Healthcare, Fed: Wealth Economic Update July 17, 2017

U.S. and World News

  • medical-531914364_360Senate Majority Leader Mitch McConnell stated that the Senate will vote on the Republican health care bill to replace Obamacare next week. McConnell has agreed with Ted Cruz on a bill that would allow insurance companies to sell plans that are cheaper and simpler. The two taxes on high-income households from the Affordable Care Act would remain and billions of dollars would be spent combating opioid addiction and assisting states in lowering premiums. The bill also entails the use of health savings accounts to pay insurance premiums.
  • Federal Reserve Chair Janet Yellen’s testimony had a more dovish tone as she indicated that balance sheet runoff would likely be pushed to September. However, Janet Yellen did provide a positive view on the economy, citing higher household spending, a pickup in business investment, and strength in the labor market. The Fed remains uncertain about inflation, but expects it to return to 2% in the next couple of years. Global equity markets reacted positively to testimony and the U.S. equity market has once again reached record highs.

Markets

  • Markets climbed higher this week. The S&P 500 rose 1.42% and closed at 2,459. The Dow Jones rose 1.04% for the week and closed at 21,638. Year to date, the S&P is up 11% and the Dow is up 10.84%.
  • Interest rates ended the week lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.86% and 2.33%, respectively.
  • The spot price of WTI Crude Oil surged 5.38% this week, closing at $46.61 per barrel. Year to date, Oil prices have fallen 13.24%.
  • The spot price of Gold ended the week higher by 1.35%, closing at $1,228.81 per ounce. Year to date, Gold prices are up 7.09%.

 Economic Data

  • Initial jobless claims fell by 3,000 from last week, coming in at 247,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims ticked up to 246,000.
  • The producer price index (PPI) increased by 0.1% in June and 2% year-over-year which was slightly higher than expectations and core PPI (finished goods excluding food and energy) rose 0.2%.
  • The consumer price index (CPI) decreased by 0.02% in June and now stands at 1.6% year-over-year. The lower CPI reflects lower energy prices. Core CPI (excluding food and energy) rose 0.12% in June and the year-over-year figure stands at 1.7%.
  • Retail sales fell by 0.2% in June versus expectations of a 0.1% increase and retail sales (ex-autos, gasoline, and building materials) fell 0.1% versus expectations of a 0.3% gain.
  • The University of Michigan consumer sentiment index fell 2 points to 93.1 for the preliminary July report reaching a nine-month low.

 

Fact of the Week

  • In July 2009 there were 14.6 million unemployed Americans and 2.2 million job openings. In April 2017 there were 7.1 million unemployed Americans and 6.0 million job openings (Source: Department of Labor).

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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