Stocks, Brazil, Macron: Wealth Economic Update May 19, 2017

U.S. and World News

  • woman_finance-668680856_360After an extended period of low-volatility and complacency in the markets, global political news shook markets on Wednesday. Weighing on U.S. markets were reports of President Trump allegedly sharing classified information with Russia’s foreign minister and ambassador, and ongoing inquiries to the Comey termination. U.S markets have recovered most of the losses since Wednesday.
  • A political crisis has unfolded in Brazil as the potential for a second impeachment in a just over a year has arisen after reports that President Temer was recorded discussing and endorsing payment of hush money to a former associate who was jailed for corruption. The Brazilian currency and stock market were sharply negative on the news. Just this morning, President Temer announced that he refuses to step down and that his innocence would be revealed by a full investigation.
  • Emmanuel Macron was sworn in as the new President of France Sunday. The European equity market saw equity fund inflows of a record $6.1 billion following Macron’s victory and analysts are projecting even more in the months ahead. Emmanuel Macron is dedicated to returning growth and confidence to the economy and in his first joint news conference with Angela Merkel he stated “First, we need to work on what we want to change, and then if it turns out it needs a treaty change, then we’re prepared to do that.”
    Markets

Markets

  • Markets dipped a bit this week, continuing the period of low volatility. The S&P 500 fell 0.26% and closed at a of 2,391. The Dow Jones lost 0.34% for the week and closed at 20,897. Year to date, the S&P is up 7.56% and the Dow is up 6.67%.
  • Interest rates also moved lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.23%, respectively.
  • The spot price of WTI Crude Oil rose 5.29% this week, closing at $50.37 per barrel. Year to date, Oil prices have fallen 6.24%.
  • The spot price of Gold ended the week higher, closing at $1,255.07 per ounce. Year to date, Gold prices are up 9.37%.

 Economic Data

  • Initial jobless claims fell by 4,000 from last week, coming in at 232,000. Claims remained particularly low in several energy-producing states year-to-date. The four week moving average for claims ticked down to 241,000.
  • Housing starts were down -2.6% in April which were below expectations of a 3.7% gain. The decline was led by multifamily homes which declined by -9.2%.
    • Building permits declined -2.5% versus expectations of 0.2%.
    • Industrial production increased 1% versus expectations of 0.4%.
    • Manufacturing production increased 1% versus expectations of 0.4%.

Fact of the Week

  • According to a recent research report by Strategas Research Partners, “Twenty years ago, there were nearly 7,500 publicly traded U.S. stocks and only a handful of major indexes to track them. Fast forward to 2017 and the number of individual equities has declined to just barely 4,000 and astonishingly, the number of indexes now totals more than 5,000. There are now more indexes than publicly traded U.S. equities.” (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
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

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Election 2016: Wealth Economic Update Nov. 13, 2016

U.S. and World News

  • 2016election_360Donald Trump has been elected the 45th president of the United States, defeating Democratic nominee Hillary Clinton. Markets initially reacted in an extreme manner to the downside in the premarket session as this result was not expected or priced in. The downturn was short-lived however, as markets turned solidly green the day following the election and continued its upward momentum through the end of the week.
  • In addition to Trump’s victory, the Republican Party was able to secure majorities in both the House and Senate. This will mark the first time that the Republican Party has held the Presidency and both houses of Congress since George W. Bush took office in 2001. Control of both the House and Senate will give the Republican Party greater freedom to implement its policy platform which stands for less regulation of banks and a repeal of Obamacare.
  • Potential scandal has returned to Brazil after evidence surfaced that new president Michel Temer may have accepted bribes from a construction company. This comes shortly after the impeachment of former president Dilma Rousseff for her role in using illegal loans from state banks to hide the fragile state of Brazil’s finances during her re-election bid in 2014. If the court rules that Temer did accept bribes, he could be removed from office.

Markets

  • This week the S&P 500 rallied 3.87% and closed at 2,164. The Dow Jones rose 5.51% to close at an ALL-TIME HIGH of 18,848. So far in 2016, the S&P is up 7.80% and the Dow is up 10.50%.
  • Interest rates surged higher this week following the results of the U.S. Presidential Election. The 5 year and 10 year U.S. Treasury Notes now yield 1.56% and 2.15%, respectively.
  • The spot price of WTI Crude Oil was down 1.95% this week to close at $43.21 per barrel. WTI Crude is up 7.89% in 2016.
  • The spot price of Gold fell 6.07% this week, closing at $1,225.90 per ounce. Year to date, gold prices are up 15.53%.

