Budget, Infrastructure: Wealth Economic Update Feb. 19, 2018

U.S. and World News

  • traffic-637694576_400President Trump released a detailed outline of his long-awaited infrastructure proposal. The major aspects of the proposal are similar to the framework that had been leaked a few weeks ago. The overall amount of federal funding for the proposal would be $200 billion and this would be combined with private funding for a total package of $1.5 trillion spread over several years. There are four broad segments addressed in the proposal: Infrastructure Incentives Program (transportation, water/sewer), Rural Infrastructure Program (broadband, electrical power), Transformative Projects Program (commercially viable projects with high risk/reward), and Infrastructure Financing Programs (additional funding and broader eligibility). In addition, President Trump is calling for a $0.25/gallon hike to the federal gas tax in order to fund the federal portion that will upgrade roads, bridges and public works. The proposal faces strong challenges before it can be enacted due to the 60 votes needed to pass it in the Senate and a current lack of bipartisan consensus about the appropriate structure for federal infrastructure funds.

Markets

  • Markets rebounded from last week’s plunge, although trading was still relatively volatile. The S&P 500 gained 4.37% and closed at 2,732. The Dow Jones followed suit by also gaining 4.36% and closing at 25,219. Year to date, the S&P is up 2.45% and the Dow Jones has gained 2.37%.
  • Yields continued their upward trend this week, the 5 year and 10 year U.S. Treasury Notes are now yielding 2.64% and 2.88%, respectively.
  • The spot price of WTI Crude Oil rose 4.04% this week, closing at $61.61 per barrel. Year to date, Oil prices are up 3.11%.
  • The spot price of Gold increased by 2.30% this week, closing at $1,346.96 per ounce. Year to date, Gold prices are up 3.39%.

Economic Data

  • Initial jobless claims increase 7,000 from last week, coming in at 230,000, a bit above consensus estimates of a slight increase. The four week moving average for claims now stands at 229,000.
  • The headline Consumer Price Index (inflation) reading for January increased 0.5%, over expectations of 0.3%. This reflected a 3.0% rise in energy prices. Over the last 12 months, headline prices have risen 2.1%.
    • Core CPI (excludes food and energy) came in at 0.35%, also higher than expectations of 0.2%. Over the last 12 months, Core inflation has been 1.85%.
  • Retail sales declined -0.3% in January, a disappointing figure compared to +0.2% expectations. Excluding autos, retail sales were flat, also below expectations. The largest declines in January were in health and personal care (-1.2%), sporting goods, hobby, book and music (-0.8%), and furniture (-0.4%) retailers.

Fact of the Week

  • The National Retail Federation estimates that more than 55% of the U.S. population celebrated Valentine’s Day this week, and will have spent $19.6 billion on gifts for the holiday.

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.

 

Advertisements

Stock Market, Shutdown, North Korea: Wealth Economic Update Feb. 12, 2018

U.S. and World News

  • stock_market-533891962_370After a long period of calm markets, the U.S equity market posted its first correction (10% loss) in two years amid concerns over rising interest rates, an overheating economy, and complex leveraged funds driven by algorithms used to speculate on volatility. International stock indexes followed suit and are now about 10% off their highs.
  • The government briefly shut down late Thursday night following a failure to reach an agreement on a new budget deal, but was reopened early this morning after a major fiscal spending bill was passed. The bill includes an extension to the debt ceiling, a two-year increase in spending on military and domestic programs by $300 billion, and an additional $90 billion to help aid the disasters that occurred in 2017, extend the Children’s Health Insurance Program, and fight the opioid crisis. House Speaker Paul Ryan stated this morning, “Ultimately, neither side got everything it wanted in this agreement, but we reached a bipartisan compromise that puts the safety and well-being of the American people first.”
  • Vice President Mike Pence stated that “The United States of America will soon unveil the toughest and most aggressive round of economic sanctions on North Korea ever” as North Korea continues its nuclear and ballistic missile program despite numerous threats to terminate it. The Vice President did not give any details regarding the planned sanctions, but it is likely that they will target Chinese businesses that do business with North Korea.

