North Korea, Japan, Cuba: Wealth Economic Update Apr. 20, 2018

U.S. and World News

  • KOREA-652900206_360Japan’s Shinzo Abe traveled to Mar-a-Lago to meet with President Trump on Tuesday to discuss trade and a planned summit with North Korean leader Kim Jong-un. Japan wanted to discuss the United States renewed interest in re-entering the Trans-Pacific Partnership (TPP) and the possibility of Japan’s inclusion in the exemption of steel and aluminum tariffs with other United States allies. Japan was also concerned that they may have been excluded from nuclear negotiations with North Korea after President Trump made a decision to meet with Kim Jong-un without first conferring with Shinzo Abe. The two-day summit concluded with no deal being reached on the TPP, no exemption for Japan on the steel and aluminum tariffs, and a stronger agreement between the two leaders on North Korea.
  • After more than 60 years of Castro leadership in Cuba, Miguel Diaz-Canel was elected the next president of Cuba, a widely expected result. On Thursday, Raul Castro announced that he is stepping down and Diaz-Canel was elected after 603 out of the 604-member National Assembly had approved of him. Raul Castro will remain head of the country’s Communist Party until the next scheduled party congress in 2021. Miguel Diaz-Canel stated that he will reform the economy to improve the communication between the government and the people while preserving Cuba’s communist system.

Markets

  • The markets finished higher this week. The S&P 500 rose 0.54% and closed at 2,670.14. The Dow Jones rose 0.46% and closed at 24,462.94. Year to date, the S&P is up 0.45% and the Dow Jones is down 0.40%.
  • Yields moved much higher for yet another week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.80% and 2.96%, respectively. The 10-year Treasury yield hit its highest level since 2014.
  • The spot price of WTI Crude Oil rose again this week by 1.15% and closed at $68.10 per barrel. Year to date, Oil prices are up 13.29%.
  • The spot price of Gold fell this week by 0.76%, closing at $1,335.96 per ounce. Year to date, Gold prices are up 2.55%.

Economic Data

  • Initial jobless claims declined 1,000 to 232,000 for the week. The largest declines were in New Jersey, Pennsylvania, and Ohio. The four-week moving average moved up 1,000 to 231,000. The pace of layoffs still remains very low.
  • The Philadelphia Fed manufacturing index moved higher by 0.9 points to 23.2 vs consensus expectations of 21.0. The increase was led by the employment component and the average workweek component.
  • Retail sales increased by 0.6% in March versus expectations of a 0.4% increase. The increase was led by auto sales and slightly held back by falling gasoline prices.
    • Retail sales ex-autos increased 0.2% versus a median forecast of 0.2%
    • Retail sales ex-autos, gasoline, and building materials increased 0.4% versus a median forecast of 0.4%
  • Housing starts rose 1.9% in March to 1,319k, short of expectations of a 2.5% increase. The rise was driven by multi-family starts.
    • Building permits rose by 2.5% month-over-month in March to an annualized rate of 1,354k compared to a median forecast of an unchanged month-over-month figure.

Fact of the Week

  • Marijuana sales in Colorado generated $506 million in tax revenue for the state, through June 2017. In 2014, the first year it was legalized, the state generated $76 million in tax revenue from marijuana, nearly double the $42 million that was generated from alcohol sales in the state. The deficit in Illinois is $148 billion as of 4/20/18. (CNN Money, US Debt Clock).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

Syria, China, Oil: Wealth Economic Update Apr. 13, 2018

U.S. and World News

  • On Sunday, President Bashar Assad of Syria allegedly launched another chemical attack on his people, killing 49 people, including women and children. President Trump stated in a tweet that “President Putin, Russia and Iran are responsible for backing Animal Assad. Big price to pay”. The United States has warned Russia that all options are on the table for a military response in Syria, a move that the United States’ allies fully support. British submarines were ordered to move within striking distance of Syria as the possibility of military response to Syria is imminent. After Russia warned against the plan of the United States and their allies launching a military strike in Syria, this morning, Russia’s foreign minister claimed that the alleged chemical attack was staged by an unknown foreign intelligence agency.
  • President Xi Jinping of China revealed at the Boao Forum for Asia on Monday night that he plans to further open up the China economy, significantly lower import tariffs, and improve the investment environment for foreign companies. This morning, China reported its first trade deficit in over a year amid trade tensions between China and the United States. The falling exports are estimated to be a result of seasonal factors such as the China New Year holiday.
  • The price of Crude oil has risen dramatically as a result of increased tension in the middle east and is having an effect on gasoline prices. The U.S. Energy Information Administration revealed that the average regular retail gas prices reached $2.70/gallon last week; this is the highest level of gasoline prices in three years.

