Fed Chair, Germany, Zimbabwe: Wealth Economic Update Nov. 24, 2017

U.S. and World News

  • germany-619762776_360In one of her last appearances as Fed Chairman, Janet Yellen discussed the direction of policy and Wall Street oversight at NYU Stern School of Business.  The scheduled discussion comes after Yellen stated her resignation from the Fed’s Board of Governors once Jerome Powell is sworn into the office.  Her departure will leave yet another vacancy at the central bank.
  • Germany  has been pushed into political uncertainty due to Angela Merkel’s failure to form a three-way coalition government.  The news dropped the euro as much as 0.7% to $1.1720 overnight. Immigration, climate change, Europe, and taxation were stated to be the irreconcilable differences that caused the Free Democrats to pull out unexpectedly, despite more than four weeks of negotiations. After the formation of the coalition collapsed, Angel Merkel stated she would prefer fresh elections to reigning with a minority government.  It is the worst governing crisis in the history of Germany’s post-WWII democracy according to President Frank-Walter Steinmeier. He has compelled all parties in the parliament “to serve our country” and form a government.
  • Vice President Emmerson Mnangagwa will be replacing President Robert Mugabe as leader of Zimbabwe’s ruling ZANU_PF party.  The dismissal follows a de facto military coup and will likely send political shockwaves across Africa.  Mnangagwa will focus on rebuilding ties with the outside world and stabilizing an economy in free fall.

Markets

  • Markets were up for the week with the S&P up 0.93% reaching a record high of 2,602. The Dow Jones rose 0.89% for the week and closed at 23,558. Year to date, the S&P is up 18.36% and the Dow is up 21.83%.
  • Interest rates were flat for the week with the 5 year and 10 year U.S. Treasury Notes yielding 2.06% and 2.34%, respectively.
  • The spot price of WTI Crude Oil increased by 3.93% this week, closing at $58.95 per barrel. Year to date, Oil prices have risen 3.44%.
  • The spot price of Gold ended the week off by 0.30%, closing at $1,288.58 per ounce. Year to date, Gold prices are up 12.29%.

 Economic Data

  • Initial jobless claims dropped 13,000 from last week, coming in at 239,000. Filings also fell for Puerto Rico’s 10-year high, which continues to deal with the aftermath of Hurricane Maria.  The four week moving average for claims rose to 240,000.
  • Existing Home sales rose 2.0% in October, beating consensus expectations of 0.2%. Sales increases were broad-based across property types with single family sales +2.1% and condos and co-ops +1.7%.

Fact of the Week

  • Over $40 Billion of gift cards value has gone unused.  With over $150 Billion in gift card sales projected in 2017, it is estimated that over $1 Billion of value will again go unused.
    • Gift cards are the #1 requested gifts, preferred by over 60% of gift recipients.
    • 93% of consumers will buy or receive a gift card this year.
    • 72% of customers will spend more than the value of their card.
    • 10% of gift cards will be e-gifted digital cards in 2017.

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.

 

Yellen, ISIS-Germany: Wealth Economic Update Dec. 27, 2016

U.S. and World News

  • baltimore-184943883_360After the Federal Reserve raised interest rates for the first time in a year, Fed Chairwoman Janet Yellen spoke in Baltimore about the economy, specifically regarding the job market and wages. In her speech, she told 2016 University of Baltimore graduates that they are “entering the strongest U.S. jobs market in nearly a decade” as the U.S. unemployment rate sits at 4.6%, its lowest level since 2007. Janet Yellen did not speak to anything relating to monetary policy, but did mention that wages continue to increase despite low economic growth.
  • ISIS has claimed responsibility for a man by the name of Anis Amri, who intentionally drove a truck through a crowded Christmas market in Berlin killing 12 and injuring 50 people. Chancellor Angela Merkel is being criticized for her security policies after it was discovered that in the past, Anis Amri was secretly under surveillance and considered a threat by German officials but the operation was later called off. Anis Amri was killed during a shoot-out with police in Milan early this morning.

Markets

  • This week the S&P 500 rose by 0.29% and closed at 2,264. The Dow Jones increased by 0.46% and closed at 19,934. So far in 2016, the S&P is up 12.96% and the Dow is up 17.14%.
  • Interest rates retreated from their highs this week. The 5 year and 10 year U.S. Treasury Notes now yield 2.02% and 2.54%, respectively.
  • The spot price of WTI Crude Oil rose by 0.21% this week and closed at $53.06 per barrel. WTI Crude is up 43.25% in 2016.
  • The spot price of Gold declined 0.26% this week, closing at $1,131.88 per ounce. Year to date, gold prices are up 6.67%.