Markets

  • In the most volatile week that we have seen in 2 years, the market has dipped into correction territory. The S&P 500 fell 5.10% and closed at 2,619. The Dow Jones followed suit by also plummeting 5.10% and closing at 24,191. Year to date, the S&P is down 1.83% and the Dow Jones is down 1.90%.
  • After trading in a wide range throughout the week, the 5 year and 10 year U.S. Treasury Notes are now yielding 2.54% and 2.85%, respectively.
  • The spot price of WTI Crude Oil fell 9.52% this week, closing at $59.22 per barrel. Year to date, Oil prices are down 1.48%.
  • The spot price of Gold decreased by 1.36% this week, closing at $1,315.21 per ounce. Year to date, Gold prices are up 1.00%.

Economic Data

  • Initial jobless claims fell 9,000 from last week, coming in at 221,000 vs. consensus estimates of a slight increase. The decline is largely attributed to a 6,000 decline in Missouri. The four week moving average for claims now stands at 225,000.
  • The trade balance came in at -$53.1 billion in December versus consensus expectations of -$52.1 billion.
  • Wholesale inventory growth increased 0.4% in December versus consensus expectations of a 0.2% increase.

Fact of the Week

  • The stock market, on average, has a correction every 357 days, or about once a year. (Source: Deutsche Bank)
  • Based on research conducted on the Dow between 1945 and 2013, the average correction (which worked out to 13.3%) lasted a mere 71.6 trading days, or about 14 calendar weeks. (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.

 

Market Volatility Comment: Wealth Economic Update Feb. 6, 2018

stock_confusion-607878216_370An equity market sell off that began last week continued on Monday and futures are pointing to another starkly lower open on Tuesday. Volatility, which had been historically low prior, has spiked tremendously with the VIX index increasing over 100% since last Friday’s close. While pullbacks are fairly regular occurrences (5% S&P pullbacks happen 91% of all years, while 10% pullbacks occur in 54% of years), the speed with which the market has corrected has amplified its perceived impact. Through Monday’s close, the S&P now stands at -0.8% in 2018, wiping out January’s gains and returning the S&P to where it finished on December 7th. In addition to ‘being due’, the cause of the correction may be recent rapid rise in interest rates, in part spurred by last Friday’s employment report that showed wage growth accelerating. This wage acceleration in conjunction with new Federal Reserve leadership intent on 3 or 4 rate hikes this year may have contributed to the repricing. Despite the downturn in prices, the fundamental data underpinning the economy remains solid: Global earnings growth reported for the 4th quarter has been strong, credit spreads have remained in check despite the rise in yields and the full benefits from tax reform are just beginning to take shape in a backdrop of already improved consumer and business sentiment.

Market turmoil such as this can be a source of opportunity and highlights the importance of sound long term investment management based on your financial goals.

 

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.

SOTU, Fed Chair: Wealth Economic Update Feb. 2, 2018

U.S. and World News

  • podium-665421982_370President Trump delivered his first State of the Union address this week in which he touched on five major policy areas: the economy, infrastructure, immigration, trade and national security. On the economy, Trump said, “Since the election we have created 2.4 million jobs, we are seeing rising wages, unemployment claims have hit a 45-year low and the stock market has smashed one record after another.” Trump also announced the “end of the war on American energy…the time to rebuild our crumbling infrastructure…and finally turn the page on decades of unfair trade deals.”
  • As widely expected, the Federal Reserve left interest rates unchanged in Janet Yellen’s final meeting as Fed Chair. The post-meeting statement generally upgraded it descriptions of economic activity, noting gains in employment, consumption and investment. The Committee also noted an expectation for inflation to pick up from its currently low levels. Leadership of the U.S. Central Bank will now shift to incoming Chairman Jerome Powell. The market is currently pricing in a 93% probability of a rate hike at the March meeting.

Markets

  • Markets retracted significantly this week, capped off by a steep Friday sell-off. The S&P fell 3.82%, closing at 2,762. The Dow Jones lost 4.11% for the week, closing at 25,520. Since the beginning of 2018, the S&P is up 3.44% and the Dow is up 3.34%.
  • Interest rates spiked this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.58% and 2.84%, respectively.
  • The spot price of WTI Crude Oil dipped by 1.83% this week, closing at $65.02 per barrel. Oil has started 2018 with a gain of 7.62%.
  • The spot price of Gold fell by 1.34%, closing at $1,331.09 per ounce. In 2018, gold prices are up 2.17%.

