Wealth Management Weekly Update November 18, 2013

Janet Yellen


         Janet Yellen*

U.S. and World News

•       Incoming Fed Chairperson Janet Yellen had her Senate confirmation hearing this week where she reiterated her dovish (accommodative) stance on monetary policy. She stated that, “We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession.” Other statements made by Yellen further indicated her support of the continuation of accommodative policies.

•       President Obama announced nearly apologetically this week that he will allow insurance companies to continue to offer existing policies in 2014 even if they fail to meet the standards set by the Affordable Care Act. Obama’s flip on this position follows pressure from the public after it emerged that his repeated pledge that, “If you like your plan, you can keep it,” completely contradicted the terms of his own law as many Americans had received notice that their current plan would not be renewed. The patchwork extension of these provisions may prove to be anything but easy as some experts are warning that it could destabilize the market and result in higher premiums for consumers.

•   Meanwhile, fewer than 50,000 people have managed to enroll in private insurance plans via the government’s bug-addled Healthcare.gov website as of last week. This number is less than 10% of the total that had been projected to be enrolled by this time. It seems as though the Congressional Budget Office’s prediction of 7 million enrollments by March is a pipedream at this point.

Markets

  • Stock markets set new record highs again this week as the S&P 500 Index increased by 1.61%, closing at 1,798. The Dow Jones Industrial Average was up 1.37% to close at 15,962. The S&P and the Dow respectively are up 26.08% and 21.81% year to date.
  • Treasury yields fell a bit this week with the 5 year and 10 year treasury now yielding 1.35% and 2.70% respectively.
  • The spot price of WTI Crude Oil continued to tumble this week, dropping by 0.95%, closing at $93.70 per barrel. Year to date, oil is now only up 0.35%.
  • The spot price of Gold held steady this week, falling by 0.12% and closing at $1290.05/ounce. Gold is now down 23.00% this year.

 

Economic Data

  • Initial jobless claims rose from last week to 339,000 vs. consensus estimates of 330,000. The Labor Department did note that claims were estimated for five states due to the Veteran’s Day Holiday.
  • Eurozone GDP growth came in lower than expected for the 3rd quarter at just 0.1% growth, worse than the 0.3% registered in the 2nd quarter. Investors viewed the weaker than expected data as further evidence that the European Central Bank will need to maintain an ultra-accommodative policy stance for the time being.
    • Contributing to the Eurozone’s disappointing growth was Italy’s 0.1% contraction in GDP. The Eurozone’s third largest economy has seen nine straight quarters of GDP decline.

Fact of the Week

  • Total health care spending in the U.S. (includes both government/public and private spending) is expected to be $2.9 trillion in 2013. The Centers for Medicare and Medicaid Services estimate that the total will climb over 72% by 2022 to $5.0 trillion.

 

 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

*Official portrait of Janet L. Yellen, Vice Chair of the Board of Governors of the Federal Reserve System. Source: Obtained via email from Federal Reserve OPA. Date: October 5, 2010. Author: United States Federal Reserve. Permission by Public Domain, per correspondence with the Federal Reserve (See, http://commons.wikimedia.org/wiki/File:Janet_Yellen_official_portrait.jpg).

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