Wealth Management Economic Update November 17, 2014

U.S. and World News

  • china_US_currency_000003445678-320The United States and China announced two landmark deals this week. The first was an agreement to drop tariffs on a wide range of technology products which have sales of roughly $1 trillion. The agreement has yet to be signed off on by other countries involved in the talks and will be discussed in Geneva by members of the World Trade Organization in December. The second deal was a joint agreement between the two countries to cut carbon emissions. Under the plan, the U.S. would emit roughly 25% less carbon in 2025 than it did in 2005. China in turn pledged to stop its emissions from growing by 2030, its first ever commitment to do something about air quality in the country.
  • Individual global investors will get a chance to buy Shanghai-listed stocks for the first time on Monday 11/17. The original start date had been for October but it was delayed amid the pro-democracy protests in Hong Kong. The move is a big step towards Chinese markets’ integration with the rest of the global financial system, and could open the door for China to be added to international benchmark indices.
  • Saudi Arabia’s oil minister, Ali al-Naimi, dismissed speculation of an OPEC “price war”, saying that it has “no basis in reality.” These were his first public comments since the price of crude oil has plunged nearly 30% in the last four months. The Saudis have typically cut production in periods of oversupply in order to keep prices elevated, but seem to have deviated from this strategy during this most recent episode.

Markets

  • Equity markets continued to head higher this week as the S&P 500 closed Friday at a new All-Time High. The S&P 500 advanced 0.43% and closed at 2,040. Likewise, the Dow Jones edged up 0.40% and closed at 17,634. Year to date, the S&P 500 is up 12.33% and the Dow Jones is up 8.54%.
  • Yields in the Treasury markets traded flat this week. The 10 year Treasury bond now yields 2.32% and the 5 year Treasury yields 1.61%.
  • The spot price of WTI Crude Oil continued its decline again this week, dipping 3.38%, closing at $75.98 per barrel. Year to date, Oil prices are down 18.04%.
  • The spot price of Gold increased this week, advancing by 0.95% and closing at $1,189.21 per ounce. Year to date, Gold prices are down 1.03%.

Economic Data

  • Initial jobless claims rose from last week, coming in at 290,000 vs. consensus estimates of 280,000. The Labor Department noted no special factors affecting the report. The four week moving average for claims now stands at 285,000, which is near the lowest it’s been since April 2000.
  • The University of Michigan consumer sentiment survey rose to a reading of 89.4 in November, beating estimates of 87.5. This is a new high mark reading for the post-2008 recovery. Most of the gains were seen in consumers’ assessment of their current situation, which can be attributed to lower gas prices and favorable employment trends.

Fact of the Week

  • According to the Federal Reserve Board, the proportion of young adults aged 18 to 31 that are living with their parents has risen from 31% in 2005 up to 36% today. The study found that rising student debt, as opposed to economic conditions or housing costs, was the primary reason for the roughly 30% increase.

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 CFA® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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