Brexit: Wealth Economic Update Mar. 31, 2017

U.S. and World News

  • london360The Brexit process has officially begun as British Prime Minister Theresa May has invoked Article 50 of the Lisbon Treaty, formally informing the European Union of its exit from the bloc. The letter of declaration was hand-delivered to EU President Donald Tusk Wednesday and now begins what is estimated to be a two year negotiation process between the UK and all of the remaining 27 European Union member states. This is anticipated to be a difficult and lengthy procedure as agreements must be reached on tough issues such as trade and immigration.
  • Complicating matters in the United Kingdom is the fact that Scottish lawmakers voted 69-59 this week to seek a new referendum on independence within the next two years. This certainly comes as an unwelcome distraction from the Brexit proceedings for British leaders. First Minister of Scotland Nicola Sturgeon declared, “The mandate for a referendum is beyond question, and it would be democratically indefensible – and utterly unsustainable – to attempt to stand in the way of it.”

Markets

  • Markets closed the 1st quarter of 2017 on an up note. The S&P 500 gained 0.82% and closed at 2,363. The Dow Jones was also positive for the week rising 0.32% and closing at 20,597. Year to date, the S&P is up 6.06% and the Dow is up 5.18%.
  • Interest rates continued to decline a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.92% and 2.39%, respectively.
  • The spot price of WTI Crude Oil rose 5.82% this week, closing at $50.76 per barrel. Year to date, Oil prices have fallen 5.51%.
  • The spot price of Gold increased by 0.38% this week, closing at $1,248.24 per ounce. Year to date, Gold prices are up 8.77%.

Economic Data

  • Initial jobless claims declined by 3,000 from last week, coming in at 258,000. The level of claims was likely affected for a second week by Winter Storm Stella. The four week moving average for claims rose to 254,000.
  • 4th Quarter GDP growth was revised up in the 3rd estimate from +1.9% to +2.1%, beating expectations of +2.0%. The main source of the upward revision was real consumer spending, which was revised up to +3.5% from +3.0% previously.
  • The Case-Schiller home price index rose by 0.9% in its latest reading, beating expectations of a 0.7% increase. Prices rose in all 20 cities measured except for Cleveland, with Seattle (+1.7%) and Chicago (+1.3%) seeing the largest increases in the month. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The PCE index (measure of inflation) rose 0.1% in February, in line with consensus expectations. Over the last 12 months, PCE inflation has increased 2.1%, also in line with estimates.
    • Core PCE (excludes food and energy, Fed’s preferred inflation measure) rose 0.2% in February, meeting expectations. Over the last year, Core PCE has risen 1.75%, still below the Fed’s 2% inflation target.

Fact of the Week

  • 25 players will make the opening day rosters of the 30 Major League Baseball teams ahead of the season opening on Sunday night, a total of 750 big league ballplayers. Coming into this season, there have been a total of 18,593 men to appear in at least 1 game at the major league level. (Source: Major League Baseball)

PLAY BALL!!

 

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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Interest Rates, Brexit: Wealth Economic Update Mar. 20, 2017

U.S. and World News

  • In a highly anticipated move, the Federal Reserve raised the Fed Funds Rate by 0.25% this week. Despite being the second rate hike in three months, the Committee remained committed to a gradual pace of rate hikes going forward. The Fed projects two more interest rate hikes in 2017, though there are differing views among the members. There was one dissent, Neel Kashkari, who supported not raising at this meeting and taking a wait and see approach. Finally, it was noted by Fed Chair Janet Yellen that the size of the Fed’s balance sheet (which stands at $4.5 trillion) was discussed at the meeting, but no decisions were made in regard to reducing it over time.
  • British Prime Minister Theresa May secured permission to trigger Article 50 which would officially mark the beginning of Brexit negotiations between the nation and its European Union counterparts. Having received the go-ahead from Parliament, May has said that she will invoke Article 50 by the end month. It’s expected that the negotiation process will last at least two years before Britain is officially able to leave the EU.

Markets

  • Markets closed the week moderately higher. The S&P 500 gained 0.28% and closed at 2,378. The Dow Jones followed suit by inching up 0.08% and closing at 20,915. Year to date, the S&P is up 6.71% and the Dow is up 6.45%.
  • Despite a 0.25% rate hike in the Fed Funds Rate, interest rates fell this week as the projected pace of future hikes was not accelerated. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.02% and 2.50%, respectively.
  • The spot price of WTI Crude Oil stabilized this week and gained 0.47% this week, closing at $48.72 per barrel. Year to date, Oil prices have fallen 9.31%.
  • The spot price of Gold increased by 2.04% this week, closing at $1,229.26 per ounce. Year to date, Gold prices are up 7.13%.