Economic Data

  • Initial jobless claims declined 1,000 from last week, coming in at 230,000, lower than expectations. The largest decreases were in Michigan, New Jersey and Ohio which all fell -2K during the week. The four week moving average for claims fell to 235,000.
  • The January employment report showed a gain of 200,000 jobs during the month, more than the forecasted 180,000. The prior two months’ figures were revised down a total 24,000 which brings the three month average for job gains to 192,000.
    • The headline unemployment rate held at 4.1% as expected. The labor force participation rate also held steady at 62.7%.
    • Average hourly earnings rose 0.3% during the month, beating expectations of 0.2%. With revisions to the prior months, over the last 12 months wages have increased 2.9%.
  • The Case-Shiller home price index rose by 0.7% in November, slightly more than expectations of 0.6%. Prices rose in all 20 cities measured with San Francisco (+1.8%), Las Vegas (+1.1%), and Tampa  (+1.0%) saw the largest monthly increases. Over the last 12 months, home prices as measured by the index have risen by 6.4%.

Fact of the Week

  • The S&P 500 has now gone 404 trading days without a peak-to-trough 5% pullback (6/28/2016 through 2/2/2018), the longest run of this kind in the history of the index. The current run overtook the previous record of 394 trading days which went from 12/21/1994 to 7/12/1996. With the drop this week, the current pullback in the S&P 500 has amounted to 3.8%. (Source: Pension Partners)

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.

 

National Data Privacy Day: 8 Tips for Keeping Your Personal Information Safe

Robert M. Duplessis, CRISC, CISM, CBVM, Senior Vice President—Information Security Officer 

January 28 is National Data Privacy Day. Its observance serves as a reminder that maintaining the privacy of your personal information is a year-round responsibility.

What’s at Risk

At the heart of the battle for your privacy is your personally identifiable information (PII). PII is any combination of data points that can lead to your identification. The more information a hacker can pull together on you the easier it becomes to obtain more, with the goal being to steal your identity.

This information may include your email address and full name—data readily available online. But, it also includes your:

  • Social Security number
  • Driver’s license
  • State identification
  • Financial account numbers
  • Medical information
  • Passwords
  • Address
  • Cellphone number

Companies like ours work diligently to protect your privacy and your data. We only collect the information we need to do business with you. We safely dispose of personal information when it is no longer needed. Unless required by law, we do not share your information without your permission or knowledge. (For more on Old Second’s privacy policies, click here.)

Every website, health care provider, insurance and financial company you deal with should have a similar policy. If they don’t or there is something about their policy that makes you uneasy, you should consider doing business elsewhere. However, it isn’t just businesses that collect data you need to be concerned about.

What You Can Do

Protecting your privacy is a shared responsibility. Every time you share your dog’s name or your child’s photo on Facebook, post vacation photos on Instagram or update your new job title on LinkedIn, you are adding to what hackers can find out about you and those you tag. Consider what Alexa and Google Home know! Then, consider how much information would be needed to start guessing your passwords.

The reality is that none of us will stop posting, sharing or using products that enhance our daily lives. What we can do, however, is take some precautions before we do. Here are some things to consider adding to your regular routine that can help safeguard your PII and that of your family members and friends.

  1. Revisit your social media settings. Make sure you know who you are sharing information with and whether you really want to. Also consider living less “in the moment.” Share photos and locations after you’ve left them.
  2. Tag only with permission. Not everyone wants their location and activities broadcast or their children’s names made public. Be respectful of the privacy of others.
  3. Manage your passwords. Change them regularly and refrain from using one to access everything. Many companies and services now use double authentication options. Consider opting into them.
  4. Monitor your credit reports. Whether your information was involved in a data breach or not, take advantage of your ability to order a report for free from each of the three reporting agencies each year. A credit-monitoring service, while an added expense, also may be warranted if your information was hacked, since hackers do not necessarily use your information right away. They may sit on it until your free year of monitoring is up.
  5. Keep your software and apps current. Updates and patches are intended to address vulnerabilities in the system. Also, uninstall apps and programs you no longer use. Hackers could use them as back doors into your system.
  6. Check your credit and debit card charges regularly. As soon as you see something odd, call your card issuer and cancel your card. Replacement cards arrive within days.
  7. Use caller ID. Every piece of information, including your voice, is fodder for scammers. If someone calls you and you don’t recognize the number or the caller’s name, do not feel compelled to pick up. Often, by entering the number in a Google search, you can confirm it was a fraudulent call.
  8. Refrain from clicking through links in emails. While legitimate companies provide links for convenience, you are better off signing onto your online account the way you typically do, just to be safe, or calling the customer service number you have on file for them.