Markets

  • The markets rallied this week as volatility continues. The S&P 500 rose 2.04% and closed at 2,656.30. The Dow Jones rose 1.80% and closed at 24,360.14. Year to date, the S&P is down 0.09% and the Dow Jones is down 0.86%.
  • Yields moved higher again this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.67% and 2.82%, respectively.
  • The spot price of WTI Crude Oil had a big week rising 8.51% and closing at $61.92 per barrel for the week as tensions in the middle east ratchet higher. Year to date, Oil prices are up 12.05%.
  • The spot price of Gold rose slightly higher this week by 0.92%, closing at $1,345.28 per ounce. Year to date, Gold prices are up 3.26%.

Economic Data

  • Initial jobless claims fell 9,000 to 233,000 for the week. The largest declines were in Pennsylvania and New Jersey. The four-week moving average moved up 2,000 to 230,000. The pace of layoffs still remains very low.
  • Import prices were unchanged in March versus expectations of a 0.1% increase. The flat reading in March is a result of a 1.6% drop in fuel prices and a 0.2% increase in import prices ex fuels.
  • The producer price index (PPI) rose 0.3% in March exceeding expectations of a 0.1% gain as the drop in fuel prices was largely offset by an increase in core producer price inflation, food, and trade services.
    • PPI ex-food and energy rose 0.3% in March versus expectations of a 0.2% increase.
    • PPI ex-food and energy and trade services rose 0.4% versus expectations of a 0.2% increase.

     

  • The Consumer Price Index (CPI) fell 0.06% in March exceeding expectations of a drop of 0.09% reflecting a fall in gasoline prices slightly offset by an increase in food prices.
    • Core CPI (ex- food and energy) rose 0.18% in March meeting expectations of a 0.2% increase.
    • The year-over-year Core CPI rate also came in at 2.12% meeting expectations of 2.1%.
  • The University of Michigan’s index of consumer sentiment fell 3.6 points to 97.8 points in the April preliminary report. The drop is related to concerns over the potential impact of proposed trade policies.

Fact of the Week

  • 94.5% of home mortgages (by number, not by dollar) are “current and performing” as of 12/31/2017. Just 2.4% of home mortgages were “seriously delinquent” (defined as 60 days or more past due) as of 12/31/2017 (source: Office of the Comptroller of the Currency).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

Attracting and Retaining Skilled Employees

Sean O’Connor, First Vice President/Retirement Benefits 

With the current robust economy comes a tight job market. While that may be great for revenues, it also brings the added pressure of attracting and retaining skilled staff members. Whether you are trying to entice good workers to leave the jobs they have to join your firm or want current employees to stay, it takes a more than salary and a pleasant workplace. Having a good employee benefit plan helps make your case.

The Thing About Millennials

Millennials, the generation that is currently flooding workplaces as the pace of Baby Boomer retirements starts to percolate, may have a reputation for being swayed by the promise of an office foosball table and Taco Tuesdays, but that is not all they want. A key characteristic for this demographic is that they are savers, and many have already begun saving for retirement. As self-guided learners, they are already looking for more sophisticated strategies and advice on retiring. They want to be prepared to “win” retirement—and a potentially early retirement at that.

As an employer, this makes your plan, and its attractiveness in meeting your staff members’ long-term goals, even more critical to your company’s continued growth and expansion.

Closing the Gaps

As a wealth management firm, we have been creating and administering employee retirement plans for decades. That includes establishing, monitoring and administering defined contribution plans, or 401ks and 403Bs, for our business and municipal clients.

With a highly “seasoned” staff—some of us started our careers with larger global consulting firms and research groups—we have an unexpectedly deep bench when it comes to our in-house capability for structuring customized new employer plans for clients. We can also provide consultative services that lead to recommendations for strengthening the retirement plan you already have in place to make it more appealing to participants of all ages.

