Wealth Management Weekly Update May 5, 2014

U.S. and World News

  • iStock_000024203309Small_350President Obama has announced new targeted sanctions against Russia that will impact more wealthy individuals and companies in the country. The G7 (the G8 excluding Russia) deemed that Russia hasn’t met its pledge to de-escalate the conflict with Ukraine. The sanctions won’t target broad sections of Russia’s economy as many European nations fear the consequences for their own economies due to energy dependence on Russia.
  • The April Federal Reserve meeting didn’t provide any major surprises as the Committee continued to taper their asset purchases by another $10 billion, bringing monthly purchases down to $45 billion per month. If Janet Yellen and the Fed continue to reduce asset purchases at this rate, they will wind down the Quantitative Easing program in October. Most of the language in the Committee’s statement was the same but they did note that “economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions.”

Markets

  • The S&P 500 rose slightly by 0.95% for the week, closing at 1,881.The Dow Jones followed suit by climbing 0.93%, closing at 16,512. So far in 2014, the S&P is up 1.77% and the Dow Jones is down 0.38%.
  • Treasury yields fell again this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.67% and 2.59%, respectively.
  • The spot price of WTI Crude Oil ended the week down 0.77%, closing at $99.83 per barrel.  Year to date, Oil prices have climbed 1.59%.
  • The spot price of Gold fell by 0.33% this week, closing at $1,298.93 per ounce. Year to date, Gold prices are up 8.10%.

Economic Data

  • Nonfarm payrolls gained 288,000 jobs surpassing estimates of 218,000 jobs gained. The unemployment rate dipped to 6.3% from 6.6%. The unemployment rate is at the lowest level since September 2008.
  • Initial jobless claims rose by 15,000 from last week, coming in at 344,000 vs. consensus estimates of 320,000. The Labor Department noted that seasonal adjustment presents difficulties during the Easter holiday and spring break from schools. The four week moving average for claims moved up for the second consecutive week to 320,000 after seeing several weeks of decline.
  • The Case-Shiller home price index rose a solid 0.8% in February, in line with consensus expectations. Over the past year, the national index has risen 12.9%, although prices have varied widely in different geographic areas.
  • The preliminary 1st quarter GDP reports showed growth of only 0.1% vs. consensus expectations of 1.2%. This was the slowest growth rate since the 4th quarter of 2012. Adverse weather is primarily being blamed for the weak number and despite the disappointing headline number, there are some positive signs in this report that suggest a solid bounce in GDP growth could be coming in the 2nd quarter.

Fact of the Week

  • Households in the U.S. are split 68%/32% between homeowners and renters. Of those homeowners, 32% of them own their home outright (no mortgage). Therefore, 22% of all U.S. households are homeowners with no debt (32% of 68%).

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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