OPEC, Budget, Manchester: Wealth Economic Update May 29, 2017

U.S. and World News

  • oil-518901244The OPEC meeting on Thursday concluded with an agreement to extend oil production cuts for an additional nine months, however crude oil prices fell sharply on the day despite the positive result as expectations were high after OPEC displayed unusual optimism prior to the meeting. Iraq was surprisingly in support of the production cuts as they have been one of the more hesitant OPEC members to favor production cuts in the past. There still remain OPEC members that will not be required to comply with the extension cap such as Libya, Iran, and Nigeria.
  • President Trump has submitted a budget proposal that aims to cut $3.6 trillion in spending over the next ten years which includes cutting Medicaid and other social programs. The budget entails a $4.1 trillion spending allowance in 2018 which includes defense, border security, and infrastructure.
  • The U.K.’s terror threat level was raised to “critical” after an explosion following the Ariana Grande concert in Manchester, England killed 22 people and injured 59. Salman Abedi is the name of the man believed to be responsible for the attack and Prime Minister Theresa May raised the U.K. threat level to its maximum level of “critical” implying that another attack is potentially imminent.

Markets

  • Markets ended the week on a positive note. The S&P 500 rose by 1.47% and closed at 2,416. The Dow Jones gained 1.35% for the week and closed at 21,080. Year to date, the S&P is up 8.78% and the Dow is up 7.75%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.79% and 2.25%, respectively.
  • The spot price of WTI Crude Oil lost 1.74% this week, closing at $49.79 per barrel. Year to date, Oil prices have fallen 7.32%.
  • The spot price of Gold ended the week higher, closing at $1,267.14 per ounce. Year to date, Gold prices are up 10.43%.

 Economic Data

  • Initial jobless claims increased by 1,000 from last week, coming in at 234,000. Most of the increases in claims were attributed to California and Michigan. The four week moving average for claims dropped to 235,000.
  • Sales of new single-family homes fell 11.4% in April reaching a four-month low, however, new home sales in the prior three months were all revised upwards. The decline in April was largely attributed to new single-family home sales in the West.
  • Existing home sales fell 2.3% in April, but still remains at a March cycle-high. Existing sales of single-family units fell by 2.4%, while sales of condos declined by 1.6%. Existing home sales decreased in the South, West, and Northeast, but increased in the Midwest region.
    • The recent loss of momentum in the housing market and existing home sales is believed to be the negative affect from higher mortgage rates.
  • During the May Federal Open Market Committee meeting on Thursday, the Fed concluded that “it would soon be appropriate” for another rate hike. There is an 80% probability of a rate hike in June and another hike is expected in September. The Fed also noted that the weak Q1 GDP figure was likely transitory.

Fact of the Week

  • There was approximately $1.54 trillion in circulation as of April 5, 2017, of which $1.49 trillion was in Federal Reserve notes (Dollars). (Source: Board of Governors of the Federal Reserve System.)

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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Wealth Management Economic Update November 2, 2015

U.S. and World News

  • The Federal Reserve chose to take no action on raising interest rates at its October meeting this week. This was the consensus expectation going into this meeting and the focus now shifts to the December meeting for possible ‘liftoff’. The statement following this month’s meeting showed reduced concern about international and stock market developments. It also expressly stated that Fed officials will be considering raising interest rates at the December meeting.
  • The House and Senate have passed a budget deal that would prevent the U.S. from breaching the debt ceiling next week and help avoid a government shutdown in December. The agreement will increase spending by $80 billion above the sequestration caps for military and domestic programs. Those increases would be offset by cuts in spending on Medicare and Social Security. The deal also lifts the debt ceiling through March 2017. The deal will now go to President Obama for final approval.
  • chinese_baby_320In a move aimed at improving growth, China has announced that it will abandon its one-child policy and allow Chinese couples to have two children. The country experienced significant social and demographic issues relating to the 35 year old policy, as China faces an aging population that doesn’t have the workers it needs for its large economy.
  • Despite rising expectations of an increase in stimulus, the Bank of Japan has kept its monetary policy on hold, holding asset purchases steady at ¥80 trillion. The decision comes amidst an output slowdown and declining consumer prices that threaten to push Japan back into deflation, something the BOJ has been fighting for two decades. BOJ Governor Hiroki Kuroda has insisted that Japan’s economy is in the middle of a moderate recovery and that the central bank has done all it can to boost growth.

