Wealth Management Weekly Update April 19, 2013

U.S. and World News

  • Japanese Prime Minister Shinzo Abe previewed his “third arrow” of economic policy aimed to boost growth in the nation. Arrows one and two were extremely easy monetary policy and a big boost in government spending and have sent Japanese markets much higher. This third arrow includes a promise for more free trade deals but has been met with skepticism as opening trade in Japan would require serious reform.
  • Italian elections remain unresolved as parliamentary votes have not been able to produce enough support to generate a consensus. Four rounds of parliament votes have been conducted to no avail.
  • Gun control legislation that would have required background checks for online and gun-show transactions failed in the Senate. The chamber voted 54-46 in favor of the measure, but fell short of the 60 required for the bill to pass.

Markets

  • Stock markets had their worst week of 2013 with the S&P 500 Index falling by 2.1%, closing at 1,555. The Dow Jones Industrial Average also fell and was down 2.1% to close at 14,547. Following the drop this week, the S&P and the Dow up 9.1% and 11.0% respectively year to date.
  • Treasury yields ended the week relatively flat compared to last week, as the 5 year and 10 year treasury finished the week at 0.70% and 1.71% respectively.
  • The spot price of WTI Crude Oil dropped along with most of the commodity complex this week, falling by 3.7%, closing at $87.90 per barrel. On the year, oil prices are down 5.6%.
  • Gold and precious metals continued their vicious sell off amid reports that struggling European central banks may have to sell its gold reserves to help pay for bailouts. The spot price of Gold plunged lower this week, falling 5.4% and closing at $1401.80/ounce. Gold continued its slide in 2013 and is down 16.3% for the year.

 Economic Data

  • Weekly Initial Jobless Claims rose by 6,000 this week and came in higher than expected at 352,000 vs. consensus expectations of 350,000. The 4-week moving average of jobless claims moved up to 358,500.
  • 1st quarter earnings season is underway, with 104 companies in the S&P 500 having reported. Some of the takeaways so far:
    • 72% of companies reporting have beat earnings expectations but less than 50% have exceeded revenue expectations.
    • Financial companies have beat earnings estimates, but investors have been disappointed with the quality of those beats, sending shares of those companies lower.

Fact of the Week

As of January 2013, there are 16 people left in the world who were born in the 1800s, according to the Gerontology Research Group. With dividends reinvested, U.S. stocks have increased 28,000-fold during their lifetimes.

 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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