Economic Data

  • Initial jobless claims came in at 254,000, a decrease from last week’s reading of 265,000. The Labor Department noted no distortions to the data this week. The four week moving average for claims moved up to 260,000.
  • The University of Michigan consumer sentiment index rose to 91.6 in the November estimate, better than consensus expectations. Both consumers’ future expectations and their assessment of current economic conditions rose during the period. All of the data collected was prior to the U.S. Presidential Election.

Fact of the Week

  • The S&P 500 has now correctly predicted 20 of the past 23 presidential election winners going back to 1928 and every election since 1984. This is based on the three month returns for stocks leading up to the election. If the stock market index is higher in the three month period before the election, it’s a predictor that the incumbent party (in this case Democratic) wins the Presidency and vice versa. The S&P 500 fell -1.9% in the three months leading up to Tuesday’s election, thus continuing the trend as the incumbent party was defeated. (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
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

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Brazil impeachment: Wealth Economic Update September 6, 2016

U.S. and World News

  • brazil_91582989_340Brazil’s senate has voted 61-20 to impeach suspended President Dilma Rousseff. She was on trial for her role in altering government fiscal accounts by using illegal loans from state banks to hide the true fragile state of Brazil’s finances in order to get re-elected in 2014. Acting President Michel Temer has been sworn in as her replacement. Rousseff claims the ouster was a parliamentary coup and pledged to appeal her impeachment, calling on supporters to fight the conservative agenda she believes has been empowered by her dismissal.
  • President Obama has appointed a seven member board that will oversee the financial restructuring for debt-laden Puerto Rico. Obama drew from a list of candidate in finance and academia who were recommended by leaders in Congress. Puerto Rico’s governor, Alejandro Garcia Padilla, was also named to the board but since he is not seeking a second term, he will be replaced by his successor in November.

Markets

  • This week the S&P 500 was up 0.56% and closed at 2,180. The Dow Jones rose 0.62% and closed at 18,492. So far in 2016, the S&P is up 8.16% and the Dow is up 8.06%.
  • Interest rates were down marginally this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.60%, respectively.
  • The spot price of WTI Crude Oil fell 7.05% this week to close at $44.28 per barrel. WTI Crude is up 10.56% in 2016.
  • The spot price of Gold was up 0.29% this week, closing at $1,324.98 per ounce. Year to date, gold prices are up 24.87%. 

Economic Data

  • Initial jobless claims came in at 263,000, a minor increase from last week’s reading of 261,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 263,000.
  • The monthly employment report showed a gain of 151,000 jobs during August, below the expected 180,000. Figures for the prior two months were revised down a combined 1,000 jobs, bringing the three month average for job gains to 232,000.
    • Headline unemployment remained at 4.9% and the labor force participation rate was also unchanged at 62.8%.
    • Average hourly earnings rose 0.1% in August, missing expectations of 0.2%. On a 12 month basis, wages have risen 2.4%, down from 2.7% in July.
  • Personal Consumer Expenditures (PCE, measure of inflation) was flat in July, in line with expectations. Over the last year, headline inflation has risen 0.8% as measured by PCE.
    • Core PCE (excludes food and energy prices, preferred measure of inflation by the Fed) rose 0.1% and is now up 1.6% year over year, both in line with estimates.
  • The Case-Shiller home price index moved down -0.1% in June, which was in line with consensus expectations. Results were mixed with 11 of the 20 surveyed cities seeing price increases. Over the last 12 months, home prices have risen 5.1%.

Fact of the Week

  • As of August 18th, the U.S. national debt stood at $19.445 trillion. It had taken 293 days (since 10/30/15) to add the latest $1 trillion of debt. It took America 205 years (1776 to 1981) to accumulate its first $1 trillion of debt. (Source: Treasury Department)

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

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Fed Symposium: Wealth Economic Update Aug 29, 2016

U.S. and World News

  • jackson_hole_wyoming_14105333_340The annual Federal Reserve Bank of Kansas City economic symposium in Jackson Hole, Wyoming began on Thursday and will run through Saturday.  Central bankers and economists from around the world have gathered at the event which this year has the title of, “Designing Resilient Monetary Policy Frameworks for the Future.” Federal Reserve Chairwoman Janet Yellen delivered her keynote speech on Friday which had been highly anticipated by market participants. Yellen stated that the “case for an increase in the Federal Funds rate has strengthened in recent months,” which was viewed as somewhat hawkish. She tempered that with the comment, “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy,” referencing potential risks overseas. Overall, there was no clear direction given on the path of interest rate policy.
  • Brazil’s senate has begun the impeachment trial of suspended President Dilma Rousseff this week. The process is likely to wrap up late next week with a final impeachment vote being held. The likelihood appears to be high that Rousseff will be removed from office on charges that she doctored government fiscal accounts in order to get re-elected in 2014. Brazilian markets have rallied lately on the prospect of the right-wing Vice President and acting President Michel Temer permanently taking over from the leftist Rousseff. Temer would face the tall task of having to drag Brazil’s economy out of its worst recession since the Great Depression and bringing down a massive budget deficit.

