Wealth Management Economic Update June 23, 2014

U.S. and World News

  • NATO has announced that Russia has begun increasing troops again on its border with Ukraine. Vladimir Putin has blamed Ukraine for the escalation, saying that Ukraine has been holding military exercises on the eastern border for days. Threats of new Western sanctions have been made, but while the U.S. can choose to institute them at any time, the European Union nations will have to wait until a meeting of top country leaders in Brussels on June 26-27.
  • The Federal Reserve announced another $10 billion dollar tapering of its monthly asset purchases, bringing the amount down to $35 billion per month. The announcement was largely expected and the comments about the economy given by Chairwoman Janet Yellen were slightly dovish. Yellen also discounted the possibility of inflationary pressures reentering the U.S. economy following higher than expected inflationary data earlier in the week.
  • internet_high-tech_000010815543After their 2010 version was rejected by an appeals court in January, the FCC is now revising the web’s “net neutrality” rules – the regulatory laws which ensure internet providers do not block or slow down users’ access to content on the web. With lobbies on both sides of the spectrum, the agency is considering whether to apply the new regulations to wireless internet traffic as well, due to the rise in mobile internet use.
  • With the escalating violence in Iraq and uncertainty of future crude oil prices, the Keystone XL pipeline is once again coming into focus. Supporters of the project are pointing to tensions in Iraq and possible supply cut-offs as a reason to push forward with the $5.3 billion pipeline, which has faced numerous delays over the last six years. This week the Senate Energy and Natural Resources committee voted to advance the bill toward a construction approval.

Markets

  • Markets rose this week, ending at All-Time Highs for the S&P 500 and Dow Jones Industrial Average. The S&P 500 gained 1.40% and closed at 1,963 while the Dow Jones followed suit by rising 1.02% and closing at 16,947. Year to date, the S&P is up 7.24% and the Dow is up 3.41%.
  • The 5 year and 10 year U.S. Treasury Notes held steady this week and are now yielding 1.69% and 2.61%, respectively.
  • The spot price of WTI Crude Oil remained elevated this week on reports of conflict in Iraq. Prices rose 0.44%, closing at $106.64 per barrel. Year to date, Oil prices have climbed 11.55%.
  • The spot price of Gold increased by 2.97% this week, closing at $1,314.87 per ounce. Year to date, Gold prices are up 9.89%.

Economic Data

  • Initial jobless claims fell by 5,000 from last week, coming in at 312,000 vs. consensus estimates of 313,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 312,000.
  • The headline Consumer Price Index (measure of inflation) increased by 0.4% in May vs. consensus estimates of 0.2%, boosted in part by increases in food (+0.5%) and energy (+0.9%) prices. Core CPI, which does not consider food and energy, was also up a bit more than expected showing an increase of 0.3% vs. expectations of 0.2%.

Fact of the Week

  • A study of retirement investments showed that in 2013, nearly 35% of workers participating in a 401(k) programs who had changed jobs in that year opted to cash out their balance as opposed to leaving the money in their former employer’s plan or rolling it over into a new 401(k) or IRA. Employees doing so before they reach age 59 ½ are subjected to a 10% penalty on the balance, as well as being responsible for paying any taxes on capital gains the account may have accumulated. Younger participants were guiltier of this behavior, with workers between ages 20-39 cashing out 401(k) balances over 40% of the time when they change jobs.

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 CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

Old Second Bank: College Checking

College Checking from Old Second

It gives you flexibility, freedom, and freebies.

If you’re a college student, you’ll need an easy, convenient way to manage your money. After all, you need to devote your time to manage your course work. That’s why Old Second has free mobile banking especially for college students. Which means you can bank without going to the bank. Just download our app onto your mobile phone.

And how about this? With your new checking account, we’ll give you a $75 cash bonus* when you sign up for a debit card and free online banking. Plus, we’ll give you 2,000 free rewards points** you can use toward the purchase of all kinds of things––from luggage and movie tickets to dining out and hot new clothes. So apply now. It just takes $50 to open.

College Checking from Old Second. It’s free. It’s mobile. And it pays.

*$75 cash bonus offer is open only to new personal checking account relationships with Old Second that are opened with money not currently on deposit at any Old Second Bank, and you must enroll for an O2 Debit Card and O2 Online Banking at new checking account opening. Bonus is issued as a cash bonus card at account opening. Cash bonus may be subject to 1099 reporting. Offer may be withdrawn at any time without notice. Only one cash bonus offer per household. **1,000 Debit Reward Points will be added to your reward point balance for three BillPay transactions completed within the first 60 days of account opening. Another 1,000 Debit Reward Points will be added when you sign up for free O2 eStatements within 90 days from the date that you open your new accounts.

