Trump speech, Fed, Sessions: Wealth Economic Update Mar. 6, 2017

U.S. and World News

  • politician_podium76797371_320President Trump delivered his first address to a joint session of Congress this week and spoke on a number of initiatives that the administration aims to put through. Trump pledged to overhaul the immigration system, improve jobs and wages for Americans, and promised “massive” tax relief to the middle class and tax cuts for businesses. Trump also laid out some general principles for an Obamacare replacement. Details on these items were absent from the address but Trump did say that he plans to ask Congress for $1 trillion in infrastructure investment, guided by the principle “Buy American and Hire American.”
  • The Federal Reserve came more into focus this week as Fed officials have indicated that there is a strong likelihood of a March interest rate hike. San Francisco Fed President John Williams said that an interest rate hike in March will be under “serious consideration” and New York’s William Dudley feels the case for tightening at the next meeting “has become a lot more compelling.” The market is now assigning a 94% chance of a Fed Funds Rate hike in March.
  • Attorney General Jeff Sessions has announced that he will recuse himself from any investigations related to President Trump’s election campaign amid backlash over his testimony about his contacts with Russia. At Sessions’ confirmation hearing, during which he was under oath, he failed to disclose meeting with Russia’s ambassador on multiple occasions when asked about contact with the Russian government during Trump’s campaign.

Markets

  • Markets rose this week following President Trump’s address to Congress. The streak of 55 consecutive trading days without a trading range of +/- 1% in the S&P 500 was broken this week. The S&P 500 gained 0.71% and closed at 2,383. The Dow Jones followed suit by rising 0.94% and closing at 21,006. Year to date, the S&P is up 6.84% and the Dow is up 6.79%.
  • Interest rates rose quite a bit this week following the address to Congress and increased rate hike odds. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.01% and 2.48%, respectively.
  • The spot price of WTI Crude Oil was down 1.39% this week, closing at $53.24 per barrel. Year to date, Oil prices have dipped 0.89%.
  • The spot price of Gold decreased by 1.78% this week, closing at $1,234.76 per ounce. Year to date, Gold prices are up 7.60%.

Economic Data

  • Initial jobless claims fell 19,000 from last week, coming in at 223,000 which is the lowest reading since 1973. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 234,000 which is a new 40-year low.
  • The Case-Shiller home price index rose by 0.9% in its latest reading, slightly beating expectations of a 0.7% increase. Prices rose in all 20 cities covered and the largest monthly increases were seen in Chicago (1.5%), Seattle (1.4%) and Tampa (1.4%). Over the last 12 months, home prices as measured by Case-Shiller have risen 5.6%.
  • The Headline PCE index (measure of inflation) rose 0.4% in January, slightly under expectations of 0.5%. Over the last year, prices as measure by PCE have increased 1.9%.
    • Core PCE (excludes food and energy, preferred inflation measure by the Fed) increased 0.3% in January, in line with expectations. Over the last year, Core PCE has risen 1.7%, still a bit below the Federal Reserve’s 2% target.

 

Fact of the Week

  • Over the last 30 years, the proportion of all US workers that were members of a union has fallen from 17.5% to 10.7%. Looking at just private sector workers, union membership has fallen from 14.0% in 1986 to just 6.4% now. (Source: Bureau of Labor Statistics)

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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