Economic Data

  • Existing home sales rose by 0.7% (mom) in November versus expectations of a 1.8% decline. Single-family home sales fell by 0.4% and sales of condos rose 10%.
  • Sales of new single-family homes increased 5.2% (mom) in November. New home sales were the highest in the Midwest and West, and lower in the South.
  • Personal income remained unchanged in November versus expectations of a slight increase. Nominal wage, salary incomes, and real disposable personal income were down 0.1% (mom). Consumer spending increased 0.2% and the personal saving rate dropped to 5.5% from 5.7%.

Fact of the Week

  • Healthcare spending in the United States reached $3.2 trillion in 2015 (18% of the nation’s economy), equal to per person spending of $9,990. 20 years earlier (1995), per person healthcare spending in America was $3,788 (source: Health Affairs).

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.

 

Attempted coup: Wealth Economic Update Aug 1, 2016

U.S. and World News

  • turkey_7947841_340Following the attempted military coup earlier this month, Turkish President Tayyip Erdogan is tightening his grip on the country by ordering the closure of over 2,000 private schools, charities and other institutions in his first action since imposing a state of emergency. Also causing alarm among Turkey’s NATO allies was Erdogan shutting down 130 media outlets and his dismissal of over 1,500 military officers as he attempts to regain complete control over the country.
  • The Federal Reserve held its policy meeting this week, leaving interest rates unchanged but altering the language in its statement. The Committee upgraded their assessment of the U.S. labor market, noting that “job gains were strong in June following weak growth in May.” The other key phrase in their statement was, “Near term risks to the economic outlook have diminished.” While this does not make a rate hike imminent, it indicates that the Fed would like to raise rates sometime this year. Kansas City Fed President Esther George dissented, favoring an increase in interest rates at this meeting.

Markets

  • This week the S&P 500 was down 0.05% and closed at 2,174. The Dow Jones fell 0.75% and closed at 18,432. So far in 2016, the S&P is up 7.56% and the Dow is up 7.25%.
  • Interest rates retreated this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.02% and 1.45%, respectively.
  • The spot price of WTI Crude Oil fell 0.62% this week to close at $41.46 per barrel. WTI Crude is up 3.65% in 2016.
  • The spot price of Gold gained 2.16% this week, closing at $1,351.28 per ounce. Year to date, gold prices are up 27.35%.

Economic Data

  • Initial jobless claims came in at 266,000 which is higher than last week’s reading of 253,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 257,000.
  • The Case-Shiller home price index declined by 0.1% in May, missing expectations of a 0.1% increase. Data was mixed across the cities that are part of the index. Over the last 12 months, home prices as measured by Case-Shiller have risen 5.2%.
  • The initial reading of 2nd quarter U.S. GDP showed 1.2% annualized growth, much lower than the consensus estimate of 2.5% annualized growth. This figure will be subject to multiple revisions.

Fact of the Week

  • National health care expenditures in the United States during 2016 are projected to reach $3.35 trillion, or $10,346 per person. (Source: Centers for Medicare and Medicaid Services)

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.

 

UK & Germany: Wealth Economic Update July 25, 2016

U.S. and World News

  • U.K. Prime Minister Theresa May made it clear that she would attempt to secure a very close economic relationship with Germany post-Brexit, but German Chancellor Angela Merkel refuses to negotiate until the U.K. invokes Article 50. If negotiations were to start early, it would give the British incentives to delay notification (the official start of the 2 year negotiation process), which would give them an advantage and could lead to the negotiations being dragged out indefinitely.  
  • A three-month state of emergency has been declared by Turkey’s President Erdogan Wednesday night in order to “protect democratic values” by stopping parliament from passing new laws against supporters of last Friday’s coup. President Erdogan has also suspended or detained roughly 50,000 police officers, judges, civil servants, and teachers this week which has provided some stability, but some uncertainty still remains. The Turkish equity index regained some of its losses and Turkey’s central bank cut its overnight lending rate 0.25% to 8.75%.

Markets

  • This week the S&P 500 was up 0.64% and closed at 2,175. The Dow Jones gained 0.35% and closed at 18,571. So far in 2016, the S&P is up 7.61% and the Dow is up 8.05%.
  • The 5 year and 10 year U.S. Treasury Notes are now yielding 1.12% and 1.57%, respectively.
  • The spot price of WTI Crude Oil fell 5.21% this week to close at $44.22 per barrel. WTI Crude is up 4.29% in 2016.
  • The spot price of Gold lost 1.11% this week, closing at $1,322.64 per ounce. Year to date, gold prices are up 24.65%. 

