Wealth Management Economic Update November 24, 2014

U.S. and World News

  • President Obama has outlined plans to use an executive order to aid millions of illegal immigrants, granting them the chance to apply for work permits and a temporary reprieve from deportation. Obama announced, “I will make it easier and faster for high-skilled immigrants, graduates and entrepreneurs to stay and contribute to our economy, as so many business leaders have proposed.” The move would mark the most drastic changes to the nation’s immigration laws in nearly 30 years and has predictably set off a fierce fight with Republicans over the limits of presidential powers.
  • China_shanghai_finance_000038795732_320In a surprising move, China has cut its benchmark interest rates for the first time in more than two years in response to a slowing economy. China is still growing faster than most developed nations but saw its growth slow to a five year low of 7.3% last quarter. The one year benchmark lending rate was lowered by 0.4% to 5.6% and the one year deposit rate was cut by 0.25% to 2.75%.
  • Data this week showed that Japan has fallen back into recession after posting a 1.6% GDP contraction in the 3rd quarter. In response, Japanese Prime Minister Shinzo Abe announced that he will delay a sales tax hike that was set to take effect next year. He also announced that snap elections will be held after the Japanese parliament is dissolved.
  • The U.S Senate fell one vote short in its attempt to approve construction of the Keystone XL pipeline, with the final tally of 59-41. Republican leadership believes that approval will come next year when the party takes majority in the Senate. It was widely believed that President Obama would have vetoed the bill had it passed in the Senate.

Markets

  • Equity markets continued to head higher this week as the S&P 500 and Dow Jones both closed Friday at new All-Time Highs. The S&P 500 advanced 1.20% and closed at 2,063. Likewise, the Dow Jones moved up 1.04% and closed at 17,810. Year to date, the S&P is up 13.68% and the Dow Jones is up 9.69%.
  • Yields in the Treasury markets traded flat this week. The 10 year Treasury bond now yields 2.31% and the 5 year Treasury yields 1.61%.
  • The spot price of WTI Crude Oil stopped its decline this week, rising 1.21%, closing at $75.98 per barrel. Year to date, Oil prices are down 17.21%.
  • The spot price of Gold increased this week, advancing by 1.04% and closing at $1,201.16 per ounce. Year to date, Gold prices are virtually unchanged.

Economic Data

  • Initial jobless claims rose from last week, coming in at 291,000 vs. consensus estimates of 284,000. The Labor Department noted no special factors affecting the report. The four week moving average for claims now stands at 288,000, which is near the lowest it’s been since April 2000.
  • Existing home sales rose 1.5% in October vs. expectations of a 0.4% decline. Existing home sales have generally trended upward since their recent trough in March, which was largely weather related.
  • The Headline Consumer Price Index was flat in October vs. expectations of -0.1%. Energy prices declined 1.9% in the month, mainly due to gasoline. Meanwhile, Core CPI (does not include food or energy) increased 0.2% this month against expectations of 0.1%.

Fact of the Week

  • According to the Social Security Administration, about 75% of single elderly people receiving Social Security benefits get more than half of their income from the program. In addition, 22% of married couples and 47% of single people receiving Social Security benefits count on the program for 90% or more of their income.

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

Visit Old Second Wealth Management

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s