Hurricane Irma, North Korea: Wealth Economic Update Sept. 18, 2017

U.S. and World News

  • florida-532409298_360Hurricane Irma tore through Florida and the southeast last weekend, knocking out power to nearly 8 million homes and causing an estimated $25 billion in damage. In combination with Hurricane Harvey, which is expected to be one of the costliest disasters in U.S. history, the storms are likely drag 3rd quarter GDP by at least 1%.
  • The North Korea saga continued this week. First the United Nations voted unanimously for fresh sanctions against North Korea which will cap oil imports and impose an embargo on the country’s textile trade. Then, for the second time in less than a month, North Korea fired a ballistic missile that flew over Japan. This prompted an emergency meeting of the UN Security Council. Also in response, Secretary of State Rex Tillerson continued to urge China to use its leverage as North Korea’s principal supplier of oil to dissuade them from further pursuing its development of nuclear weapons.

Markets

  • Markets rallied this week with both the S&P 500 and Dow Jones Industrial Average closing at new All-Time Highs. The S&P rose 1.63% and closed at 2,500. The Dow Jones spiked 2.19% for the week and closed at 22,268. Year to date, the S&P is up 13.25% and the Dow is up 12.20%.
  • Interest rates rebounded from last week’s declines. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.80% and 2.20%, respectively.
  • The spot price of WTI Crude Oil increased by 5.06% this week, closing at $49.88 per barrel. Year to date, Oil prices have fallen 7.15%.
  • The spot price of Gold ended the week lower by 1.87%, closing at $1,321.38 per ounce. Year to date, Gold prices are up 15.15%.

 Economic Data

  • Initial jobless claims declined by 14,000 from last week, coming in at 284,000. The drop reflected a rebound from the effects of Hurricane Harvey, however, the effects of Hurricane Irma have not yet been included. The four week moving average for claims rose to 263,000.
  • Headline CPI (measure of inflation) rose by 0.4% in August, more than expectations of 0.3%. This was largely due to a 2.8% increase in energy prices related to Hurricane Harvey. Over the last 12 months, headline CPI has risen 1.9%.
    • Core CPI (excludes food and energy prices) rose 0.2% in August, in line with expectations. Over the last 12 months Core CPI has risen 1.7%.

Fact of the Week

  • Only 40% of American households reporting between $100,000-$199,999 of income have investments in the stock market. The percentage of stock ownership drops to 20% of American households for those reporting between $50,000-$74,999 of income. (Source: Federal Reserve Bank of St. Louis)

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Hurricane Irma, Debt Ceiling, DACA: Wealth Economic Update Sept. 8, 2017

U.S. and World News

  • hurricane-499087970_360As Texas gets the cleanup and reconstruction process underway following Hurricane Harvey, Florida is bracing for Hurricane Irma which is expected to hit the U.S. mainland on Sunday. Irma, which has developed into one of the most powerful storms ever recorded in the Atlantic Ocean, has already decimated many islands in the Caribbean, including Puerto Rico, on its way to East Coast.
  • A short term deal regarding the debt ceiling is close to completion, pushing the deadline back 3 months to March 2018. The temporary fix will be coupled with more than $15 billion in aid funding for Hurricanes Harvey and Irma. Some economists see this as a potential negative for tax reform prospects as the debt ceiling will now be breached sometime in the 1st quarter of 2018, right when it’s expected that tax legislation would be unveiled which may complicate matters further.
  • President Trump has decided to revoke the DACA program that shields young unauthorized immigrants from deportation. Trump announced that no action will be taken on those in the ‘Dreamers’ program for six months, giving Congress time to craft a solution. Absent action from Congress in that time frame, Trump said that he will “revisit the issue” when that deadline hits. Presumably, if a resolution isn’t found, over 800,000 young adults brought into the country illegally would become eligible for deportation.

Markets

  • Markets dipped this week. The S&P 500 fell 0.58% and closed at 2,461. The Dow Jones dropped 0.82% for the week and closed at 21,798. Year to date, the S&P is up 11.45% and the Dow is up 12.20%.
  • Interest rates fell quite substantially this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.64% and 2.05%, respectively.
  • The spot price of WTI Crude Oil decreased by 0.57% this week, closing at $47.56 per barrel. Year to date, Oil prices have fallen 12.52%.
  • The spot price of Gold ended the week higher by 1.63%, closing at $1,346.78 per ounce. Year to date, Gold prices are up 17.37%.

