Hurricane Matthew: Wealth Economic Update Oct 10, 2016

U.S. and World News

  • hurricane_43705814_360Hurricane Matthew has made its way to the United States after inflicting server damage and loss of life in the Caribbean where it has killed at least 339 people in Haiti. A state of emergency and an evacuation mandate has been issued for many areas in the East Coast. While the storm has been downgraded to a Category 3, the National Weather Service has used some of its strongest language since Hurricane Katrina in describing the strength and dangers of the storm.
  • New U.K. Prime Minister Theresa May has provided an updated timeline for Parliament to initiate the “Brexit” process. May stated that the country would invoke Article 50 by the end of next March, which would officially indicate their intent to leave the European Union. Though the vote took place in June, the March timeline for beginning a ‘hard Brexit’ comes earlier than many observers believed would be the case, causing some volatility in the Sterling currency.

Markets

  • This week the S&P 500 dipped 0.60% and closed at 2,154. The Dow Jones fell 0.31% and closed at 18,240. So far in 2016, the S&P is up 7.09% and the Dow is up 6.77%.
  • Interest rates climbed higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.26% and 1.72%, respectively.
  • The spot price of WTI Crude Oil was up 2.88% this week to close at $49.63 per barrel. WTI Crude is up 23.92% in 2016.
  • The spot price of Gold declined 4.50% this week, closing at $1,256.75 per ounce. Year to date, gold prices are up 18.44%.

Economic Data

  • Initial jobless claims came in at 249,000, down from last week’s reading of 255,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 254,000.
  • The monthly employment report showed an increase of 156,000 jobs in September, below expectations of 170,000. The prior two months had their figures revised down a combined 7,000 jobs, bringing the three month average of job gains to 192,000.
    • The headline unemployment rate ticked up 0.1% to 5.0%. This was largely due to a 0.1% increase in the labor force participation rate to 62.9% in September.
    • Average hourly earnings came in a bit below forecast, rising 0.2% in the month compared to the 0.3% being expected. Over the last 12 months, wages have risen 2.6%. 

Fact of the Week

  • The California Public Employees’ Retirement System projected back in 1999 that the investments backing state employees’ pensions would grow from $159.1 billion to $613.5 billion in 2016 due to an assumed 8.25% annual rate of return. In actuality, as a result of market downturns and lower interest rates, the actual fund size in 2016 was just $295.1 billion, representing an annualized 3.70% rate of return. (Source: CalPERS)

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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