Healthcare, McCain: Wealth Economic Update July 21, 2017

U.S. and World News

  • stethoscope-519691768_360The U.S. Senate has further delayed a vote regarding repealing and replacing Obamacare and may scrap the plan altogether. This was the result of two more GOP senators stating they would not vote for the proposal, leaving Republicans short of the votes they would need to pass the American Health Care Act. Adding to the uncertainty, Senator John McCain has been diagnosed with a brain tumor and the timing of his return is very much unknown.

Markets

  • Markets were mixed this week. The S&P 500 rose 0.55% and closed at 2,472. The Dow Jones dipped 0.23% for the week and closed at 21,579. Year to date, the S&P is up 11.61% and the Dow is up 10.59%.
  • Markets were mixed this week. The S&P 500 rose 0.55% and closed at 2,472. The Dow Jones dipped 0.23% for the week and closed at 21,579. Year to date, the S&P is up 11.61% and the Dow is up 10.59%.
  • Interest rates ended the week lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.80% and 2.23%, respectively.
  • The spot price of WTI Crude Oil fell by 1.83% this week, closing at $45.69 per barrel. Year to date, Oil prices have fallen 14.95%.
  • The spot price of Gold ended the week higher by 2.14%, closing at $1,254.97 per ounce. Year to date, Gold prices are up 9.37%.

 Economic Data

  • Initial jobless claims fell by 15,000 from last week, coming in at 233,000. The Labor Department noted that the decrease may have been a result of summer auto plant shutdowns during the July 4th holiday. The four week moving average for claims moved down to 244,000.
  • Housing starts rose by 8.3% in June, beating expectations of a 6.2% increase. The increase was led by the volatile multifamily category (+13.3%) but single-family starts also increased (+6.3%) follow three months of declines.

Fact of the Week

  • On October 3, 1995, all activity in the United States halted in anticipation of the verdict of the “Trial of the Century”; the murder trial of Hall of Fame NFL Player and Actor O.J. Simpson. After 16 months of obsessive media coverage, the nation dropped everything they were doing to watch the verdict live. Among other phenomena such as water usage plummeting (not wanting to miss the verdict while in the bathroom) and electricity consumption surging (TV sets being turned on), trading volumes on the New York Stock Exchange fell by 41% as traders were glued to their TV screens. In all, it is believed that the verdict cost the U.S. economy $480 million in productivity that day. (Source: Alan Dershowitz’s “America on Trial)

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.

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

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

IL Budget, G20: Wealth Economic Update July 7, 2017

U.S. and World News

  • balance-183243003_400For the first time since July of 2015, the state of Illinois has a budget after the House of Representatives overrode the governor’s vetoes. The state of Illinois’ unpaid bills reached $15 billion and the new budget is projected to bring that figure down by about $5 billion, however, according to Moody’s Investor Service this is likely not enough for Illinois to avoid being downgraded to junk status with the unpaid bill backlog and unfunded pension liability being so overwhelmingly high.
  • The G-20 summit begins today in Hamburg, Germany where tens of thousands of protesters have already begun demonstrating a day in advance as sensitive topics such as terrorism, global trade, and climate change are on the agenda and a long awaited first meeting between President Trump and Vladimir Putin. The meeting between President Trump and Vladimir Putin is not expected to go without tension after sanctions, concerns over Ukraine and Syria, and accusations of meddling in the election have transpired in the past few months.

Markets

  • Markets ended the week slightly higher. The S&P 500 rose 0.14% and closed at 2,425. The Dow Jones increased by 0.38% for the week and closed at 21,414. Year to date, the S&P is up 9.46% and the Dow is up 9.71%.
  • Interest rates rose on both the short and long ends this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.95% and 2.39%, respectively.
  • The spot price of WTI Crude Oil fell 3.80% this week, closing at $44.29 per barrel. Year to date, Oil prices have fallen 17.55%.
  • The spot price of Gold ended the week lower by 2.34%, closing at $1,212.60 per ounce. Year to date, Gold prices are up 5.67%.

 Economic Data

  • Initial jobless claims increased by 4,000 from last week, coming in at 248,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims ticked up to 243,000.
  • Nonfarm payrolls rose 222k in June which was higher than consensus expectations of 178k and prior months were revised up. The unemployment rate rose slightly to 4.4% and the labor force participation rate also increased to 62.8%. Average hourly earnings rose 0.15% and average weekly hours rose 0.1 to 34.5.
  • The ISM non-manufacturing index rose 0.5 points to 57.4 in June against expectations of a slight decline.
  • The ISM manufacturing index rose 2.9 points to 57.8 beating expectations with new orders, employment, and production all increasing for the month.

