Fed rate increase, Qatar: Wealth Economic Update June 17, 2017

U.S. and World News

  • rate_balloon-491446733_360The Federal Reserve increased the federal funds rate by 0.25% to a target range of 1%-1.25% at its June meeting this week and signaled that there would be one more increase this year. While this move was widely expected, markets were more focused on the details regarding reduction of the balance sheet. The Fed indicated that they will begin shrinking the balance sheet and that each quarter going forward; they will allow higher amounts of securities to roll off the balance sheet without reinvestment.
  • The International Energy Agency stated that the conflict between a handful of Middle East countries and Qatar regarding accusations that Qatar is in support of Islamist militants is causing “logistical headaches”. Saudi Arabia, Egypt, Bahrain, and the UAE have officially stopped working with Qatar and the UAE has banned oil tankers linked to Qatar. Egyptian finance minister Amr El-Garhy is not concerned about the possibility of financial repercussions resulting from the conflict and stated “It’s not a matter of a loss of money… it’s a matter of principle.”

Markets

  • Markets ended the week slightly higher. The S&P 500 rose by 0.12% and closed at 2,433. The Dow Jones increased by 0.33% for the week and closed at a New All Time High of 21,384. Year to date, the S&P is up 9.70% and the Dow is up 9.47%.
  • Interest rates fell this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.74% and 2.15%, respectively
  • The spot price of WTI Crude Oil slid 2.40% this week, closing at $44.73 per barrel. Year to date, Oil prices have fallen 16.73%
  • The spot price of Gold ended the week lower, closing at $1,254.14 per ounce. Year to date, Gold prices are up 9.29%.

 Economic Data

  • Initial jobless claims decreased by 8,000 from last week, coming in at 237,000. The decline was largely attributed to California and other energy producing states. The four week moving average for claims moved up to 243,000.
  • The Consumer Price Index (CPI) decreased by 0.13% in May and the year-over-year rate fell 0.3% and came in at 1.9%. The decline was led by the drop in energy prices during the month.
  • Retail sales were down for the month declining by 0.3% versus expectations of no change.
    Core retail sales (ex-autos, gasoline and building materials) were unchanged versus expectations of a 0.3% gain. Core April sales were revised up 0.5% which more than offset the miss for last month.

    • Housing starts fell by 5.5% in May to 1092k, which was below expectations. The decline was led by both multifamily and single-family homes in the Midwest and Southern regions.
    • The University of Michigan’s consumer sentiment index declined by 2.6 points to 94.5 in the preliminary June report. The drop marks a seven month low, but still remains a relatively high level.

Fact of the Week

  • The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)

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

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UK Election, Qatar, Puerto Rico: Wealth Economic Update June 9, 2017

U.S. and World News

  • UKflag-518908074_360The decision to hold snap elections in the United Kingdom seems to have back-fired on Prime Minister Theresa May and her Conservative Party as they lost their majority with the Labour Party gaining significant ground in Thursday’s vote. In April, Theresa May decided to hold the snap general election in an attempt to gain a significant majority for her ahead of the Brexit negotiations but with the poor results there have been calls for her resignation. The split parliament could make Brexit negotiations with the UK’s European Union partners more difficult.
  • Four Arab states (Saudi Arabia, Egypt, the United Arab Emirates and Bahrain) have cut off diplomatic ties with Qatar, as well as closing air and sea routes. This marked a significant escalation of a rift between the Persian Gulf countries that has been brewing for a few months. President Trump stated that he wished to “de-escalate” the situation but appeared to support the isolation of Qatar, noting that his message against funding terror and extremism is being heeded by those other countries in the region.
  • Citizens of Puerto Rico are voting this weekend in a referendum on the island’s political status. There will be three choices on the ballot: statehood, “current territorial status” and independence. It’s not clear what would happen in the case of any of these choices winning decisively or how Congress would interpret the results. This is the island’s fifth referendum since 1898 and comes amid a crippling economic crisis.