 Economic Data

  • Initial jobless claims rose by 62,000 from last week, coming in at 298,000. This is the highest level of claims in more than two years; however, this mostly reflects a large jump (52,000) of jobless claims in Texas associated with Hurricane Harvey. The four week moving average for claims rose to 250,000.

Fact of the Week

  • According to the Census Bureau, 53% of the owner-occupied homes in the U.S. are owned by people who are age 55 or older. Ten years prior, the proportion of age 55+ homeowners was just 43%.

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

T+2: What a Change in Settlement Dates Means to You

Brad Johnson, CFA CFP® Vice President—Investment Officer 

A seismic change hit the securities markets on Sept. 5, 2017, without causing so much as a ripple. That is the day financial companies, Old Second included, will figuratively flip a switch and begin settling stock, ETF, corporate and municipal bond, and some limited partnership transactions two business days after their trade dates. Previously, trades settled on a T+3 basis, or in three business days.

What This Means to You

With the change to T+2, when you sell exchange-traded securities you will receive your money one day sooner than in the past. As a buyer, you can expect to pay and take ownership of these securities one day earlier. Treasuries and most mutual funds are unaffected. They will continue to offer a faster settlement.

While shortening the settlement cycle seems like a big deal, it mainly will affect mindsets. It also may require a bit more planning, at least initially, to ensure cash is available to accommodate the earlier payment date.

For corporate cash managers, the shortened cycle may also mean adjustments in their liquidity strategies. However, increased efficiency should be the end-result.

Why the Change?

The change reflects the electronic nature of securities transactions. Today, there is no need to accommodate paper-based delivery of securities, which is where the processing delay originated. It’s also a move that will align the United States and Canada (which will be making the switch to T+2 at the same time) with settlement procedures already in practice on other global market exchanges.

Also, T+2 will help reduce some market, counterparty and credit risk, specifically for firms that clear transactions. With less time to settle, there is less time for things to go wrong. When they do the response and resolution should similarly occur that much faster.

Once the markets and investors have had an opportunity to adjust to T+2, a move toward T+1 is expected to follow, which would improve efficiencies further. In addition, some experts suspect that the switch could eventually lead to lower collateral requirements when securities are pledged against loans. However, we are not there just yet.

Should you have any questions about how the change to T+2 affects your trading or cash management strategies, call me at 1-630-906-5545.

Harvey, North Korea: Wealth Economic Update Sept. 1, 2017

U.S. and World News

  • flood-184878691_360Almost a quarter of the country’s oil refining capacity is offline this week and 10% of those refineries currently offline may remain unavailable for several months after Hurricane Harvey wreaked havoc in southern Texas last weekend. As a result, gasoline prices in the U.S. have reached $2 per gallon, the highest since 2015. Hurricane Harvey is expected to be the most expensive natural disaster in American history at an estimated $190 billion after the storm left the most rainfall ever measured in the U.S according to AccuWeather.
  • Kim Jong-un has warned that his regime will be testing more ballistic missiles and that the missile launch over Japan was a “meaningful prelude to containing” the island of Guam. The UN has responded by calling for the implementation of harsh sanctions that have recently been developed and agreed on. Defense Secretary James Mattis and Secretary of State Rex Tillerson expressed their hopes of having some dialogue with North Korea and solving the issue in Southeast Asia diplomatically while President Trump tweeted on Wednesday that “Talking is not the answer!”

Markets

  • Markets rose higher this week. The S&P 500 gained 1.40% and closed at 2,477. The Dow Jones rose 0.92% for the week and closed at 21,988. Year to date, the S&P is up 12.10% and the Dow is up 13.11%.
  • Interest rates had a volatile week but ended relatively unchanged. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.74% and 2.16%, respectively.
  • The spot price of WTI Crude Oil decreased by 1.15% this week, closing at $47.32 per barrel. Year to date, Oil prices have fallen 11.91%.
  • The spot price of Gold ended the week higher by 2.62%, closing at $1,325.19 per ounce. Year to date, Gold prices are up 15.48%.

