Fed Symposium: Wealth Economic Update Aug 29, 2016

U.S. and World News

  • jackson_hole_wyoming_14105333_340The annual Federal Reserve Bank of Kansas City economic symposium in Jackson Hole, Wyoming began on Thursday and will run through Saturday.  Central bankers and economists from around the world have gathered at the event which this year has the title of, “Designing Resilient Monetary Policy Frameworks for the Future.” Federal Reserve Chairwoman Janet Yellen delivered her keynote speech on Friday which had been highly anticipated by market participants. Yellen stated that the “case for an increase in the Federal Funds rate has strengthened in recent months,” which was viewed as somewhat hawkish. She tempered that with the comment, “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy,” referencing potential risks overseas. Overall, there was no clear direction given on the path of interest rate policy.
  • Brazil’s senate has begun the impeachment trial of suspended President Dilma Rousseff this week. The process is likely to wrap up late next week with a final impeachment vote being held. The likelihood appears to be high that Rousseff will be removed from office on charges that she doctored government fiscal accounts in order to get re-elected in 2014. Brazilian markets have rallied lately on the prospect of the right-wing Vice President and acting President Michel Temer permanently taking over from the leftist Rousseff. Temer would face the tall task of having to drag Brazil’s economy out of its worst recession since the Great Depression and bringing down a massive budget deficit.

Markets

  • This week the S&P 500 was down 0.67% and closed at 2,169. The Dow Jones fell 0.85% and closed at 18,395. So far in 2016, the S&P is up 7.57% and the Dow is up 7.41%.
  • Interest rates increased this week following Janet Yellen’s speech at Jackson Hole on Friday. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.62%, respectively.
  • The spot price of WTI Crude Oil dipped 2.49% this week to close at $47.31 per barrel. WTI Crude is up 18.13% in 2016.
  • The spot price of Gold was down 1.48% this week, closing at $1,321.60 per ounce. Year to date, gold prices are up 25.55%. 

Economic Data

  • Initial jobless claims came in at 261,000, edging down from last week’s reading of 262,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 264,000.
  • New single-family home sales rose by 12.4% in July, bringing the seasonally adjusted annualized rate to the highest level since late 2007. New home sales increased in the South, Northeast and Midwest, while remaining flat in the West region.
  • Existing home sales declined by -3.2% in July, more than an expected 1.1% decline. Single family sales decreased by 2.0%, while multi-family sales fell 12.3% following solid gains in June.

Fact of the Week

  • The average rate of return on the Dow Jones Industrial Average during the 26 Summer Olympic Games dating back from 1900 through 2012 was an impressive 4% from the opening to closing ceremonies, with positive returns seen 68% of the time. This year’s Games which just concluded continued this trend as the Dow Jones was up 1.65% during the two weeks of the Rio Olympics. (Source: Bespoke Investment Group)

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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