EU tariffs, Iran, Greek fire: Wealth Economic Update July 30, 2018

U.S. and World News

  • soybeans-802349002_370The United States and the European Union have agreed to work towards “zero tariffs, zero non-tariff barriers and zero subsidies for the non-auto industrial goods.” Additionally, the European Union will import more soybeans and liquefied natural gas from the United States. Earlier in June, a 25% tariff on steel and a 10% tariff on aluminum imported from the European Union was put in place by the United States, and soon after, the European Union imposed retaliatory tariffs on the United States. The planned 20% tariff on cars imported from Europe was put on hold this week as the two sides work towards zero tariffs.
  • Tensions with Iran continue to rise as Iran struggles with sanctions imposed by the United States. The United States will sanction any country that purchases Persian crude oil. Iran has threatened to halt all oil shipments through the Strait of Hormuz if the United States continues to pressure its oil exports. The Strait of Hormuz is an area where 30% of all seaborne-traded crude oil is carried and blocking it could send oil prices up near $90 per barrel.
  • In a city just northeast of Athens, Greece, a fire broke out that has killed at least 82 people and is said to be the worst in decades for the country. Public Order Minister Nikos Toskas stated “We have serious indications and significant findings of criminal activity concerning arson.” Satellite image analysis indicated that the fire broke out in multiple places within a short time frame. The fire tore through seaside resorts and vacation residences in an area popular for tourism.


Markets

  • Stocks rose higher this week. The S&P 500 increased by 0.61% and closed at 2,819. The Dow Jones rose 1.57% and closed at 25,451. Year to date, the S&P is up 6.51% and the Dow Jones is up 4.20%.
  • Yields also spiked this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.84% and 2.96%, respectively.
  • The spot price of WTI Crude Oil rose this week amidst higher tensions in the Mideast, gaining 1.07% and closing at $68.99 per barrel. Year to date, Oil prices are up 14.77%.
  • The spot price of Gold decreased 0.51% this week, closing at $1,223.24 per ounce. Year to date, Gold prices are down 6.11%.

Economic Data

  • Initial jobless claims rose by 9,000 to 217,000 this week. The four-week moving average of claims moved down by 3,000 to 218,000. Jobless claims rose by 4,000 in Kentucky, and 3,000 in Michigan.
  • Durable goods orders increased by 1.0% in June versus consensus expectations of a 3.0% increase, reflecting a decline in defense orders.
    • Durable goods ex-transports rose 0.4% in June versus expectations of a 0.5% increase.
  • Wholesale inventories were flat in June versus expectations of a 0.3% increase.
  • Existing home sales fell 0.6% month-over-month in June to a seasonally adjusted rate of 5.38 million units. Expectations were for a 0.2% increase.
  • Sales of new single-family homes fell 5.3% in June to a seasonally adjusted rate of 631k units, below expectations of 668k units. The decline was led by the Midwest region.
  • Real GDP rose by 4.1% in the second quarter, the fastest pace since 2014. Consensus expectations were for 4.2%. The strong quarter was led by stronger-than-expected growth in consumption and business investment.
    • Q1 GDP was revised up by 0.2% to 2.2%
  • The University of Michigan’s index of consumer sentiment increased by 0.8 points to 97.9 in July against expectations of a flat reading.


Fact of the Week

  • In a recently conducted British survey, 42% of respondents admit that they are not sure whether you can put an electric car through a car wash. (Source: Go Ultra Low)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