Markets

  • Markets were mixed this week. The S&P 500 dropped by 0.27% and closed at 2,432. The Dow Jones gained 0.33% for the week and closed at a New All Time High 21,272. Year to date, the S&P is up 9.57% and the Dow is up 8.84%.
  • Interest rates edged higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.20%, respectively.
  • The spot price of WTI Crude Oil lost 3.80% this week, closing at $45.85 per barrel. Year to date, Oil prices have fallen 14.65%.
  • The spot price of Gold ended the week higher, closing at $1,267.45 per ounce. Year to date, Gold prices are up 10.45%.

 Economic Data

  • Initial jobless claims decreased by 10,000 from last week, coming in at 245,000. Most of the decreases in claims were attributed to California and Tennessee, reversing their increases last week. The four week moving average for claims moved up to 242,000.

Fact of the Week

  • The New York Stock Exchange (NYSE) has more than twice the number of listed securities as the NASDAQ exchange (8,500 vs. 3,100). Despite this difference, The NASDAQ, which lists mostly technology companies, averages more than double the daily trading volume of the NYSE (2 billion shares for the NASDAQ vs. 880 million for the NYSE). (Average daily trade volume based on 1-month average figure)

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

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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

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.

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

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.

French Election, China, Fed: Wealth Economic Update May 15, 2017

U.S. and World News

  • France-516919908_360As expected, Emmanuel Macron won the French Presidential election in convincing fashion, securing 66% of Sunday’s runoff vote against National Front leader Marine Le Pen. “I will fight with all my strength against the divisions that are undermining us,” Macron declared in his victory speech. Global market reaction was subdued as the polls showed this to be the likely result, but the victory was nonetheless welcomed as it solidifies France’s place in the European Union. Also part of Macron’s policy goals are to reform France’s labor market, unify the country’s pension plans and reduce the budget deficit.
  • Reshaping their trade relationship, the U.S. and China have revealed a new 10-point plan that will see China open its market to American companies and agencies. Commerce Secretary Wilbur Ross said the import/export deals on beef, poultry, natural gas, agriculture, financial services and biotechnology will help reduce the massive trade deficit that the U.S. currently has with China.

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 moved modestly lower this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.85% and 2.33%, respectively.
  • The spot price of WTI Crude Oil rose 3.46% this week, closing at $47.82 per barrel. Year to date, Oil prices have fallen 10.98%.
  • The spot price of Gold was mostly unchanged this week, closing at $1,228.43 per ounce. Year to date, Gold prices are up 7.18%.

 Economic Data

  • Initial jobless claims fell by 2,000 from last week, coming in at 236,000. The Labor Department did not note any factors that may have affected the data this week. The four week moving average for claims ticked up to 244,000.
  • Retail sales increased 0.4% in April, falling short of expectations for a 0.6% gain. Retail sales ex-autos increased 0.3% in the month.
  • The headline Consumer Price Index (measure of inflation) rose by 0.2% in April, in line with expectations. This modest rise came despite a 1.1% rise in energy prices and a 0.2% increase in food prices. Over the last 12 months, headline CPI has risen 2.2%.
    • Core CPI (excludes food and energy costs) disappointed and rose only 0.1% compared to expectations of 0.2%. Over the last 12 months, core prices have risen 1.9%.
  • The University of Michigan consumer sentiment index rose by 0.7 to a reading of 97.7 in the preliminary May report. The survey found consumers’ expectations for the future rose during the month and their assessment of current conditions was flat.

Fact of the Week

  • Core CPI (excludes food and energy costs) disappointed and rose only 0.1% compared to expectations of 0.2%. Over the last 12 months, core prices have risen 1.9%.

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.

French Election, AHCA, Fed: Wealth Economic Update May 5, 2017

U.S. and World News

  • Voters in France will head to the polls on Sunday to elect a new President, selecting either Emmanuel Macron or Marine Le Pen. The two candidates have been campaigning tirelessly since the first round of the election led to their selection in the run-off. In order to try to gain more broad appeal, the typically anti-EU Le Pen has eased off of her stance that if elected she would push for France’s exit from the European Union. Despite these efforts, Macron currently holds a sizable lead in the polling figures and is viewed as the more ‘status-quo’ candidate.
  • medical_360The U.S. House of Representatives passed the American Health Care Act by a slim 217-213 margin this week. “Make no mistake: This is a repeal and replace of Obamacare,” President Trump said after the bill’s passage. The legislation now faces an uphill battle in the Senate, where several Republican members have already signaled it could see major revisions. Reports also suggest that the Senate may write its own version of a bill.
  • The Federal Reserve held a policy meeting this week and held interest rates at their current levels as was the expectation in the market. The post-meeting statement acknowledged but downplayed the weak 1st quarter GDP growth, stating that it was likely ‘transitory,’ maintaining expectations of a June rate hike. The market is currently pricing in a nearly 100% probability that the Fed Funds Rate will be increased at the next meeting.