Markets

  • This week the S&P 500 was down 0.67% and closed at 2,169. The Dow Jones fell 0.85% and closed at 18,395. So far in 2016, the S&P is up 7.57% and the Dow is up 7.41%.
  • Interest rates increased this week following Janet Yellen’s speech at Jackson Hole on Friday. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.62%, respectively.
  • The spot price of WTI Crude Oil dipped 2.49% this week to close at $47.31 per barrel. WTI Crude is up 18.13% in 2016.
  • The spot price of Gold was down 1.48% this week, closing at $1,321.60 per ounce. Year to date, gold prices are up 25.55%. 

Economic Data

  • Initial jobless claims came in at 261,000, edging down from last week’s reading of 262,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 264,000.
  • New single-family home sales rose by 12.4% in July, bringing the seasonally adjusted annualized rate to the highest level since late 2007. New home sales increased in the South, Northeast and Midwest, while remaining flat in the West region.
  • Existing home sales declined by -3.2% in July, more than an expected 1.1% decline. Single family sales decreased by 2.0%, while multi-family sales fell 12.3% following solid gains in June.

Fact of the Week

  • The average rate of return on the Dow Jones Industrial Average during the 26 Summer Olympic Games dating back from 1900 through 2012 was an impressive 4% from the opening to closing ceremonies, with positive returns seen 68% of the time. This year’s Games which just concluded continued this trend as the Dow Jones was up 1.65% during the two weeks of the Rio Olympics. (Source: Bespoke Investment Group)

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

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Brazil impeachment trial: Wealth Economic Update Aug 15, 2016

U.S. and World News

  • brazil_17780429_340The Olympic Games have begun in Brazil but that did not stop the country’s Senate from voting to put suspended President Dilma Rousseff on an impeachment trial. Rousseff had been suspended from her post for allegedly illegally financing government spending. The decision to proceed with impeachment hearings could seal her fate and lead to her successor Michel Temer taking the post on a permanent basis as early as this month.
  • Vladimir Putin has promised to respond in kind to what he called Ukraine’s “terror” tactics in the disputed region of Crimea. Fighting between Ukrainian government forces and Russian-backed rebels has intensified once again with two servicemen being killed in clashes in the last week. Putin also threatened to cancel the peace negotiations at next month’s G20 meeting and called the talks “pointless”.
  • On Thursday, in an event that hadn’t occurred since December 31, 1999, the S&P 500, the Dow Jones Industrial Average and the NASDAQ indices all set all-time highs on the same day. This accentuates a strong comeback in equity markets from historically the worst start to a year which saw those same indices decline more than 10% through mid-February.

Markets

  • This week the S&P 500 was up 0.12% and closed at 2,184. The Dow Jones rose 0.33% and closed at 18,576. So far in 2016, the S&P is up 8.21% and the Dow is up 8.29%.
  • Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.10% and 1.51%, respectively.
  • The spot price of WTI Crude Oil gained 6.96% this week to close at $44.71 per barrel. WTI Crude is up 11.64% in 2016.
  • The spot price of Gold was unchanged this week, closing at $1,335.97 per ounce. Year to date, gold prices are up 25.90%.

Economic Data

  • Initial jobless claims came in at 266,000, edging down from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
  • Retail sales were flat in July, missing expectations of a 0.4% acceleration. Solid increases in vehicle and parts sales were offset by lower gas station sales as fuel prices declined. Core retail sales (excludes autos, gasoline and building materials) also showed no gain, underperforming estimates of 0.3%.
  • The University of Michigan consumer sentiment index moved up to 90.4 from 90.0 in the initial August release. This was a bit below expectations of a 91.5 reading. Within the report, consumers’ assessment of current economic conditions declined while their expectations of the future improved.

Fact of the Week

  • Americans spent $3.63 billion less at gas stations in June 2016 compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (Source: Census Bureau).