China tariffs, Gasoline: Wealth Economic Update July 23, 2018

U.S. and World News

  • Trade talks with China have stalled after the United States imposed $34 billion worth of tariffs on the country earlier this month. An additional $16 billion is being targeted after the initial $34 billion was met with reciprocity by China almost immediately. President Trump stated in an interview with CNBC this morning that he is ready to go to $500 billion worth of tariffs on Chinese goods if needed. Chinese stocks are down almost 30% since peaking in January amidst the ongoing trade tensions. The European Union is considering retaliatory tariffs on United States coal, pharmaceuticals, and chemical products if restrictions are imposed on European cars. President Trump stated this week that a trade deal with Mexico is currently being negotiated and that a separate one would be crafted with Canada following that.
  • gasoline-504794324The price of WTI Crude oil fell back below $70/barrel this week after Saudi Arabia has begun supplying at least two Asian countries with additional cargoes. Meanwhile, the Trump administration is attempting to lower gas prices before the November elections and is considering using its Strategic Petroleum Reserve. The state of Texas is on its way to becoming the world’s number 3 oil producer behind Russia and Saudi Arabia as the cost of drilling has declined dramatically. Approximately 5.6 million barrels per day is expected to be produced from the Permian Basin and Eagle Ford oilfields alone by 2019.


Markets

  • Stocks finished the week slightly higher. The S&P 500 increased by 0.40% and closed at 2,802. The Dow Jones rose 0.20% and closed at 25,058. Year to date, the S&P is up 5.87% and the Dow Jones is up 2.59%.
  • Yields rose higher this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.77% and 2.90%, respectively.
  • The spot price of WTI Crude Oil fell this week once again, losing 0.77% and closing at $70.46 per barrel. Year to date, Oil prices are up 17.22%.
  • The spot price of Gold decreased 1.07% this week, closing at $1,230.97 per ounce. Year to date, Gold prices are down 5.51%.


Economic Data

  • Initial jobless claims fell by 8,000 to 207,000 this week. The four-week moving average of claims moved down by 2,000 to 221,000. Jobless claims fell by 2,000 in Florida, New Jersey, Oregon, and Tennessee and fell by 4,000 in New York.
  • The Philadelphia Fed manufacturing index rose by 5.8 points in July to 25.7 exceeding consensus estimates of 21.5.
  • Housing starts fell by 12.3% in June to 1,173k versus expectations of a 2.2% decline. The June weakness was led by the mult-family category declining by 19.8% during the month.
  • Building permits fell by 2.2% to an annualized rate of 1,273k in June versus expectations of a 2.2% increase.
  • Industrial production rose by 0.6% in June versus consensus expectations of a 0.5 increase. The increase was led by motor vehicle output.
  • Retail Sales increased by 0.5% month-over-month in June meeting expectations. The increase was led by gas stations and auto dealerships.
    • Core Retail Sales ex-autos came in a 0.2% in June versus expectations of a 0.4% increase. Clothing and departing store figures came in lighter than expected.


Fact of the Week

  • On 7/01/18, the price of a barrel of oil was $74.15 while the average price of a gallon of gasoline was $2.85. On 7/01/17 (1 year ago), the price of a barrel of oil was $46.04 while the average price of a gallon of gasoline was $2.24 (source: NYMEX, AAA).

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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, China tariffs: Wealth Economic Update July 13, 2018

U.S. and World News

  • brexit-583815736_370Brexit was at the center of attention this week as Secretary David Davis and junior Brexit ministers Steve Baker and Suella Braverman have stepped down. The resignations are a result of opposition to Theresa May’s new “soft Brexit” strategy and pose a threat to Theresa May’s ability to gain the backing of parliament as nine months remain before Britain leaves the European Union. The way in which Great Britain will separate from the European Union is to be agreed upon given two strong sided beliefs; one side believes in more freedom from the European Union while the other side wishes to remain closer to the European Union to minimize the risk of damage to the economy. Jeremy Hunt has been appointed as U.K. foreign secretary, a supporter of the “soft Brexit” strategy. President Trump expressed concern that Theresa May’s Brexit strategy may not lead to a free trade deal with the United States.
  • Earlier this week, the United States announced that it would put in place an additional 10% tariff on $200 billion of Chinese goods. China called the move “completely unacceptable” and plans to retaliate. Meanwhile, China’s monthly trade surplus with the United States rose to a record $28.97 billion, underlying the existing problems on trade with China.