Markets

  • Equity markets continued to advance upwards this week. The S&P 500 ended the week up 0.22%, closing at 2,079. Similarly, the Dow Jones increased 0.10% and closed at 17,663. Year to date, the S&P is up 2.71% and the Dow has gained 1.05%.
  • Yields in the Treasury markets moved higher this week. The 10 year Treasury bond now yields 2.15% while the 5 year Treasury bond now yields 1.52%.
  • The spot price of WTI Crude Oil rose this week. Prices increased by 4.00% closing at $46.38 per barrel. In 2015, WTI Oil prices are down 21.98%.
  • The spot price of Gold decreased this week, losing 1.92% and closing at $1,142.11 per ounce. Year to date, gold prices are down 3.57%.

Economic Data

  • Initial jobless claims came in at 260,000 which was an increase from the prior week’s figure of 259,000. The Labor Department noted that there were no special factors that affected the claims figure. The four week moving average for claims now stands at 259,000, which is a new low for this economic cycle.
  • The price index for personal consumption expenditures (PCE, measure of inflation) declined by 0.1% in September as was expected given the further drop in energy prices. The Core PCE measure (excluding food and energy) rose 0.15% during the month, bringing the one-year figure to 1.3%, well short of the Federal Reserve’s 2% target.
  • The Employment Cost Index (ECI, measure of wage inflation) increased by 0.6% during the 3rd quarter, in line with expectations. Over the past 12 months, compensation has increased by 2.0%.
  • The first estimate of 3rd quarter GDP showed growth of 1.5%, according to the Commerce Department’s report. The figure reflects solid growth in consumer spending with an offsetting drag from slow inventory accumulation.

Fact of the Week

  • According to the Federal Reserve, as of August 31st the total outstanding credit card debt in the U.S. was $918.5 billion. This translates to an average of $8,004 of credit card debt for every household in the country.

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

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Wealth Management Weekly Update April 28, 2014

U.S. and World News

  • The agreement reached last week to de-escalate the situation in Ukraine doesn’t appear to have been of much use. Gun fights have broken out in Eastern Ukraine causing President Obama to have to warn of additional sanctions on Russia if Putin doesn’t act to ease tensions.  Russia has not heeded these warnings and has begun military exercises on the Ukrainian border after five pro-Russian rebels were killed during attempts to reassert Russian control over the eastern part of the country.
  • S&P has reduced Russia’s debt rating by a notch to BBB-, or just one grade above junk status. S&P also kept the country’s outlook at negative as the tensions with Ukraine continue to ratchet up.
  • Japan_Toyko_000037699828_316Japan has overhauled the investment committee of its $1.26 trillion Government Pension Investment Fund (GPIF), the world’s largest pension fund. Prime Minister Shinzo Abe wants the fund to improve returns by making higher risk investments (stocks) and reducing its reliance on low-yielding government bonds. The revamp is part of Abe’s “third arrow” of economic reform and an attempt to lift Japan out of deflation.

Markets

  • The S&P 500 dipped slightly by 0.81% for the week, closing at 1,863.The Dow Jones followed suit by falling 0.85%, closing at 16,361. So far in 2014, the S&P is up 0.81% and the Dow Jones is down 1.30%.
  • Treasury yields fell this week in conjunction with lower stock prices. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.73% and 2.66%, respectively.
  • The spot price of WTI Crude Oil ended the week down 2.64%, closing at $100.64 per barrel.  Year to date, Oil prices have climbed 3.45%.
  • The spot price of Gold rose by 0.69% this week, closing at $1,303.25 per ounce. Year to date, Gold prices are up 8.46%.