Fact of the Week

  • The total amount of money owed by every single person and country in the world is US$199 trillion, but the world has only US$80.9 trillion in cash and bank deposits. (Source: Marketwatch)

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.

Healthcare, IL “junk” status: Wealth Economic Update June 30, 2017

U.S. and World News

  • healthcare-587952472_360After unveiling their version of healthcare reform legislation, Senate Republican leaders decided to delay a vote until after the July 4th .  This came after the Congressional Budget Office scoring reported that the legislation in its current form would result in 22 million more people being uninsured by 2020.  Senate Republican leader Mitch McConnell said there was a ‘really good chance’ the bill will eventually pass despite the delay and a number of GOP lawmakers expressing their concerns over the bill.
  • Illinois is facing the possibility of becoming the first U.S. state to have its credit rating downgraded to ‘junk’ status by S&P. State lawmakers have until Friday night’s deadline to agree on a budget, something that hasn’t happened since 2015, before S&P stated that it will lower Illinois’ credit rating for the 4th time in the last year.

Markets

  • Markets ended the week slightly lower. The S&P 500 fell by 0.58% and closed at 2,423. The Dow Jones decreased by 0.21% for the week and closed at 21,350. Year to date, the S&P is up 9.31% and the Dow is up 9.30%.
  • Interest rates rose on both the short and long ends this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.89% and 2.30%, respectively.
  • The spot price of WTI Crude Oil popped 7.67% this week, closing at $46.31 per barrel. Year to date, Oil prices have fallen 13.79%.
  • The spot price of Gold ended the week lower by 1.20%, closing at $1,241.61 per ounce. Year to date, Gold prices are up 8.20%.

 Economic Data

  • Initial jobless claims increased by 2,000 from last week, coming in at 244,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims moved down to 242,000.
  • The Case-Shiller home price index rose by 0.3% in April, below consensus expectations of 0.5%. By city, Detroit (+1.8%) and Seattle (+1.1%) showed the largest increases, while Cleveland (-1.0%) and Boston (-0.7%) showed the largest decreases in prices. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The headline PCE index (measure of inflation) declined -0.1% in May, lower than the estimated 0.2% increase. Over the last 12 months, headline PCE inflation has risen 1.4%.
    • Core PCE (excludes food and energy, Fed’s preferred inflation method), rose 0.1% in May, in line with expectations. Over the last 12 months, Core PCE inflation has risen 1.4%.

Fact of the Week

  • Just 54% of over 18,000 adults surveyed in April 2017 own stocks (either directly or indirectly through a mutual fund or exchange traded fund) in their personal accounts or pre-tax retirement accounts. (Source: Gallup)

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.

Brexit, Healthcare: Wealth Economic Update June 23, 2017

U.S. and World News

  • brexit-540371754_360A year after the vote for Britain to leave the European Union, Brexit talks have finally begun in Brussels. EU chief negotiator Michel Barnier will be sitting down with U.K. Brexit Secretary David Davis to work through the details of the anticipated two year separation process. Additionally, Prime Minister Theresa May unveiled an offer to allow at least 3 million EU citizens living in the U.K. to stay after Brexit, an offer that was welcomed by other European heads of state, including German Chancellor Angela Merkel.
  • Senate Republicans released their version of the healthcare reform legislation this week, giving the public their first chance to see what their iteration looks like. The Senate version is similar to the House bill in that both would radically overhaul Medicaid, remove the individual and employer mandates as well as eliminate taxes tied to Obamacare. There are also some differences, for instance, the Senate version would provide subsidies based on income, cost of coverage and age, as opposed to just age as was in the House bill. The nonpartisan Congressional Budget Office is expected to issue its analysis of the bill early next week.

Markets

  • Markets ended the week slightly higher. The S&P 500 rose by 0.22% and closed at 2,438. The Dow Jones increased by 0.05% for the week and closed at 21,395. Year to date, the S&P is up 9.98% and the Dow is up 9.52%.
  • Interest rates held steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.76% and 2.14%, respectively.
  • The spot price of WTI Crude Oil slid 3.78% this week, closing at $43.11 per barrel. Year to date, Oil prices have fallen 19.75%.
  • The spot price of Gold ended the week modestly higher, closing at $1,256.67 per ounce. Year to date, Gold prices are up 9.51%.

