Russia-US-Syria: Wealth Economic Update Sept 19, 2016

U.S. and World News

  • syria_aleppo_340The United States and Russia have agreed on a cease-fire in Syria with support from Syrian President Bashar Assad, and as part of the deal, Syria will continue to strike at the Islamic state for one week until the U.S. and Russia take over. The cease-fire was successful in its first full day with no recorded combat deaths and a cautious effort to deliver aid to fortified areas has begun. However, the ability of the U.S. and Russia to work together on the fight against ISIS has been questioned as they have begun to accuse one another of failing to do their part in the agreement.
  • Greece has stated that it plans to tell its creditors that it is unable to comply with the labor reforms set by the IMF for its €86 billion bailout. The terms of the labor reform is a ban on the right of workers to collectively negotiate wages and conditions.
  • The Bank of Japan plans to continue the use of negative interest rate policy for monetary easing. Negative interest rate policy has been in use by the BOJ since February in an effort to meet their 2% inflation target. The policy has come with repercussions such as a stronger Yen and lower margins for financial institutions.
  • The market currently has priced in a 20% probability of a 0.25% rate increase from the Federal Reserve next week.

Markets

  • After a volatile week, the S&P 500 finished up 0.59% and closed at 2,139. The Dow Jones rose 0.25% and closed at 18,124. So far in 2016, the S&P is up 6.26% and the Dow is up 6.04%.
  • Interest rates were up slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.69%, respectively.
  • The spot price of WTI Crude Oil fell 5.82% this week to close at $43.21 per barrel. WTI Crude is up 16.60% in 2016.
  • The spot price of Gold was down 1.33% this week, closing at $1,310.21 per ounce. Year to date, gold prices are up 23.48%.

Economic Data

  • Initial jobless claims came in at 260,000, up slightly from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000.
  • Retail sales declined by 0.3% in August compared to consensus estimates of a decline of 0.1%. The decline in oil prices transitioning to lower gasoline station sales is part of the reason for this.
  • The Consumer Price Index (CPI) increased by 0.2% in August compared to consensus estimates of 0.1%. The increase reflects increased prices in medical care commodities and services.

Fact of the Week

  • More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

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

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