Economic Data

  • Initial jobless claims rose by 25,000 from last week, coming in at 329,000 vs. consensus estimates of 315,000. The Labor Department noted that seasonal adjustment presents difficulties during the Easter holiday and spring break from schools. The four week moving average for claims moved up to 317,000 after seeing several weeks of decline.
  • New home sales dropped by 14.5% in March vs. expectations of them rising by 2.3%. This was the largest decline in this measure since July 2013 shortly after last year’s sharp jump in mortgage rates. While it’s possible that adverse weather earlier in the winter had a lagged effect on March new home sales by delaying home searches, this is being viewed as a legitimately disappointing report.
  • China’s manufacturing sector has contracted for a fourth consecutive month in April as the HSBC PMI gauge registered another sub-50 (50 is breakeven) reading at 48.3. Given China’s slowing economy, many analysts believe that the Chinese government will add to its recent stimulus measures.

Fact of the Week

  • The U.S. government had a streak of 42 consecutive monthly deficits through 3/31/2012, an all-time record. Since then, 7 of the last 24 months have actually generated a surplus (tax receipts greater than expenditures). Higher taxes collected due to economic improvements and stock market gains, as well as reduced spending through measure like the sequester have helped to balance the budget.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update April 14, 2014

U.S. and World News

  • The Senate has passed a bill that would extend unemployment benefits for 2.8 million people who have been out of work for at least six months. The legislation would restore the payout for five months retroactive to December, when the payouts expired. The bill will now be reviewed by the House, where approval is expected to be harder to come by due to concerns about costs of the extension.
  • The world’s largest election began this week in India with an electorate of 815 millionindia_taj_mahal_350 people. The ballot comprises of nine rounds and will take five weeks with results due on May 16th. The favorite to win is the Bharatiya Janata Party led by Narendra Modi, who has the support of businesses in the country. There are hopes that, if elected, he could form a stable coalition and revive India’s lackluster economy.
  • Ukraine’s security forces have been attempting to clear Kharkiv, the country’s second largest city, of separatists as the government tries to counteract what it sees as Russian schemes to engineer further annexations. Violence has flared up recently amid pro-Russian demonstrations in Ukraine.
  • The Illinois House and Senate approved a bill that would increase employee contributions to two Chicago city pension systems and will cut future cost of living increases for retirees. The bill is the start of an attempt to deal with a pension system that has a shortfall of around $20 billion, with some funds on track to completely run out of money within a decade.

Markets

  • Stock markets continued their slide this week that began last Friday. The S&P 500 was down 2.61% for the week, closing at 1,816.The Dow Jones fell 2.31%, closing at 16,026. So far in 2014, the S&P is down 1.20% and the Dow Jones is down 2.69%.
  • Treasury yields fell this week in conjunction with falling stock prices as the growth prospects of the U.S. economy have been called into question. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.58% and 2.63%, respectively.
  • The spot price of WTI Crude Oil ended the week up 2.28%, closing at $103.40 per barrel.  Year to date, Oil prices have risen 5.52%.
  • The spot price of Gold rose by 1.14% this week, closing at $1,318.34 per ounce. Year to date, Gold prices are up 9.71%.

Economic Data

  • Initial jobless claims dropped by 32,000 from last week, coming in at 300,000 vs. consensus estimates of 320,000. The level of claims was a post-recession low and was the best reading since May 2007. The four week moving average for claims fell to 316,000, continuing the improvement in this timely measure of employment.

Fact of the Week

  • According to the IRS, eliminating the deduction for home mortgage interest expense would increase annual tax revenues to the U.S. government by $175 billion, a boost of 6.3%.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update April 8, 2014

cuffsU.S. and World News

  • The FBI, Justice Department and the SEC all announced this week that they are investigating whether high-frequency trading companies break insider trading laws by abusing the fast moving information that they are able to receive microseconds before investors. The traders in question are able to use this informational advantage to front run investor orders, generating riskless profit on their end. The announcements come of the heels of a media tour by author Michael Lewis, whose new book, ‘Flash Boys’, accuses the high-frequency traders of rigging the stock markets.
  • The government has met its goal of signing up 7 million people for Obamacare by the end of March. Over 7.1 million Americans enrolled despite significant technical issues in the final days before this enrollment deadline. The administration failed to disclose the detail behind those who have signed up, including the most important metric for the success of the program: how many young people enrolled.
  • China has unveiled another stimulus package as part of the country’s attempt to stabilize slowing growth and maintain confidence. The announcement comes even as the government looks to reform the economy so that it relies less on the state sector. The stimulus includes selling 150 billion Yuan ($25 billion) in bonds for railway construction, improved low income housing and tax relief for struggling small businesses.