For more tips and information on keeping your personal information safe, we maintain a variety of resources on our website. Also, feel free to call 877-866-0202 . We are always happy to talk through your concerns, privately.

DACA, Shutdown: Wealth Economic Update Jan. 26, 2018

U.S. and World News

  • worker-614128222_400The shutdown of the U.S. government lasted all of 3 days as Congress voted to reopen the government and provide funding through February 8th. Senate Democrats reluctantly voted to adopt a short-term spending bill to fund government operations without first addressing the fate of young undocumented immigrants in the DACA program. With another government shutdown on the horizon, President Trump will release a “legislative framework” on immigration issues next week that he believes “represents a compromise that members of both parties can support.” This would include “four agreed upon pillars”, “securing the border and closing legal loopholes, ending extended family chain migration, canceling the visa lottery and providing a permanent solution on DACA.”

Markets

  • Markets had yet another week of strong gains. The S&P rose 2.23%, closing at a new All-Time High of 2,872. The Dow Jones gained 2.09% for the week, also closing at a new All-Time High of 26,617. Since the beginning of 2018, the S&P is up 7.54% and the Dow is up 7.77%.
  • Interest rates were little changed from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.47% and 2.66%, respectively.
  • The spot price of WTI Crude Oil climbed by 4.48% this week, closing at $66.21 per barrel. Oil has started 2018 with a gain of 9.58%.
  • The spot price of Gold rose by 1.44%, closing at $1,350.97 per ounce. In 2018, gold prices are up 3.70%.

Economic Data

  • Initial jobless claims rose 17,000 from last week, coming in at 233,000, in line with expectations. The largest increases were in Michigan (+4k) and Wisconsin (+3k). The four week moving average for claims fell to 240,000.
  • The first estimate of 4th quarter 2017 real GDP showed 2.6% annualized growth, below expectations of 3.0%. Much of the miss was due to net exports which reflected the strength in goods imports during the quarter. For the entirety of 2017, real GDP of the U.S. grew 2.3%.

Fact of the Week

  • Janet Yellen’s 4 years as Federal Reserve Chair ends next Wednesday January 31st with her 32nd and final meeting. During Yellen’s term, the central bank implemented 5 rate hikes and began reversing the $4 trillion of bond purchases made from 2008-2014 during “Quantitative Easing”, which was started by her predecessor Ben Bernanke. President Trump’s nominee Jerome Powell is poised to take over as Fed Chair next month after being confirmed by the Senate this week.

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.

 

Spending Bill, Shutdown: Wealth Economic Update Jan. 19, 2018

U.S. and World News

  • debate_664944046_370If lawmakers in the senate do not agree on a spending bill by 12:01 A.M Saturday, the government will shut down for the first time since October of 2013. There was a meeting held today between Democratic Leader Charles Schumer and President Trump at the White House, however no deal has been reached. Democratic leaders are strongly against the bill because it does not protect illegal immigrants who arrived in the United States as children from deportation. House Budget Director Mick Mulvaney stated that the odds of a government shutdown are 50-50 and preparations by the administration are being made. The top percentage of furloughed workers during the event of a government shutdown would be from the Department of Housing and Urban Development (HUD), the Environmental Protection Agency (EPA), and the Department of Education.

Markets

  • Markets had yet another week of gains. The S&P rose 1.23%, closing at a new All-Time High of 2,810. The Dow Jones gained 1.12% for the week, also closing at a new All-Time High of  26,072.
  • Interest rates also increased this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.45% and 2.66%, respectively.
  • The spot price of WTI Crude Oil fell by 1.23% this week, closing at $63.51 per barrel.
  • The spot price of Gold edged lower by 0.39%, closing at $1,332.48 per ounce.

Economic Data

  • Initial jobless claims fell 41,000 from last week, coming in at a 45-year low of 220,000, far below expectations. The largest declines were in California (-5k), Pennsylvania (-5k), Michigan (-4k) and Illinois (-3k). The four week moving average for claims fell to 245,000.
  • Housing starts declined 8.2% month-over-month in December to 1192k, missing expectations of a 1.7% decline. The prior two months were revised up by a net 7k. The 11.8% drop in single-family starts largely attributed to the overall broad based decline.
  • Building permits were down 0.1% in November, exceeding expectations. The multifamily category declined by 3.9% while the single family category rose 1.8% driven by permits in the northeast (+43%).
  • The University of Michigan’s index of consumer sentiment fell 1.5 points to 94.4 to a six-month low in the January preliminary report.

