Wealth Management Economic Update October 12, 2015

U.S. and World News

  • After five years of talks, the Trans-Pacific Partnership has been agreed to by the U.S. and a dozen nations across the Pacific Basin, reducing tariffs in countries making up 40% of the global economy. The sticking points of auto trade, dairy exports and monopoly periods for next-generation drugs were able to be smoothed out in round the clock negotiations last weekend. Although an agreement is in place, approval from Congress is likely to be a contentious battle and may not actually take place until after next year’s election.
  • Minutes from the September Fed meeting were released this week and were mostly consistent with the message from Janet Yellen’s post-meeting press conference. Although most Fed officials saw rate increases in the relatively near future, they felt it prudent to wait for more information. However, in contrast to public comments made by Fed officials following the decision to hold off interest rate increases, the minutes do not show that the September decision was a ‘close call’.
  • Making the country’s political and economic crisis even worse, Brazil’s Federal Accounts Court has ruled that President Dilma Rousseff manipulated government budget figures in 2014. This comes off the heels of the nation’s highest court permitting a lawsuit to annul last year’s presidential election. The ruling paves the way for a potential impeachment of the controversial Rousseff, though any ouster is likely to take months if successful.
    Embed from Getty Images

Markets

  • Equity markets continued to rally this week. The S&P 500 ended the week up 3.30%, closing at 2,015. Similarly, the Dow Jones increased 3.75% and closed at 17,085. Year to date, the S&P is down 0.55% and the Dow is down 2.33%.
  • Yields in the Treasury markets moved higher this week. The 10 year Treasury bond now yields 2.10% while the 5 year Treasury bond now yields 1.40%.
  • The spot price of WTI Crude Oil showed significant gains this week. Prices rose by 8.76% closing at $49.53 per barrel. In 2015, WTI Oil prices are down 15.75%.
  • The spot price of Gold increased this week, gaining 1.66% and closing at $1,157.45 per ounce. Year to date, gold prices are down 2.27%.

Economic Data

  • Initial jobless claims came in at 263,000 which was a decrease from the prior week’s figure of 277,000. The Labor Department noted that there were no special factors that affected the claims figure, although it’s believed a portion of the decline may have been due to seasonal adjustment factors. The four week moving average for claims now stands at 267,500.

Fact of the Week

  • Prior to Wednesday, the last game the Chicago Cubs had won in the playoffs was on October 11, 2003. On that date, the S&P 500 was trading at 1,038 (now: 2,015), the Dow Jones was at 9,675 (now: 17,085) and the 10 year treasury yield was at 4.29% (now: 2.10%). Additionally, Apple stock was trading at $1.69 per share (now: $112.09) and Google was still 10 months away from filing its Initial Public Offering.

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®, CFP® – (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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

*Image of Japanese Prime Minister Shinzo Abe. Author: 多摩に暇人. License: GNU Free Documentation License, also filed under Creative Commons Attribution-Share Alike 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license. (See, https://commons.wikimedia.org/wiki/File:Shinzo_Abe.jpg).

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