrangements.

5 Potential Benefits of Refinancing

  • Eliminate mortgage insurance
  • Pay off faster
  • Lower monthly payment
  • Cash out
  • Potentially reduce taxes

Where You Started Versus Where You Are Today

It’s natural that after making a big decision, especially one involving a lot of paperwork, like a mortgage, to resume your regularly scheduled life and not give it another thought. However, given the amount of money you have invested in your home and the size of your monthly mortgage payment, proactively managing your home loan through periodic reviews has the potential to help you meet more of your financial goals even sooner.

When to Review Your Mortgage

  • Interest rate environment changes
  • Life changes (marital status, new baby, college-bound child, retirement)
  • Remodeling or have plans to
  • Home equity rises above 20%

To schedule your annual mortgage review, contact your loan officer here or call 1-877-966-0202.

Interest Rates: Wealth Economic Update Feb. 24, 2017

U.S. and World News

  • commerce-517533970_360Minutes from the January Fed meeting were released this week and comments from many of the participants indicated that it would be appropriate to raise interest rates again “fairly soon” if upcoming data are in line with expectations. Members mostly only saw a modest risk of a significant increase in inflation pressures and thought the Fed would have “ample time” to respond if necessary. The market is currently pricing in a 40% probability that the Fed raises interest rates at their next meeting in March.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 0.73% and closed at 2,367 which is an All-Time High. The Dow Jones followed suit by rising 0.99% and closing at an All-Time High of 20,822. Year to date, the S&P is up 6.08% and the Dow is up 5.80%.
  • Interest rates fell this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.80% and 2.31%, respectively.
  • The spot price of WTI Crude Oil was up 1.83% this week, closing at $54.02 per barrel. Year to date, Oil prices have risen 0.56%.
  • The spot price of Gold increased by 1.83% this week, closing at $1,257.19 per ounce. Year to date, Gold prices are up 9.56%.

Economic Data

  • Initial jobless claims rose 5,000 from last week, coming in at 244,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 241,000 which is a new 40-year low.
  • New home sales rose by 3.7% in January which was a smaller rise than expected. New home sales rose in the Midwest, South and Northeast regions but fell in the West.
  • Existing home sales rose 3.3% in January. Sales of single family units rose 2.6% while multi-family unit sales rose 8.3%.

Fact of the Week

  • The Dow finished Friday at a new record high for the 11th consecutive day, the best streak of consecutive new highs since 1987.

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

Keystone, Interest Rates: Wealth Economic Update Feb. 17, 2017

U.S. and World News

  • oil_socialPresident Trump met with Canadian Prime Minister Justin Trudeau this week for their first face-to-face meeting. The major topic of discussion was the NAFTA trade deal that Trump has vowed to update and renegotiate. The two leaders also discussed Trump’s decision to conditionally approve the Keystone XL pipeline which begins in Alberta’s oil sands. Coming out of the meeting, Trump said that the trade situation with Canada is already “less severe” than it is with Mexico. Canada sends 75% of its exports to the United States, accounting for 20% of Canada’s GDP.
  • Janet Yellen delivered her semi-annual testimony to Congress this week and touched on a number of topics, including the pace of interest rate hikes in the near future. On that note, she stated that, “I would say every meeting would be live,” indicating that the next hike could come as soon as the Fed’s March meeting. The markets are now pricing in a little over a 1 in 3 chance that the Fed raises rates in March.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 1.60% and closed at 2,351 which is an All-Time High. The Dow Jones followed suit by rising 1.88% and closing at 20,624. Year to date, the S&P is up 5.31% and the Dow is up 4.76%.
  • Interest rates were little changed this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.90% and 2.42%, respectively.
  • The spot price of WTI Crude Oil was down 0.91% this week, closing at $53.37 per barrel. Year to date, Oil prices have dipped 0.65%.
  • The spot price of Gold increased by 0.11% this week, closing at $1,235.00 per ounce. Year to date, Gold prices are up 7.63%.