Markets

  • Stocks continued their upward path this week. The S&P 500 increased by 1.55% and closed at 2,801. The Dow Jones rose 2.31% and closed at 25,019. Year to date, the S&P is up 5.82% and the Dow Jones is up 2.39%.
  • Yields were unchanged for the week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.72% and 2.82%, respectively.
  • The spot price of WTI Crude Oil fell this week, losing 4.21% and closing at $70.69 per barrel. Year to date, Oil prices are up 17.60%.
  • The spot price of Gold decreased 1.11% this week, closing at $1,241.50 per ounce. Year to date, Gold prices are down 4.71%.

Economic Data

  • Initial jobless claims fell by 18,000 to 214,000 this week. The four-week moving average of claims moved down by 2,000 to 223,000. Jobless claims fell by 4,000 in Kentucky and rose by 2,000 in Oregon.
  • The consumer price index (CPI) rose 0.13% month-over-month in June versus expectations of a 0.2% increase. The lower than expected figure reflects lower energy prices. The year-over-year rate of core inflation rose 0.1% to 2.3%.
  • Import prices fell 0.4% in June month-over-month missing expectations of a 0.1% increase. The decline reflected a drop in food and beverage prices.
  • The University of Michigan’s index of consumer sentiment fell by 1.1 points to 97.1 in the July preliminary report versus expectations of 98.0.
  • The producer price index rose 0.3% in May versus expectations of a 0.2% increase. The rise reflects higher energy prices and higher retailer margins.

Fact of the Week

  • The cost of renting a 26-foot moving truck for a 1-way trip from San Jose, CA to Las Vegas, NV is $1,990 for a July 2018 trip. The cost associated with a trip from Las Vegas to San Jose (the reverse trip) over the same time period is $174. The price disparity is due to a shortage of moving trucks in California caused by an exodus of California residents to other states. (Source: U-Haul)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

 

China tariffs, OPEC: Wealth Economic Update July 6, 2018

U.S. and World News

  • shipping-868192010_370Just after midnight Washington time, a 25% tariff on $34 billion of Chinese goods went into effect as scheduled. Also expected, China hit back with tariffs of the same scale on goods such as soybeans and automobiles. Neither side is showing signs of backing down as the Trump administration is already discussing $16 billion in additional tariffs on Chinese goods. During a rally in Montana on Thursday, President Trump threatened that tariffs on Chinese goods could reach $500 billion, which is almost equal to what the United States imports from China in total. Markets did not react to the tariffs taking affect as investors were aware of the event, however, risk arises from higher prices passed on to companies and consumers.
  • On Saturday, President Trump made an agreement with Saudi Arabia that gives the kingdom a 2 million barrel per day spare capacity output to use if and when necessary, to make up for the lost supply from Iran and Venezuela. OPEC members, particularly Iran, have responded negatively to President Trump’s tweets directed at OPEC. The United States is attempting to stop all allies from importing oil from Iran, while President Trump is directing tweets at OPEC to influence them to lower oil prices. Iranian Revolutionary Guards commander Ismail Kowsari said that Tehran will block oil shipments through the Strait of Hormuz in the Gulf if the U.S. bans Iranian oil sales.

Markets

  • Stocks rebounded this week. The S&P 500 increased by 1.56% and closed at 2,760. The Dow Jones rose 0.82% and closed at 24,456. Year to date, the S&P is up 4.23% and the Dow Jones is up 0.10%.
  • Stocks rebounded this week. The S&P 500 increased by 1.56% and closed at 2,760. The Dow Jones rose 0.82% and closed at 24,456. Year to date, the S&P is up 4.23% and the Dow Jones is up 0.10%.
  • Yields fell slightly this week and the yield curve continued to flatten. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.72% and 2.82%, respectively.
  • The spot price of WTI Crude Oil was relatively calmer, losing 0.39% this week and closing at $73.86 per barrel. Year to date, Oil prices are up 22.87%.
  • The spot price of Gold increased 0.20% this week, closing at $1,255.08 per ounce. Year to date, Gold prices are down 3.66%.

