Wealth Management Economic Update March 28, 2016

U.S. and World News

  • Brussels_Belgium_360Terrorism ripped through the Belgian city of Brussels this week as explosives were placed at the capital’s airport and metro station, killing 31 and wounding 300 more. Terrorist group ISIS claimed responsibility for the Brussels attacks that took place just four months after another major attack in Paris. One suspect believed to have been involved in the attacks has been arrested and is being questioned. The most recent attacks again shine the spotlight on the European migrant crisis and put Europe’s open borders policy into question.
  • This week President Obama became the first sitting U.S. president since Calvin Coolidge in 1928 to visit Cuba in a historic visit. Obama met with Cuban President Raul Castro in a symbolic measure that indicated the end of the Cold War era conflict between the two nations. Despite the opening up of limited trade between the two countries, vast ideological differences remain.

Markets

  • Markets were down marginally in the holiday shortened trading week. The S&P 500 lost 0.65% and closed at 2,036. Likewise, the Dow Jones fell 0.49% and closed at 17,516. So far in 2016, the S&P is up 0.14% and the Dow is up 1.22%.
  • Interest rates were mostly unchanged this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.38% and 1.90%, respectively.
  • The spot price of WTI Crude Oil fell 4.08% this week to close at $39.46 per barrel. WTI Crude is down 1.30% in 2016.
  • The spot price of Gold decreased 3.06% this week, closing at $1,217.05 per ounce. Year to date, gold prices are up 14.70%.

Economic Data

  • Initial jobless claims came in at 265,000 which was unchanged from last week’s reading. The Labor Department noted no special factors in the data. The four week moving average for claims moved slightly up to 259,750.
  • Existing home sales declined by -7.1% in February, worse than an expected -3.0% drop. Sales of existing single family (-7.2%) and multi-family (-6.6%) fell during the month.
  • New home sales were in line with expectations, rising 2.0% during February. Despite the increase, the West region was the only one to see gains in new home sales while the Midwest, South and North regions saw declines.

Fact of the Week

  • The average holding period of a stock in the United States has fallen from about 8 years as of 1960, to only 1.3 years today. The average holding period of stocks hit its low of 1.0 years in 2010 (Source: Strategas Research 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
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
Tamara Wiley, CFP® – (630) 844-3222 twiley@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.

 

Wealth Management Economic Update January 19, 2016

U.S. and World News

  • Poor economic data and further currency devaluation in China continued this week and sent global stocks lower.
  • President Obama delivered his 7th and final State of the Union address this week. Among the topics he discussed was ensuring opportunity for everyone, harnessing technological change and keeping the country safe. Obama lauded the economic progress the country has made since he took office but mentioned that one of his few regrets during his Presidency has been “that the rancor and suspicion between the parties has gotten worse instead of better.”
    Embed from Getty Images

Markets

  • Markets continued their downward start to 2016 highlighted by a large down move to end the week. The S&P 500 declined 2.18% and closed at 1,880. Likewise, the Dow Jones fell 2.19% and closed at 15,988. So far in 2016, the S&P is down 7.96% and the Dow is down 8.19%.
  • Interest rates fell during this week, reflecting the weakness in the stock markets. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.46% and 2.04%, respectively.
  • The spot price of WTI Crude Oil plunged again this week, dropping 10.62% to a new 52 week low of $29.64 per barrel. WTI Crude has fallen 20.00% in 2016.
  • The spot price of Gold dipped 1.31% this week, closing at $1089.70 per ounce. Year to date, gold prices are up 2.70%.

Economic Data

  • Initial jobless claims came in at 284,000 which was an increase from last week’s reading of 277,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 279,000.
  • Headline retail sales declined by 0.1% in December, in line with expectations. However, core retail sales (excluding auto and gasoline sales) declined by 0.3%, much weaker than the estimated 0.3% increase.
  • The University of Michigan consumer sentiment index improved in the initial January estimate to 93.3 from 92.6 in December. Consumers’ expectations of the future improved, however their assessment of current economic conditions declined in the month.

Fact of the Week

  • According to the Social Security Administration, in 1994 there was 2.8% of America’s working-age population that was receiving Social Security disability benefits. This has increased to 5.1% of the working-age population in 2015.

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
Tamara Wiley, CFP® – (630) 844-3222 twiley@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.

 

Wealth Management Economic Update February 2, 2015

U.S. and World News

  • The left-wing, anti-austerity Syriza party won the general election in Greece on Sunday, raising concerns over the country’s future status as member of the European Union. Party leader Alexis Tsipras has already moved to form a coalition that will work to reverse years of austerity measures imposed by the Troika. The Syriza government also came out against increasing sanctions on Russia for escalating violence in Ukraine. This could be very problematic for EU foreign policy, as further sanctions must be unanimously voted upon by all EU nations.
  • Just about a week after President Obama floated the idea of ending the tax advantage of 529 College Savings plans, the administration has decided to scrap the proposal. Amid outrage from a broad range of Americans, Obama has decided that the plan is a “distraction” and will seek to raise revenue in other ways.
  • ruble_320Ratings agency Standard and Poor’s downgraded Russia’s credit rating to junk, due to weak economic growth prospects, low oil prices and sanctions from the West. The move sent the Russian currency, the ruble, plunging to new lows.

