Brazil impeachment: Wealth Economic Update September 6, 2016

U.S. and World News

  • brazil_91582989_340Brazil’s senate has voted 61-20 to impeach suspended President Dilma Rousseff. She was on trial for her role in altering government fiscal accounts by using illegal loans from state banks to hide the true fragile state of Brazil’s finances in order to get re-elected in 2014. Acting President Michel Temer has been sworn in as her replacement. Rousseff claims the ouster was a parliamentary coup and pledged to appeal her impeachment, calling on supporters to fight the conservative agenda she believes has been empowered by her dismissal.
  • President Obama has appointed a seven member board that will oversee the financial restructuring for debt-laden Puerto Rico. Obama drew from a list of candidate in finance and academia who were recommended by leaders in Congress. Puerto Rico’s governor, Alejandro Garcia Padilla, was also named to the board but since he is not seeking a second term, he will be replaced by his successor in November.

Markets

  • This week the S&P 500 was up 0.56% and closed at 2,180. The Dow Jones rose 0.62% and closed at 18,492. So far in 2016, the S&P is up 8.16% and the Dow is up 8.06%.
  • Interest rates were down marginally this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.60%, respectively.
  • The spot price of WTI Crude Oil fell 7.05% this week to close at $44.28 per barrel. WTI Crude is up 10.56% in 2016.
  • The spot price of Gold was up 0.29% this week, closing at $1,324.98 per ounce. Year to date, gold prices are up 24.87%. 

Economic Data

  • Initial jobless claims came in at 263,000, a minor increase from last week’s reading of 261,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 263,000.
  • The monthly employment report showed a gain of 151,000 jobs during August, below the expected 180,000. Figures for the prior two months were revised down a combined 1,000 jobs, bringing the three month average for job gains to 232,000.
    • Headline unemployment remained at 4.9% and the labor force participation rate was also unchanged at 62.8%.
    • Average hourly earnings rose 0.1% in August, missing expectations of 0.2%. On a 12 month basis, wages have risen 2.4%, down from 2.7% in July.
  • Personal Consumer Expenditures (PCE, measure of inflation) was flat in July, in line with expectations. Over the last year, headline inflation has risen 0.8% as measured by PCE.
    • Core PCE (excludes food and energy prices, preferred measure of inflation by the Fed) rose 0.1% and is now up 1.6% year over year, both in line with estimates.
  • The Case-Shiller home price index moved down -0.1% in June, which was in line with consensus expectations. Results were mixed with 11 of the 20 surveyed cities seeing price increases. Over the last 12 months, home prices have risen 5.1%.

Fact of the Week

  • As of August 18th, the U.S. national debt stood at $19.445 trillion. It had taken 293 days (since 10/30/15) to add the latest $1 trillion of debt. It took America 205 years (1776 to 1981) to accumulate its first $1 trillion of debt. (Source: Treasury Department)

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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