Economic Data

  • Initial jobless claims edged 2,000 lower from last week, coming in at 241,000. The Labor Department noted no special factors in the data. The four week moving average for claims remained at 237,000 which is a near a 40-year low.
  • Retail sales increased 0.1% in February, in line with expectations. Sales excluding autos and gasoline increased 0.2%. Delayed tax refunds appeared to bring down several Retail categories.
  • The Consumer Price Index (measure of inflation) increased 0.1% in February, slightly beating expectations for flat prices. Over the last 12 months, CPI has increased 2.7%.
    • Core CPI (excludes food and energy) rose 0.2% for February, in line with expectations. Core prices have risen 2.2% over the last year.
  • Housing starts increased by 3.0% in February, beating expectations of 1.1%. The details of the report were also favorable, as the less volatile single family starts increased by 6.5% to the highest level since October 2007 while multi-family starts decreased 3.7%.

Fact of the Week

  • The S&P 500 has now gone 108 consecutive trading days without suffering at least a 1% decline over any single trading day. That’s the longest stretch that the S&P has gone without a 1% drop since it had a run of 105 trading days without one that ended on December 15, 1995. (Source: By The Numbers 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
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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Keystone, Interest Rates: Wealth Economic Update Feb. 17, 2017

U.S. and World News

  • oil_socialPresident Trump met with Canadian Prime Minister Justin Trudeau this week for their first face-to-face meeting. The major topic of discussion was the NAFTA trade deal that Trump has vowed to update and renegotiate. The two leaders also discussed Trump’s decision to conditionally approve the Keystone XL pipeline which begins in Alberta’s oil sands. Coming out of the meeting, Trump said that the trade situation with Canada is already “less severe” than it is with Mexico. Canada sends 75% of its exports to the United States, accounting for 20% of Canada’s GDP.
  • Janet Yellen delivered her semi-annual testimony to Congress this week and touched on a number of topics, including the pace of interest rate hikes in the near future. On that note, she stated that, “I would say every meeting would be live,” indicating that the next hike could come as soon as the Fed’s March meeting. The markets are now pricing in a little over a 1 in 3 chance that the Fed raises rates in March.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 1.60% and closed at 2,351 which is an All-Time High. The Dow Jones followed suit by rising 1.88% and closing at 20,624. Year to date, the S&P is up 5.31% and the Dow is up 4.76%.
  • Interest rates were little changed this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.90% and 2.42%, respectively.
  • The spot price of WTI Crude Oil was down 0.91% this week, closing at $53.37 per barrel. Year to date, Oil prices have dipped 0.65%.
  • The spot price of Gold increased by 0.11% this week, closing at $1,235.00 per ounce. Year to date, Gold prices are up 7.63%.

Economic Data

  • Initial jobless claims rose 5,000 from last week, coming in at 239,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 245,000 which is very close to a new 40-year low.
  • Retail sales increased by 0.4% in January, beating expectations of 0.1%. Retail sales ex-autos rose by 0.8%. Gains were broad-based across categories, with the largest increases coming from sporting goods (1.8%), electronics (1.6%), restaurants/bars (1.4%) and department stores (1.2%).
  • The headline Consumer Price Index (measure of inflation) increased by 0.6% in January, beating expectations of 0.3%. This was mostly the result of a 4.0% increase in energy prices during the month. Over the last 12 months, headline CPI has risen 2.5%.
    • Core CPI (excludes food and energy) increased by 0.3% during January, more than the 0.2% forecasted. In the last year, core prices have risen 2.3%.

Fact of the Week

  • 54% of student loan borrowers have either defaulted or failed to pay down even $1 of principal on their outstanding debt over the last 7 years. Until an error was discovered in the government calculations last month, it was believed that the percentage was much lower, at 34%. (Source: Education 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
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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Travel Ban, One China: Wealth Economic Update Feb. 10, 2017

