Wealth Management Weekly Update August 19, 2013

sphinx_pyramids_300pxU.S. and World News

  • Violence in Egypt has returned as citizens protested the actions of the country’s military. Egypt has been plagued by unrest since widespread demonstrations prompted the Egyptian army to oust the country’s elected president, Mohamed Morsi, from power and install a provisional government in July. In the weeks since, Morsi supporters have taken to the streets protesting these actions and calling for Morsi’s reinstatement. The military, struggling to contain the demonstrations, have cracked down violently, reaching new levels this week as it is reported that the civilian death toll has topped 600. Stock markets and oil markets have been reacting negatively to the bloodshed in the embattled region.
  • With the September Federal Reserve meeting fast approaching and speculation of an announcement of tapering of asset purchases growing, some Fed members are voicing their concerns that it may be too soon. St. Louis Fed’s Jim Bullard argued that the Fed needs more data before deciding whether to begin a reduction of purchases. His argument was that while unemployment is down and payroll growth is generally strong, other measures such as GDP are weak and inflation expectations are tame.

 

Markets

  • Stock markets continued to sell off this week on light trading volume, Fed tapering concerns and unrest in the Middle East. The S&P 500 Index fell by 2.10%, closing at 1,656. The Dow Jones Industrial Average was down 2.23% to close at 15,082. The S&P and the Dow respectively are up 16.10% and 15.09% year to date.
  • Treasury yields spiked up this week on continued tapering concerns with the 5 year and 10 year treasury finishing at 1.57% and 2.83% respectively.
  • The spot price of WTI Crude Oil rose on the violence in Egypt this week, increasing by 1.62%, and closing at $107.69 per barrel. Year to date, oil is up 14.91%.
  • The spot price of Gold jumped higher this week, increasing by 4.58% and closing at $1,373.44/ounce. Gold is now down 18.02% this year.

 

Economic Data

  • Weekly Initial Jobless Claims fell to a new post-recession low, declining by 13,000 and coming in at 320,000 vs. expectations of 335,000. The Labor Department did not note any special factors distorting the data as they have in the last several weeks. The 4-week moving average of jobless claims moved down to 332,000, also a new post-recession low.
  • Housing starts rose by less than expected in July at a rate of 5.9% vs. expectations of 7.7%. Over the past 12 months, total housing starts are up 20.9% and building permits are up 12.4%.

Fact of the Week

  • Since the S&P 500 hit its bottom on 3/9/09, the bull market has entered its 54th month and the index has gained 175% in total return through the close of trading last Friday 8/9/13. The average bull market for the stock index since 1950 has lasted 57 months.

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 – (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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