Easy Access to Answers

Recently, we’ve been making the biggest difference for our plan sponsor clients by bringing their plans up to the technological standards workers expect, especially those that are younger and tech savvy. Millennials, in particular, are information miners. They expect to find the answers they need to questions as they occur to them, online and through a mobile device. Then, they want to be able to contact a person for a one-on-one conversation. We accommodate that.

Through a variety of vendor relationships, we strive to create a seamless and intuitive experience for your plan participants. This enables them to trade online and access research on their own. It also provides the tools and apps that help them focus on achieving their financial wellness goals. Given our own community banking heritage, we are also available to take calls and meet on-site to address their questions and provide the educational assistance that enables participants to get the most out of their employer plan.

Investment Guidance

As a division within a commercial bank’s trust department, we also offer two more advantages. Fiduciary duty is part of our DNA. We are required by law to operate with fiduciary responsibility at every level of our business. This isn’t something new for us; it has always been part of our service.

Secondly, being a wealth management provider, we are also able to leverage the market research and investment knowledge of in-house experts to the advantage of your plan. That expertise can help in structuring the plan and choosing the most cost-effective investment options for you to offer. Beyond fund selection, the fact that we monitor markets and investments daily can lead to a quicker reaction to shifts in market and economic fundamentals. Many of our plan sponsor clients find that added responsiveness and proactive involvement relieves them of the extra responsibility and pressure to conduct their own monitoring and investment reviews.

We Simplify Plan Sponsors’ Lives

We also help keep compliance testing in line with ERISA compliance and monitor costs related to the investments and to the plan’s operation. After all, controlling costs creates more of a growth opportunity for participants. Although, we also recognize it isn’t always about the price. It’s about being able to deliver participants to their goals and providing plan sponsors with the services and support they need—from access to the best investment platforms to on-site education and consultations.

Whether you want to ensure your current plan remains competitive in today’s battle for workers or you think it’s time to add a plan, visit us here or, better yet, give us a call at 630-844-8655. We can help you stay competitive and keep your employees on track to achieve the retirement goals.

China, Tariffs: Wealth Economic Update Apr. 6, 2018

U.S. and World News

  • The trade negotiation between the United States and China has gained popularity in the news this week as new tariffs are announced by either side seemingly every day. Both sides appear to be playing a game of chicken as it relates to trade; on Monday, China implemented tariffs of 25% on 128 U.S products totaling $3 billion in response to the United States recently imposed steel and aluminum tariffs. The United States quickly retaliated on Wednesday with an additional $50 billion worth of 25% tariffs on 1,300 Chinese products to which China responded with tariffs on 106 more U.S products totaling $50 billion on products such as cars, whiskey, and soybeans. Thursday evening President Trump announced that he had told the U.S trade representative to look into whether $100 billion in additional tariffs would be appropriate. China ambassador Cui Tiankai discussed the United States levying further tariffs on Chinese products in an interview Monday stating “If they do, we will certainly take countermeasures of the same proportion, and the same scale, same intensity”.

Markets

  • The markets sold off this week, prolonging the ongoing correction. The S&P 500 lost 1.35% and closed at 2,604.47. The Dow Jones fared slightly better losing 0.67% and closed at 23,932.76. Year to date, the S&P is down 2.08% and the Dow Jones is down 2.60%.
  • Yields moved higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 59% and 2.77%, respectively.
  • The spot price of WTI Crude Oil decreased by 65% this week, closing at $61.92 per barrel. Year to date, Oil prices are up 3.01%.
  • The spot price of Gold rose slightly higher this week by 57%, closing at $1,333.03 per ounce. Year to date, Gold prices are up 2.32%.

Economic Data

  • Initial jobless claims rose 24,000 to 242,000 for the week which was larger-than-expected. The largest increases were in California, New York, and Pennsylvania. The four-week moving average moved up 3,000 to 228,000. The pace of layoffs still remains very low.
  • The ISM manufacturing index fell 1.5 points to 59.3 in March versus expectations of 59.7. The decline in employment and new orders led the decline for the month, however the pace of manufacturing growth remains very strong
  • Construction spending rose 0.1% in February versus expectations of a 0.4% increase and the decline was led by public construction spending as opposed to private construction spending.
  • Private Sector ADP employment rose 241,000 in March exceeding expectations of a 210,000 gain. The gain in private sector employment was led by professional and business services and trade, transportation, and utilities.
  • Nonfarm payrolls came in at 103,000 for the month of March below consensus expectations of 185,000. The weakness in job growth for the month of March is believed to be the result of severe winter weather.
    • Average hourly earnings rose by 0.30% in March and the year-over-year rate rose 0.1% to 2.7%.
    • The unemployment rate remained at 4.1% versus expectations of a decline to 4.0%.