Markets

  • Equity markets tumbled this week with the S&P 500 falling 2.75% and closing at 1,995. Likewise, the Dow Jones lost 2.87% and closed at 17,165. Year to date, the S&P and Dow Jones are down 3.00% and 3.58% respectively.
  • Yields in the Treasury markets remained at very low levels this week. The 10 year Treasury bond now yields 1.65% and the 5 year Treasury bond yields 1.17%.
  • The spot price of WTI Crude Oil reversed course after a sharp bounce on Friday, rising 4.89% and closing at $47.82 per barrel. In 2015, WTI Oil prices have fallen 10.95%.
  • The spot price of Gold fell by 0.79% this week and closed at $1,283.92 per ounce. Year to date, gold prices are up 8.41%.

Economic Data

  • Initial jobless claims declined sharply from last week, coming in at 265,000 vs. consensus estimates of 300,000. This was a new low mark for the recovery. While the Labor Department noted no special factors affecting the report, the holiday shortened week (MLK Day) may have skewed the data. The four week moving average for claims now stands at 298,500.
  • The Case-Shiller home price index rose 0.7% in November vs. expectations of 0.6%. This represents the strongest monthly gain since March. Over the last 12 months, home prices as measured by the index have risen 4.3%.
  • The first estimate of GDP showed 2.6% growth vs. expectations of 3%. Growth was aided by a strong 4.3% increase in consumer spending but was suppressed by increasing import activity. Full year 2014 GDP growth now stands at 2.5%, which is a solid gain especially given the -2.1% number posted in the 1st quarter of 2014.

Fact of the Week

  • Apple reported earnings this week, showing that the company has $178 billion in cash reserves on its balance sheet. The size of this cash component alone would rank it 5th in size in the entire S&P 500. This amount of cash would be enough to give each American $556 or purchase every pro sports franchise in the NFL, MLB, NBA and NHL.

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® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Wealth Management Economic Update January 26, 2015

U.S. and World News

  • President Obama delivered his State of the Union address this week, declaring that the economy has recovered under his leadership and discussed several measures that he would like to see enacted during his final two years in office. Among them, he called on Congress to impose new taxes on high-income earners and new fees on large financial institutions. Obama also reiterated his plan to offer free community college that would be funded by the federal and state government, but is seemingly seeking to discourage individuals from saving for their child’s college by eliminating the tax advantages of Section 529 and Coverdell Education Savings Accounts. Many of the issues he raised have little to no chance of passing in the Republican controlled House and Senate.
  • European Central Bank President Mario Draghi announced this week that the central bank plans to expand its purchase of European government bonds to €60 billion per month until at least September 2016. While additional quantitative easing was expected, the size of the program was larger than consensus expectations. The goal of the plan is to reverse deflationary pressures that are weighing on the Eurozone as many of the country’s economies have stagnated recently.
  • oil-rig_000003751456_250King Abdullah, 91, of Saudi Arabia died this week, calling into question the future of the Saudi’s strategy for crude oil production. Historically, the country has been the oil market’s swing producer, altering production volumes based on demand in order to keep prices stable, but this has not been the case during the current plunge in oil prices. Abdullah’s half-brother, Crown Prince Salman has been declared King and a key indicator of the future Saudi oil policy will be whether Salman retains oil minister Ali Al-Naimi, who has driven the decision making since 1995.

Markets

  • Equity markets ended positively this week following the ECB’s announcement of an increased quantitative easing program. The S&P 500 rose 1.62% and closed at 2,052. Likewise, the Dow Jones gained 0.95% and closed at 17,673. Year to date, the S&P and Dow Jones are down 0.26% and 0.73% respectively.
  • Yields in the Treasury markets remained at very low levels this week. The 10 year Treasury bond now yields 1.79% and the 5 year Treasury bond yields 1.31%.
  • The spot price of WTI Crude Oil plunged again this week, falling 7.63% and closing at $45.32 per barrel. In 2015, WTI Oil prices have fallen 15.49%.  According to AAA, the national average gas price is now $2.04/gallon as compared to $3.29 a year ago.
  • The spot price of Gold rose by 1.09% this week and closed at $1,294.39 per ounce. Year to date, gold prices are up 9.29%.

Economic Data

  • Initial jobless claims declined from last week, coming in at 307,000 vs. consensus estimates of 300,000. The Labor Department noted no special factors affecting the report. The four week moving average for claims now stands at 306,500.
  • Housing starts rose 4.4% in December against expectations of 1.2%. Rising 7.2% in the month, the increase was primarily from the single-family home category which is a more positive signal.
  • China reported that its economy grew by 7.4% in 2014, its slowest pace since 1990 when growth was only 3.8% as a result of international sanctions following the Tiananmen Square massacre. The slowing growth pace has prompted speculation that the People’s Bank of China may undergo additional support measures.

Fact of the Week

  • The economy of the United States is estimated to be $17.5 trillion, representing 23% of the $77.6 trillion global economy. The 19 countries that make up the Eurozone and use the common currency collectively have an economy of $13.2 trillion, or 17% of the global economy.

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® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management