Wealth Management Weekly Update March 31, 2014

ukraine_moscow_mapU.S. and World News

  • World leaders met in the Netherlands this week to discuss a wide range of issues, but probably most notably the situation with Russia and Ukraine. The leaders barred Russia’s participation from the scheduled G-8 meeting, making it instead a G-7 conference with the United States, Britain, France, Germany, Italy, Canada and Japan participating. The group reaffirmed that Russia’s actions will have significant consequences, declaring Russia’s annexation of Crimea as a clear violation of international law.
  • The International Monetary Fund (IMF) has agreed to provide Ukraine with $14-18 billion as part of an economic reform program that will enable the country to tap into a total of $27 billion of international support over the next two years. In the U.S., Congress has overwhelmingly approved an aid package for Ukraine that includes $1 billion in loan guarantees and $150 million in direct assistance.

Markets

  • Stock markets were mixed this week. The S&P 500 was down 0.45% for the week, closing at 1,858.The Dow Jones edged up 0.12%, closing at 16,323. So far in 2014, the S&P is up 1.00% and the Dow Jones is now down 0.97%.
  • Short maturity issues saw their yields rise again this week, continuing last week’s trend following Janet Yellen’s hints that rate hikes may be coming sooner that expected. The     5 year and 10 year U.S. Treasury Notes are now yielding 1.75% and 2.72%, respectively.
  • The spot price of WTI Crude Oil ended the week up 2.06%, closing at $101.53 per barrel.  Year to date, Oil prices have risen 3.61%.
  • The spot price of Gold fell by 3.03% this week, closing at $1,293.85 per ounce. Year to date, Gold prices are up 7.67%.

Economic Data

  • Initial jobless claims dropped by 10,000 from last week, coming in at 311,000 vs. consensus estimates of 323,000. The four week moving average for claims fell to 318,000 continuing the positive trend in this timely employment indicator.
  • The Case-Schiller home price index rose a solid 0.8% in January vs. expectations of 0.6%. All 20 cities in the index saw price increases and prices nationally have risen 13.2% over the past year.
  • Chinese factory activity has shrunk for the fifth straight month with manufacturing PMI slipping to a reading of 48.1 (a reading of 50 is breakeven). Analysts see weakness in the country being broadly based and expect the Chinese government to launch a series of policy measures in an effort to stabilize growth.

Fact of the Week

  •        According to Bloomberg, American corporations hold an estimated total of $1.95 trillion in foreign earnings that have not been brought back into the United States in order to avoid the taxation of repatriating these funds. This foreign cash is equal to 12% of the size of the U.S. economy.

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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