 

Fact of the Week

  • The US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $40.8 trillion as of 12/31/17. The US bond market was worth $4.1 trillion as of 12/31/85 (Source: Securities Industry and Financial Markets Association).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

China, Korea, Tariffs: Wealth Economic Update Apr. 2, 2018

U.S. and World News

  • semiconductor-179653150_360The Trump administration sent a letter with specific requests to help reduce China’s trade surplus with the U.S. to Chinese economic overseer Liu He. These requests include a tariff cut on U.S. automobiles, more Chinese purchases of U.S. semiconductors and greater access to China’s financial sector by American companies. A list of retaliatory tariffs on a large number of major imports to China are to be announced soon.
  • After revising its six-year-old bilateral trade deal with the U.S., South Korea is next to escape President Trump’s metal tariffs.  Seoul will double its import quota for American-made cars and decrease the amount of steel sent to the United States. South Korea will also allow the United States to keep the 25% tariffs on pickup trucks in place for 20 more years.
  • In more than a decade North and South Korea will hold their first Summit on April 27th, after Kim Jong-un pledged his commitment to denuclearization.  The summit will be on the southern side of the Demilitarized Zone.
  • During a  meeting with President Xi in Beijing, Kim Jung-un agreed to denuclearize the Korean peninsula.  Since he assumed power in 2011, this is Kim’s first known trip abroad.  It is believed by analysts as preparation for upcoming summits with South Korea and the U.S.  Kim is scheduled to meet President Trump sometime in May.

Markets

  • The markets rebounded this week. The S&P 500 gained 05% and closed at 2,640.87. The Dow Jones followed suit by also gaining 2.42% and closed at 24,103.11. Year to date, the S&P is down 0.75% and the Dow Jones is down 1.95%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 56% and 2.74%, respectively.
  • The spot price of WTI Crude Oil decreased by 43% this week, closing at $64.94 per barrel. Year to date, Oil prices are up 8.04%.
  • The spot price of Gold fell this week by 62%, closing at $1,325.48 per ounce. Year to date, Gold prices are up 1.74%.

Economic Data

  • Initial jobless claims dropped to a new 49-year low of 215,000, a decrease of 12,000. The largest decreases were in California, New York, New Jersey, and Virginia. The four-week moving average remained stable at 225,000.
  • GDP grew to 2.9% reflecting a moderately faster pace of consumption growth.
  • Merchant Wholesale inventories rose 1.1% in February.
  • Pending home sales are up 3.1% in February which is slightly more than expected.  Sales were led by the Northeast and the South regions.  Pending home sales are still 4.1% lower than a year ago.

Fact of the Week

  • American oil producers have pumped at least 10 million barrels a day of crude oil for the last 7 weeks, hitting 10.407 million barrels per day or the week ending Friday 3/16/18.  The last time US oil producers hit 10 million barrels a day of crude oil was in 1970. (source: Energy Information Administration).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

A Wealth of Experience

Jacqueline A. Runnberg, CFP®, First Vice President/Wealth Advisor 

When it takes a lifetime to build a legacy, it’s only natural to want it to last for generations, along with the advisor you entrust with it. What many people don’t realize about Old Second Bank is that we are that advisor. Not only are we the largest provider of personal fiduciary, investment management, wealth management, and trust and custody services in the western suburbs, we were also the first. We are literally second to none, having been in the trust business since 1919. In fact, we currently have $1.16 billion in assets under management for our clients (as of 12/31/2017).

Expertise You Can Trust Close to Home

For nearly a century, Old Second has consistently delivered wealth management solutions to the families that formed the communities we all now call home. While we’ve consistently provided a full range of highly personalized solutions, many of our competitors in this area have exited the business over the decades. Many others consolidated into larger banks and, in the process, shifted their services to central locations outside our area. Meanwhile, at Old Second we have continued to pursue our strategy of providing personalized, well-informed and comprehensive wealth management services close to home.

