Wealth Management Economic Update February 15, 2016

U.S. and World News

  • mosquito_320President Obama has asked Congress for $1.8 billion in emergency funding to combat the Zika virus, the disease that is transmitted primarily from bites of Aedes mosquitoes, but has also been found to be passed through sexual contact or blood transfusion. The funds would be used for research for vaccines and diagnostics, as well as helping public health systems. Meanwhile, cases of Zika have been identified in 20 U.S. states and in addition to potential birth defects, the virus has caused two miscarriages in the U.S. according to the Center for Disease Control.
  • Federal Reserve Chair Janet Yellen conducted her regular testimony to Congress this week but did not clarify the Central Bank’s path for raising rates. While she did not take a March rate hike off the table, she did state that, “Financial conditions in the United States have recently become less supportive of growth.” Confusing markets further, Yellen stressed that the Fed was not on a preset path to interest rate normalization but also wouldn’t rule out negative rates at some point.
  • Sweden’s central bank has lowered key interest rates further into negative territory. The Swedish Central Bank said it’s prepared to use its full toolbox of measures as it battles to revive inflation and keep its currency from appreciating. Following Japan’s surprising move into negative rate territory last month, 25% of the world’s GDP now comes from countries with negative interest rates.

Markets

  • Markets continued their volatility and despite a rally on Friday ended the week in negative territory. The S&P 500 fell 0.73% and closed at 1,865. Likewise, the Dow Jones dropped 1.23% and closed at 15,974. So far in 2016, the S&P is down 8.53% and the Dow is down 8.00%.
  • Interest rates continued to slide lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.74%, respectively.
  • The spot price of WTI Crude Oil fell 5.57% this week to close at $29.17 per barrel. WTI Crude has fallen 25.58% in 2016.
  • The spot price of Gold advanced 5.55% this week, closing at $1,238.58 per ounce. Year to date, gold prices are up 16.73%.

Economic Data

  • Initial jobless claims came in at 269,000 which was a decrease from last week’s reading of 285,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 281,250.
  • Retail sales increased by 0.2% in January, beating expectations of 0.1%. Core retail sales (excludes autos and gas) were also strong, increasing 0.6% and beating forecasts of 0.3%.
  • The University of Michigan consumer sentiment index declined in the preliminary February estimate to a level of 90.7 from 92.0 in January. Both consumers’ assessment of current economic conditions and their expectations for the future declined during the month.

Fact of the Week

  • The face value for the most expensive ticket for Super Bowl 1 in Los Angeles in 1967 was $12. The face value for the most expensive ticket to Super Bowl 50 last Sunday was $1,800. This increase from 1967 to 2016 represents a 10.8% compounded annual increase, besting the return seen in the S&P 500 during that time frame of 10.1% total return per year. (Source: Super Bowl, BTN Research)

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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