U.S. and World News

  • scales_gavel-509557490_360Three judges in the U.S. Appeals Court upheld the suspension of President Trump’s travel ban this week. The government now has 14 days to ask the 9th Circuit to have a larger panel of judges review the decision or appeal directly to the U.S. Supreme Court, which would likely determine the case’s final outcome. Expressing his displeasure with the Circuit Court’s decision, Trump tweeted, “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!”
  • In his first phone call with Chinese President Xi Jinping, President Trump said that he would honor the nation’s “One China” policy which considers Taiwan as one with China and not a separate nation. Trump also urged closer ties between the U.S. and China. The clarification on the “One China” policy ends weeks of uncertainty regarding Washington’s approach to China.
  • According to a new U.S. Department of Homeland Security report, President Trump’s wall along the U.S.-Mexico border would be a series of fences and walls that would cost as much as $21.6 billion and take more than three years to construct. The projected price tag is much higher than the $12 billion figure cited on the campaign trail and the $15 billion estimated by Republican Congressional leaders.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 0.87% and closed at 2,316 which is an All-Time High. The Dow Jones followed suit by rising 1.13% and closing at 20,269, also an All-Time High. Year to date, the S&P is up 3.66% and the Dow is up 2.83%.
  • Interest rates fell this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.89% and 2.41%, respectively.
  • The spot price of WTI Crude Oil was unchanged this week, closing at $53.81 per barrel. Year to date, Oil prices have risen 0.18%.
  • The spot price of Gold increased by 1.09% this week, closing at $1,233.62 per ounce. Year to date, Gold prices are up 7.51%.

Economic Data

  • Initial jobless claims fell 12,000 from last week, coming in at 234,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 244,000 which marks a new 40-year low.
  • The University of Michigan consumer sentiment index fell to 95.7 in the preliminary February report following increases in the previous three months. Both consumers’ assessment of current conditions and expectations for the future declined with the expectations component falling further.

Fact of the Week

  • Equity market volatility has been very low for the last portion of 2016 extending into 2017. The S&P 500 has now gone 39 consecutive trading days without experiencing an intraday range of greater than +/- 1% which is the longest stretch that has occurred since 1982. (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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SCOTUS, Brexit, Fed: Wealth Economic Update Feb. 6, 2017

U.S. and World News

  • scales-178714734_360President Trump continued to make headlines this week starting with his firing of Attorney General Sally Yates after she ordered DOJ lawyers not to defend the newly enacted travel and immigration restrictions. Dana Boente, U.S. Attorney General for the Eastern District of Virginia, has been named acting Attorney General until Jeff Sessions is confirmed by the Senate. Trump also announced his nomination of Neil Gorsuch, an appointee of President George W. Bush, to the U.S. Supreme Court. Gorsuch is the youngest (49) nominee to the Supreme Court in more than 25 years and will face a difficult confirmation process as Democrats have already come out in opposition of him.
  • After a two day debate, Britain’s departure from the European Union took a step forward this week as the House of Commons voted overwhelmingly in favor of triggering Article 50. Once triggered, it will begin a two year process for Britain to leave the EU. With that obstacle cleared, Prime Minister Theresa May is set to publish a detailed Brexit plan that includes controlling migration, pulling out of the single market and negotiation plans with Britain’s trading partners.
  • The Federal Reserve held a policy meeting this week and elected to keep interest rates unchanged as was the expectation going in. The Committee made few changes to their prior statement saying that the economy was expanding “at a moderate pace” and that job growth was still “solid.” They did make one meaningful upgrade to their assessment of the economy saying “measures of consumer and business sentiment have improved of late.” The Fed will meet again March 14-15 and the market is currently pricing in a 35% probability of a rate hike at that meeting.

Markets

  • Markets traded relatively flat this week. The S&P 500 gained 0.16% and closed at 2,297. The Dow Jones dipped 0.09% and closed at 20,071. Year to date, the S&P is up 2.76% and the Dow is up 1.69%.
  • Interest rates held steady this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.93% and 2.49%, respectively.
  • The spot price of WTI Crude Oil rose by 1.28% this week, closing at $53.85 per barrel. Year to date, Oil prices are unchanged.
  • The spot price of Gold increased by 2.44% this week, closing at $1,220.30 per ounce. Year to date, Gold prices are up 6.34%.

Economic Data

  • Initial jobless claims fell 14,000 from last week, coming in at 246,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 248,000.
  • The January employment report showed a gain of 227,000 jobs in the month, beating consensus estimates of 180,000. The prior two months were revised down by a combined 39,000 which brings the three month average of job gains to 183,000.
    • Headline unemployment ticked up 0.1% to 4.8% in January. The move up was the result of a 0.2% increase in the labor force participation rate to 62.9%.
    • Average hourly earnings only rose 0.1% in January, lower than expectations of 0.3%. Over the last 12 months, wages have grown 2.5%.
  • The Case-Shiller Home Price Index rose by 0.9% in December, beating forecasts of 0.7%. All 20 cities measured by the index saw increased prices and have now grown 5.3% over the last 12 months.
  • The PCE Index (measure of inflation) rose by 0.2% in December, in line with expectations. Over the last 12 months PCE prices have risen 1.6%.
    • Core PCE (excludes food and energy, preferred measure of inflation by the Fed) rose 0.1% in the month, meeting expectations. Over the last year, Core PCE has risen 1.7%, still short of the Federal Reserve’s 2% target.

