Wealth Management Economic Update March 7, 2016

U.S. and World News

  • Last weekend’s G20 summit failed to yield a comprehensive plan for spurring global growth. World leaders met in Shanghai and called for more fiscal measures and structural reforms to revive the global economy but also cited a number of risks to growth, including a potential British exit from the European Union. In a joint statement, the G20 leaders said, “Monetary policies will continue to support economic activity and ensure price stability but monetary policy alone cannot lead to balanced growth.”
  • North Korean leader Kim Jong Un has ordered his country to be ready to use its nuclear weapons at any time and to turn its military posture to “pre-emptive attack” mode. Un told his military that this was necessary due to “growing threats from enemies.” The comments mark further escalation of tension on the Korean peninsula after the U.N. Security Council imposed harsh new sanctions against North Korea.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 2.71% and closed at 2,000. Likewise, the Dow Jones rose 2.24% and closed at 17,007. So far in 2016, the S&P is down 1.73% and the Dow is down 1.85%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.38% and 1.88%, respectively.
  • The spot price of WTI Crude Oil gained 10.71% this week to close at $36.29 per barrel. WTI Crude has fallen 7.26% in 2016.
  • The spot price of Gold increased 2.90% this week, closing at $1,258.95 per ounce. Year to date, gold prices are up 18.65%.

Economic Data

  • Initial jobless claims came in at 278,000 which was an increase from last week’s reading of 272,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 270,250.
  • The February employment report showed 242,000 non-farm jobs created, beating expectations of 195,000. The prior two months’ figures were revised up a combined 30,000, bringing the three month average for job gains to 228,000.
    • The headline unemployment rate remained at 4.9%, in line with expectations. The unemployment rate held steady despite the solid addition of new jobs due to a 0.2% increase in the labor force participation rate to 62.9%. Participation is now up 0.5% in the last six months.
    • Wage growth disappointed in the month, falling -0.1% while estimates were for 0.2% growth. Over the last 12 months, wage growth now stands at 2.2%, down from 2.5% in the prior month.

Fact of the Week

  • Since the inception of the Dow Jones Industrial Average in May of 1896, there have been 23 trading days taking place on ‘Leap Day’, including this past Monday. Of those 23 trading days, 16 have been negative, including 13 of the last 17 Leap Days. The average return for the Dow Jones on Leap Days is -0.1%. (Source: Crossing Wall Street)

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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