 Economic Data

  • Initial jobless claims rose by 1,000 from last week, coming in at 236,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims moved down to 237,000.
  • The core PCE price index (excluding food and energy) increased 0.09% last month as expected and the year-over-year figure dropped 0.1% to 1.41%.
  • Pending home sales declined by 0.8% in July which was below expectations of a 0.4% gain.
  • Quarter 2 Real GDP was revised up 0.4% to 3.0%; the best figure in two years, after a larger-than-expected revision to personal consumption and business fixed investment.
  • Nonfarm payroll growth came in at 156,000 in August which was lower than expectations of 160,000 and the previous two months were revised down. The unemployment rate ticked up to 4.4% while the participation rate remained at 62.9%. Average hourly earnings increased by 0.1% in August and the year-over-year rate remained stable at 2.5% missing consensus expectations of 2.6%. Average weekly hours declined 0.1% to 34.4.

Fact of the Week

  • More than 114,000 Social Security recipients have their benefits garnished to pay student loan debt, debt that in many cases was taken out on behalf of a child, grandchild or other relative’s education rather than their own. The report, by the GAO, said that is an increase of 540 percent over the last 10 years and that in some cases the beneficiaries fall below the poverty line as a result.

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Fed summit: Wealth Economic Update Aug 25, 2017

U.S. and World News

  • Monetary policymakers from around the world have gathered in Jacksonjackson-hole-507309204_360 Hole, Wyoming for the Federal Reserve’s annual summit on economic policy. Janet Yellen, possibly on her last trip to Jackson Hole as Fed Chair, delivered a speech on past and prospective reforms to the financial system but did not offer any additional details regarding the future path of Fed rate hikes or balance sheet reduction. Also in focus will be European Central Bank Chair Mario Draghi who may offer clues as to when the ECB will begin to taper their Quantitative Easing program.

Markets

  • Markets bounced back this week following consecutive weeks of declines. The S&P 500 gained 0.75% and closed at 2,443. The Dow Jones rose 0.71% for the week and closed at 21,814. Year to date, the S&P is up 10.54% and the Dow is up 12.14%.
  • Interest rates ended the week relatively unchanged. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.76% and 2.17%, respectively.
  • The spot price of WTI Crude Oil decreased by 1.46% this week, closing at $47.80 per barrel. Year to date, Oil prices have fallen 11.02%.
  • The spot price of Gold ended the week higher by 0.55%, closing at $1,291.13 per ounce. Year to date, Gold prices are up 12.52%.

 Economic Data

  • Initial jobless claims rose by 2,000 from last week, coming in at 234,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims moved down to 238,000.
  • New home sales declined by 9.4% in July, disappointing compared to consensus estimates. The July weakness was fairly broad-based with only the Midwest (+4k) seeing an increase versus declines in the Northwest (-10k), South (-14k) and the West (-39k).
  • Existing home sales declined -1.3% in July, lower than expectations of a 0.5% increase. The regional data were mixed with increases in the West (+5.0%) and South (+2.2%) and decreases in the Midwest (-5.3%) and Northeast (-14.5%).

Fact of the Week

  • The average interest rate paid by the U.S. government on its interest bearing debt was 2.28% as of 7/31. The average interest rate that the government was paying on its debt 10 years ago was 5.04%, or more than double what it is now. Every 1% increase in the cost of debt on our country’s $14.4 trillion of debt is equal to $144 billion of additional annual interest expense. (Source: Treasury Department)

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Lot Loans: Perfect Homes Start With the Perfect Spot

Jocelyn Retz, Vice President—Home Loans 

Whether it’s the unobstructed view or the opportunity to build a custom home, what are your next steps after you find the perfect vacant lot?

If you plan to finance the property, the first step is to find a lender, like Old Second, that is willing to make a “lot loan” for the property you wish to purchase. With the abundance of undeveloped land in the counties we serve—and those where our clients frequently vacation—we have extensive experience in financing this type of purchase.

For clients interested in building a home on an empty lot, however, we do require that it be an improved lot. This means that there is infrastructure—roads and utilities—already present.

Other Considerations

Before purchasing, we also recommend running through a list of considerations to help determine whether the property will suit your plans and your budget. Specifically, we suggest you ask yourself:

  • Will you need to install a septic tank? This may require some adjustments and added costs along with ongoing maintenance.
  • What is the soil like? Depending on previous use of the land, it may require extra attention.
  • Can the topography support your plans? For instance, if you envision having a walk-out basement, will that be possible with this lot?
  • Could any local ordinances or permit fees affect your plans? Each municipality has unique restrictions and construction ordinances.
  • Will your plans require approval by an architectural review committee? Many developments have homeowner’s associations that have rules in place to maintain a certain look within the neighborhood.
  • How much can you expect to pay in property taxes? While the property taxes for the lot will be on the listing sheet, you may want to look into the taxes you would expect to incur once your home is built in order to budget properly. You can do this by reviewing the public records for nearby homes of similar style and size.