Markets

  • Stock markets made new all-time highs in the middle of the week before experiencing a sharp sell-off on Friday following the monthly jobs report. The S&P 500 was up 0.43% for the week, closing at 1,865.The Dow Jones rose 0.58%, closing at 16,412. So far in 2014, the S&P is up 1.45% and the Dow Jones is now down 0.39%.
  • Treasury yields did not fluctuate much from last week despite seeing some moderate  mid-week swings. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.71% and 2.73%, respectively.
  • The spot price of WTI Crude Oil ended the week down 0.57%, closing at $101.09 per barrel.  Year to date, Oil prices have risen 3.16%.
  • The spot price of Gold rose by 0.70% this week, closing at $1,304.25 per ounce. Year to date, Gold prices are up 8.54%.

Economic Data

  • Initial jobless claims rose by 16,000 from last week, coming in at 326,000 vs. consensus estimates of 319,000. The four week moving average for claims ticked up to 320,000.
  • Monthly nonfarm payroll employment increased by 192,000 vs. expectations of 200,000 jobs gained. Revisions to the January and February reports added another 37,000 jobs. The unemployment rate held steady at 6.7% and the labor force participation rate rose by 0.2% in the month. Overall, the report was good but not great and employment numbers may have seen an artificial boost from the expiration of emergency unemployment benefits.

Fact of the Week

  • According to the IRS, the total number of pages in the Federal Tax Rules has increased by 34,108 pages since 1995. Now standing at a total of 74,608 pages, the U.S. tax code has expanded by 5 new pages per day every day in the last 19 years.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update March 31, 2014

ukraine_moscow_mapU.S. and World News

  • World leaders met in the Netherlands this week to discuss a wide range of issues, but probably most notably the situation with Russia and Ukraine. The leaders barred Russia’s participation from the scheduled G-8 meeting, making it instead a G-7 conference with the United States, Britain, France, Germany, Italy, Canada and Japan participating. The group reaffirmed that Russia’s actions will have significant consequences, declaring Russia’s annexation of Crimea as a clear violation of international law.
  • The International Monetary Fund (IMF) has agreed to provide Ukraine with $14-18 billion as part of an economic reform program that will enable the country to tap into a total of $27 billion of international support over the next two years. In the U.S., Congress has overwhelmingly approved an aid package for Ukraine that includes $1 billion in loan guarantees and $150 million in direct assistance.

Markets

  • Stock markets were mixed this week. The S&P 500 was down 0.45% for the week, closing at 1,858.The Dow Jones edged up 0.12%, closing at 16,323. So far in 2014, the S&P is up 1.00% and the Dow Jones is now down 0.97%.
  • Short maturity issues saw their yields rise again this week, continuing last week’s trend following Janet Yellen’s hints that rate hikes may be coming sooner that expected. The     5 year and 10 year U.S. Treasury Notes are now yielding 1.75% and 2.72%, respectively.
  • The spot price of WTI Crude Oil ended the week up 2.06%, closing at $101.53 per barrel.  Year to date, Oil prices have risen 3.61%.
  • The spot price of Gold fell by 3.03% this week, closing at $1,293.85 per ounce. Year to date, Gold prices are up 7.67%.

Economic Data

  • Initial jobless claims dropped by 10,000 from last week, coming in at 311,000 vs. consensus estimates of 323,000. The four week moving average for claims fell to 318,000 continuing the positive trend in this timely employment indicator.
  • The Case-Schiller home price index rose a solid 0.8% in January vs. expectations of 0.6%. All 20 cities in the index saw price increases and prices nationally have risen 13.2% over the past year.
  • Chinese factory activity has shrunk for the fifth straight month with manufacturing PMI slipping to a reading of 48.1 (a reading of 50 is breakeven). Analysts see weakness in the country being broadly based and expect the Chinese government to launch a series of policy measures in an effort to stabilize growth.