Economic Data

  • Initial jobless claims rose by 3,000 to 231,000 this week. The four-week moving average of claims moved up by 3,000 to 225,000. Jobless claims fell by 6,000 in California and rose by 2,000 in Ohio and Massachusetts.
  • Private payrolls increased by 177,000 in June versus expectations of a 190,000 increase. The gains were mostly balanced across sectors.
  • The ISM manufacturing index rose by 1.5 points to 60.2 in June against expectations of 58.5. The increase was led by supplier deliveries.
  • The ISM non-manufacturing index rose by 0.5 points to 59.1 against expectations of 58.3. The report was mostly mixed.
  • Nonfarm payrolls rose by 213,000 in June versus consensus expectations of 195,000, and previous months were revised up by a net 37,000. The positive payrolls figure was led by jobs in the manufacturing sector.
    • The unemployment rate came in at 4.0% versus expectations of 3.8%, this was led higher by a higher labor force participation rate.
    • Average hourly earnings rose by 0.2% in June and the year-over-year rate remained at 2.7%. The consensus estimate was for 0.3% in June.
  • The trade deficit declined to -$43.1 billion in May from -$46.1 billion in April. The decline in the trade balance came from non-petroleum categories.

Fact of the Week

  • The S&P 500 has closed at its calendar year high in the second half of the year (i.e., during the 6 months of July-December) 74% of the time since 1950. In 15 of the last 25 years, the index’s calendar year high has occurred during the month of December. The S&P 500 consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

 

Why Borrowing From Yourself Can Be a Smart Move

Terri Hanson, Vice President—Residential Lending  

With the recent appreciation in home values in our area, it’s likely your home equity has risen to a point where you’re living inside a literal nest egg. Accessing that equity to finance some of the other expenses in your life could be a smart financial move, given the current level of interest rates.

Be at Home With Your Loan: Borrowing Options

One option homeowners have for accessing the savings they’ve accumulated in their home is to refinance with a cash-out mortgage. This involves replacing your current mortgage with one that has a higher outstanding balance. It’s typically more beneficial when interest rates are below the rate of your existing mortgage.

When interest rates are rising, as they are expected to do, using a home equity loan is often more cost-effective than refinancing. Home equity loans are secured by residential real estate, which is typically your largest asset and tends to appreciate over time. So, they often have more attractive terms than unsecured personal loans or those secured by another asset, such as a car.

Home equity loans come in two “flavors”: fixed-rate home equity loans and home equity lines of credit (HELOCs). Here’s what you need to know about each type.

Fixed-rate home equity loans are like having second mortgages. When you borrow, you receive a lump sum and begin repaying the loan immediately, with fixed monthly payments of principal and interest. The loans have a set maturity and are closed after you repay them.

As mentioned above, when rates are rising, home equity loans are helpful in minimizing borrowing costs. For instance, customers who don’t qualify for the best terms at auto dealerships or who buy used cars on a person-to-person basis may find using a home equity loan to buy a car could lower their cost of borrowing.

HELOCs are also secured by your home equity, but they offer greater flexibility. This is why many homeowners prefer them to fixed-rate home equity loans. They work like credit cards in that you only receive a bill when you have an outstanding balance. You can also borrow, repay and borrow again. When you borrow against a HELOC, only the interest on your current balance is due each month for a number of years before principal payments are expected. This enables you to decide how much you want to repay on the principal amount and when to do it.

Prior to retiring, many older homeowners will open a HELOC so they have access to emergency funds for unexpected repairs and medical expenses. There are no restrictions for how the money may be used. However, the interest rate charged on outstanding balances will fluctuate. At Old Second, HELOCs adjust with the U.S. Prime Rate (plus a margin). As interest rates go up or down, so will the interest due each month.

Is It the Right Thing to Do?

Building home equity creates options as you move through your financial life. In addition to the wealth you have in individual savings and investment and retirement accounts, it makes sense to manage the money you accumulate in your home as well. Whether it helps you afford college expenses, pay for a wedding, prepare your current home for sale or is a source of funds for your new home’s down payment, borrowing against your home equity can be a smart financial move. However, before taking out any loan, make sure you know your options and the terms and costs associated with each one. You can check our current rates and incentives here.