Economic Data

  • Initial jobless claims came in at 253,000 which is slightly lower than last week’s reading. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
  • Existing home sales were up 1.1% in June reaching a post-crisis high versus expectations of a slight decline. This was led by multi-family home sales and homes in the Midwest region.

Fact of the Week

  • The medium square footage of new single family homes built in the United States in 2015 was 2,467 square feet, an increase of 547 square feet over the last 20 years. That’s equivalent to a 23’ x 23’ addition to new homes today when compared to 1995 home construction. Source: Joint Center for Housing Studies of Harvard University.

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

*Image of Theresa May, Photo credit:UK Home Office, via Wikimedia Commons. License: Creative Commons Attribution 2.0 Generic license.. (See, https://commons.wikimedia.org/wiki/File:Theresa_May_2015_(cropped).jpg).

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 August 24, 2015

U.S. and World News

  • After the Chinese Yuan fell 3.6% last week, Chinese markets continued their decline this week. The Hang Seng officially entered the bear market territory as it has plummeted over 20% from its high in April. The IMF has given a sign that it will be at least another year until the Chinese currency will be added to its basket of reserve currencies. Concerns about China’s economy has rattled markets globally this week and has been blamed for the sharp decline of the S&P 500 which is down over 6% from its high in May.
  • Germany has voted in favor of the bailout package for Greece by a large margin, putting an end to negotiations lasting months. The first disbursement of €13B of funds from the bailout package was received by Greece just in time to make a €3.2B payment due to the ECB. €12B of this amount will be used to pay down debt. Greek Prime Minister Alexis Tsipras announced his resignation shortly after receiving the first disbursement of the €86B bailout deal.
  • oil_drill_320For the first time ever, the U.S. will allow limited sales of crude oil to Mexico. The oil that will be exported is expected to be high-quality shale which will help Mexico produce premium fuel. The U.S. will continue to receive the heavy oil coming from Mexico which is better for U.S refiners than the light oil they receive from Texas and North Dakota. WTI crude declined for the eighth straight week after the U.S revealed a large supply of 2.6M barrels.

Markets

  • Equity markets plunged this week amid global worries. The S&P 500 lost 5.77%, closing at 1,971. Similarly, the Dow Jones fell 5.82% and closed at 16,460. Year to date, the S&P is down 4.27% and the Dow is down 7.65%.
  • Yields in the Treasury markets fell this week. The 10 year Treasury bond now yields 2.05% while the 5 year Treasury bond now yields 1.43%.
  • The spot price of WTI Crude Oil continued its decline, and dropped by 6.73% closing at $40.21 per barrel. In 2015, WTI Oil prices are down 30.81%.
  • The spot price of Gold continued its weekly increase and gained 4.00% closing at $1,159.70 per ounce. Year to date, gold prices are down 2.09%.

Economic Data

  • Initial jobless claims came in at 277,000 which was an increase from the prior week’s figure of 273,000. The Labor Department noted that there were no special factors that affected the claims figure. The four week moving average for claims now stands at 271,500.
  • Existing home sales rose 2.0% in July vs. consensus of -1.1% to a high of 5.59 million. Single family homes sales are up 2.7% and condo and co-op sales fell -3.1%.
  • Housing starts were up 0.2% month-over-month in July, slightly higher than consensus forecasts.
  • The Consumer Price Index (CPI) increased 0.1% month-over-month in July, slightly lower than expected.

Fact of the Week

  • 64% of Millennials (ages 18-34 in 2015) believe they have a greater chance of winning the lottery than ever receiving a penny from Social Security once they retire. (T. Rowe Price)

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 2, 2015

U.S. and World News

  • Greece submitted its list of economic reform plans to the Eurozone finance ministers just before Monday’s deadline. While the list was approved, clearing the path for a four month extension to Greece’s bailout funding, the finance ministers warned that the reforms must be expanded in detail before new bailout funding would be released.
  • Following months of negotiations, West Coast ports have been reopened and are working at full speed after a new five year labor contract agreement was reached. Port officials estimate that it will take at least three months to clear the backlog of containers that have been piling up during the labor stoppage. The strike has disrupted shipments for companies across the country as merchandise has been sitting idle in stacked containers, waiting to be unloaded.
  • world_internet_000003759439_320The FCC has approved net neutrality restrictions on the internet, reclassifying broadband services under the Telecommunications Act. The vote for the measure was 3 to 2 and went down party lines with the Democrats carrying the vote. The new rules will prevent internet service providers from prioritizing the speeds of service they provide to customers and charging higher rates for ‘fast lanes’ of the internet. FCC Chairman Tom Wheeler said the action was an “irrefutable reflection of the principle that no one, whether government or corporate, should control free and open access to the internet.”