Economic Data

  • Initial jobless claims rose 5,000 from last week, coming in at 239,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 245,000 which is very close to a new 40-year low.
  • Retail sales increased by 0.4% in January, beating expectations of 0.1%. Retail sales ex-autos rose by 0.8%. Gains were broad-based across categories, with the largest increases coming from sporting goods (1.8%), electronics (1.6%), restaurants/bars (1.4%) and department stores (1.2%).
  • The headline Consumer Price Index (measure of inflation) increased by 0.6% in January, beating expectations of 0.3%. This was mostly the result of a 4.0% increase in energy prices during the month. Over the last 12 months, headline CPI has risen 2.5%.
    • Core CPI (excludes food and energy) increased by 0.3% during January, more than the 0.2% forecasted. In the last year, core prices have risen 2.3%.

Fact of the Week

  • 54% of student loan borrowers have either defaulted or failed to pay down even $1 of principal on their outstanding debt over the last 7 years. Until an error was discovered in the government calculations last month, it was believed that the percentage was much lower, at 34%. (Source: Education Department)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

What First-Time Home Buyers Need to Know Today

Jocelyn Retz, 1st Vice President—Home Loans jretz

There’s a first time for everything. When it comes to home buying, having a resource who can show you the ropes and guide you through your financing options isn’t just helpful—it can save you money.

You Have Options…Lots of Options

First-timers have choices. Each of the mortgage programs serving first-time home buyers in our area have different terms, benefits and uses. Some are more appropriate for new construction, while others can provide added benefits if you are buying a fixer-upper.

Probably the most familiar option is the Federal Housing Administration FHA mortgage. These often have less stringent standards than most conventional lending programs. However, not all homes will qualify. While FHA-insured loans used to be the choice for those seeking to make a low down payment (with a 3.5 percent minimum), some conventional loans now offer an even lower down payment option for borrowers with good credit at just 3 percent.

Veterans have access to even more flexible programs with no down payment requirement. The further away you are from the Chicago Metropolitan area, the likelihood increases that you may be able to borrow through the United States Department of Agriculture (USDA), which offers another zero percent down payment program with attractive terms for those settling down in rural areas.

The State of Illinois, through the Illinois Housing Development Authority (IHDA), is another source of financing for first-time home buyers who work with Old Second. Its 1ST Home Illinois mortgage offers generous down payment assistance to working class families.

While a lot of buyers today look to their friends and family members for advice, the features and requirements of some of the better known mortgage programs have changed recently. By working directly with a community-based lender who participates in a wide variety of programs—not every lender does—you can make a more informed decision about what would be most advantageous for your financial situation. In particular, you can find out how much it will cost you over time.

Don’t Just Get a Mortgage—Get Advice

While many lenders now take applications online and communicate via text and email—Old Second included—having a person to talk to as your application makes its way through the review process can help you understand how it works and what additional requests for information mean. That said, the mortgage process isn’t as complicated as most people think. Compared to what borrowers go through to receive and repay a student loan, for instance, this can be much simpler.

Many of the conventional mortgages Old Second makes continue to be serviced by us after they close. Some clients find it reassuring that after the effort they make to choose the right lender, they will have an ongoing relationship with that same lender over the life of their loan. That is not typical outside of a community-based bank. However, the way we see it, our reputation as a bank, as employees and your neighbors is on the line when we work with you. We want to be there for you from the beginning of the process through your closing—and for the party to celebrate your paid-off mortgage!

For more information on how we work with our first-time home buyers, visit us here or call 1-877-966-0202. We can’t wait to talk to you about what we can do to help you succeed with your first big move.