The Next Move Is Yours

To access a collection of home equity calculators that will help you understand how borrowing against your home would affect your budget, click here or contact us about your home equity loan options at 630-466-4843 (thanson@oldsecond.com). We can’t wait to talk to you about what we can do for you today.

If you are ready to start an online application, click here.

 

 

 

 

 

 

 

 

Source: TransUnion HELOC Study

China tariffs, Iran: Wealth Economic Update June 29, 2018

U.S. and World News

  • china-468808340_370.jpgChinese stocks made their way into bear market territory this week as trade tensions continue to rise. According to reports, another trade initiative is currently being crafted that would restrict companies with at least 25% Chinese ownership from buying companies involved in industrially significant technology. President Trump tweeted earlier this week that “The U.S. is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the USA.”
  • As the U.S. continues to pressure Iran after pulling out of the Iran Nuclear Deal, the United States has asked its allies to stop importing oil from Iran, or face U.S. sanctions. This new development has sent the price of WTI crude oil over $70 per barrel as OPEC’s third largest producer is put under pressure. Saudi Arabia plans to pump more oil in July than ever before at 11 million barrels per day to respond to the supply gap and rising oil prices.

Markets

  • Stock markets fell again this week. The S&P 500 dropped 1.31% this week and closed at 2,718. The Dow Jones fell 1.26% and closed at 24,271. Year to date, the S&P is up 2.64% and the Dow Jones is down 0.71%.
  • Yields also declined this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.73% and 2.86%, respectively.
  • The spot price of WTI Crude Oil surged 8.36% this week and closed at $74.31 per barrel.. Year to date, Oil prices are up 23.62%.
  • The spot price of Gold decreased 1.39% this week, closing at $1,252.94 per ounce. Year to date, Gold prices are down 3.83%.

Economic Data

  • Initial jobless claims rose by 9,000 to 227,000 this week. The four-week moving average of claims edged up by 1,000 to 222,000. Jobless claims rose by 3,000 in California and Kentucky, and rose by 2,000 in Maryland.
  • The third estimate of first quarter GDP was revised down to 2.0% from 2.2% and the year-over-year rate was unchanged at 2.8%. The downward revision was led by a decline in the consumer spending component, net trade, and inventories.
  • Sales of new single-family homes rose by 6.7% month-over-month in May to a seasonally adjusted rate of 689,000 units, exceeding consensus expectations of 667,000. The rise in new single-family home sales were led by sales in the South.
  • The Conference Board index of consumer confidence fell to 126.4 from 128.8.
  • New orders for durable goods fell by 0.6% in May versus consensus expectations of a 1.0% decline.
  • Wholesale inventories rose by 0.5% in May versus expectations of a 0.2% increase.
  • Pending home sales fell 0.5% in May versus expectations of a 0.5% increase.
  • Personal income rose 0.4% in May, in line with expectations.
  • Personal spending rose 0.2% in May, versus expectations of a 0.4% increase.

Fact of the Week

  • An analysis by the ECB and Dutch central bank found that trading volume during the FIFA World Cup drops roughly 33% during the games from normal levels. Median trading volume was found to be 55% lower on a given exchange when the exchange’s home county was playing. (Source: Seeking Alpha)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

 

US-North Korea relations, China tariffs, California split: Wealth Economic Update June 15, 2018

U.S. and World News

  • US-NK-830925980_380On Tuesday night, the United States and North Korea signed a historic document that included establishment of new US-DPRK relations, building a lasting and stable peace regime, reaffirming commitments to work toward complete denuclearization and recovering POW/MIA remains. The United States will keep in place its tough sanctions on North Korea and keep U.S military forces on the Korean peninsula until there is a complete, verifiable, and irreversible dismantlement of the nuclear weapons program. Secretary of State Mike Pompeo stated that the United States would resume joint military exercises with South Korea if the talks stall.
  • The United States announced today that it will move forward with $50 billion in tariffs on a range of Chinese products, $34 billion of that amount going into effect on July 6th. Shortly afterwards, China responded stating, “We will immediately introduce taxation measures of the same scale and with the same intensity”. The imposed tariffs do not include commonly purchased goods by Americans such as cell phones and TV’s. This was announced following months of trade negotiations between the two countries.
  • The plan to split California into three separate states, also known as the Cal3 initiative, has gained enough votes to make it onto the November 6th ballot. The new states would be named North California, California, and South California. Political experts say that Congress is unlikely to approve this plan.

