Wealth Management Economic Update December 29, 2014

U.S. and World News

Shinzo Abe


   Shinzō Abe*

  • Shinzō Abe was re-elected prime minister by Japan’s parliament, following his victory at the polls earlier this month. Abe faces many challenges in trying to reignite an economy that has contracted for two straight quarters. There are talks that a new round of stimulus is being prepared by Abe’s cabinet and is expected to include monetary easing and structural reforms.
  • China has stepped in to offer assistance to Russia in trying to support the Russian ruble. The currency has been weakening significantly as a result of the economic sanctions placed on Russia by the West, as well as the recent plunge in oil prices. The support from China will allow Russia to conserve its already depleted foreign exchange reserves as it defends its currency.

Markets

  • Equity markets rose during the holiday shortened week to close at All-Time Highs.  The S&P gained 0.86% and closed at 2,089. Likewise, the Dow Jones moved up 1.40% and closed at 18,054. Year to date, the S&P is up 15.22% and the Dow Jones is up 11.38%
  • Yields in the Treasury markets moved higher this week. The 10 year Treasury bond now yields 2.25% and the 5 year Treasury bond yields 1.76%.
  • The spot price of WTI Crude Oil fell again this week, reaching a new 52 week low. Prices fell 3.17%, closing at $54.73 per barrel. Year to date, Oil prices are down 40.00%.
  • The spot price of Gold went unchanged this week and closed at $1,196.00 per ounce. Year to date, Gold prices are down 0.47%.

Economic Data

  • Initial jobless claims fell from last week, coming in at 280,000 vs. consensus estimates of 290,000. The Labor Department noted no special factors affecting the report, although the holiday season is traditionally more volatile. The four week moving average for claims now stands at 290,000.
  • The core PCE index, which the Federal Reserve uses as its preferred measure of inflation, was unchanged in November. This makes the rate over the past year equal to 1.41%, still well below the Fed’s 2% inflation target.

Fact of the Week

  • According to the Society of Actuaries, in the year 2000 the average 65 year old American male had a life expectancy of 19.6 years and the average 65 year old American female had one of 21.4 years. Today, the average 65 year old male has a life expectancy of 21.6 years and the average 65 year old female has a life expectancy of 23.8 years. These are increases of 2.0 and 2.4 years and life expectancy is projected to increase even further in the future with technology and health care advances.

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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*Portrait of Shinzō Abe, Prime Minister of Japan. Source: Obtained from Wikimedia Commons. Date: July 14, 2014. Author: Chuck Hagel. Image used in accord with Creative Commons Legal Code Attribution 2.0 (https://creativecommons.org/licenses/by/2.0/legalcode). (See, http://commons.wikimedia.org/wiki/File:Shinzō_Abe_April_2014.jpg).

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