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

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UK Vote: Wealth Economic Update June 27, 2016

U.S. and World News

  • london_big-ben_49186880_340The United Kingdom has voted to Leave the European Union in the historic Brexit vote held on Thursday. For more information on this event, please see the special Brexit update here.
  • Acting Brazilian President Michel Temer has authorized a payment of $850 million from the federal government to the state of Rio de Janeiro, which is struggling with a fiscal crisis less than two months before the Olympic Games are slated to begin. This is in addition to fears about the Zika virus and other major public health concerns leading up to the Olympics. Rio declared a state of financial emergency last week as a result of deteriorating finances, which have forced deep cuts to services like education, healthcare and policing.
  • Just a week before $2 billion in bond payments come due, Puerto Rico’s governor Alejandro Garcia Padilla reiterated that the island will default on its general obligations even if services are cut off. Padilla is currently in Washington lobbying for Congressional approval of a bill that would establish the framework for Puerto Rico to restructure its $70 billion in debt.

Markets

  • Equity markets rallied early in the week before dropping dramatically after the results of the Brexit Referendum. The S&P 500 was down -1.62% for the week and closed at 2037. The Dow Jones dropped 1.55% and closed at 17,400. So far in 2016, the S&P is up 0.74% and the Dow is up 1.18%.
  • Interest rates moved lower again this week following the Brexit vote. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.07% and 1.56%, respectively.
  • The spot price of WTI Crude Oil lost 2.04% this week to close at $47.57 per barrel. WTI Crude is up 13.59% in 2016.
  • The spot price of Gold gained 1.32% this week, closing at $1,315.75 per ounce. Year to date, gold prices are up 24.00%.

Economic Data

  • Initial jobless claims came in at 259,000 which was a decrease 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 moved down to 267,000.
  • Existing home sales increased by 1.8% in May, which was in line with consensus and reached a new post-crisis high. Single family home sales rose 1.9% in the month, while multi-family sales increased 1.6%. By region, existing home sales rose in the Northeast (+4.1%), South (+4.6%) and West (+5.4%), but fell in the Midwest (-6.5%).

Fact of the Week

  • During the 25 years from 1991 to 2015, the average interest rate on a 10 year US Treasury note was 4.7%. As of close on Friday June 24th, the 10 year US Treasury note had a yield of 1.56%. (Source: Treasury Department)

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.

 

Wealth Management Economic Update May 16, 2016

U.S. and World News

  • President Dilma Rousseff has been suspended from office after an overwhelming 55-22 senate vote to start an impeachment trial and Vice President Michel Temer will assume the role as President for up to six months while the trial is ongoing. Former Central Bank Chief Henrique Meirelles who is liked among investors, will assume the role as Finance Minister. Despite the majority, Rousseff continues to ignore calls to resign and states that she will prevail in the trial.
  • The U.S congress continues to work towards a solution to fix Puerto Rico’s debt situation after the U.S territory released its fiscal 2017 forecast which indicated that their economy would likely contract for the fifth year in a row. The House of Representatives will reveal a plan in the near future that will stipulate how Puerto Rico’s many creditors will be prioritized.
  • oil_drill_saudi_000023179128_320Saudi Arabia has named Khalid al-Falih as the new oil minister, replacing Ali al-Naimi who has been oil minister since 1995. Khalid al-Falih is currently the chairman of Aramco, a state owned oil company. Al-Falih stated that he does not intend to bring changes to Saudi Arabia’s current strategy of defending market share and maintaining stable petroleum policies.

Markets

  • Equity markets declined this week. The S&P 500 fell 0.51% and closed at 2047. Likewise, the Dow Jones dipped 1.16% and closed at 17,535. So far in 2016, the S&P is up 0.13% and the Dow is up 0.63%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.70%, respectively.
  • The spot price of WTI Crude Oil gained 3.61% this week to close at $46.27 per barrel. WTI Crude is up 13.66% in 2016.
  • The spot price of Gold lost 1.16% this week, closing at $1,274.06 per ounce. Year to date, gold prices are up 20.07%.

Economic Data

  • Initial jobless claims came in at 294,000 which was an increase from last week’s reading of 274,000. The increase was expected and is estimated to be attributed to seasonal factors in New York State. The four week moving average for claims ticked up to 268,000.
  • Retail sales increased 1.3% (mom) in April and beat expectations for the month. The gain reflected both higher energy prices and department store sales. Non-store retailers (online shopping) grew at a rapid monthly pace of 2.1%.
    • The Producer Price Index (PPI) increased by 0.2% (mom) in April which was supported by higher energy prices as food prices were down (-0.4%). PPI excluding food and energy rose 0.1% for the month.
  • The University of Michigan Sentiment Index preliminary release for May climbed to 95.8 from 89.0 with expectations of only a small increase. The rise in the index was driven by a rise in forward-looking consumer expectations.

