French Election, Taxes, N Korea: Wealth Economic Update Apr. 28, 2017

U.S. and World News

  • iStock-534000920_400Results from the first round of the French Presidential Election showed Emmanuel Macron and Marine Le Pen advancing to a presidential runoff as voters turned their backs on the political establishment. Macron, the independent centrist won 23.75% of the vote, while Le Pen, the National Front leader, garnered 21.53%. Trying to broaden her appeal, Le Pen is taking a leave of absence from her leadership position of the National Front party, whose platform is slashing immigration, clamping down on trade and removing France from the European Union. The runoff vote is scheduled for May 7th, in which current polls show Macron holding the advantage.
  • President Trump unveiled the outline for his proposed tax reform this week. While details remain to be filled in, the plan is highlighted by a series of broad tax cuts. It included a reduction of the corporate tax rate from 35% to 15%, lower individual tax rates along with simplified brackets, a bigger standard deduction, and a repeal of the estate and alternative minimum taxes. This one page proposal did not include the controversial border-adjustment tax on imports.
  • Tensions continue to rise in Korea as the North detained another U.S. citizen and staged a massive live fire-drill to commemorate the 85th anniversary of its military. In response to this escalation, the U.S. military has started moving key parts of its controversial THAAD anti-missile defense system to a deployment site in South Korea. This move, which has angered North Korea, China and Russia, prompted protests by local residents and was denounced by the frontrunner in South Korea’s presidential election.

Markets

  • Markets bounced higher following the results of the first round of the French Election. The S&P 500 rose 1.53% and closed at 2,384. The Dow Jones gained 1.91% for the week and closed at 20,941. Year to date, the S&P is up 7.14% and the Dow is up 6.69%.
  • Interest rates moved modestly higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.82% and 2.29%, respectively.
  • The spot price of WTI Crude Oil dipped 0.87% this week, closing at $49.19 per barrel. Year to date, Oil prices have fallen 8.43%.
  • The spot price of Gold declined 1.26% this week, closing at $1,268.21 per ounce. Year to date, Gold prices are up 10.52%.

 Economic Data

  • Initial jobless claims rose by 14,000 from last week, coming in at 257,000. The numbers may have been elevated this week due to seasonal adjustments surrounding Easter and spring break holidays. The four week moving average for claims dropped to 242,000.
  • The Case-Shiller home price index rose by 0.7% in March, in line with expectations. Prices rose in all 20 cities measured, with Seattle (1.9%), Dallas (1.2%) and San Francisco (1.0%) seeing the largest increases. Home prices as measured by the index have now risen 5.9% over the last 12 months.
  • The first estimate of 1st Quarter GDP showed growth of only 0.7% vs. expectations of 1.0%. The slowdown in consumer spending was a significant drag on the headline number.
  • The Employment Cost Index (ECI) rose by 0.8% in the 1st quarter, beating expectations of 0.6%. With the strong quarter, total compensation has now increased 2.4% over the last year.

Fact of the Week

  • 41% of homeowners between the ages of 65-74 and 63% of homeowners over age 75 own their home free and clear of any debt. (Source: Center for Retirement Research at Boston College)

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
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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