Our wealth managers and investment professionals average more than 20 years of trust and investment experience. We have the depth and breadth of knowledge to provide all the wealth management solutions and services you need while maintaining the balance of personalized services you expect from a bank in your community.

A Common Sense Approach

When it comes to wealth management, it’s a matter of trust, and you can trust us to take a common sense approach that rests on a comprehensive process for delivering services. These services include:

  • Using a financial planning-based approach, we Identify your specific life goals and financial objectives and assessing your current circumstances.
  • Communicating with you every step of the way and listening to what you have to say rather than talking at you.
  • Involving you, your family members, your beneficiaries and your other financial professionals when appropriate and according to your wishes.
  • Investing the time to build a lasting relationship with you and each generation of your family.

Sound Advice

With a seasoned staff of professional wealth managers, we provide advice regardless of where you are in your financial life—from young families just starting to build wealth to those who are planning for their wealth’s transition. Our distinct and comprehensive approach brings a team of credentialed specialists together to provide advanced financial planning, investment and money management, tax planning, estate planning and administration, charitable giving and wealth transfer. Over the decades, individuals and families like yours have placed their trust in our consistently sound advice as they’ve built and shaped their legacies.

Whether you’re in the early stages of building wealth or looking to preserve the wealth you have, visit us here  or, better yet, give us a call at 630-966-2462 so we can start proving to you that we truly are second to none.

China, Budget: Wealth Economic Update Mar. 23, 2018

U.S. and World News

  • The trade negotiations heated up this week as the newly imposed steel and aluminum tariffs come closer to taking effect. China continues to be the main target after an investigation into their practices revealed evidence of unfair terms on U.S. companies and foreign ownership restrictions. The United States filed a complaint at the World Trade Organization (WTO) over allegations that China is breaking WTO rules by denying basic patent rights that would stop Chinese entities from eventually using the technology of foreign patent holders. China responded on Thursday evening by revealing a specific list of 128 U.S goods that they plan to tariff in two steps. The plan includes a 15% tariff on 120 goods totaling $1 billion and a 25% tariff on eight goods totaling $2 billion.
  • self-driving-829192480_360Early this morning, the Senate passed a $1.3 trillion spending bill that would fund the government until September 30th, putting an end to the fuss about a potential government shutdown. The bill includes an increase in defense spending of $80 billion, domestic spending of $63 billion, $1.6 billion to fund a border wall with Mexico, and $100 million for research and testing of autonomous cars. Before President Trump signed the bill, he threatened to veto it citing lack of funding for the border wall with Mexico and no consideration for undocumented immigrants.

Markets

  • The markets experienced another selloff this week. The S&P 500 plummeted 93% and closed at 2,588.26. The Dow Jones also experienced a sharp decline this week losing 5.67% and closed at 23,533.20. Year to date, the S&P is down 2.74% and the Dow Jones is down 4.25%.
  • Yields moved lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 60% and 2.81%, respectively.
  • The spot price of WTI Crude Oil rose 70% this week, closing at $65.97 per barrel. Year to date, Oil prices are up 9.75%.
  • The spot price of Gold moved higher this week gaining 55%, closing at $1,347.80 per ounce. Year to date, Gold prices are up 3.45%.

Economic Data

  • Initial jobless claims rose by 3,000 from last week, coming in at 229,000. The four-week moving average moved slightly higher to 224,000. Layoffs remain at a very low pace and continue to fall further.
  • Existing home sales increased by 3.0% in February to a seasonally adjusted rate of 5.54 million units, beating expectations of a 0.4% increase. Sales in the West largely contributed to the increase.
  • Sales of new single-family homes fell 0.6% in February to a seasonally adjusted rate of 618,000 units slightly missing expectations of a 620,000 increase.
  • The Federal Open Market Committee (FOMC) raised the Fed Funds rate by 0.25% to a range of 1.50-1.75% in a widely expected move on Wednesday. The meeting had a more hawkish tone than expected, signaling 8 cumulative hikes in 2018-2020 when 6.75 were previously expected. The Fed now expects inflation to rebound in “the coming months” as opposed to “this year”.
  • Durable goods orders rose 3.1% in the month of February, beating expectations of a 1.6% increase. Durable goods orders continue to trend higher and a 25.5% increase in aircraft orders contributed to much of the increase.