Markets

  • After rising for much of the beginning of June, the markets fell slightly this week. The S&P 500 gained 0.06% this week and closed at 2,779.42. The Dow Jones fell 0.84% and closed at 25,090.48. Year to date, the S&P is up 4.89% and the Dow Jones is up 2.61%.
  • Yields were mixed this week with shorter term yields rising more than longer term yields (yield curve flattening) after the FOMC raised the fed funds rate. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.80% and 2.92%, respectively.
  • The spot price of WTI Crude Oil fell 1.81% this week and closed at $64.55 per barrel. Year to date, Oil prices are up 7.39%.
  • The spot price of Gold fell 1.39% this week, closing at $1,280.13 per ounce. Year to date, Gold prices are down 1.74%.

Economic Data

  • Initial jobless claims fell 4,000 this week to 218,000. The largest declines were in California and Florida. The four-week moving average moved lower by 1,000 to 224,000. The pace of layoffs still remains very low.
  • Retail sales rose by 0.8% in May versus consensus expectations of a 0.4% increase. The increase reflects an increase in gas station sales and an increase in auto sales. The largest increases were from miscellaneous retailers and building materials and supply dealers.
  • Import prices rose 0.6% in May versus consensus expectations of a 0.5% increase. The increase reflects an increase in fuel prices.
  • The consumer price index (CPI) increased by 0.21% in May versus expectations of a 0.2% increase. The increase largely reflected a rise in energy prices. The year-over-year rate rose 0.1% to 2.2%
    • Core CPI (ex-food and energy) rose by 0.17% in May versus expectations of a 0.2% increase.
  • The producer price index (PPI) rose by 0.5% in May versus expectations of a 0.3% increase. The increase reflects higher energy prices and higher retailer margins.
    • PPI (ex-food and energy) rose by 0.3% in May versus consensus expectations of a 0.2% increase.
  • Industrial Production fell 0.1% in May versus expectations of a 0.2% increase. The decline was led by a sharp drop in motor vehicle output.
  • The Federal Open Market Committee raised the target policy rate range to 1.75-2% on Wednesday. The meeting had a hawkish tone versus what expectations were and rate hike projections were increased to 4 this year, 3 next year, and 1 in 2020. The previous estimate was 3 this year, 3 next year, and 2 in 2020.

Fact of the Week

  • 22% of Americans at least age 85 need help with “personal care” daily. The number of Americans at least age 85 is projected to more than double from 6.4 million in 2016 to 14.6 million in 2040 (source: Administration for Community Living).

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

Are You Ready for Prime Time?

Denise Rogers, Assistant Vice President—Senior Director

Being a community bank, we’re able to offer services that are just more personal. Offering our customers membership into our Prime Time Club is one of them. The membership not only provides access to a variety of free or discounted services, it can be your ticket to some truly memorable experiences.

Oh, the Places You’ll Go

We try to keep a balance in our group travel experiences. In addition to the trips that involve relying on coach services and flying, we accommodate members who are only interested in day trips and those who want to drive places on their own.

The Prime Time Club brings you together with others in the community who share similar financial, social and travel interests. We’re able to buy tickets and arrange transportation at group discount rates to and from a variety of local venues: Broadway show performances at the Paramount Theatre here in Aurora to baseball games in Chicago, Wisconsin and St. Louis, Mo.

Among our more popular events are the FREE Rules of Road refresher courses, which help members prepare for their written driver’s test, and our two-day, AARP Smart Driver program. This longer course leads to a certificate you can present to your insurance company in exchange for a discount on your premiums.