When it comes to borrowing against the property, many of the same things that apply in a home loan will apply here. The bank will order an appraisal of the property. We will look at your credit. One different aspect is that the down payment on vacant land is higher. At Old Second, for example, we require 25 percent.

Benefits

Building your own home means it will be a while before your move-in day. However, when that day comes, you’ll be moving into a home that is unique to you. It will reflect your tastes and your choice of materials—and the closets will be exactly where you want them!

When you find the right spot for that home, visit us here or call 1-877-966-0202. We cannot wait to talk to you about how a lot loan can get you that much closer to your move-in day.

Charlottesville, Bannon, Fed: Wealth Economic Update Aug 18, 2017

U.S. and World News

  • iStock-137169606_360In the wake of President Trump’s response to the violent and deadly acts at a white nationalist rally in Charlottesville, Virginia last weekend, many high profile CEOs began resigning from Trump’s Manufacturing Council. President Trump originally responded to the first resignations by tweeting, “For every CEO that drops out, I have many to take their place.” However, as the resignations began to mount, the Manufacturing Council as well as the Strategic and Policy Forum were disbanded as more and more CEOs refused to be associated with this administration. In addition to the CEOs that have abandoned ship, famed investor Carl Icahn stepped down as a special advisor to the President late Friday afternoon.
  • Chief White House Strategist Steve Bannon has left his duties at the White House, though the nature of his departure remains unclear. A person close to Bannon said that the strategist had submitted his resignation on August 7, but the announcement was delayed after the violence that occurred at a white nationalist rally in Charlottesville, Virginia on August 12. Traders on the floor of the New York Stock Exchange audibly cheered when the news broke, reflecting the views on many on Wall Street. Stock markets initially rose on the news before fading late in the day as traders may think that with Bannon’s ouster and Chief Economic Advisor Gary Cohn remaining on the staff, the prospects of passing a budget and getting tax reform improve.
  • Minutes from the Federal Reserve’s July meeting were released this week and showed that policymakers are divided over the timeline for future rate hikes. While some members appeared wary about the recent weak inflation figures, others were more eager to have an additional rate increase sometime in 2017. The minutes also seemed to indicate that an announcement regarding the reduction of the Fed’s balance sheet could occur at the September meeting. The market is currently pricing in a 35% probability of an additional rate hike this year.

Markets

  • Markets fell this again this week following a rally on Monday. The S&P 500 dropped 0.58% and closed at 2,426. The Dow Jones fell 0.77% for the week and closed at 21,675. Year to date, the S&P is up 9.73% and the Dow is up 11.36%.
  • Interest rates ended the week relatively unchanged. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.76% and 2.20%, respectively.
  • The spot price of WTI Crude Oil decreased by 0.28% this week, closing at $48.68 per barrel. Year to date, Oil prices have fallen 9.45%.
  • The spot price of Gold ended the week lower by 0.32%, closing at $1,289.30 per ounce. Year to date, Gold prices are up 12.00%.

 Economic Data

  • Initial jobless claims fell by 12,000 from last week, coming in at 232,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims remained at 241,000.
  • Housing starts declined -4.8% in July, lower than the median forecast of a 0.4% increase. The volatile multi-family category led the decline (-15.3%), while the more stable single family starts figure dropped -0.5%. Starts declined in the Northeast (-15.7%), Midwest (-15.2%) and West (-1.6%) but edged up in the South (+0.6%).
  • The University of Michigan consumer sentiment index rose 4.2 points to 97.6 in the preliminary August report, rebounding from declines in June and July. Although the survey’s current conditions index dipped, the expectations for the future component had the largest jump in four years.