 Economic Data

  • Initial jobless claims increased by 3,000 from last week, coming in at 241,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims moved up to 245,000.
  • Existing home sales rose 1.1% in May, beating consensus expectations of a -0.4% decline in sales. Sales of single family units rose 1.0%, while sales of multi-family unites increased by 1.6%. By region, existing home sales increased in the Northeast (+6.8%), West (+3.4%), and South (+2.2%), but declined in the Midwest (-5.9%).
    • New home sales increased by 2.9% in May, following a -7.9% decline in April. The result was better than consensus expectations, New home sales increased in the South (+21k), and West (+19k), but declined in the Northeast (-4k) and Midwest (-19k) regions.

Fact of the Week

  • Today (6/23) marks the 1 year anniversary of the historic Brexit vote where U.K. citizens elected to leave the European Union. Markets initially moved to the downside following the surprising result, but quickly rebounded. In the one year since the vote, the United Kingdom’s stock market (FTSE 100) has gained 21.8%, outpacing the overall MSCI European Index (+14.2%) and the S&P 500 (+17.7%). (Returns are stated in local currency)

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.

Taking the Stress Out of Closings

Alaine Bussler, Residential Closing Manager00001

David Kozuh, First Vice President—Residential Lending

Making the decision to buy a new home is thrilling, and the last thing we want is for the mortgage process to interfere with that. That’s why we make sure you know what to expect each step of the way. If you have a question or don’t understand something in a document you’ve been sent, we are here to talk you through it.

New Transparency

In the past, much of the stress in the closing process came from the way lenders were required to provide disclosure and loan documents to you. It made it harder to know how much your home—and your loan—would really cost after fees. That was typically something that came at the very last minute, without adequate time to review.

That has changed. The disclosure requirements are now much easier to read and understand. We are able to give you the first document, The Loan Estimate, three days after you apply for a mortgage, and the second document, The Closing Disclosure, three days before you close. This gives you time to review the terms and amounts you are agreeing to and enables you to ask questions if there is anything you are unsure of.

The Loan Estimate

Like its name implies, this three-page document summarizes the terms and price of your loan. It provides the information needed to develop a better understanding of your mortgage quote, including the amount you can expect to pay monthly based on the estimated closing costs.

The Closing Disclosure

The Closing Disclosure is an itemized account of the final settlement expenses and is provided three days before you close. Specifically, it confirms the final terms, how much cash you will need to bring to your closing, the loan details and the total cost of the loan. The Closing Disclosure also provides an accounting of any changes in the amounts that appeared in the Loan Estimate, along with reasons for them.

In combination, the two documents enable you to understand what, if anything, changed before agreeing to the final terms.

Big Numbers Shouldn’t Lead to Tense Times

The changes to the disclosure law essentially make the way we work with our borrowers—taking the time to answer questions and being transparent about what’s being agreed to—standard to the industry.

Give us a call, at 877-966-0202 and let’s talk about what we can do to keep your mortgage experience as stress free as possible.

 

Fed rate increase, Qatar: Wealth Economic Update June 17, 2017

U.S. and World News

  • rate_balloon-491446733_360The Federal Reserve increased the federal funds rate by 0.25% to a target range of 1%-1.25% at its June meeting this week and signaled that there would be one more increase this year. While this move was widely expected, markets were more focused on the details regarding reduction of the balance sheet. The Fed indicated that they will begin shrinking the balance sheet and that each quarter going forward; they will allow higher amounts of securities to roll off the balance sheet without reinvestment.
  • The International Energy Agency stated that the conflict between a handful of Middle East countries and Qatar regarding accusations that Qatar is in support of Islamist militants is causing “logistical headaches”. Saudi Arabia, Egypt, Bahrain, and the UAE have officially stopped working with Qatar and the UAE has banned oil tankers linked to Qatar. Egyptian finance minister Amr El-Garhy is not concerned about the possibility of financial repercussions resulting from the conflict and stated “It’s not a matter of a loss of money… it’s a matter of principle.”

Markets

  • Markets ended the week slightly higher. The S&P 500 rose by 0.12% and closed at 2,433. The Dow Jones increased by 0.33% for the week and closed at a New All Time High of 21,384. Year to date, the S&P is up 9.70% and the Dow is up 9.47%.
  • Interest rates fell this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.74% and 2.15%, respectively
  • The spot price of WTI Crude Oil slid 2.40% this week, closing at $44.73 per barrel. Year to date, Oil prices have fallen 16.73%
  • The spot price of Gold ended the week lower, closing at $1,254.14 per ounce. Year to date, Gold prices are up 9.29%.