Markets

  • Markets continued to climb higher this week as economic data came in strong and international risks appeared to ease. The S&P 500 rose 0.66% and closed at a New All-Time High of 2,399. The Dow Jones gained 0.33% for the week and closed at 21,007. Year to date, the S&P is up 7.84% and the Dow is up 7.04%.
  • Interest rates moved modestly higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.88% and 2.35%, respectively.
  • The spot price of WTI Crude Oil dropped 5.68% this week, closing at $46.53 per barrel. Year to date, Oil prices have fallen 13.38%.
  • The spot price of Gold declined 3.12% this week, closing at $1,228.70 per ounce. Year to date, Gold prices are up 7.08%.

 Economic Data

  • Initial jobless claims fell by 19,000 from last week, coming in at 238,000. The drop appears to be a reversal from the effects of the Easter and spring break holidays that elevated the figures last week. The four week moving average for claims ticked up to 243,000.
  • The April jobs report showed an increase of 211,000 jobs during the month, beating consensus expectations of 190,000. This was a large improvement from the March report that showed only 79,000 jobs being created. The prior two months’ figures were revised down a combined 6,000 jobs, bringing the three month average job gains to 174,000 per month.
    • The headline unemployment rate moved down to 4.4% in the report, beating expectations of 4.6% and matching the lows achieved during the previous cycle (2006-2007). The labor force participation rate did fall -0.1% to 62.9%.
    • Average hourly earnings rose by 0.3% in April, in line with expectations. Over the last year, wages have increased by 2.5%.

Fact of the Week

  • Sell in May? – In analyzing the returns of the S&P 500 since 1990, the six month period from November through April has beaten the six month period from May through October in 18 of 27 years. The November through April periods have seen a total return of 636% in the S&P during that time vs. a 73% gain for the May through October periods. (Source: BTN Research)

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.

French Election, Taxes, N Korea: Wealth Economic Update Apr. 28, 2017

U.S. and World News

  • iStock-534000920_400Results from the first round of the French Presidential Election showed Emmanuel Macron and Marine Le Pen advancing to a presidential runoff as voters turned their backs on the political establishment. Macron, the independent centrist won 23.75% of the vote, while Le Pen, the National Front leader, garnered 21.53%. Trying to broaden her appeal, Le Pen is taking a leave of absence from her leadership position of the National Front party, whose platform is slashing immigration, clamping down on trade and removing France from the European Union. The runoff vote is scheduled for May 7th, in which current polls show Macron holding the advantage.
  • President Trump unveiled the outline for his proposed tax reform this week. While details remain to be filled in, the plan is highlighted by a series of broad tax cuts. It included a reduction of the corporate tax rate from 35% to 15%, lower individual tax rates along with simplified brackets, a bigger standard deduction, and a repeal of the estate and alternative minimum taxes. This one page proposal did not include the controversial border-adjustment tax on imports.
  • Tensions continue to rise in Korea as the North detained another U.S. citizen and staged a massive live fire-drill to commemorate the 85th anniversary of its military. In response to this escalation, the U.S. military has started moving key parts of its controversial THAAD anti-missile defense system to a deployment site in South Korea. This move, which has angered North Korea, China and Russia, prompted protests by local residents and was denounced by the frontrunner in South Korea’s presidential election.

Markets

  • Markets bounced higher following the results of the first round of the French Election. The S&P 500 rose 1.53% and closed at 2,384. The Dow Jones gained 1.91% for the week and closed at 20,941. Year to date, the S&P is up 7.14% and the Dow is up 6.69%.
  • Interest rates moved modestly higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.82% and 2.29%, respectively.
  • The spot price of WTI Crude Oil dipped 0.87% this week, closing at $49.19 per barrel. Year to date, Oil prices have fallen 8.43%.
  • The spot price of Gold declined 1.26% this week, closing at $1,268.21 per ounce. Year to date, Gold prices are up 10.52%.