Fact of the Week

  • As of last Friday (3/16/18), no US bank had failed YTD and required a financial bailout from the FDIC. This is the latest in any calendar year with no bank failures YTD since 2006, the last year in which no bank failures occurred during the entire year. Over the last 5 calendar years (2013-17), 63 banks failed in the United States, an average of 13 per year (source: Federal Deposit Insurance Corporation).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

Kudlow, Japan/EU: Wealth Economic Update Mar. 19, 2018

U.S. and World News

  • economics_telescope-687981332_360CNBC Commentator Larry Kudlow has accepted the role of Chief Economic Advisor to President Trump after the departure of Gary Cohn amidst conflicting opinions on steel and aluminum tariffs. Larry Kudlow will first be tasked with negotiating the issue on tariffs while being particularly tough on China and he stated on Wednesday, “China can expect the U.S. to take a tough stance when it comes to international trade.” Larry Kudlow has been known to dislike tariffs and disagree with the President on this issue, however, after learning of the Canada and Mexico exemptions he has softened his view stating “I must say as somebody who doesn’t like tariffs, I think that China has earned a tough response not only from the United States.”
  • Japan and the European Union have pressured the United States to exempt them from the new steel and aluminum tariffs during a meeting in Brussels on Saturday. This was expected to come up as the United States has left further exemptions up for discussion after signing into law the new tariffs last week. The three countries agreed to take joint steps to combat steel overcapacity and attempt to regulate market prices with stronger subsidy rules.

Markets

  • Markets ended the week lower. The S&P 500 lost 20% and closed at 2,752.01. The Dow Jones also fell by 1.51% and closed at 24,946.51. Year to date, the S&P is up 3.37% and the Dow Jones is up 1.46%.
  • Yields were once again relatively unchanged this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 64% and 2.84%, respectively.
  • The spot price of WTI Crude Oil rose 24% this week, closing at $62.19 per barrel. Year to date, Oil prices are up 3.48%.
  • The spot price of Gold was down for the week losing 77%, closing at $1,313.70 per ounce. Year to date, Gold prices are up 0.84%.

Economic Data

  • Initial jobless claims fell by 4,000 from last week, coming in at 226,000. The four-week moving average was unchanged at 222,000. Layoffs remain at a very low pace and continue to fall further.
  • The Consumer Price Index rose by 0.15% in February, slightly below expectations of 0.2%. The rise in February was mostly influenced by rising energy prices and the year-over-year rate remained at 1.8%.
  • The Producer Price Index rose by 0.2% in the month of February driven by core producer price inflation. This was higher than expectations of a 0.1% increase and the year-over-year rate stands at 2.9%.
  • Retail Sales declined by 0.1% in February coming in short of expectations of a 0.3% increase and the previous two months were revised down slightly.
  • Housing starts declined by -7% in February to 1,236, below consensus expectations of a -2.7% decrease. The decline of housing starts in the west largely contributed to the February figure.

 

Fact of the Week

  • Just 2.2% of the banks and savings institutions in the United States hold 83% of the deposits maintained in FDIC-insured institutions nationwide as of 12/31/17. There are a total of 5,670 banks and savings institutions holdings $17.4 trillion of deposits as of the end of last year (Source: FDIC).

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
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@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.

Diversity and Inclusion Comes From Within

Damaris Abella, Vice President—Support Centers 

The sense of belonging is one of the perks of coming to work at Old Second Bank each day. It’s like being part of a family, a very large family. Like most families, ours spans generations—from our call center representatives with decades of banking experience to our newly hired tellers.

The feeling also extends beyond the people who work here. Many of our customers are members of families who have banked with us through several generations. Then, there are customers we just know so well; they seem like family.

What is particularly gratifying, especially for me, is that our Old Second family is as culturally diverse as the communities and businesses we serve. It’s a reflection of the people we see, where we go and how we live our daily lives.

At Our Core

What I believe helps us achieve and sustain this highly inclusive and personal environment, for both our customers and ourselves, is that our staff members have gone “all in,” so to speak, in adopting the core values at the heart of Old Second. Normally, core values are an inward facing thing. However, they’re reflected in the encounters we have with our customers.

