Presidential Transition: Wealth Economic Update Nov. 21, 2016

U.S. and World News

  • washington_dc-486225108_360President-elect Donald Trump has offered retired Lt. Gen. Michael Flynn the National Security Advisor role. Lt. Gen. Michael Flynn is the former head of the Defense Intelligence Agency and was Trump’s top national security advisor during his campaign. Donald Trump also agreed to cooperate with Vladimir Putin to “tackle international terrorism” after the two discussed the matters by telephone on Monday. An unexpected meeting between Mitt Romney and Donald Trump will take place this weekend regarding the Secretary of State position. SEC Chairman Mary Jo White plans to step down at the end of President Obama’s term and a Republican-appointed leader will assume the role which is expected to result in less regulation on Wall Street.
  • Fed Chair Janet Yellen hinted that the FOMC is on course to raise rates in December and that uncertainty related to the election would not influence the decision. Janet Yellen stated that a rate increase “could well become appropriate relatively soon” and that recent economic data has shown that the economy is “making very good progress”.

Markets

  • This week the S&P 500 increased 0.89% and closed at 2,182. The Dow Jones rose 0.26% and closed at 18,868. So far in 2016, the S&P is up 8.74% and the Dow is up 9.10%.
  • Interest rates increased significantly higher once again this week as investors foresee higher inflation in the future as a result of a Trump presidency. The Dollar index hit 100 for the first time in almost a year after it rose by more than 1% this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.79% and 2.35%, respectively.
  • The spot price of WTI Crude Oil increased by 4.98% this week to close at $45.57 per barrel. WTI Crude is up 3.97% in 2016.
  • The spot price of Gold fell 1.55% this week, closing at $1,208.64 per ounce. Year to date, gold prices are up 13.90%. 

Economic Data

  • Initial jobless claims came in at 235,000, a decrease from last week’s reading of 254,000 and the lowest level since the early 1970’s. The largest declines were in California, Missouri, and Illinois. The four week moving average for claims moved down to 253,000.
  • Housing starts rose 25.5% in October, which was the largest increase since July of 1982 and significantly higher than expectations of a 10.4% increase. The multifamily home starts increased by 68.8% and single family starts increased by 10.7%.
  • Retail sales increased by 0.8% in October which was above consensus expectations of a 0.5% gain. Core retail sales (excluding autos, gas, and building materials) was also up 0.8% versus consensus expectations of a 0.4% increase.
  • The consumer price index (CPI) gained 0.4% in October and 1.6% from one year ago, which was in line with expectations, and heightened by higher energy prices. The core CPI (excluding food and energy) rose by 0.15% in October versus expectations of 0.2% and increased 2.17% from one year ago. 

Fact of the Week

  • A child born in 2016 that begins kindergarten in the fall of 2021 would attend college between the years of 2034 and 2038. If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years (+5.2% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would total $490,502 or $122,625 per year (source: College Board).

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
Steve Meves, CFA® – (630) 801-2217 – smeves@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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