Where many of our members see the greatest value, however, is in the longer trips we plan. For instance, in 2019, we will be heading East for a weeklong “Chesapeake Bay Getaway” (April 24–May 1, 2019). The Prime Time Club will also be traveling to Iceland next summer (July 27–August 2, 2019) and in the fall experience a “Pacific Coastal Cruise” (October 12–21, 2019). As with the day trips, we make all the arrangements, including booking the transportation, accommodations and day tours. For members, it’s a worry-free way of seeing the best of what the world has to offer.

Fellow Travelers

For me, one rewarding aspect of being the director of the program goes beyond interacting with the travelers; also watching everyone enjoying themselves is fulfilling. It’s seeing those who’ve joined us for the first time without knowing anyone return home having made new acquaintances and connections within the community. Traveling beyond their daily routines literally makes the world a little smaller.

Whether you would benefit from the discounted banking services, are transitioning toward a life of increased leisure time or find yourself at a time in your life where you would like to meet new people, consider joining the Prime Time Club. The Club has been offered to customers for 36+ years. Currently, we are 6,200 members strong, and there is always room for one more.

Membership Details

  • Membership is open to any Old Second customer who:
    • Is 55 years or better.
    • Has a checking or Money Manager account
    • Has combined balances of $10,000 in Old Second Bank or trust accounts.
  • Prime Time checking with interest.
  • Debit card with rewards.
  • Free services include:
    • Money orders and cashier’s checks.
    • Signature guarantees and notary services.
    • A financial counseling session.
    • ATM withdrawals at all O2 ATMs and MoneyPass® ATMs (up to three free withdrawals at non-O2 and non-MoneyPass® ATMs).
    • No fee on gift cards.
    • Newsletter regarding upcoming events.
    • Annual member luncheon.
  • Discounts include:
    • Safe deposit box rental.
    • Extended tours and one-day trips.

To learn more about how Prime Time Club membership would benefit you, visit our website or give me a call at 630-365-5193. For an idea of what we’ve been up to and to review upcoming performances, seminars and road trips, check out our calendar.

China tariffs, Social security, Dimon & Buffett: Wealth Economic Update June 8, 2018

U.S. and World News

  • SHANGHAI-623208766_360The White House plans to move ahead with its goal of reducing the trade deficit with China by $200 billion by introducing trade tariffs by June 15th. In May, China’s trade surplus with the United States rose by 11.7% in the midst of tense trade negotiations, which is expected to increase Washington’s efforts with regard to trade with China. Trade tensions eased on Thursday after the U.S. decided to end the ban on Chinese company ZTE Corp’s ability to access U.S. companies.
  • Social Security will have to reach into its $3 trillion trust fund to cover benefits for the first time in 36 years. Income to fund these benefits comes from tax revenue and interest earned off of the trust fund. The program was not expected to tap into its trust fund for another three years, but as a result of economic projections, it was forced to do so sooner. The Trustees Report projects the trust fund balance will run out in 2034.
  • JPMorgan CEO Jamie Dimon and renowned billionaire investor Warren Buffett are forming a joint effort to convince public company CEO’s to stop providing quarterly earnings-per-share guidance. They stated that “It leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability”. Another point made was that as a result, corporations “frequently hold back on technology spending, hiring, and research and development” in order to meet guided earnings estimates.

Markets

  • The markets surged higher this week. The S&P 500 gained 1.66% this week and closed at 2,779.03. The Dow Jones rose 2.79% and closed at 25,316.53. Year to date, the S&P is up 4.82% and the Dow Jones is up 3.47%.
  • Yields rose slightly higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.78% and 2.94%, respectively.
  • The spot price of WTI Crude Oil fell 0.24% this week and closed at $65.65 per barrel. Year to date, Oil prices are up 9.22%.
  • The spot price of Gold increased 0.43% this week, closing at $1,298.97 per ounce. Year to date, Gold prices are down -0.29%.