 

Travel Ban, One China: Wealth Economic Update Feb. 10, 2017

U.S. and World News

  • scales_gavel-509557490_360Three judges in the U.S. Appeals Court upheld the suspension of President Trump’s travel ban this week. The government now has 14 days to ask the 9th Circuit to have a larger panel of judges review the decision or appeal directly to the U.S. Supreme Court, which would likely determine the case’s final outcome. Expressing his displeasure with the Circuit Court’s decision, Trump tweeted, “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!”
  • In his first phone call with Chinese President Xi Jinping, President Trump said that he would honor the nation’s “One China” policy which considers Taiwan as one with China and not a separate nation. Trump also urged closer ties between the U.S. and China. The clarification on the “One China” policy ends weeks of uncertainty regarding Washington’s approach to China.
  • According to a new U.S. Department of Homeland Security report, President Trump’s wall along the U.S.-Mexico border would be a series of fences and walls that would cost as much as $21.6 billion and take more than three years to construct. The projected price tag is much higher than the $12 billion figure cited on the campaign trail and the $15 billion estimated by Republican Congressional leaders.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 0.87% and closed at 2,316 which is an All-Time High. The Dow Jones followed suit by rising 1.13% and closing at 20,269, also an All-Time High. Year to date, the S&P is up 3.66% and the Dow is up 2.83%.
  • Interest rates fell this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.89% and 2.41%, respectively.
  • The spot price of WTI Crude Oil was unchanged this week, closing at $53.81 per barrel. Year to date, Oil prices have risen 0.18%.
  • The spot price of Gold increased by 1.09% this week, closing at $1,233.62 per ounce. Year to date, Gold prices are up 7.51%.

Economic Data

  • Initial jobless claims fell 12,000 from last week, coming in at 234,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 244,000 which marks a new 40-year low.
  • The University of Michigan consumer sentiment index fell to 95.7 in the preliminary February report following increases in the previous three months. Both consumers’ assessment of current conditions and expectations for the future declined with the expectations component falling further.

Fact of the Week

  • Equity market volatility has been very low for the last portion of 2016 extending into 2017. The S&P 500 has now gone 39 consecutive trading days without experiencing an intraday range of greater than +/- 1% which is the longest stretch that has occurred since 1982. (Source: Strategas Research Partners)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

SCOTUS, Brexit, Fed: Wealth Economic Update Feb. 6, 2017

U.S. and World News

  • scales-178714734_360President Trump continued to make headlines this week starting with his firing of Attorney General Sally Yates after she ordered DOJ lawyers not to defend the newly enacted travel and immigration restrictions. Dana Boente, U.S. Attorney General for the Eastern District of Virginia, has been named acting Attorney General until Jeff Sessions is confirmed by the Senate. Trump also announced his nomination of Neil Gorsuch, an appointee of President George W. Bush, to the U.S. Supreme Court. Gorsuch is the youngest (49) nominee to the Supreme Court in more than 25 years and will face a difficult confirmation process as Democrats have already come out in opposition of him.
  • After a two day debate, Britain’s departure from the European Union took a step forward this week as the House of Commons voted overwhelmingly in favor of triggering Article 50. Once triggered, it will begin a two year process for Britain to leave the EU. With that obstacle cleared, Prime Minister Theresa May is set to publish a detailed Brexit plan that includes controlling migration, pulling out of the single market and negotiation plans with Britain’s trading partners.
  • The Federal Reserve held a policy meeting this week and elected to keep interest rates unchanged as was the expectation going in. The Committee made few changes to their prior statement saying that the economy was expanding “at a moderate pace” and that job growth was still “solid.” They did make one meaningful upgrade to their assessment of the economy saying “measures of consumer and business sentiment have improved of late.” The Fed will meet again March 14-15 and the market is currently pricing in a 35% probability of a rate hike at that meeting.

Markets

  • Markets traded relatively flat this week. The S&P 500 gained 0.16% and closed at 2,297. The Dow Jones dipped 0.09% and closed at 20,071. Year to date, the S&P is up 2.76% and the Dow is up 1.69%.
  • Interest rates held steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.93% and 2.49%, respectively.
  • The spot price of WTI Crude Oil rose by 1.28% this week, closing at $53.85 per barrel. Year to date, Oil prices are unchanged.
  • The spot price of Gold increased by 2.44% this week, closing at $1,220.30 per ounce. Year to date, Gold prices are up 6.34%.