 Economic Data

  • Initial jobless claims decreased by 8,000 from last week, coming in at 237,000. The decline was largely attributed to California and other energy producing states. The four week moving average for claims moved up to 243,000.
  • The Consumer Price Index (CPI) decreased by 0.13% in May and the year-over-year rate fell 0.3% and came in at 1.9%. The decline was led by the drop in energy prices during the month.
  • Retail sales were down for the month declining by 0.3% versus expectations of no change.
    Core retail sales (ex-autos, gasoline and building materials) were unchanged versus expectations of a 0.3% gain. Core April sales were revised up 0.5% which more than offset the miss for last month.

    • Housing starts fell by 5.5% in May to 1092k, which was below expectations. The decline was led by both multifamily and single-family homes in the Midwest and Southern regions.
    • The University of Michigan’s consumer sentiment index declined by 2.6 points to 94.5 in the preliminary June report. The drop marks a seven month low, but still remains a relatively high level.

Fact of the Week

  • The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)

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.

UK Election, Qatar, Puerto Rico: Wealth Economic Update June 9, 2017

U.S. and World News

  • UKflag-518908074_360The decision to hold snap elections in the United Kingdom seems to have back-fired on Prime Minister Theresa May and her Conservative Party as they lost their majority with the Labour Party gaining significant ground in Thursday’s vote. In April, Theresa May decided to hold the snap general election in an attempt to gain a significant majority for her ahead of the Brexit negotiations but with the poor results there have been calls for her resignation. The split parliament could make Brexit negotiations with the UK’s European Union partners more difficult.
  • Four Arab states (Saudi Arabia, Egypt, the United Arab Emirates and Bahrain) have cut off diplomatic ties with Qatar, as well as closing air and sea routes. This marked a significant escalation of a rift between the Persian Gulf countries that has been brewing for a few months. President Trump stated that he wished to “de-escalate” the situation but appeared to support the isolation of Qatar, noting that his message against funding terror and extremism is being heeded by those other countries in the region.
  • Citizens of Puerto Rico are voting this weekend in a referendum on the island’s political status. There will be three choices on the ballot: statehood, “current territorial status” and independence. It’s not clear what would happen in the case of any of these choices winning decisively or how Congress would interpret the results. This is the island’s fifth referendum since 1898 and comes amid a crippling economic crisis.

Markets

  • Markets were mixed this week. The S&P 500 dropped by 0.27% and closed at 2,432. The Dow Jones gained 0.33% for the week and closed at a New All Time High 21,272. Year to date, the S&P is up 9.57% and the Dow is up 8.84%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.20%, respectively.
  • The spot price of WTI Crude Oil lost 3.80% this week, closing at $45.85 per barrel. Year to date, Oil prices have fallen 14.65%.
  • The spot price of Gold ended the week higher, closing at $1,267.45 per ounce. Year to date, Gold prices are up 10.45%.

 Economic Data

  • Initial jobless claims decreased by 10,000 from last week, coming in at 245,000. Most of the decreases in claims were attributed to California and Tennessee, reversing their increases last week. The four week moving average for claims moved up to 242,000.

Fact of the Week

  • The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)

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.

Climate, Illinois downgraded: Wealth Economic Update June 3, 2017

U.S. and World News

  • weather-171576532_360President Trump has announced that the United States will withdraw from the Paris Climate Accord. The landmark 2015 agreement between 195 nations aimed at fighting climate change and promoting clean energy, however Trump has been staunchly against the deal as he feels that it puts America at an economic disadvantage compared to many of the other countries in the agreement. While according to the language of the agreement makes it so the U.S. can’t officially withdraw until 2020, the administration says they will simply not enforce any of the provisions of the deal until that time. Trump added that the U.S. could begin negotiations to re-enter the Paris accord down the road or “a new transaction on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers.”
  • Standard and Poor’s has downgraded the debt rating of the State of Illinois down to BBB- from BBB, one notch above ‘Junk’ status. This was the third downgrade of Illinois’ debt by S&P in the past year. Illinois is by far the lowest rated state and it is the only state that S&P has in the BBB tier and indications are that the rating could fall further in what was described as a ‘negative credit spiral’. Gabriel Patek of S&P noted, “If lawmakers fail to reach agreement on a budget with provisions designed to reduce the state’s structural deficit, it’s likely we will again lower the ratings.”

