Wealth Management Economic Update May 16, 2016

U.S. and World News

  • President Dilma Rousseff has been suspended from office after an overwhelming 55-22 senate vote to start an impeachment trial and Vice President Michel Temer will assume the role as President for up to six months while the trial is ongoing. Former Central Bank Chief Henrique Meirelles who is liked among investors, will assume the role as Finance Minister. Despite the majority, Rousseff continues to ignore calls to resign and states that she will prevail in the trial.
  • The U.S congress continues to work towards a solution to fix Puerto Rico’s debt situation after the U.S territory released its fiscal 2017 forecast which indicated that their economy would likely contract for the fifth year in a row. The House of Representatives will reveal a plan in the near future that will stipulate how Puerto Rico’s many creditors will be prioritized.
  • oil_drill_saudi_000023179128_320Saudi Arabia has named Khalid al-Falih as the new oil minister, replacing Ali al-Naimi who has been oil minister since 1995. Khalid al-Falih is currently the chairman of Aramco, a state owned oil company. Al-Falih stated that he does not intend to bring changes to Saudi Arabia’s current strategy of defending market share and maintaining stable petroleum policies.

Markets

  • Equity markets declined this week. The S&P 500 fell 0.51% and closed at 2047. Likewise, the Dow Jones dipped 1.16% and closed at 17,535. So far in 2016, the S&P is up 0.13% and the Dow is up 0.63%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.70%, respectively.
  • The spot price of WTI Crude Oil gained 3.61% this week to close at $46.27 per barrel. WTI Crude is up 13.66% in 2016.
  • The spot price of Gold lost 1.16% this week, closing at $1,274.06 per ounce. Year to date, gold prices are up 20.07%.

Economic Data

  • Initial jobless claims came in at 294,000 which was an increase from last week’s reading of 274,000. The increase was expected and is estimated to be attributed to seasonal factors in New York State. The four week moving average for claims ticked up to 268,000.
  • Retail sales increased 1.3% (mom) in April and beat expectations for the month. The gain reflected both higher energy prices and department store sales. Non-store retailers (online shopping) grew at a rapid monthly pace of 2.1%.
    • The Producer Price Index (PPI) increased by 0.2% (mom) in April which was supported by higher energy prices as food prices were down (-0.4%). PPI excluding food and energy rose 0.1% for the month.
  • The University of Michigan Sentiment Index preliminary release for May climbed to 95.8 from 89.0 with expectations of only a small increase. The rise in the index was driven by a rise in forward-looking consumer expectations.

Fact of the Week

  • According to the National Endowment for Financial Education, 45% of the 118 million households in the United States live “paycheck-to-paycheck”.

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.

 

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