Fact of the Week

  • There has not been a government shutdown when one party controls the government since Carter was President in the 1970’s. (Source: Strategas Research Partners)has not been a government shutdown when one party controls the government since Carter was President in the 1970’s. (Source: Strategas Research Partners)
  • Each week of government shutdown would reduce Q1 GDP by 0.2% (quarter-over-quarter annualized), but this would be reversed in the subsequent quarter. (Source: Goldman Sachs)

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.

 

NAFTA: Wealth Economic Update Jan. 16, 2018

U.S. and World News

  • NAFTA-655951028Negotiators have set a March deadline to rewrite NAFTA (North American Free Trade Agreement) amid an increasingly contentious process between the U.S., Mexico and Canada. This also comes amid reports of Canadian officials believing President Trump could pull the U.S. out of the deal altogether. Regarding the timeline, Trump told the Wall Street Journal that he was a ‘little flexible’ on it given Mexico’s July 1 presidential election. On the topic of the border wall between the U.S. and Mexico, Trump said, “They can pay for it indirectly through NAFTA…We make a good deal on NAFTA, and, say, I’m going to take a small percentage of that money and it’s going toward the wall. Guess what? Mexico’s paying.” The next round of negotiations will be taking place in Montreal in two weeks.

Markets

  • Markets continued their upward move to start 2018. The S&P rose 1.61%, closing at a new All-Time High of 2,786. The Dow Jones gained 2.02% for the week, also closing at a new All-Time High of  25,803.
  • Interest rates generally rose again this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.35% and 2.55%, respectively.
  • The spot price of WTI Crude Oil rose by 4.66% this week, closing at $64.30 per barrel.
  • The spot price of Gold ended the week up by 1.37%, closing at $1,337.64 per ounce.

Economic Data

  • Initial jobless claims were up 11,000 from last week, coming in at a three-month high of 261,000. The largest increases were in California (10k), Pennsylvania (3k) and Wisconsin (3k). The four week moving average for claims rose to 251,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.15% in December, beating expectations of 0.1%. A 1.2% drop in energy prices partially offset a 0.2% rise in food prices. Headline inflation rose 2.1% in 2017.
    • Core CPI (excludes food and energy) rose 0.3% in December, higher than the expected 0.2%. During 2017, Core CPI rose 1.8%.
  • Retail sales rose 0.4% in December, a bit below consensus expectations of 0.5%. The largest December gains were at nonstore retailers (+1.2%) and building materials stores (+1.2%) while sales declined at clothing (-0.3%) and sporting goods (-1.6%) stores.

Fact of the Week

  • During the 2000-2002 bear market, the S&P 500 hit a bear market low on October 9, 2002. The headline in USA Today the following morning (10/10/02) was, “Where’s the bottom? No end in sight.” The S&P rose 102% from that point on until peaking five years later in 2007.

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.

 

2017 Summary: Wealth Economic Update Jan. 2, 2018

U.S. and World News

  • wallst-462756183_380Trading in 2017 has concluded, wrapping up a very positive year in global stock markets despite facing a laundry list of headwinds and fears. In a year that included the inauguration of a new President, nuclear tension with North Korea, fears of Populism spreading in Europe, numerous terrorist attacks domestically & abroad, pessimism over tax overhaul, multiple devastating hurricanes, renegotiations of several global trade agreements and three Fed rate hikes; the U.S. benchmark index, the S&P 500, set 62 new all-time highs on its way to a 8% total return in 2017. The technology weighted Nasdaq Composite returned 29.7% and the Russell 2000 (small cap U.S. stocks) lagged but still gained 14.7%.  International markets also enjoyed strong gains in 2017 with developed international stocks returning 25.2% (MSCI EAFE Index) and emerging market stocks returning 36.9% (MSCI Emerging Markets Index). Looking forward to next year, markets will be focused on the effects of the new tax reform law on both businesses and individuals, the path of the Federal Reserve under new incoming Chairman Jerome Powell and the effects of synchronized global growth on inflation and asset valuations.