Fact of the Week

  • The New York Stock Exchange introduced its opening/closing bell in the 1870’s when continuous trading began and started off as a Chinese gong. In 1903, the NYSE moved to its current building and the gong was replaced by a brass bell. The first guest to ring the opening bell (which has now become a tradition) was Leonard Ross in 1956. Leonard was a 10 year old who had won a TV quiz show answering questions about the stock market to earn that honor. (Source: NYSE.com)

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.

 

Brexit: Special Wealth Management Economic Update June 24, 2016

brexit_graphThe United Kingdom has spoken and its decision is for the nation to Leave the European Union. With all of the votes counted in the Brexit referendum, ‘Leave’ was victorious over ‘Remain’ by a margin of 52% to 48%. The result was a surprise to book makers and financial markets, both of which had heavily priced in a status quo result. Equity markets are sharply negative this morning, particularly overseas, and currency markets are quite volatile as they attempt to digest the surprising outcome.

UK Voters have had issues with the trade and particularly the immigration policies that had been imposed by the European Union for quite some time. The populistic belief that they had ‘lost their country’ to immigrants was the overriding reason for the ‘Leave’ vote. In response, Prime Minister David Cameron announced that he would resign and a replacement would be selected by October.

So what now? It should be noted that this will not be a fast process for the U.K. to leave. There is a two year negotiation period in order to establish new trade deals with the remaining EU members, all of which require parliamentary approval. The vote may also lead to other independence votes by other disgruntled EU members down the line, though EU officials will try to suppress these movements by making the terms of the UK’s exit as unattractive as possible. The longer term economic impact on the UK and Europe in general is up for debate, with many believing that all parties will be better off for the split, however short term volatility will likely continue as the details are worked out.

We at Old Second Wealth Management focus on long term investing, and market volatility such as this often presents opportunity to invest at depressed prices. If you have any questions or concerns, please do not hesitate to reach out to your 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
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 March 28, 2016

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

  • The average holding period of a stock in the United States has fallen from about 8 years as of 1960, to only 1.3 years today. The average holding period of stocks hit its low of 1.0 years in 2010 (Source: Strategas Research Partners).

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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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 March 21, 2016

U.S. and World News

  • The Federal Reserve met this week and decided to keep interest rates unchanged, a result which was expected by markets and forecasters. The Fed indicated a more cautious approach to future monetary policy and lowered its internal projections to just two interest rate hikes in 2016, down from the four projected to begin the year. Fed officials pointed to global economic and financial developments as the cause for their concern and noted that while inflation has picked up in recent months, it remains below the committee’s long-run objective.
  • President Obama has nominated Judge Merrick Garland to the Supreme Court following the death of long-serving conservative Justice Antonin Scalia. Merrick would be the 113th Supreme Court justice if confirmed. Standing in his way however, is the Republican controlled Senate which has vowed to not hold any confirmation hearings for any Obama nominee as they believe that the seat should be filled by the next president following this year’s election.

Markets

  • Markets continued to rally this week and have broken into positive territory for 2016. The S&P 500 added 1.37% and closed at 2,050. Likewise, the Dow Jones rose 2.26% and closed at 17,602. So far in 2016, the S&P is up 0.80% and the Dow is up 1.72%.
  • Interest rates fell amid the rally in equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.39% and 1.88%, respectively.
  • The spot price of WTI Crude Oil gained 2.21% this week to close at $39.35 per barrel. WTI Crude has risen 0.56% in 2016.
  • The spot price of Gold increased 0.48% this week, closing at $1,255.40 per ounce. Year to date, gold prices are up 18.31%.

Economic Data

  • Initial jobless claims came in at 265,000 which was an increase from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved slightly up to 268,000.
  • Retail sales declined by -0.1% in February, in line with forecasts, reflecting lower vehicle and gas station sales. Core retail sales (excludes gas and autos) were unchanged in February, lower than forecasts of a 0.2% increase. Additionally, core retail sales during the prior two months were revised down -0.3%, adding to an overall disappointing report.
  • Consumer Price Index (measure of inflation) declined by -0.2% in February, in line with forecasts. This was largely due to a -6% decline in energy prices during the month. Headline inflation is now up 1.0% over the last 12 months.
    • Core CPI (excludes food and energy costs) rose by 0.3%, better than expectations of 0.2%. This brings the increase of core prices to 2.3% over the last 12 months.

