Wealth Management Economic Update December 21, 2015

U.S. and World News

  • The highly anticipated Fed decision on monetary policy was made on Wednesday when all members of the FOMC voted unanimously to raise the fed funds rate to a 0.25%-0.5% range. This marks the 7th anniversary since the Fed decided to reduce the Fed Funds Rate to 0%, and the first Fed Funds Rate increase since 2006. The FOMC mentioned that the path for rate increases going forward will be gradual and that they will carefully monitor inflation as it has not yet reached their 2% target.
  • An agreement has been made on an omnibus spending bill that would repeal the oil export ban which has been in place for four decades. This is considered a win for Republicans who have been pushing for the ban to be lifted so that American oil producers could take advantage of low oil prices by gaining access to the international market. Also, the production tax credit for wind power installations and the investment tax credit for solar installations would be extended for several years.
  • For the first time ever, a deal on climate change was signed in Paris over the weekend. The deal, in which participation is voluntary, is designed to limit the rise of average global temperatures to within two degrees of where they were before industrial times.

Markets

  • Markets dropped slightly after a very volatile week. The S&P 500 lost 0.34% and closed at 2,005. The Dow Jones fell 0.79% closing at 17,128. Year to date, the S&P is down 2.59% and the Dow is down 3.90%.
  • Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.67% and 2.20%, respectively.
  • The spot price of WTI Crude Oil dropped again by 3.00% this week, closing at $34.55 per barrel. Year to date, Oil prices are down 42.39%.
  • The spot price of Gold decreased by 0.78% this week, closing at $1066.40 per ounce. Year to date, Gold prices are down 9.98%.

Economic Data

  • The Consumer Price Index (CPI) was unchanged in November (mom), as a result of declines in food and energy; however, core consumer prices (Core CPI, excluding food and energy) rose last month by 0.18% with help from medical care services, education, and transportation services.
  • Initial jobless claims came in at 271k for the week which was a decrease from last week’s increase to 282k. The four week moving average for jobless claims is 270,500.
  • Housing starts increased by 10.5% (mom) in November which was higher than expectations. Multi-family starts increased by 16.4% and single-family starts rose by 7.6% which is a new post-crisis high.

Fact of the Week

  • Only 53% of the nearly 3 million Americans that enrolled for college in the fall of 2009 had earned a bachelor’s or an associate degree by the summer of 2015 (source: National Student Clearinghouse Research Center).

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.

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