Fed Rate, Healthcare: Wealth Economic Update July 31, 2017

U.S. and World News

  • traffic_360The Federal Reserve left interest rates unchanged at their policy meeting this week as was expected. The post-meeting statement noted that the Committee expects to begin reducing the size of its balance sheet “relatively soon” as opposed to “this year” as had been in the June statement. This implies that there will be some sort of an announcement regarding letting maturing bonds run-off the balance sheet at the Fed’s September meeting. The market is currently pricing in a 40% chance there is another rate hike before the end of the year.
  • Following failed Senate votes to repeal and replace Obamacare, Republican senators shifted their focus to a “skinny” healthcare repeal that introduces smaller changes to the Affordable Care Act. The changes included eliminating individual and employer insurance mandates and removing the medical device tax. Despite the more limited scope of the “skinny repeal”, the bill was still struck down by a vote of 51-49 as three GOP senators voted against it. In a floor speech following the defeat, Senate Majority Leader Mitch McConnell said, “it is time to move on.”

Markets

  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Markets were mixed this week. The S&P 500 was flat and closed at 2,472. The Dow Jones rose 1.17% for the week and closed at a new All-Time High of 21,830. Year to date, the S&P is up 11.67% and the Dow is up 11.88%.
  • Interest rates ended the week a bit higher. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.83% and 2.29%, respectively.
  • The spot price of WTI Crude Oil increased by 8.63% this week, closing at $49.72 per barrel. Year to date, Oil prices have fallen 7.45%.
  • The spot price of Gold ended the week higher by 1.14%, closing at $1,269.34 per ounce. Year to date, Gold prices are up 10.62%.

 Economic Data

  • Initial jobless claims rose by 10,000 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 held steady at 244,000.
  • Initial jobless claims rose by 10,000 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 held steady at 244,000.
  • The Case-Shiller home price index rose by 0.1% in May, lower than expectations of a 0.3% increase. Prices rose in 14 of the 20 cities surveyed with Seattle (+0.9%), Las Vegas (+0.6%) and Portland (+0.5%) showing the largest monthly increases and New York City (-0.6%), Chicago (-0.4%) and Boston (-0.4%) seeing the largest decreases. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The first estimate of 2nd quarter Real GDP showed 2.6% quarter over quarter growth, slightly below expectations of 2.7%. This first print represents an acceleration of growth over the 1st quarter’s figure of 1.4%.

Fact of the Week

  • Over the last 5 years ending June 30th, the S&P 500 has had an annualized total return of 14.6% per year. If an investor were to have missed out on the 5 best performance days in that span, the average annual return was cut by 3% to 11.6% per year. (Source: BTN Research)

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, 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.

Understanding the Benefits of a Special Needs Trust

Michele Morgan, Vice President/Trust OfficerMorganM_BUS003xqc

When you or a family member has a disability, protecting financial assets becomes a priority, especially when qualification for Medicaid and Supplemental Security Income (SSI) is involved. Fortunately, two types of special needs trusts (SNT) can help accomplish this.

Both trusts offer significant financial protection and can be used to pay for quality-of-life expenses, like wages for personal attendants and travel costs as well as for home furnishings, cars and even the therapeutic treatments not covered by Medicaid. The trusts differ in the degree to which these supplemental expenses are covered. This makes it essential to choose the right one for the job.

  • First-Party-Funded SNTs are funded using the disabled person’s own financial assets.
  • Third-Party-Funded SNTs are created using someone else’s money, not the disabled person’s assets.

While both types of trusts are exempt for Medicaid-qualification purposes, different rules apply to the way distributions can be made. This means the situations for their best use also differ.

First-Party-Funded SNT Rules

This type of trust is used when the disabled person’s own assets are sufficient to pay for the expenses Medicaid doesn’t cover. The disabled person, or someone acting on their behalf, creates the trust. That person is a parent, grandparent, legal guardian or the court. Funds typically come from a personal injury settlement, or inheritance that did not take a disability into account.

These trusts are irrevocable—once established, no changes are permitted. They must also include language that declares Medicaid has a lien on the trust’s assets. Any balances due to Medicaid for services received during the disabled person’s lifetime will need to be repaid to Medicaid before any other distributions may be made per the wishes of the disabled person’s estate.

Because Medicaid has this claim against the trust, all distributions during the trust owner’s lifetime are subject to review by Medicaid. The rules regarding those distributions are restrictive. For instance, a disabled person who wants to give a birthday gift to a sibling is prevented from doing so under this type of trust. The penalty for an errant disbursement can be severe. The disabled person is disqualified from Medicaid, becomes a private payer and needs to spend down the trust. Once that person’s assets reach $2,000 they may reapply for Medicaid.

Third-Party-Funded SNT Rules

This SNT is also exempt for Medicaid purposes because the money is not the disabled person’s and there is not a Medicaid lien. However, with no payback provision, the allowed distributions are less restrictive and determined by the grantor of the trust. Third-party trusts are typically funded with inheritances and bequests from family members who planned ahead and created the trust.

However, there are still rules. Chief among these is that the disabled person may not have any control whatsoever over the funds.

Hiring a Professional

Because the administration and investment of these trusts requires deep knowledge of the disbursement rules, typically either a corporate trustee or a combination of both a family member and a corporate trustee is chosen to oversee them. While naming only a family member is also possible, it puts undue pressure on that person. One false disbursement could strip a loved one of Medicaid coverage.

When hiring a corporate trustee, it’s important to find one who is willing to spend the time needed to understand and accommodate not just the rules but the needs and preferences of the disabled person.