Fact of the Week

  • Of the 8.56 million new households formed in the last 10 years, 95% of them (8.13 million) were comprised of families that are renting. (Source: Census Bureau)

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

North Korea: Wealth Economic Update Aug 11, 2017

U.S. and World News

  • north_korea-157533672_360Tensions between the United States and North Korea continue to escalate as intelligence reports suggest that North Korea has successfully developed a “miniaturized nuclear weapon” that can be launched by missile. President Trump stated early in the week, “North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen.” North Korea responded by threatening to hit the U.S. territory of Guam with missiles.  Trump has continued to stand by his ‘fire and fury’ statement, even reiterating them and warning that if Kim Jong-un’s regime does anything to the U.S. or an ally, “things will happen to them like they never thought possible.”

Markets

  • Markets fell this week amid geopolitical tensions. The S&P 500 dropped 1.36% and closed at 2,441. The Dow Jones fell 0.91% for the week and closed at 21,858. Year to date, the S&P is up 10.36% and the Dow is up 12.21%.
  • Markets fell this week amid geopolitical tensions. The S&P 500 dropped 1.36% and closed at 2,441. The Dow Jones fell 0.91% for the week and closed at 21,858. Year to date, the S&P is up 10.36% and the Dow is up 12.21%.
  • Interest rates ended the week a lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.74% and 2.19%, respectively.
  • The spot price of WTI Crude Oil decreased by 1.59% this week, closing at $48.79 per barrel. Year to date, Oil prices have fallen 9.18%.
  • The spot price of Gold ended the week higher by 2.42%, closing at $1,289.30 per ounce. Year to date, Gold prices are up 12.36%.

 Economic Data

  • Initial jobless claims rose by 3,000 from last week, coming in at 244,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims edged down to 241,000.
  • The Consumer Price Index (inflation) rose 0.1% in July, lower than expectations of 0.2%. Food prices gained 0.2% in the month but energy prices edged down -0.1%. Over the last 12 months, headline CPI has increased 1.7%.
    • Core CPI (excludes food and energy) also rose 0.1%, again missing expectations of 0.2%. Over the last 12 months, Core CPI has increased 1.7%.

Fact of the Week

  • The Dow Jones Industrial Average (DJIA) just finished a 10 day winning streak this week, which is historically a good sign for bull markets. However, despite the 2.8% gain over the 10-day period, the S&P 500 returned a more modest 0.4%, and the Dow’s gain marked the lowest return during a 10-day winning streak.

    The DJIA is a price weighted index that aims to represent the broad market using only 30 stocks. These 30 stocks are decided upon by editors of the Wall Street Journal, and are exclusively blue chip names. Unlike its peers such as the S&P 500, the DJIA is price-weighted, meaning that the impact a stock within the DJIA has on the index as a whole is dependent solely on the price of the stock. For example, Boeing (BA) is currently the largest weighted holding in the Dow at 7.3% with a price of $234.88/share. At the bottom is General Electric (GE) at only 0.79% of the index with a price of $25.20/share. Boeing has a market capitalization of $140 billion while General Electric has a market capitalization of $223 billion. (Sources: LPL Research, InvestorPlace, IndexArb)

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

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Guardianships: Someone to Watch Over Them

Michele Morgan, Vice President/Trust Officer MorganM_BUS003xqc

The one thing you should know about guardianships—also known as conservatorships—is that they protect individuals who are unable to make sound decisions for themselves. As court-ordered arrangements, they result in the appointment of an individual or corporation to handle that person’s care and/or financial matters.

The arrangement lasts as long as necessary. In the case of a minor, that may be until they reach the age of 18. For an adult, it could be a lifelong appointment or just until they sufficiently recover from a health issue.

Circumstances That Lead to the Need

Guardianships are subject to state laws, and established by a court proceeding in the individual’s home county. Where children are involved, there is typically a large sum of money—either an unexpected inheritance or a personal injury settlement. Adult guardianships generally arise due to a temporary or permanent disability or an injury.

When the need arises, there are two different roles created in a guardianship: one involving the “Guardian of the Person” where the named individual or corporation is appointed to oversee the needs and care of the individual. The second role is the “Guardian of the Estate” to oversee the individual’s financial matters.

Guardians can be family members, unrelated individuals or, as mentioned above, corporations. Where large sums are involved, judges often prefer to see a bank serve as the guardian of the estate or, at the very least, as a co-guardian to ensure the assets will remain in place to support the individual throughout their life. Regardless of who is appointed the court requires an annual report to ensure the current arrangements continue to serve the needs and best interests of the individual.

