Wealth Management Economic Update December 1, 2014

U.S. and World News

  • The oil cartel OPEC shook the oil markets as the group unexpectedly decided to keep its collective output target at 30 million barrels per day. The decision to maintain output in the face of plentiful global supply and already declining prices caused the price of oil to plunge by more than 10% on Friday. Whereas in the past, OPEC was oil_barrel_000038827142_210relied upon to alter its production levels to maintain prices, the group seems to be rejecting the role of “swing producer”. The 12-member group, which pumps 40% of the world’s oil, will convene again next June in Vienna.
  • The European Central Bank will be gauging whether it needs to start buying sovereign bonds to stimulate the Eurozone economies during the first quarter of next year. The comments made by ECB Vice President Vitor Constancio are the clearest indication yet to the exact timing of future QE in Europe.

Markets

  • Equity markets continued to head higher in this holiday shortened week. The S&P 500 advanced 0.23% and closed at 2,068. Likewise, the Dow Jones moved up 0.14% and closed at 17,828. Year to date, the S&P is up 13.98% and the Dow Jones is up 9.89%.
  • Yields in the Treasury markets traded down this week. The 10 year Treasury bond now yields 2.18% and the 5 year Treasury yields 1.49%.
  • The spot price of WTI Crude Oil plunged this week following the decision by OPEC to continue with production at current levels. Prices fell 13.52%, closing at $66.16 per barrel. Year to date, Oil prices are down 28%.
  • The spot price of Gold decreased this week, declining by 2.70% and closing at $1,169.05 per ounce. Year to date, Gold prices are down 2.70%.

Economic Data

  • Initial jobless claims rose from last week, coming in at 313,000 vs. consensus estimates of 288,000. This is the highest level of claims since early September. The Labor Department noted no special factors affecting the report despite some poor weather conditions in parts of the country. The four week moving average for claims now stands at 294,000.
  • The 3rd quarter GDP growth figure was revised up by 0.4% to 3.9%. This beat expectations that the revision would see a 0.2% decrease in the growth measure. Most of the positive surprise came from consumer spending which was stronger than initially estimated.

Fact of the Week

  • According to the Mortgage Bankers Association, as of 12/31/2009, 1 out of every 7 mortgages was either delinquent or was in the foreclosure process. This rate has significantly improved to 1 out of every 12 mortgages as of 9/30/2014.

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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