Economic Data

  • Initial jobless claims fell 14,000 from last week, coming in at 246,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 248,000.
  • The January employment report showed a gain of 227,000 jobs in the month, beating consensus estimates of 180,000. The prior two months were revised down by a combined 39,000 which brings the three month average of job gains to 183,000.
    • Headline unemployment ticked up 0.1% to 4.8% in January. The move up was the result of a 0.2% increase in the labor force participation rate to 62.9%.
    • Average hourly earnings only rose 0.1% in January, lower than expectations of 0.3%. Over the last 12 months, wages have grown 2.5%.
  • The Case-Shiller Home Price Index rose by 0.9% in December, beating forecasts of 0.7%. All 20 cities measured by the index saw increased prices and have now grown 5.3% over the last 12 months.
  • The PCE Index (measure of inflation) rose by 0.2% in December, in line with expectations. Over the last 12 months PCE prices have risen 1.6%.
    • Core PCE (excludes food and energy, preferred measure of inflation by the Fed) rose 0.1% in the month, meeting expectations. Over the last year, Core PCE has risen 1.7%, still short of the Federal Reserve’s 2% target.

Fact of the Week

  • The New York Stock Exchange introduced its opening/closing bell in the 1870’s when continuous trading began and started off as a Chinese gong. In 1903, the NYSE moved to its current building and the gong was replaced by a brass bell. The first guest to ring the opening bell (which has now become a tradition) was Leonard Ross in 1956. Leonard was a 10 year old who had won a TV quiz show answering questions about the stock market to earn that honor. (Source: NYSE.com)

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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.

 

How to Prepare for the Spring Home-Buying Season

William Schumann, 1st Vice President—Mortgage Sales 

William Schumann, First Vice President, Head of Mortgage Sales

William Schumann, First Vice President, Head of Mortgage Sales

Ready to make your move? Whether you are trading up, downsizing or taking your first plunge into home ownership, preparation makes for a more efficient process and, ultimately, more livable results. What you’re preparing for is more than a financial transaction—it’s a purchase that will influence your overall lifestyle.

Choose a Neighborhood

A good real estate agent can help you understand what a neighborhood offers and how it might match up with your lifestyle preferences. There are also a variety of apps you can download to help you get acquainted with an area’s walkability, its schools, and how well it will serve your daily needs.

Determine What “Home” Looks Like

Once you decide where you want to look, consider the type of home you are looking for. Many online listings now have walk-through videos to provide previews. Although, until you start walking through homes, knowing what will feel comfortable may be hard to gauge, especially if this is your first purchase.

Find Your Financial Comfort Zone

Once you develop a feel for your preferences, it’s time to start thinking about what you are comfortable with financially. You should consider where you are today, given your current income and debt levels, and where you expect to be in a few years.

For an approximate idea of what will be affordable, you can take a DIY approach and use the calculators that banks like ours offer to help you run the numbers. However, it’s typically more helpful to sit down and talk to a banker. A banker can also prequalify you, which will improve your understanding of how much of a mortgage you can comfortably afford, giving consideration to both the monthly payment as well as the total loan amount.

Speaking with a mortgage professional also alerts you to any programs you may qualify for. Currently, there are programs with special incentives for first-time buyers. There are also programs that make buying a property that will need immediate fixing up more affordable.

Spring Ahead

Spring is considered the kickoff to the home-buying season. This year, however, there is some incentive for starting to prep for buying a bit earlier.

Recently, mortgage rates increased. The rise was not dramatic, and though additional increases are anticipated in 2017, mortgage rates are expected to remain at the low end of their historical range. However, each increase adds to the cost of buying.

Another reason to start preparing now is that home values in many areas have recovered to their prerecession levels. Realtor.com forecasts that prices in our area could rise another 1.95 percent this year.[1]

For more information on how we can help you prepare for your home purchase, visit us here or call 1-877-966-0202. We can’t wait to talk to you about what we can do to help you make your next move.

Sources:

[1] Joe Kirchner, “Realtor.com®2017 National Housing Forecast,” Realtor.com, posted Nov. 30, 2016, retrieved Jan. 4, 2017.