Markets

  • Markets ended the week on a positive note. The S&P 500 rose by 1.01% and closed at 2,430. The Dow Jones gained 0.69% for the week and closed at 21,144. Year to date, the S&P is up 9.87% and the Dow is up 8.48%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.72% and 2.16%, respectively.
  • The spot price of WTI Crude Oil lost 4.14% this week, closing at $47.74 per barrel. Year to date, Oil prices have fallen 11.13%.
  • The spot price of Gold ended the week higher, closing at $1,279.17 per ounce. Year to date, Gold prices are up 11.47%.

 Economic Data

  • Initial jobless claims increased by 10,000 from last week, coming in at 248,000. Most of the increases in claims were attributed to California and Tennessee. The four week moving average for claims ticked up to 238,000.
  • The Headline PCE index (measure of inflation) rose 0.2% in April, in line with expectations. Over the last year, PCE inflation has risen 1.7%.
    • Core PCE (excludes food and energy, preferred inflation measure of the Federal Reserve) rose by 0.15% in April, slightly better than expectations of 0.1%. Core PCE has risen 1.5% over the last 12 months.
  • The Case Shiller home price index rose by 0.9% in April, in line with expectations. Prices rose in all 20 cities measured with Minneapolis (+1.3%), Detroit (+1.2%), Seattle (+1.1%) and New York (+1.1%) showing the largest monthly increases. Over the last 12 months, home prices as measured by the index have risen 5.9%.

Fact of the Week

  • Apple (AAPL) reported cash and cash equivalents of $256.8B at the end of Q1. That is enough cash to purchase any company held in the S&P 500, outside of the top 10 holdings. Alternatively, Apple could purchase all of the bottom 45 companies held in the S&P 500. (Based on Market Capitalization)

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.

OPEC, Budget, Manchester: Wealth Economic Update May 29, 2017

U.S. and World News

  • oil-518901244The OPEC meeting on Thursday concluded with an agreement to extend oil production cuts for an additional nine months, however crude oil prices fell sharply on the day despite the positive result as expectations were high after OPEC displayed unusual optimism prior to the meeting. Iraq was surprisingly in support of the production cuts as they have been one of the more hesitant OPEC members to favor production cuts in the past. There still remain OPEC members that will not be required to comply with the extension cap such as Libya, Iran, and Nigeria.
  • President Trump has submitted a budget proposal that aims to cut $3.6 trillion in spending over the next ten years which includes cutting Medicaid and other social programs. The budget entails a $4.1 trillion spending allowance in 2018 which includes defense, border security, and infrastructure.
  • The U.K.’s terror threat level was raised to “critical” after an explosion following the Ariana Grande concert in Manchester, England killed 22 people and injured 59. Salman Abedi is the name of the man believed to be responsible for the attack and Prime Minister Theresa May raised the U.K. threat level to its maximum level of “critical” implying that another attack is potentially imminent.

Markets

  • Markets ended the week on a positive note. The S&P 500 rose by 1.47% and closed at 2,416. The Dow Jones gained 1.35% for the week and closed at 21,080. Year to date, the S&P is up 8.78% and the Dow is up 7.75%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.79% and 2.25%, respectively.
  • The spot price of WTI Crude Oil lost 1.74% this week, closing at $49.79 per barrel. Year to date, Oil prices have fallen 7.32%.
  • The spot price of Gold ended the week higher, closing at $1,267.14 per ounce. Year to date, Gold prices are up 10.43%.

 Economic Data

  • Initial jobless claims increased by 1,000 from last week, coming in at 234,000. Most of the increases in claims were attributed to California and Michigan. The four week moving average for claims dropped to 235,000.
  • Sales of new single-family homes fell 11.4% in April reaching a four-month low, however, new home sales in the prior three months were all revised upwards. The decline in April was largely attributed to new single-family home sales in the West.
  • Existing home sales fell 2.3% in April, but still remains at a March cycle-high. Existing sales of single-family units fell by 2.4%, while sales of condos declined by 1.6%. Existing home sales decreased in the South, West, and Northeast, but increased in the Midwest region.
    • The recent loss of momentum in the housing market and existing home sales is believed to be the negative affect from higher mortgage rates.
  • During the May Federal Open Market Committee meeting on Thursday, the Fed concluded that “it would soon be appropriate” for another rate hike. There is an 80% probability of a rate hike in June and another hike is expected in September. The Fed also noted that the weak Q1 GDP figure was likely transitory.

Fact of the Week

  • There was approximately $1.54 trillion in circulation as of April 5, 2017, of which $1.49 trillion was in Federal Reserve notes (Dollars). (Source: Board of Governors of the Federal Reserve System.)

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.