We Are Here to Serve

As a member of Old Second’s Diversity and Inclusion Committee and a longtime member of the Diversity, Equity and Inclusion Committee for Oswego School District 308, I thrive on being responsible to and for people. As the head of Old Second’s call center, I have a unique view of how well we as a banking family reflect our values and how our customers react and benefit from them.

From working with staff members across the management structure and different divisions of Old Second, I’ve noticed a common driver: Each of us wants to make a difference, for you, for the bank and for our families.

Making that difference takes teamwork. Like a family, we need to be there for one another. That means when a customer raises a concern, we work together as quickly and efficiently as possible to address the issue to everyone’s satisfaction.

Empowered Ownership

When you work in a call center, the reality is that your job is to get every caller a quick resolution. Whether it is an issue with an ATM, a lost wallet, or opening a new account, we are in a position that empowers us to take ownership of finding the quickest way to a resolution. Regardless of where an issue originates—with us, with you, with some source beyond our respective control—you can trust us to do what needs to be done to get things right—and also to be professional about it. Then, we look for ways the next caller’s experience can be improved. We do this for a living, after all, and we want to be the best we can be at it.

Customized to You

When you treat everyone the way you would like to be treated, it creates a pleasant environment. It also becomes quite personal. Maintaining this level of personalization cuts to the core of what Old Second is all about. For instance, in the call center, it’s the reason we keep our upfront phone menu to a few clicks. We want to get you to a person as quickly as possible. While we support self-service, we’re all about customization and personal attention. We want you to receive the advice and products that are right for you and your particular situation.

Whether you are looking for a more meaningful banking experience or a career opportunity where your work will have meaning—or you just want to talk to a banker who will take the time to listen—give us a call at 1-877-866-0202. We can’t wait to talk to you!

To learn more about our efforts regarding diversity and inclusion, visit us here.

Steel, North Korea: Wealth Economic Update Mar. 9, 2018

U.S. and World News

  • After more than 100 House Republicans had signed a letter to President Trump objecting the proposed steel and aluminum tariffs, the President signed an order imposing a 25% tariff on steel and a 10% tariff on aluminum excluding Canada and Mexico. Canada, the United States biggest source of aluminum and steel, threatened to reciprocate the trade tariffs if they were included. The order was much less aggressive than originally intended after some drama in the White House which included Chief Economic Advisor Gary Cohn resigning over a dispute with President Trump over the planned tariffs. The order also includes the potential for other nations to be reduced to a lower rate down the road.
  • north_korea-672521128_360North Korean leader Kim Jong-un has invited President Trump to meet and discuss denuclearization on the heels of some of the toughest sanctions placed on North Korea by the United States. Kim Jong-un stated that North Korea would suspend missile tests while talks are ongoing. President Trump responded by saying he would meet by May and the time and place of the meeting is to be determined.

Markets

  • Markets surged higher this week. The S&P 500 soared 59% and closed at 2,786.57. The Dow Jones also rose higher by 3.01% and closing at 25,335.74. Year to date, the S&P is up 4.62% and the Dow Jones is up 3.01%.
  • Yields held relatively steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 65% and 2.90%, respectively.
  • The spot price of WTI Crude Oil rose 39% this week, closing at $62.10 per barrel. Year to date, Oil prices are up 2.81%.
  • The spot price of Gold was unchanged for the week increasing by just 06% this week, closing at $1,323.58 per ounce. Year to date, Gold prices are up 1.60%.

Economic Data

  • Initial jobless claims increased 21,000 from last week, coming in at 231,000. The four-week moving average moved up to 223,000. Layoffs remain at a very low pace and continue to fall further.
  • Nonfarm payrolls rose 313,000 in the month of February, soaring past consensus expectations of 108,000.
  • Average hourly earnings rose 0.1% which was lower than the consensus estimates of 0.2%. Previous months were revised lower, bringing the year-over-year rate down to 2.6% from 2.9%.
  • The unemployment rate remained at 4.1%.

Fact of the Week

  • There are currently 1,510 cryptocurrencies in the world with a market capitalization of 392 billion. About 1,000 users control 40% of the cryptocurrency. (Source: Strategas)

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
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.