IL Budget, G20: Wealth Economic Update July 7, 2017

U.S. and World News

  • balance-183243003_400For the first time since July of 2015, the state of Illinois has a budget after the House of Representatives overrode the governor’s vetoes. The state of Illinois’ unpaid bills reached $15 billion and the new budget is projected to bring that figure down by about $5 billion, however, according to Moody’s Investor Service this is likely not enough for Illinois to avoid being downgraded to junk status with the unpaid bill backlog and unfunded pension liability being so overwhelmingly high.
  • The G-20 summit begins today in Hamburg, Germany where tens of thousands of protesters have already begun demonstrating a day in advance as sensitive topics such as terrorism, global trade, and climate change are on the agenda and a long awaited first meeting between President Trump and Vladimir Putin. The meeting between President Trump and Vladimir Putin is not expected to go without tension after sanctions, concerns over Ukraine and Syria, and accusations of meddling in the election have transpired in the past few months.

Markets

  • Markets ended the week slightly higher. The S&P 500 rose 0.14% and closed at 2,425. The Dow Jones increased by 0.38% for the week and closed at 21,414. Year to date, the S&P is up 9.46% and the Dow is up 9.71%.
  • Interest rates rose on both the short and long ends this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.95% and 2.39%, respectively.
  • The spot price of WTI Crude Oil fell 3.80% this week, closing at $44.29 per barrel. Year to date, Oil prices have fallen 17.55%.
  • The spot price of Gold ended the week lower by 2.34%, closing at $1,212.60 per ounce. Year to date, Gold prices are up 5.67%.

 Economic Data

  • Initial jobless claims increased by 4,000 from last week, coming in at 248,000. The Labor Department noted no unusual factors affecting the data this week. The four week moving average for claims ticked up to 243,000.
  • Nonfarm payrolls rose 222k in June which was higher than consensus expectations of 178k and prior months were revised up. The unemployment rate rose slightly to 4.4% and the labor force participation rate also increased to 62.8%. Average hourly earnings rose 0.15% and average weekly hours rose 0.1 to 34.5.
  • The ISM non-manufacturing index rose 0.5 points to 57.4 in June against expectations of a slight decline.
  • The ISM manufacturing index rose 2.9 points to 57.8 beating expectations with new orders, employment, and production all increasing for the month.

Fact of the Week

  • The total amount of money owed by every single person and country in the world is US$199 trillion, but the world has only US$80.9 trillion in cash and bank deposits. (Source: Marketwatch)

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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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.

 

Wealth Management Economic Update February 29, 2016

U.S. and World News

  • britain_000085343391_320Despite last week’s report that an agreement between Britain and European Union was on track, British Prime Minister David Cameron has announced a historic referendum to decide whether the United Kingdom should remain in the EU. Though Cameron himself strongly favors remaining in the economic bloc, he lost the backing of London Mayor Boris Johnson, who became the most high profile supporter of a British exit, or Brexit. The referendum is set to take place on June 23rd and the announcement set off a plunge in the value of the British Pound.
  • Finance ministers and central bank governors from the world’s 20 leading economies have convened in Shanghai to discuss a response to the dim global economic landscape. G20 participants will discuss many issues including the plunge in commodity prices, increased market volatility, exchange rates and the slowdown of China’s economy.

Markets

  • Markets continued to gain back ground this week. The S&P 500 gained 1.61% and closed at 1,948. Likewise, the Dow Jones rose 1.52% and closed at 16,640. So far in 2016, the S&P is down 4.33% and the Dow is down 4.03%.
  • Interest rates rose modestly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.24% and 1.77%, respectively.
  • The spot price of WTI Crude Oil gained 3.43% this week to close at $32.43 per barrel. WTI Crude has fallen 16.08% in 2016.
  • The spot price of Gold decreased 0.27% this week, closing at $1,223.46 per ounce. Year to date, gold prices are up 15.30%.

Economic Data

  • Initial jobless claims came in at 272,000 which was an increase from last week’s reading of 262,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 272,000.
  • The Case-Shiller home price index rose 0.8% in December, slightly lower than expectations of 0.9%. Of the 20 city index, 19 showed price increases during the month. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The headline PCE index (measure of inflation) rose by 0.1% in January, better than expectations of flat prices. Over the last 12 months, prices as measured by PCE have risen 1.3% vs. forecasts of 1.1%. Core PCE (excludes food and energy prices, preferred measure of inflation used by the Fed) was up 0.26% in January, narrowly beating expectations of 0.2%. Over the last 12 months, core PCE is up 1.7%, closer to the Federal Reserve’s goal of 2.0% inflation.
  • GDP growth in the 4th quarter of 2015 was revised up to 1.0% from the initial estimate of 0.7%. This was better growth than had been expected by the consensus (0.4%).

Fact of the Week

  • According to the National Association of Home Builders, over the last 30 years, the average size of a new single family home built in the U.S. has increased by 935 square feet to a total of 2,720 square feet. This is roughly the equivalent of adding a 30’ by 31’ room.