Guardianships for children end at the age of 18 with a proceeding that determines the individual is now capable of making rational and prompt decisions about their own care and finances. For adults, a physician typically supplies a statement verifying they’ve regained the capacity to assume responsibility for their own care and finances.

Guardianships versus Powers of Attorney or Estate Plans

The need for a guardianship arises from the lack of other legal documents, such as powers of attorney or an estate plan. Sometimes, family members are overwhelmed by the medical side of caring for a loved one or have trouble agreeing on a course of action. In such cases, they may petition the court to appoint an impartial corporate guardian, especially to oversee financial matters. This saves family members from having to account to the court for how money is spent and from having to reimburse the estate if any charges are deemed inappropriate later.

Compassion Is Part of the Arrangement

While having the court involved in the care and financial matters of a loved one may seem invasive, judges involved with cases like these typically act as extended family members, especially where juveniles are involved. They take a genuine interest in ensuring each person gets what they need to be the best they can be. Compassion carries the day.

To learn more about guardianships and how Old Second can be of assistance in this area, please call me at 630-844-3222. I’m here to help get you the answers you need as you consider your family’s options.

Russia sanctions, China trade: Wealth Economic Update Aug 4, 2017

U.S. and World News

  • moscow-155388930_360President Trump has signed a bill that imposes sanctions on Russia after Moscow ordered the U.S. to cut hundreds of diplomatic staff and said it would seize two U.S. diplomatic properties. The new sanctions are the equivalent of a “full-scale trade war” according to Russian Prime Minister Dimitry Medvedev. The sanctions mark some of the strongest action Congress has taken against Russia since the Cold War. Meanwhile, the investigation into Russian interference in the U.S. election is taking a step forward as special counsel Robert Mueller has reportedly convened a grand jury. The move would give him the power to compel witness testimony and obtain evidence. Links between the Trump campaign and Russia are subject to the investigation, although President Trump has deemed the probe a “witch hunt”.
  • A planned announcement by President Trump outlining a significant trade action against China has been postponed. It was expected that President Trump would direct U.S. Trade Representative Robert Lighthizer to open an investigation into Chinese violations of U.S. intellectual property rights and forced technology transfer. The move would bypass the World Trade Organization and is getting some rare bipartisan support; with Senate Democratic leader Chuck Schumer saying that the U.S. should skip any investigation and take immediate action against China. It is now unknown when or if this trade action will be announced.

Markets

  • Markets were generally higher this week. The S&P 500 rose 0.23% and closed at 2,477. The Dow Jones rose 1.22% for the week and closed at a new All-Time High of 22,093. Year to date, the S&P is up 11.87% and the Dow is up 13.23%.
  • Interest rates ended the week a bit lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.82% and 2.26%, respectively.
  • The spot price of WTI Crude Oil decreased by 0.38% this week, closing at $49.52 per barrel. Year to date, Oil prices have fallen 7.85%.
  • The spot price of Gold ended the week lower by 0.81%, closing at $1,259.31 per ounce. Year to date, Gold prices are up 9.74%.

 Economic Data

  • Initial jobless claims fell by 5,000 from last week, coming in at 240,000. The Labor Department noted no factors affecting the data this week. The four week moving average for claims held steady at 242,000.
  • The July jobs reports came in better than expected with 209,000 jobs added, beating estimates of 180,000. The prior two months’ figures were revised upwards by 2,000, bringing the three month average for job gains to 194,000.
    • The headline unemployment rate edged down to 4.3%, in line with forecasts. The labor force participation rate ticked up 0.1% to 62.9%, making the reduction in the unemployment rate stronger.
    • Average hourly earnings increased by 0.3% in the month, meeting expectations. Over the last year, wages have grown 2.5%.
  • Headline PCE inflation was flat in the month of June, in line with consensus expectations. Over the last 12 months, headline PCE inflation has increased 1.4%.
    • Core PCE inflation (excludes food and energy, Fed’s preferred inflation measure) rose by 0.1% in June, also in line with expectations. Over the last 12 months, Core PCE inflation has increased 1.5%.

Fact of the Week

  • Since 1962, Congress has increased the nation’s debt ceiling 79 times. This amounts to once every 8 months over the last 55 years. This year, Congress must vote by mid-October to raise America’s debt ceiling or risk defaulting on its debt. (Source: Federal Reserve)

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

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