Wealth Management Weekly Update March 8, 2013

U.S. and World News

  • China has begun a week and a half process of political pageantry that will complete the handover of power to new leadership. Xi Jinping is set to replace Hu Jintao as President and Li Keqiang to take over for Wen Jiabao as Premier. Observers and market participants will be watching the extent of any bureaucratic reorganization as an indicator of Beijing’s appetite for reforms.
  • The House of Representatives passed a stop-gap measure that would fund the government until the end of the fiscal year in September. The vote came well ahead of the deadline of March 27th and averts the possibility of a government shutdown. The measure, which does not change the $85B in sequestration cuts, is expected to be voted on by the Senate next week.
  • The Federal Housing Finance Agency is working on a plan to merge some of the operations of Fannie Mae and Freddie Mac. The new venture would be separate from the two firms and could be the initial stages for eventually replacing them. Initially, the plan would consolidate some of the back-office operations that Fannie and Freddie duplicate.
  • Venezuelan President Hugo Chavez died of cancer this week. The country will hold elections within 30 days to select a new president. Chavez’s passing leaves major uncertainty, especially over the country’s oil fields, whose capacity has been declining due to chronic under-investment and hostility towards foreign firms.

 

Markets

  • Markets posted positive gains again this week with the S&P 500 Index up by 2.17% closing at 1,551. The Dow Jones Industrial Average ended the week with a gain of 2.18% and closed at 14,397. Equity markets continued to add to their impressive 2013 returns; the S&P and the Dow are up 8.76% and 9.87% respectively year to date.
  • Treasury yields rose this week on positive job reports as the 5 year and 10 year treasury finished the week at 0.88% and 2.04% respectively.
  • The spot price of WTI Crude Oil rose this week by 1.3%, closing at $91.87 per barrel. So far in 2013 oil prices have fallen 0.9%.
  • The spot price of Gold was slightly higher for the week rising 0.2% closing at $1578.90/ounce. Year to date in 2013, gold is down 5.7%.

 

Economic Data

  • Weekly Initial Jobless Claims fell by 4,000 and came in lower than expected at 340,000 vs. consensus expectations of 355,000. The 4-week moving average of jobless claims decreased to 349,000, which is its lowest level since March 2008.
  • The February employment report came in better than expected, showing the addition of 236,000 nonfarm payrolls vs. consensus expectations of 165,000.  Job gains were particularly strong in construction and professional services.
    • The unemployment rate unexpectedly ticked down by 0.2% to 7.7% vs. consensus expectations of 7.9%. However, part of this decrease can be attributed to the labor force participation rate falling more than expected.

Fact of the Week

  • Fees on 401(k)’s can add up; a study by Demos found that the average couple will pay $155,000 in 401(k) fees over their careers, reducing an average account balance from $510,000 to $355,000.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann – (630) 844-5730 rgartelmann@oldsecond.com
Dayle Malone – (630) 906-5489 dmalone@oldsecond.com 
Brad Johnson – (630) 906-5545 bjohnson@oldsecond.com 
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

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