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 December 7, 2015

U.S. and World News

  • European Central Bank President Mario Draghi announced a new stimulus plan this week that included extending the central bank’s €60 billion per month bond buying program to at least March 2017. In addition, the ECB cut its deposit rate further into negative territory, dropping it 0.1% to -0.3%. However, the measures appear to have disappointed the markets as European indices were down significantly following the announcement. ECB action thus far has failed to spur significant economic growth and inflation in the Eurozone.
  • The International Monetary Fund has added the Chinese yuan to its Special Drawing Rights Basket this week in a much anticipated announcement. The addition will be official in October 2016 and will increase China’s economic standing in global finance as it makes the yuan more freely accessible and tradable.
  • truck320The House and Senate have reached an agreement on a five year highway bill that will add $305 billion to infrastructure spending that is sorely needed. The bill also reauthorizes the Export-Import Bank which had its charter expired in June after some Republicans targeted it as a waste of government funds. The bill has now moved to President Obama’s desk where it is expected  to be approved.
  • At its semi-annual meeting in Vienna this week, members of OPEC have decided to maintain the cartel’s production ceiling of 30 million barrels per day even as oil markets remain in a supply glut. It was just over a year ago at the meeting when OPEC made the same call to maintain supply at current levels, sending crude oil prices spiraling lower. Many believe that OPEC’s stance is an attempt to drive out U.S. shale producers that have much higher costs of production.

Markets

  • Markets rose modestly in volatile end of week trade, falling on the ECB’s stimulus measures that were less than expected and then rising on a moderately strong employment report. The S&P 500 gained 0.12% and closed at 2,092. The Dow Jones followed suit by rising 0.36% and closing at 17,848. Year to date, the S&P is up 3.56% and the Dow is up 2.50%.
  • Interest rates rose a bit this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.71% and 2.27%, respectively.
  • The spot price of WTI Crude Oil fell by 3.76% this week, closing at $40.14 per barrel. Year to date, Oil prices are down 33.07%.
  • The spot price of Gold increased by 2.74% this week, closing at $1,086.44 per ounce. Year to date, Gold prices are down 8.24%.

Economic Data

  • Initial jobless claims came in at 269,000 which was an increase from last week’s reading of 260,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 269,000.
  • The November nonfarm payroll report showed the addition of 211,000 during the month, beating expectations of 200,000. Employment growth over the prior two months was revised up by a total of 35,000, bringing the three month average to 220,000 jobs created.
    • The unemployment rate remained unchanged at 5.0%, in line with expectations. The labor force participation rate rose by 0.1% to 62.5%
    • Average hourly earnings increased by 0.2% in November, bring the 12 month increase in wages to 2.3%.

Fact of the Week

  • According to the Government Accountability Office, an estimated 9,300 Americans will turn 65 years old each day in 2016, representing the 6th of 19 years that “Baby Boomers” will turn 65. It’s estimated that by 2029, there will be 11,400 Americans turning 65 each day.

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 November 16, 2015

U.S. and World News

  • The President of the European Central Bank hinted this week at the possible need for the Eurozone to expand is QE program. This is based on comments that Mario Draghi made in Brussels in which he said that downside economic risks are clearly visible, which may translate to an increase in the ECB’s monetary policy measures at the next policy meeting in December.
  • China has taken another step to boost its yuan currency’s global usage by announcing it will start direct trading with the Swiss franc. The franc marks the 7th major currency outside of the U.S. dollar that can be exchanged directly for the yuan. The announcement comes ahead of an International Monetary Fund meeting this month that will consider the inclusion of the yuan in its Special Drawing Rights Basket, putting it on par with the U.S. dollar, yen, euro and pound sterling in terms of international acceptance.
  • The leaders of the world’s 20 largest economies, known as the G20, are set to meet in Turkey starting on Sunday. Among others, items to be discussed at the global forum include bank regulation, tax cooperation, global growth, the Syrian civil war and the Iranian nuclear deal. G20 countries account for 85% of the world economy, 75% of world trade and 67% of the world’s population.

Markets

  • Equity markets reversed their recent course, heading negative this week. The S&P 500 ended the week down 3.56%, closing at 2,023. Similarly, the Dow Jones decreased 3.64% and closed at 17,245. Year to date, the S&P is up 0.08% and the Dow is down 1.13%.
  • Yields in the Treasury markets moved lower this week after last week’s spike upwards. The 10 year Treasury bond now yields 2.28% while the 5 year Treasury bond now yields 1.67%.
  • The spot price of WTI Crude Oil fell significantly again this week. Prices decreased by 7.97% closing at $40.76 per barrel. In 2015, WTI Oil prices are down 31.44%.
  • The spot price of Gold decreased this week, losing 0.55% and closing at a 52-week low of $1,083.82 per ounce. Year to date, gold prices are down 8.49%.

Economic Data

  • Initial jobless claims came in at 276,000 which was unchanged from the prior week’s figure. 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 268,000.
  • Retail sales in October disappointed against consensus expectations, rising just 0.1%. Core retail sales (excluding auto sales) showed a gain of 0.2% in October, also missing estimates.
  • The University of Michigan’s measure of consumer sentiment was stronger than expected in the preliminary November reading at 93.1, an increase from the 90.0 level seen in October. Both consumers’ assessment of current conditions and household expectations of the future increased during the month.

Fact of the Week

  • A large portion of the Friday the 13th superstition can be traced to the 1907 novel by Thomas Lawson, entitled Friday, the Thirteenth. In it, the antagonist, an evil stock broker takes advantage of the public’s fear of the number 13 to crash the market and cause Wall Street panic on Friday the 13th. Despite the negative connotation, the Dow Jones has been positive 66% of the time on these dates. Although it is a different story when the occurrence is in the month of November; the market has fallen 70% of those November occurrences (including today). (Source: Art Cashin)

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.