If you, a friend or a family member might benefit from establishing an SNT—or from having a corporate trustee assume more responsibility for administering an existing SNT—we would be happy to talk to you about the options.

Call me at 630-844-3222. I am happy to help in any way I can.

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.

Land Trusts: An Estate Planning Tool

Carolyn Swafford, CTFA, Vice President/Trust OfficerSwaffordC_BUS014qc

Land trusts are a versatile legal tool for holding title to real estate. Individuals, investors, businesses and families all use land trusts to accomplish specific goals regarding the acquisition, ownership and transfer of property.

Land of Lincoln…and Trusts

Illinois is among only a handful of states that allows the creation of land trusts. Although the legal precedent originated in England, land trusts also began popping up in the United States. They first appeared in Illinois in the late 19th century and were used by real estate developers to acquire multiple parcels of land needed to build large-scale developments.

Using Land Trusts

Privacy is a popular reason to establish a land trust. Property can be deeded into a land trust either at the time of purchase or anytime afterwards. The trust becomes the owner of the property. The individual then becomes the beneficiary with all the rights, avails and proceeds to the property. Since the trust is the owner of the property, the beneficiary is able to keep their name off all public records.

As a legal tool, therefore, a land trust can be used to accomplish very specific goals. Here are three of the most common uses.

Protecting Business Interests

Land trusts are a great way to add a layer of protection between the beneficiary and the property that is contained in the trust. This protection ensures judgment claims against a beneficiary do not automatically become a lien on the real estate or otherwise cloud the title.

Bypassing Probate

If an individual or individuals are named to inherit the beneficiary’s interest after their death, the land trust is not subject to the probate process. This allows the remainder beneficiaries to manage or sell the real estate much faster.

Transferring Interests

When there are multiple beneficiaries in a land trust, there may be a time when one beneficiary buys another out. Individuals may also want to gift their share to another person. Transferring interests within a land trust is accomplished easily and quickly without the need to record public documents.

Flexible and Easy to Establish

Since a land trust is a legal entity, you will want your attorney to prepare the Land Trust Agreement and Deed in Trust. In cases where Old Second is named as the trustee, the necessary forms are downloadable from our website.

For more information on land trusts, click here or contact me directly at 630-906-5470 to discuss how this legal tool might benefit you.

 

 

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.

Career Tips for the Class of 2017

Chris Lasse, First Vice President/Human Resource DirectorLasseC_IN097qc

With graduation comes a deluge of well-intended career advice from family, friends…and total strangers. Some of it will transcend the ages, while some may reflect a different time and employment environment. Other advice may simply not be right for you and what you want to accomplish.

As you sort through it all, here are six tips to help you make the most of your first career move and the opportunities that follow. They’re based on what we see as we pour through resumes, interview candidates and make hiring decisions.

  1. Choose passion over money. When you are excited about what you do, you tend to do it well. That passion will eventually lead to a higher paycheck over the long haul. Taking a job that holds little interest but offers a higher salary may seem like the responsible thing to do. However, it can lead to being stuck in a career path you can’t afford to exit. It can also leave you without the skills and experience needed to transition into the profession you aspired to in the first place.
  2. Know the tradeoffs of working for a large or small company. Large companies can be well-oiled recruiting and training machines. Often, however, in exchange for a company that looks good on your resume, you give up some control over the skills you acquire, what you get to do with them, the breadth of experience you gain and the positions open to you. Working for a smaller company can expose you to a wider variety of job duties. Many times, this means gaining exposure to senior-level executives and the work that they perform—things that can be off limits at bigger companies.
  3. Be realistic about the market value of your degree. As an English major, for example, your starting salary might be less than half of that of an engineering graduate. Realize your value as an entry-level candidate—don’t shortchange yourself, but be pragmatic. Factor in the long-term value of building skills and gaining experience. And, if you need a tie-breaker, always take the job with the better boss.
  4. Look beyond the title. Good entry-level jobs help train you for long-term success. For instance, we often have openings for Credit Analysts. These positions are vital to the lending process. More importantly, they can lead to any number of lucrative career paths since they offer employees the chance to build very marketable experience and skills that are currently in short supply. Consider these types of jobs, they are stepping stones to greater responsibility.
  5. Find a way to stand out. The numerous job sites—from Indeed to LinkedIn—make it easy to find and apply for positions. With one click, you and several hundred other new graduates with your same degree and level of experience can go after the same job. Find ways to be different.

When you are one in 400, make sure your resume stands out.

  • Find a way to become an employee referral. This will improve your odds of getting hired more than anything else you do.
  • Check LinkedIn for any possible connection you can make to the recruiter or someone at the hiring company.
  • Edit your resume for each job to include phrases from the posting. If an automatic parsing tool is used, you will be a perfect match. If not, you’ll catch the recruiter’s eye.
  • Craft a unique cover letter for each position to personalize your application.
  • Have a zero-tolerance policy for grammatical and spelling errors.
  1. Be strategic and have a long-term plan. This means thinking about where you want to be in 3–5 years or more. Mapping out your path will help you identify the type of experience you need and the skills you want to acquire. It not only makes you a more committed candidate, but it also keeps you focused and motivated.

Remember, the path you are on is long and likely to take unexpected turns. Our best advice is to use each stop to learn, expand your skills and gain the experience that leads to the next opportunity. We know you’ll do great.

If you are interested in making Old Second Bank your first stop after graduating, click here.

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

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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.