Russia-Election, Turkey: Wealth Economic Update Dec. 30, 2016

U.S. and World News

  • In response to its alleged hacking and interference in the 2016 presidential election, the Obama administration announced new sanctions against Russia this week, including expelling 35 Russian diplomats and closing two Russian compounds in the U.S. The White House stated, “Russia’s cyber activities were intended to influence the election, erode faith in U.S. democratic institutions, sow doubt about the integrity of our electoral process, and undermine confidence in the institutions of the U.S. government.” Russian President Vladimir Putin has announced that Moscow will not retaliate in-kind and will refrain from expelling U.S. diplomats from the country, a decision that was praised by President-Elect Donald Trump in a Friday afternoon tweet.
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  • Expanding on the truce that was established in Aleppo earlier this month, Russia and Turkey have brokered a nationwide ceasefire in Syria. The agreement would come into force in all regions where fighting between pro-government forces and opposition groups is taking place. The accord is already off to a shaky start as just after the ceasefire was set to take effect, it was reported that clashes between insurgents and government forces took place in several locations.

Markets

  • This week the S&P 500 fell by 1.07% and closed at 2,239. The Dow Jones Industrial Average decreased by 0.46% and closed the year at 19,763 and was unable to reach the 20,000 milestone in 2016. For the year, the S&P rose 11.77% and the Dow climbed 16.16%.
  • Interest rates continued to retreat from their recent highs this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.93% and 2.45%, respectively.
  • The spot price of WTI Crude Oil rose by 1.49% this week and closed 2016 at $53.83 per barrel. WTI Crude was up 34.40% in 2016.
  • The spot price of Gold increased by 1.59% this week, ending the year at $1,151.35 per ounce. In 2016, gold prices rose 8.50%.

Economic Data

  • Weekly initial jobless claims came in at 265,000, a decrease from last week’s reading of 275,000. The Labor Department noted not major distortions to the data this week. The four week moving average for jobless claims now stands at 263,000.
  • The Case-Shiller home price index rose by 0.6% in October, beating expectations of 0.5%. Prices rose in all 20 cities measured by the index and have now risen 5.1% over the last 12 months.
  • Pending home sales fell 2.5% in November to a 10-month low. Pending sales fell in the West (-6.7%), Midwest (-2.5%) and South (-1.2%) but rose in the Northeast (+0.6%). The weak report may be an indication that higher mortgage rates are beginning to affect demand.

Fact of the Week

  • The number of electronic devices that are connected to the internet (ie. laptops, phones, care, appliances etc.) surpassed the world’s population in 2010. By 2020, the number of connected devices will reach 50 billion, or almost 7 times the world’s population of 7.3 billion. (Source: Federal Trade Commission)

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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@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.

 

Russia-US-Syria: Wealth Economic Update Sept 19, 2016

U.S. and World News

  • syria_aleppo_340The United States and Russia have agreed on a cease-fire in Syria with support from Syrian President Bashar Assad, and as part of the deal, Syria will continue to strike at the Islamic state for one week until the U.S. and Russia take over. The cease-fire was successful in its first full day with no recorded combat deaths and a cautious effort to deliver aid to fortified areas has begun. However, the ability of the U.S. and Russia to work together on the fight against ISIS has been questioned as they have begun to accuse one another of failing to do their part in the agreement.
  • Greece has stated that it plans to tell its creditors that it is unable to comply with the labor reforms set by the IMF for its €86 billion bailout. The terms of the labor reform is a ban on the right of workers to collectively negotiate wages and conditions.
  • The Bank of Japan plans to continue the use of negative interest rate policy for monetary easing. Negative interest rate policy has been in use by the BOJ since February in an effort to meet their 2% inflation target. The policy has come with repercussions such as a stronger Yen and lower margins for financial institutions.
  • The market currently has priced in a 20% probability of a 0.25% rate increase from the Federal Reserve next week.

Markets

  • After a volatile week, the S&P 500 finished up 0.59% and closed at 2,139. The Dow Jones rose 0.25% and closed at 18,124. So far in 2016, the S&P is up 6.26% and the Dow is up 6.04%.
  • Interest rates were up slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.69%, respectively.
  • The spot price of WTI Crude Oil fell 5.82% this week to close at $43.21 per barrel. WTI Crude is up 16.60% in 2016.
  • The spot price of Gold was down 1.33% this week, closing at $1,310.21 per ounce. Year to date, gold prices are up 23.48%.

Economic Data

  • Initial jobless claims came in at 260,000, up slightly from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000.
  • Retail sales declined by 0.3% in August compared to consensus estimates of a decline of 0.1%. The decline in oil prices transitioning to lower gasoline station sales is part of the reason for this.
  • The Consumer Price Index (CPI) increased by 0.2% in August compared to consensus estimates of 0.1%. The increase reflects increased prices in medical care commodities and services.

Fact of the Week

  • More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@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.