Economic Data

  • Initial jobless claims fell 1,000 this week to 222,000. The largest decline of 6,000 in Michigan was offset by declines of a 6,000 increase in California and a 2,000 rise in Tennessee. The four-week moving average moved higher by 3,000 to 226,000. The pace of layoffs still remains very low.
  • Factory orders fell 0.8% in April versus expectations of a 0.5% decline.
  • The ISM non-manufacturing index rose 1.8 points to 58.6 versus expectations of 57.6. The increase was led by business activity, new orders, and employment.
  • The trade deficit fell to -$46.2 billion versus expectations of -$49 billion. Exports were slightly weaker than expected.
  • Wholesale Inventories rose 0.1% in April versus expectations of no change.

Fact of the Week

  • Next year an estimated 45% of 176.1 million tax returns (about 80 million) projected to be filed will legally pay zero federal income tax. (source: Tax Policy Center)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

Italy, China tariffs, North Korea: Wealth Economic Update June 4, 2018

U.S. and World News

  • italy-469253936_360Italian President Sergio Mattarella blocked the formation of an anti-establishment government earlier this week, sparking fears of a snap election and roiling European markets. The left-wing 5-Star Movement and the right-wing League tried to appoint economist and anti-European Union politician Paolo Savona as finance minister. The two eventually formed an agreement to form a new coalition government, appointing economics professor Giovanni Tria as finance minister. Italy’s departure from the European Union remains a possibility in the future as the 5-Star Movement and the League both want to leave the European Union.
  • Washington has moved forward with its proposal of 25% tariffs on $50 billion of Chinese goods and restrictions on Chinese investment in U.S. high-tech industries. The United States has also announced import tariffs on steel and aluminum from the European Union, Mexico, and Canada, which will be met with retaliatory tariffs on various U.S. goods including jeans, bourbon, motorcycles, whiskey, orange juice, metals, and other food products. Canada is challenging the U.S. tariffs under NAFTA Chapter 20 and the dispute settlement process through the World Trade Organization, which threatens the success of NAFTA negotiations.
  • President Trump stated that a summit with North Korean leader Kim Jon Un will take place, as previously scheduled, on June 12th in Singapore after a high level official from North Korea visited the White House today for the first time since 2000. The goal of the summit will be to rid North Korea of its nuclear arms, and what will be provided in exchange is up for negotiation. President Trump stated that he expects a number of summits to take place before all of the issues are settled.

Markets

  • The markets ended mixed this week. The S&P 500 gained 0.54% this week and closed at 2,734.62. The Dow Jones fell 0.38% and closed at 24,635.21. Year to date, the S&P is up 3.12% and the Dow Jones is up 0.69%.
  • Yields also experienced above average volatility this week and ended the week slightly lower. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.75% and 2.90%, respectively.
  • The spot price of WTI Crude Oil fell another 3.26% this week and closed at $65.67 per barrel. Year to date, Oil prices are up 9.25%.
  • The spot price of Gold fell by 0.66% this week, closing at $1,293.77 per ounce. Year to date, Gold prices are down -0.70%.

Economic Data

  • Initial jobless claims fell 13,000 this week to 2221,000. The largest declines were in California and Kentucky. The four-week moving average moved higher by 2,000 to 222,000. The pace of layoffs still remains very low.
  • Personal income rose 0.3% in April, meeting expectations• Consumer spending rose 0.6% in April, exceeding expectations of a 0.3% increase.
  • Consumer confidence rose to 128.0 in May, matching expectations.
  • Pending home sales fell 1.3% in April versus expectations of a 0.4% increase. The decline was led by sales in the Midwest region.
  • Nonfarm payroll growth rose by 223,000 in May versus expectations of a 190,000 increase. Job gains were led by the retail, construction, and leisure and hospitality sectors.
    • The unemployment rate ticked lower to 3.8% from 3.9%.
    • The labor force participation rate fell to 62.7%
    • Average hourly earnings increased 0.30% in May versus expectations of a 0.20% increase and the year-over-year rate increased to 2.7%.

Fact of the Week

  • 58 publicly-held US companies produced at least $1 billion of sales per week in 2017, up from 39 companies that accomplished that level of weekly sales in 2007. Just 1 domestic company generated more than $1 billion of sales per day during 2017 (source: Fortune).

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.