Markets

  • Markets ended 2017 on a bit of a down note. The S&P fell 0.33%, closing at 2,674. The Dow Jones dipped 0.14% for the week and closed at 24,719. In 2017, the S&P gained 21.82% and the Dow returned 28.11%.
  • Interest rates pulled back this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.21% and 2.41%, respectively.
  • The spot price of WTI Crude Oil rose by 2.81% this week, closing at $60.11 per barrel. During 2017, Oil prices rose 11.90%.
  • The spot price of Gold ended the week up by 2.28%, closing at $1,303.28 per ounce. In 2017, Gold prices were up 13.58%.

Economic Data

  • Initial jobless claims were flat from last week, coming in at 245,000. The largest increases were in Texas (4k), New York (4k) and Kentucky (3k). The four week moving average for claims rose to 238,000.
  • The Case-Shiller home price index rose by 0.7% in October, slightly beating expectations of 0.6%. Prices rose in all 20 cities measured with Las Vegas (+1.4%), San Francisco (+1.2%), New York (+0.8%), and Charlotte (+0.8%) showing the largest monthly increases. Over the last 12 months, home prices as measured by the index have risen 6.4%.

Fact of the Week

  • The largest drawdown in the S&P 500 during 2017 was a mere -3% pullback seen from March to mid-April. This was the smallest intra-year drawdown in the S&P 500 since 1995 which also only saw a -3% pullback. The next year in 1996, the S&P 500 did see an -8% drawdown at one point but wound up gaining 20% by year’s end. (Source: Strategas Research Partners)

    Happy New Year!

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.

 

Tax Reform, Pay-Go Waiver: Wealth Economic Update Dec. 26, 2017

U.S. and World News

  • capitol-588594274_360President Trump has signed the Tax Cut and Reform Bill after the measure passed through both the House and Senate this week. On the business side, the sweeping bill will slash taxes for corporations, revamp how multinational companies are taxed (including a repatriation provision), and create a deduction for the owners of “pass-through” businesses. Most individuals and families will see their tax rates cut, in addition to a doubled standard deduction and increased child care credit. Also included in the bill was the repeal of the individual mandate which was the provision of Obamacare that required Americans to carry a certain level of health insurance or else face a fine.
  • Also in Washington D.C., Congress has passed a stopgap spending bill that keeps the government funded through mid-January. This will push contentious policy debates into next year, in particular surrounding what is called a “pay-go” waiver. This provision suspends rules that bar the government from deficit creating new programs unless there is enough money in the current year’s budget to pay for them.

Markets

  • Markets were up this week as the tax reform bill was finalized and signed by President Trump. The S&P gained 0.30%, closing at 2,683. The Dow Jones rose 0.42% for the week and closed at 24,754. Year to date, the S&P is up 22.23% and the Dow is up 28.28%.
  • Interest rates moved higher on the heels of the tax reform bill passage. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.25% and 2.48%, respectively.
  • The spot price of WTI Crude Oil rose by 1.80% this week, closing at $58.33 per barrel. Year to date, Oil prices have risen 8.57%.
  • The spot price of Gold ended the week up by 1.46%, closing at $1,274.72 per ounce. Year to date, Gold prices are up 11.09%.

Economic Data

  • Initial jobless claims rose 20,000 from last week, coming in at 245,000. The largest increases were in New York (4k), Pennsylvania (3k) and California (2k). The four week moving average for claims rose to 236,000.
  • Housing starts rose 3.3% in November, beating expectations for a -3.1% decline. Single family housing starts rose by 5.3% in the month, while multi-family starts edged down -1.6%.
  • The headline PCE index (measure of inflation) rose 0.2% in November, slightly below expectations of 0.3%. Over the last 12 months, headline PCE has risen 1.8%.
    • Core PCE (excludes food and energy, Fed’s preferred inflation metric) rose 0.1% in the month, in line with expectations. Over the last 12 months, Core PCE has risen 1.5%.

Fact of the Week

  • Every Christmas Eve and New Year’s Eve (or the trading day prior if they fall on a weekend) traders on the floor of the New York Stock Exchange take some time out of their schedule to gather and sing “Wait Till the Sun Shines, Nellie.” With a theme of optimism coming from waiting for the rain to pass, the song has been a tradition on the NYSE floor dating back to the years following the crash of 1929 and the Great Depression.

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.