Fact of the Week

  •        According to Bloomberg, American corporations hold an estimated total of $1.95 trillion in foreign earnings that have not been brought back into the United States in order to avoid the taxation of repatriating these funds. This foreign cash is equal to 12% of the size of the U.S. 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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update March 17, 2014

U.S. and World News

  • Quickly condemned as an illegal referendum by the U.S., the overwhelming majority of Crimeans voted to secede from Ukraine and join Russia last Sunday. Russian President Vladimir Putin authorized the annexation despite warnings of economic sanctions from President Obama and European Union nations. Obama has since responded by imposing asset freezes and visa bans on some senior Russian officials and businessmen closely associated with Putin. Meanwhile, Ukraine plans to pull its troops out of Crimea, effectively accepting Russia’s annexation of the province and will now fortify its eastern border with Russia.
  • fed_000011172845SmallThe Federal Reserve board met this week and decided to continue on with the tapering of asset purchases, lowering monthly treasury purchases by another $10 billion to $55 billion per month. The Committee also provided an update to their forward guidance regarding raising short term interest rates from their near zero level. First, they have abandoned the use of a 6.5% unemployment rate threshold as a timing mechanism for raising rates. The unemployment rate has continued to fall, aided by a declining labor force, and was no longer useful to the policy makers as a true measure of labor market strength. Secondly, the Committee confirmed their use of a 2% inflation target when deciding on policy. Chairwoman Janet Yellen also made headlines when she estimated that rate hikes could come “around six months” after the Fed fully winds down its Quantitative Easing program. With the pace of tapering setting the course for an October end of asset purchases, higher rates could come in April of 2015, earlier than many expectations of late 2015/early 2016.

Markets

  • Despite the results of the Crimean annexation vote and an increase of international political tensions, stock markets rose this week. The S&P 500 was up 1.38% for the week, closing at 1,867. The Dow Jones climbed 1.48%, closing at 16,302. So far in 2014, the S&P is up 1.45% and the Dow Jones is now down 1.09%.
  • Treasury yields jumped higher this week, especially shorter maturity issues, after Janet Yellen’s hints that rate hikes may be coming sooner that expected. The 5 year and 10 year U.S. Treasury Notes yielding 1.71% and 2.75%, respectively.
  • The spot price of WTI Crude Oil ended the week up 1.04%, closing at $99.58 per barrel.  Year to date, Oil prices have risen 1.62%.
  • The spot price of Gold fell by 3.51% this week, closing at $1,334.32 per ounce. Year to date, Gold prices are up 11.04%.

Economic Data

  • Initial jobless claims edged up by 5,000 from last week, coming in at 320,000 vs. consensus estimates of 322,000. The four week moving average for claims fell to 327,000 continuing the positive trend in this timely employment indicator.
  • The Headline Consumer Price Index rose 0.1% in February, in line with expectations. Energy prices declined 0.5%, as a 3.6% increase in natural gas prices was offset by a 1.7% decline in motor fuel prices. Over the past year, headline CPI has increased 1.1%, consistent with a subdued inflationary environment.

Fact of the Week

  • According to a study by the National Institute on Retirement Security, 38 million of the 84 million American households (45%) that are headed by working-age people (ie. not retired) do not own any tax-advantaged retirement accounts like an IRA or 401(k).

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update March 17, 2014

iStock_000024203309Small_350U.S. and World News

  • Tensions continue to mount overseas as rhetoric and vague threats of economic sanctions from President Obama and John Kerry against Russian action in Ukraine have fallen on deaf ears. The citizens of the Ukrainian province Crimea are scheduled to hold a referendum vote on Sunday in regards to joining the Russian Federation. Russia has stated that they will honor the results of the vote by the Crimean people, while John Kerry has stated that an annexation of Crimea by Russia will not be recognized by the United States and would bring with it strong consequences.
  • A bipartisan group of senators has agreed on a proposal to renew long-term jobless benefits for five months. The payments would be made retroactively from December, when the previous extension expired. The measure, which would cost $10 billion, is expected to pass through the Senate, but is expected to meet significant opposition in the House, making ultimate passage a toss-up.