Fact of the Week

  • The exchange traded fund (ETF) industry has grown from 80 funds in the year 2000 to now 1,603 funds today managing over $2.1 trillion in assets. (Source: Strategas Research Partners)

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Wealth Management Economic Update March 14, 2016

U.S. and World News

  • European Central Bank President Mario Draghi announced additional easing this week in an effort to spur growth in the still struggling European Union. Draghi announced several cuts to interest rates, including lowering the deposit rate further into negative territory to -0.4% from -0.3%. Additionally, the ECB announced that its Asset Purchase Program would be extended until at least March 2017, that the amount of bonds purchased each month would be increased from €60 billion to €80 billion and that corporate bonds would now be part of the purchases. Markets reacted favorably initially following the announcement, however they fell back when during his post-meeting press conference, Draghi indicated that interest rates were unlikely to fall further.
  • north-korea_320Tensions continue to escalate in North Korea as leader Kim Jong-un has ordered his country’s scientists to conduct more nuclear tests and urged them to boost the nation’s nuclear attack capability. Further unconfirmed reports from Pyongang have the country in possession of miniaturized nuclear warheads to mount on ballistic missiles. North Korea has also threatened military steps against South Korea in addition to firing short-range ballistic missiles off its eastern coast.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 1.16% and closed at 2,022. Likewise, the Dow Jones rose 1.31% and closed at 17,213. So far in 2016, the S&P is down 0.60% and the Dow is down 0.57%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.50% and 1.99%, respectively.
  • The spot price of WTI Crude Oil gained 7.10% this week to close at $38.47 per barrel. WTI Crude has fallen 1.69% in 2016.
  • The spot price of Gold decreased 0.76% this week, closing at $1,249.45 per ounce. Year to date, gold prices are up 17.75%.

Economic Data

  • Initial jobless claims came in at 259,000 which was a decrease from last week’s reading of 278,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 267,500.

Fact of the Week

  • The cost of tuition, fees, room and board at an average in-state public college has increased 5.6% per year over the last 30 years, bringing those costs to $19,548 for the 2015-2016 school year. Had these costs only risen by the rate of inflation (as measured by the Consumer Price Index) over the last 30 years (2.7% per year), then a year of college would cost $8,515 for the current year. (Sources: College Board, 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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Wealth Management Economic Update March 7, 2016

U.S. and World News

  • Last weekend’s G20 summit failed to yield a comprehensive plan for spurring global growth. World leaders met in Shanghai and called for more fiscal measures and structural reforms to revive the global economy but also cited a number of risks to growth, including a potential British exit from the European Union. In a joint statement, the G20 leaders said, “Monetary policies will continue to support economic activity and ensure price stability but monetary policy alone cannot lead to balanced growth.”
  • North Korean leader Kim Jong Un has ordered his country to be ready to use its nuclear weapons at any time and to turn its military posture to “pre-emptive attack” mode. Un told his military that this was necessary due to “growing threats from enemies.” The comments mark further escalation of tension on the Korean peninsula after the U.N. Security Council imposed harsh new sanctions against North Korea.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 2.71% and closed at 2,000. Likewise, the Dow Jones rose 2.24% and closed at 17,007. So far in 2016, the S&P is down 1.73% and the Dow is down 1.85%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.38% and 1.88%, respectively.
  • The spot price of WTI Crude Oil gained 10.71% this week to close at $36.29 per barrel. WTI Crude has fallen 7.26% in 2016.
  • The spot price of Gold increased 2.90% this week, closing at $1,258.95 per ounce. Year to date, gold prices are up 18.65%.

Economic Data

  • Initial jobless claims came in at 278,000 which was an increase from last week’s reading of 272,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 270,250.
  • The February employment report showed 242,000 non-farm jobs created, beating expectations of 195,000. The prior two months’ figures were revised up a combined 30,000, bringing the three month average for job gains to 228,000.
    • The headline unemployment rate remained at 4.9%, in line with expectations. The unemployment rate held steady despite the solid addition of new jobs due to a 0.2% increase in the labor force participation rate to 62.9%. Participation is now up 0.5% in the last six months.
    • Wage growth disappointed in the month, falling -0.1% while estimates were for 0.2% growth. Over the last 12 months, wage growth now stands at 2.2%, down from 2.5% in the prior month.

Fact of the Week

  • Since the inception of the Dow Jones Industrial Average in May of 1896, there have been 23 trading days taking place on ‘Leap Day’, including this past Monday. Of those 23 trading days, 16 have been negative, including 13 of the last 17 Leap Days. The average return for the Dow Jones on Leap Days is -0.1%. (Source: Crossing Wall Street)

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.