Wealth Management Economic Update April 18, 2016

U.S. and World News

  • Legislators in Washington D.C. have begun working towards a solution for Puerto Rico’s $70 billion debt burden, though the process is not expected to move smoothly due to partisan bickering. Plans are to unveil a bill that would create a seven member oversight board appointed by President Obama as well as create collective action clauses, which would separate creditors into different pools and allow them to vote on modifications to the debt. The proposal stops short of giving Puerto Rico broad bankruptcy authority, forcing the island to work with Washington to find a solution.
  • Brazil’s lower house of Congress has voted to recommend President Dilma Rousseff’s impeachment for allegedly manipulating public finances. Further votes are expected this weekend that could continue momentum for her ouster. If the proceedings reach Brazil’s Senate, the chamber could decide by simple majority to put Rousseff on trial, which would suspend her position for up to six months, requiring Vice President Michel Temer to become acting president.
    Embed from Getty Images
  • A U.S. appeals court has cleared the way for Argentina to raise as much as $15 billion to pay holdout creditors whom had loaned the country money in the past. The ruling would allow Argentina to re-enter the international capital markets for the first time in more than a decade following a default on its debts in 2001. This marks another victory for President Mauricio Macri, who has been diligently been negotiating with the country’s creditors since he was elected last year and has already passed a number of economic and financial reforms.

Markets

  • The markets rose this week as 1st quarter earnings reports started coming in. The S&P 500 gained 1.62% and closed at 2,081. Likewise, the Dow Jones rose 1.82% and closed at 17,897. So far in 2016, the S&P is up 1.80% and the Dow is up 2.71%.
  • Interest rates turned higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.75%, respectively.
  • The spot price of WTI Crude Oil rose 1.76% this week to close at $40.42 per barrel. WTI Crude is up 1.10% in 2016.
  • The spot price of Gold declined 0.53% this week, closing at $1,234.08 per ounce. Year to date, gold prices are up 16.30%.

Economic Data

  • Initial jobless claims came in at 253,000 which was a decrease from last week’s reading of 267,000. The Labor Department noted no special factors in the data. This marks 58 consecutive weeks of initial claims below 300,000, the longest streak since 1973. The four week moving average for claims moved down to 265,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.1% in March, below expectations of a 0.2% gain. Over the last 12 months, overall inflation has risen 0.9%, which is lower than the forecasted 1.0%.
    • Core CPI (excludes food and energy) increased by 0.1%, which was also below estimates of 0.2% gains. Core prices have now risen 2.2% over the last 12 months.
  • Retail sales declined -0.3% in the month of March, missing estimates of a 0.1% gain. A 2.1% decline in motor vehicle sales and 0.9% decline in clothing purchases were largely responsible for the miss.
  • The University of Michigan’s index of consumer sentiment dropped to 89.7 in April compared to 91.0 in March, and against consensus expectations for a minor increase. The decline was mainly driven by a lower assessment of both current conditions and consumer expectations.

Fact of the Week

  • The average national price of gasoline fell from $2.26 to $2.00 in 2015. Lower gas prices saved Americans $126 billion in 2015, an average of $1,084 per household. (Source: Financial Times)

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
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.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s