Fact of the Week

  • According to the National Endowment for Financial Education, 45% of the 118 million households in the United States live “paycheck-to-paycheck”.

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.

 

Wealth Management Economic Update April 25, 2016

U.S. and World News

  • Looking to stave off impeachment proceedings, Brazilian President Dilma Rousseff will travel to the United Nations in New York to rally international support around her. While there, Rousseff will attempt to frame the recent votes by the Brazilian congress to move forward with impeachment as a coup. If the Senate in Brazil votes by simple majority in early May to continue with impeachment, Rousseff will be suspended from her post and replaced by VP Michel Temer. Prior to Rousseff, four of Brazil’s eight presidents since 1950 have failed to serve out their terms, with one impeachment, one resignation, one suicide and one military overthrow.
  • argentina_congress340Argentina has officially returned to the global bond markets following a 15 year hiatus. The country unveiled the biggest sovereign debt issuance by an emerging market nation in 20 years. The country is selling $15 billion in bonds yielding between 6.5% – 8%, however demand was strong, attracting orders worth $65 billion. Most of the cash raised will go toward paying off creditors from Argentina’s previous default, the reason for the 15 year hiatus.

Markets

  • Equity markets continued to climb higher this week. The S&P 500 gained 0.53% and closed at 2,092. Likewise, the Dow Jones rose 0.62% and closed at 18,004. So far in 2016, the S&P is up 3.02% and the Dow is up 4.16%.
  • Interest rates turned higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.36% and 1.89%, respectively.
  • The spot price of WTI Crude Oil rose 8.33% this week to close at $43.72 per barrel. This, despite an OPEC summit in Doha, Qatar last weekend that yielded no change in policy.  WTI Crude is up 9.36% in 2016.
  • The spot price of Gold was virtually unchanged this week, closing at $1,233.61 per ounce. Year to date, gold prices are up 16.26%.

Economic Data

  • Initial jobless claims came in at 247,000 which was a decrease from last week’s reading of 253,000. The Labor Department noted no special factors in the data. This was the lowest level of initial claims since 1973. The four week moving average for claims moved down to 261,000.
  • Housing starts declined by -8.8% in March, worse than expectations of a -1.1% decline. Single family starts declined -9.2% and multifamily starts fell by -7.9%.
  • Existing home sales increased 5.1% in March, beating expectations of 3.9%. The gain marks a big bounce back from the -7.3% decline in February.

Fact of the Week

  • 25 years ago, 89% of American workers expected to be retired by at least age 65. Today, only 57% of American workers expect to be retired by 65. (Source: Employee Benefit Research Institute)

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.

 

Wealth Management Economic Update April 18, 2016

U.S. and World News

  • Legislators in Washington D.C. have begun working towards a solution for Puerto Rico’s $70 billion debt burden, though the process is not expected to move smoothly due to partisan bickering. Plans are to unveil a bill that would create a seven member oversight board appointed by President Obama as well as create collective action clauses, which would separate creditors into different pools and allow them to vote on modifications to the debt. The proposal stops short of giving Puerto Rico broad bankruptcy authority, forcing the island to work with Washington to find a solution.
  • Brazil’s lower house of Congress has voted to recommend President Dilma Rousseff’s impeachment for allegedly manipulating public finances. Further votes are expected this weekend that could continue momentum for her ouster. If the proceedings reach Brazil’s Senate, the chamber could decide by simple majority to put Rousseff on trial, which would suspend her position for up to six months, requiring Vice President Michel Temer to become acting president.
  • A U.S. appeals court has cleared the way for Argentina to raise as much as $15 billion to pay holdout creditors whom had loaned the country money in the past. The ruling would allow Argentina to re-enter the international capital markets for the first time in more than a decade following a default on its debts in 2001. This marks another victory for President Mauricio Macri, who has been diligently been negotiating with the country’s creditors since he was elected last year and has already passed a number of economic and financial reforms.