 Economic Data

  • Initial jobless claims rose by 14,000 from last week, coming in at 257,000. The numbers may have been elevated this week due to seasonal adjustments surrounding Easter and spring break holidays. The four week moving average for claims dropped to 242,000.
  • The Case-Shiller home price index rose by 0.7% in March, in line with expectations. Prices rose in all 20 cities measured, with Seattle (1.9%), Dallas (1.2%) and San Francisco (1.0%) seeing the largest increases. Home prices as measured by the index have now risen 5.9% over the last 12 months.
  • The first estimate of 1st Quarter GDP showed growth of only 0.7% vs. expectations of 1.0%. The slowdown in consumer spending was a significant drag on the headline number.
  • The Employment Cost Index (ECI) rose by 0.8% in the 1st quarter, beating expectations of 0.6%. With the strong quarter, total compensation has now increased 2.4% over the last year.

Fact of the Week

  • 41% of homeowners between the ages of 65-74 and 63% of homeowners over age 75 own their home free and clear of any debt. (Source: Center for Retirement Research at Boston College)

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.

French Election, Brexit: Wealth Economic Update Apr. 21, 2017

U.S. and World News

  • france360France will be holding what is presumed to be the 1st round of its Presidential Election on Sunday. The current four top candidates in the polling are only separated by 4% points, making the race extremely tight. Under French election rules, if no candidate secures a majority (which seems all but a certainty), the two highest vote-getters will square off in a run-off election scheduled for May 7th. The four candidates include two broadly pro-market, liberal reformers (Emmanuel Macron and Francois Fillon) and two populist eurosceptics who promise labor market and trade protectionism (Marine Le Pen and Jean-Luc Melenchon). Macron and Fillon have put greater focus on domestic issues like tax reform, unemployment and the national debt. Meanwhile, both Le Pen and Melenchon focused on immigration control and have proposed taking France out of the European Union with Le Pen being more staunchly opposed to France remaining in the euro. Global markets will be watching the results of this election closely.
  • British Prime Minister Theresa May has called a snap general election in the U.K., with the vote to be held on June 8th. With her Conservative party holding a sizeable lead in polls, May is taking the opportunity to try to gain a significant majority as Brexit negotiations get underway. May said that the vote was necessary to secure a mandate going into a “moment of enormous national significance”, also stating that Westminster was currently too dividend to take on this task.

Markets

  • Markets rebounded a bit this week. The S&P 500 rose 0.87% and closed at 2,349. The Dow Jones gained 0.51% for the week and closed at 20,548. Year to date, the S&P is up 5.54% and the Dow is up 4.71%.
  • Interest rates ended the week where they began and remain at low levels. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.24%, respectively.
  • The spot price of WTI Crude Oil dropped 6.86% this week, closing at $49.58 per barrel. Year to date, Oil prices have fallen 7.80%.
  • The spot price of Gold was little changed this week, closing at $1,284.72 per ounce. Year to date, Gold prices are up 11.96%.

 Economic Data

  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no special factors affecting the data this week. The four week moving average for claims dropped to 243,000.
  • Housing starts declined -6.8% in March which was a larger drop than the expected -3.0%. The report was broadly weak with both the single-family category (-6.2%) and the multi-family category (-7.9%) seeing declines.
  • Existing home sales rebounded in March, increasing 4.4% vs. forecasts of 2.2%. This marks a full retracement of February’s -3.9% drop. Both sales of existing single family units (4.3%) and condos/co-ops (5.0%) rose during the month. On a regional level, existing home sales increased in the Northeast (10.1%), Midwest (9.2%) and South (3.4%) but declined in the West (-1.6%).

Fact of the Week

  • Of U.S. metropolitan areas with populations of at least 1 million, Salt Lake City has the lowest unemployment rate at 3.0% and Cleveland has the highest at 6.6%. The nationwide unemployment rate current stands at 4.5%. (Source: Department of Labor)

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.