Markets

  • Stock markets fell this week amid disappointing economic data from China and intensified rhetoric leading up to the Crimean referendum vote. The S&P 500 fell 1.92% for the week, closing at 1,841. The Dow Jones dropped by 2.29%, closing at 16,066. So far in 2014, the S&P is up 0.07% and the Dow Jones is now down 2.53%.
  • Treasury yields came back down this week following the increasing of tensions overseas with the 5 year and 10 year U.S. Treasury Notes yielding 1.54% and 2.66%, respectively.
  • The spot price of WTI Crude Oil ended the week down 3.54%, closing at $98.95 per barrel.  Year to date, Oil prices have risen 0.52%.
  • The spot price of Gold increased this week, gaining 3.19% and closing at $1,382.72 per ounce. Year to date, Gold prices are up 15.07%.

Economic Data

  • Initial jobless claims dropped by 8,000 from last week, coming in at 315,000 vs. consensus estimates of 330,000. The four week moving average for claims fell to 330,500. The Labor Department noted that there were no special factors affecting last week’s claims.
  • Consumer inflation in India fell for the third consecutive month in February, dropping to 8.1% from 8.8% in January. The decline comes as the Reserve Bank of India considers setting an inflation target after having raised interest rates three times since September.

Fact of the Week

  • According to the National Institute on Retirement Security, in 1975 85% of American workers in the private sector (non-government jobs) were covered by a defined benefit pension plan. This compares to just 16% of private sector workers being covered by pensions today, highlighting the dramatic shift from defined benefit pensions toward defined contribution plans such as 401(k)’s.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update March 10, 2014

U.S. and World Newsukraine_map

  • Russian forces took control of Crimea and threatened a full-scale invasion of Ukraine early this week, causing markets to fall drastically on Monday. Russian President Vladimir Putin then calmed markets by ordering some military units back to their bases and claiming that the country has no intention of using military force in the Ukraine. However, in a bit of a surprising twist, the Crimean parliament has voted unanimously for the province to become a part of Russia. The parliament’s vote is not binding in any way but this action will now go to a referendum vote by the citizens of Crimea that is scheduled for March 16th, where a “Yes” vote to join Russia could put the U.S. and the European Union in a bit of a democratic bind.
  • The crisis in Ukraine has renewed calls among Republicans and energy state Democrats for an easing of restrictions on foreign sales of natural gas. With Russia supplying Europe with 30% of its natural gas, there are many nations who are wary of imposing major sanctions on the country. By increasing U.S. gas exports, that sort of reliance on Russia could be reduced and give the U.S. and E.U. a freer hand when dealing with Russia, particularly in the long term.
  • President Obama unveiled his $3.9 trillion budget for fiscal year 2015 this week. His budget includes tax hikes for the wealthy and energy companies, as well as increased spending on infrastructure and education. Many of the proposals included in his budget stand little chance of passing but will provide fodder for the upcoming mid-term elections.

Markets

  • Stock markets shrugged off losses on Monday due to the tensions in Ukraine and rallied to end the week. The S&P 500 again closed at an all-time high, ending up 1.04% for the week, closing at 1,878. The Dow Jones rose by 0.82%, closing at 16,453. So far in 2014, the S&P is up 2.01% and the Dow Jones is now down 0.26%.
  • Treasury yields rose this week following an easing of tensions overseas with the 5 year and 10 year U. S. Treasury Notes yielding 1.64% and 2.79%, respectively.
  • The spot price of WTI Crude Oil ended the week flat, closing at $102.55 per barrel.  Year to date, Oil prices have risen 4.16%.
  • The spot price of Gold increased this week, gaining 1.05% and closing at $1,340.32 per ounce. Year to date, Gold prices are up 11.54%.