Markets

  • The markets rose this week as 1st quarter earnings reports started coming in. The S&P 500 gained 1.62% and closed at 2,081. Likewise, the Dow Jones rose 1.82% and closed at 17,897. So far in 2016, the S&P is up 1.80% and the Dow is up 2.71%.
  • Interest rates turned higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.75%, respectively.
  • The spot price of WTI Crude Oil rose 1.76% this week to close at $40.42 per barrel. WTI Crude is up 1.10% in 2016.
  • The spot price of Gold declined 0.53% this week, closing at $1,234.08 per ounce. Year to date, gold prices are up 16.30%.

Economic Data

  • Initial jobless claims came in at 253,000 which was a decrease from last week’s reading of 267,000. The Labor Department noted no special factors in the data. This marks 58 consecutive weeks of initial claims below 300,000, the longest streak since 1973. The four week moving average for claims moved down to 265,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.1% in March, below expectations of a 0.2% gain. Over the last 12 months, overall inflation has risen 0.9%, which is lower than the forecasted 1.0%.
    • Core CPI (excludes food and energy) increased by 0.1%, which was also below estimates of 0.2% gains. Core prices have now risen 2.2% over the last 12 months.
  • Retail sales declined -0.3% in the month of March, missing estimates of a 0.1% gain. A 2.1% decline in motor vehicle sales and 0.9% decline in clothing purchases were largely responsible for the miss.
  • The University of Michigan’s index of consumer sentiment dropped to 89.7 in April compared to 91.0 in March, and against consensus expectations for a minor increase. The decline was mainly driven by a lower assessment of both current conditions and consumer expectations.

Fact of the Week

  • The average national price of gasoline fell from $2.26 to $2.00 in 2015. Lower gas prices saved Americans $126 billion in 2015, an average of $1,084 per household. (Source: Financial Times)

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.

 

Wealth Management Economic Update December 14, 2015

U.S. and World News

  • Brazilian President Dilma Rousseff (Photo credit: Agencia Brasil)

    Brazilian President Dilma Rousseff*

    The impeachment process for Brazilian President Dilma Rousseff has begun this week with the selection of a special committee that will handle the first phase of the investigation. The selection of the committee went poorly for the President, as Brazil’s Congress chose representatives that were opposed by Rouseff’s supporters. Rousseff is being accused of tampering with the national budget to illegally disguise poor fiscal performance and a growing budget gap.

  • In an attempt to help Puerto Rico avoid a bond default on January 1st, the U.S. Senate has introduced a bill to extend assistance to the island. However, the proposal stopped well short of giving the U.S. Commonwealth access to bankruptcy court, a measure that has been speculated on recently. The proposed measures would cut employee payroll taxes and extend as much as $3 billion in funding to the island, which is dealing with over $72 billion in debt and a 45% poverty rate.

Markets

  • Markets fell sharply this week as the price of oil continued to fall. The S&P 500 lost 3.76% and closed at 2,012. The Dow Jones followed suit by falling 3.20% and closing at 17,265. Year to date, the S&P is down 0.25% and the Dow is down 0.69%.
  • Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.55% and 2.12%, respectively.
  • The spot price of WTI Crude Oil plunged by 11.53% this week, closing at a 52-week low of $35.36 per barrel. Year to date, Oil prices are down 41.04%.
  • The spot price of Gold decreased by 1.07% this week, closing at $1,074.77 per ounce. Year to date, Gold prices are down 9.25%.

Economic Data

  • Initial jobless claims came in at 282,000 which was an increase from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 270,750.
  • The University of Michigan consumer sentiment index rose in the first December estimate to a reading of 91.8 from 91.3 in November. Consumers’ assessment of current economic conditions rose, however expectations for the future worsened.
  • Headline retail sales increased by 0.2% in November, below consensus expectations of 0.3%. Core retail sales, which go into the official GDP calculation, rose by a larger than expected 0.6%. There were solid gains seen in sales of electronics, apparel and food service expenditures. However, sales at gas stations continued to fall, reflecting the continued decline in gas prices.

Fact of the Week

  • According to a new Pew Research Center report, middle class Americans now comprise less than half (49.9%) of the nation’s population, down from 61% in 1971. For the report, middle class was defined as households earning between 67% and 200% of the overall median income in the U.S. after adjusting for household size. For example, a family of three would be categorized as middle class if its total annual income ranged from $42,000 to $126,000.

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.

*Image of Brazilian President Dilma Rousseff. Photo credit: Agencia Brasil, via Wikimedia Commons. License: Creative Commons Attribution 3.0 Brazil License. (See, https://commons.wikimedia.org/wiki/File:Santos_and_Rouseff.jpg).