Wealth Management Weekly Update June 9, 2014

U.S. and World News

  • power_000030464078SmallThe Environmental Protection Agency has proposed legislation mandating U.S. power plants to cut greenhouse gas emissions by an average of 30% by 2030. The law would affect hundreds of fossil fuel power plants and would strike the nation’s 600 coal fired plants hardest.
  • The European Central Bank announced a series of dramatic policy actions this week in an attempt to stimulate the Eurozone’s economy that faces low growth and threats of deflation. The ECB announced that it would be lowering all three of its key interest rates, bringing the refinancing rate to 0.15%, marginal lending facility to 0.4% and the deposit rate was lowered to -0.1% (banks are charged for holding excess reserves with the central bank, incentivizing them to lend). Liquidity was also injected into the system in the form of €400 billion of Targeted Long-Term Refinancing Operations (TLTRO) wherein the ECB would buy up asset-backed securities from its banks to improve their balance sheets and again incentivize them to lend more.

Markets

  • Markets continued to rise this week, setting new All-Time Highs. The S&P 500 climbed 1.38% and closing at 1,949. The Dow Jones followed suit by increasing 1.26% and closing at 16,924. Year to date, the S&P is up 6.42% and the Dow Jones is up 3.19%.
  • Treasury yields rose this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.65% and 2.60%, respectively.
  • The spot price of WTI Crude Oil was relatively unchanged this week, closing at $102.75 per barrel. Year to date, Oil prices have climbed 6.53%.
  • The spot price of Gold increased by 0.30% this week, closing at $1,253.41 per ounce. Year to date, Gold prices are up 4.31%.

Economic Data

  • Initial jobless claims rose by 12,000 from last week, coming in at 312,000 vs. consensus estimates of 310,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 310,000, the lowest since June 2007.
  • Monthly nonfarm payroll jobs came in slightly better than expected, showing an increase of 217,000 jobs vs. consensus estimates of 215,000. With this gain, the level of nonfarm payroll employment now exceeds its 2008 peak, although the working-age population has grown significantly in that time.
    • The unemployment rate held steady at 6.3%, as did the labor force participation rate which remained at a very low 62.8%.
    • Also of note were wages growing by 0.2% in the month and now are up 2.1% over the last year. It now appears that wage growth is in an uptrend, as would be expected in the second half of a business cycle.

Fact of the Week

  • According to the Department of Commerce, the personal savings rate (after-tax income minus spending divided by after-tax income) in the U.S. was 13.1% in 1973. As of 3/31/2014, the personal savings rate has dropped to a meager 3.8%.

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 CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management

Old Second College Checking: $75 Just for Signing Up!

Old Second Bank offers a great account for college students looking to save!  There is no minimum balance requirement or monthly fees.

When you sign up, you get $75! Old Second’s college checking also offers a great rewards program.

Wealth Management Weekly Update June 2, 2014

U.S. and World News

  • The ‘Chocolate King’ Petro Poroshenko has been elected as the new Ukrainian President and has said he is prepared to talk to Moscow and Russia has indicated their willingness to speak to Poroshenko as well. Poroshenko comes into office facing a number of challenges including boosting Ukraine’s lagging economy, preventing civil war and dealing with Russian attempts to destabilize the region.
  • Thailand’s new military rulers are in the process are restoring central parts of their economy after receiving royal endorsement to rule earlier this week. General Prayuth Chan-Ochoa claims the army had to restore order after nearly seven months of rioting. This weekend the U.S. cancelled military exercises in Thailand and threatened to cut military assistance. The question remains whether the U.S. will start to cut economic ties as well.

Markets

  • Markets continued to rise this week with the S&P 500 climbing 1.64% and closing at 1924.The Dow Jones followed suit by increasing 1.05% and closing at 16,717. Year to date, the S&P is up 4.07% and the Dow Jones is up 0.85%.
  • Treasury yields had little fluctuation this week with the exception of the 10 year yield which continued to decline. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.54% and 2.48%, respectively.
  • oil_barrel_000036578632SmallThe spot price of WTI Crude Oil fell after the holiday weekend, ending the week down 1.42%, closing at $102.87 per barrel. Year to date, Oil prices have climbed 6.66%.
  • The spot price of Gold dropped 3.32% this week closing at $1249.68 per ounce. Year to date, Gold prices are up 4.00%.

Economic Data

  • Initial jobless claims fell by 26,000 from last week, coming in at 300,000 vs. consensus estimates of 318,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 312,000.
  • Gross Domestic Product (GDP) growth in the 1st quarter was revised down from a +0.1% initial reading to a -1.0% contraction in economic growth. This was the first negative growth quarter since the 1st quarter of 2011. Many economists continue to believe the negative print was largely due to especially harsh weather during the quarter and doesn’t represent a trend of a shrinking U.S. economy.
  • The Case-Shiller home price index rose a solid 1.2% in March vs. consensus estimates of 0.7%. Nearly all cities measured showed price increases. The national index is now up 12.4% in the past 12 months.

Fact of the Week

  • In 1950 there were 16 American workers for every 1 Social Security retiree receiving benefits. It is estimated that by the year 2035, there will be just 2.1 American workers for every 1 Social Security retiree receiving benefits.

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 CFP® – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management