Election: Special Wealth Management Update Nov. 9, 2016

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U.S. voters have spoken, and despite the popular vote favoring Democratic candidate Hillary Clinton, the Republican nominee Donald Trump secured an unexpected electoral victory reminiscent of the 2000 Presidential Election. While there may not be any “hanging chads” there are sure to be many “hanging pollsters” in the aftermath of this result. Online markets predicted an 85% chance of a Clinton win while Nate Silver’s FiveThirtyEight.com forecast Clinton as a 71% favorite in his final prediction.  As it became apparent that the Republican nominee was going to be competitive through the “rust belt”, uncertainty was introduced to the markets.

Foreign markets began trading on this uncertainty with the Nikkei Index closing down 5.36% and the Hang Seng Index off 2.16%.   Aftermarket traders began moving U.S. futures significantly into the red with the Dow Jones Futures trading down by over 800 points.  As the election results rolled in and electoral votes continued to stack up in favor of Donald Trump, the markets began to more efficiently price the outcome.  With markets stabilizing, European markets were pricing in an increase of 1% for the FTSE index and 1.5% for the DAX and the Dow Jones Futures moving back to pre-election levels.

While the results of the election were certainly a surprise, it was not outside of the scope of possible outcomes.  On the heels of the United Kingdom voting in favor of “Brexit” when polling data pointed toward a “Remain” outcome, the potential for a “Closet Trump Vote” was in the cards.  While the initial surprise rattled market expectations, investors quickly processed the information and markets recovered.

We at Old Second Wealth Management  focus on long term investing, and market volatility predicated from binary events often create opportunity to invest.  Additionally, the changing landscape of Washington may create further opportunities or challenges within the investment markets.  If you have any questions or concerns, please do not hesitate to reach out to you Old Second Relationship Manager or Investment Officer.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Wealth Management Economic Update May 9, 2016

U.S. and World News

  • Puerto Rico missed a $422 million bond payment due to its Government Development Bank this week, pushing the island’s debt crisis to a new level. The missed payment is the largest so far by Puerto Rico and is believed by many analysts to be a precursor to additional defaults this summer, when more than $2 billion in bonds come due. U.S. Treasury Secretary Jack Lew warned in a letter to Congress that a U.S. “taxpayer-funded bailout may become the only course available” if the proposed restructuring legislation on the table is not approved.
  • politician_podium76797371_320Texas Senator Ted Cruz and Ohio Governor John Kasich have both officially suspended their presidential campaigns following large losses in the Indiana primary this week. This leaves Donald Trump as the presumptive Republican nominee for the 2016 Presidential Election. Trump’s next step seems to be the selection of a running mate for which he reportedly has a short list. On the Democratic side, Bernie Sanders won the Indiana primary and remains in the race with Hilary Clinton, though his path to nomination is a very narrow one.

Markets

  • Equity markets were down marginally this week. The S&P 500 fell 0.33% and closed at 2,057. Likewise, the Dow Jones dipped 0.10% and closed at 17,741. So far in 2016, the S&P is up 1.37% and the Dow is up 2.67%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.78%, respectively.
  • The spot price of WTI Crude Oil dropped 2.81% this week to close at $44.63 per barrel. WTI Crude is up 9.63% in 2016.
  • The spot price of Gold lost 0.38% this week, closing at $1,288.60 per ounce. Year to date, gold prices are up 21.44%.

Economic Data

  • Initial jobless claims came in at 274,000 which was an increase from last week’s reading of 257,000. The Labor Department noted no special factors in the data. The four week moving average for claims ticked up to 258,000.
  • The monthly non-farm payrolls report showed an increase of 160,000 jobs in April, below expectations of 200,000 jobs. With 19,000 of negative revisions to the prior two months’ figures, the three month average of job gains stands at 200,000.
    • The headline unemployment rate remained at 5.0%, missing expectations of 4.9%. The miss was largely due to a 0.2% decline in the labor force participation to 62.8%.
    • Average hourly earnings rose 0.3% in April, in line with expectations. Over the last 12 months, wages have grown 2.5%.

Fact of the Week

  • Of the 5.26 million existing home sales in 2015, 30% (1.58 million) were completed by first-time home buyers. (Source: National Association of Realtors)

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.