Economic Data

  • Initial jobless claims dropped by 26,000 from last week, coming in at 323,000 vs. consensus estimates of 335,000. The four week moving average for claims fell to 336,500. The Labor Department noted that there were no special factors affecting last week’s claims.
  • The monthly non-farms payroll employment figure came in higher than expected, showing a gain of 175k jobs vs. estimates of 149k. The negative impact from weather ended up being smaller than anticipated. The previous two months numbers were revised up by 25k, bringing the three month average gain to 129k.
    • The unemployment rate ticked up to 6.7% from 6.6%, while the labor force participation rate held steady at a very low 63.0%.
    • Also in the report, average hourly earnings unexpectedly rose 0.4% for the month, the strongest gain in eight months and have risen 2.2% over the last 12 months. This could perhaps be the early signs of a more normal inflationary environment.

Fact of the Week

  • Sunday marks the 5 year anniversary of the stock market recession low (3/9/2009), which was famously called by late CNBC anchor Mark Haines when he proclaimed, “I’m going to go out on a limb here…I think we are at a bottom. I really do.” On that date, the     S&P 500 traded at 676 and has since gained 208.75% total return (including dividends) to close today at an all-time high of 1,878. In that same time frame, the Dow Jones has risen from 6,547 to 16,453, a total return of 187.55%.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

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Wealth Management Weekly Update January 21, 2014

iStock_000012809706XSmallU.S. and World News

  • Senate leaders have been unable to come to an agreement over extending benefits for the long-term unemployed, primarily due to differences over financing the aid and how long the extension should last. It not appears likely that the Senate will not revisit the issue until late this month.
  • Both the House and Senate have approved the $1.01 trillion budget to finance the government through September 30th. The 1,582 page proposal eases some automatic spending reductions and will now go to President Obama for his approval. Congress will now turn its attention to the $16.7 trillion debt limit that is about six weeks away from being breached.
  • According to a report from the Department of Health and Human Services, only 30% of the people who have bought insurance under Obamacare are 34 years old or younger, while over one third are 55 or older. This could be a problem because the success of the Affordable Care Act hinges on signing up enough “young invincibles” who would need less care, in order to help pay for the sick and elderly. The White House had been banking on at least 40% of those who enroll being under 34 and if the numbers don’t balance out as needed, premiums could rise substantially.

Markets

  • Stock markets were mixed this week as the S&P 500 ended the week down by 0.18%, closing at 1,839 and the Dow Jones gained 0.15%, closing at 16,458. So far in 2014, the S&P and Dow are down 0.52% and 0.71% respectively.
  • Treasury yields continued to fall with week. The 5 year and 10 year treasury now yielding 1.63% and 2.82% respectively.
  • The spot price of WTI Crude Oil rose this week by 1.49%, closing at $94.10 per barrel. Oil prices are down 4.39% in 2014.
  • The spot price of Gold rose a bit this week, gaining 0.59% and closing at $1,253.94 per ounce. Year to date, Gold prices are up 4.35%.

Economic Data

  • Initial jobless claims declined from last week to 326,000 vs. consensus estimates of 328,000. The four week moving average for claims fell by 14,000 to 335,000. The Labor Department noted that there was nothing unusual in the data this week as we exit the holiday season.
  • The Headline Consumer Price Index (measure of inflation) rose 0.3% last month, in line with expectations with a 2.1% increase in energy prices boosting the figure. Over the past 12 months, inflation has increased by 1.5%, a very subdued rate.
  • The number of foreclosure filings last year dropped to the lowest level since 2007, declining by 26% to 1.36 million properties. The figure is less than half of the peak year of 2010 when 2.9 million properties were foreclosed. The states with the highest foreclosure rates in 2013 were Florida, Nevada, Illinois, Maryland and Ohio.

Fact of the Week

  • 40 years ago this month, President Richard Nixon declared that “in 1980, the US will not be dependent on any other country for the energy we need.” Of the 18.6 million barrels per day of petroleum products that Americans consumed last year, 7.4 million barrels (or 40%) were imported.

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 – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg – (630) 966-2462 jrunnberg@oldsecond.com

Visit Old Second Wealth Management