Wealth Management Weekly Update December 2, 2013

iStock_000005557972XSmallU.S. and World News

  • A historic deal was agreed to last weekend in Geneva, Switzerland between Iran and the P5 + 1 group of six world powers (United States, Russia, China, United Kingdom and France, plus Germany). The deal consists of a short-term freeze on portions of Iran’s nuclear program in exchange for decreased economic sanctions on Iran with the hope of there being a long-term agreement down the line. Although the deal doesn’t relax restrictions on Iran’s crude oil sales, some believe that this deal will be a precursor to the eventual resumption of exports. The agreement represents the only one of its kind between the U.S. and Iran in over 34 years.
  • According to Ardo Hansson, Governing Council member of the European Central Bank, the ECB is prepared to further lower interest rates and even impose a negative deposit rate. Hansson believes that the potential benefits of a move like this are justified as he does not see any outright deflationary risk in having a negative deposit rate. These comments come after the ECB surprisingly reduced its main refinancing rate from 0.5% to a record low 0.25% earlier this month.

Markets

  • Stock markets set new record highs again in this shortened holiday week as the S&P 500 Index increased by 0.09%, closing at 1,806. The Dow Jones Industrial Average was up 0.20% to close at 16,086. The S&P and the Dow respectively are up 26.62% and 22.76% year to date.
  • Treasury yields remained relatively stable this week, the 5 year and 10 year treasury are now yielding 1.37% and 2.75% respectively.
  • The spot price of WTI Crude Oil fell this week, likely due to potential implications of the Iran deal. Spot prices dropped by 2.17% and closed at $92.78 per barrel. Year to date, oil is now down 0.44%.
  • The spot price of Gold rose a bit this week, climbing 0.7% and closing at $1,252.44 per ounce. Gold is now down 25.24% this year.

 

Economic Data

  • Initial jobless claims fell from last week to 316,000 vs. consensus estimates of 330,000. The four week moving average for claims fell to 332,000. The Labor Department noted that while no states estimated claims, seasonal adjustment around the holidays may be affecting claims numbers.
  • Pending home sales declined 0.6% in October, worse than expectations of a 1.0% rise. Pending sales, which are based on contract signings rather than closings, are a timely indicator of sales activity and suggest that existing home sales data in coming months may be weak. In the past 12 months, pending home sales have decline 2.2%.
  • The Case-Shiller home price index rose 1.0% in September, beating consensus expectations of a 0.9% rise. Prices have risen a strong 13.3% over the past 12 months, but remain well below their 2006 peak levels.
  • Eurozone unemployment unexpectedly fell for the first time since February 2011, dropping to 12.1% in October from 12.2% a month prior. Austria had the lowest unemployment rate in the region at 4.8%, while Spain had the highest at 26.7%.

Fact of the Week

  • The National Retail Federation has forecasted that 140 million consumers will go shopping over the long Thanksgiving weekend, up from 139.4 million last year. Also, IBISWorld has projected that total sales through Cyber Monday will rise 2.2% to $40.5 billion.

 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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