Markets

  • Equity markets were mostly flat this week. The S&P 500 lost 0.24%, closing at 2,104, while the Dow Jones gained 0.02% and closed at 18,033. Year to date, the S&P and Dow Jones are up 2.57% and 2.22%.
  • Yields in the Treasury markets moved down this week. The 10 year Treasury bond now yields 2.00% and the 5 year Treasury bond yields 1.50%.
  • The spot price of WTI Crude Oil fell this week, losing 3.05% and closing at $49.26 per barrel. In 2015, WTI Oil prices have fallen 9.21%.
  • The spot price of Gold rose by 0.92% this week and closed at $1,213.00 per ounce. Year to date, gold prices are up 2.41%.

Economic Data

  • Initial jobless claims jumped up from last week, coming in at 313,000 vs. consensus estimates of 290,000. The Labor Department noted that no special factors affected claims this week. The four week moving average for claims now stands at 294,500.
  • The Case-Shiller home price index rose 0.9% in December vs. consensus estimates of a 0.6% increase. Appreciation was seen across all 20 of the cities monitored in this index. Over the past year, home prices have risen 4.5% as measured by the index.
  • The headline Consumer Price Index (measure of inflation) fell 0.7% in January, pushed lower by an 18.7% drop in gasoline prices. Core CPI, which does not include food or energy, rose 0.2%, better than the expected 0.1%. Despite this better core CPI number for January, the one year rate of change stands at a subdued 1.6%.

Fact of the Week

  • On July 15, 2014, Federal Reserve Chair Janet Yellen stated in her scheduled testimony to Congress that, “Equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched…” This sort of sector specific commentary from a Fed Chair was highly unusual and questioned at the time. Her call on social media stocks was good, as since then, those stocks have returned -1.11% (as measured by the Global X Social Media ETF, SOCL) compared to the S&P 500 return of 7.9% during that time. However, her biotech call doesn’t look so good as those stocks have gained 52.3% (as measured by the SPDR Biotech ETF, XBI) in that time. Yellen was back in front of Congress again this week but didn’t provide any asset class valuation calls this time around.

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® – (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

Wealth Management Economic Update February 11, 2015

U.S. and World News

  • The second full week of the Syriza Party’s power in Greece was another tumultuous one that first started with Germany ruling out any debt write downs for Greece and an ECB policymaker threatening to cut off funding to Greek banks if Athens doesn’t agree to renew its bailout package. Fears were calmed a bit when Greece proposed ending the confrontation with its creditors by swapping outstanding debt for new growth-linked bonds, running a permanent budget surplus and targeting wealthy tax-evaders. However, later in the week the ECB put more pressure on Greece by revoking a waiver that allowed banks to use Greek government debt as collateral for loans. All of this is to say, stay tuned to the Greek situation.
  • australia_000047410124_300The Reserve Bank of Australia has joined the easing party, becoming the latest global central bank to cut interest rates in response to slowing inflation and concerns about economic growth. The RBA’s cut was its first change since August 2014 and lowered its benchmark rate by 0.25% to a new low of 2.25%

Markets

  • Equity markets rallied this week, with the S&P 500 gaining 3.09% and closing at 2,055. Likewise, the Dow Jones gained 3.86% and closed at 17,824. Year to date, the S&P and Dow Jones are virtually unchanged.
  • Yields in the Treasury markets spiked up this week, especially after a solid employment report seemed supportive of a Fed rate hike during the summer. The 10 year Treasury bond now yields 1.97% and the 5 year Treasury bond yields 1.49%.
  • The spot price of WTI Crude Oil continued to bounce from very low levels, rising 8.37% and closing at $52.28 per barrel. In 2015, WTI Oil prices have fallen 2.64%.
  • The spot price of Gold fell by 3.88% this week and closed at $1,234.04 per ounce. Year to date, gold prices are up 4.19%.

Economic Data

  • Initial jobless claims increased a bit from last week but remained quite low, coming in at 278,000 vs. consensus estimates of 290,000. The Labor Department noted no special factors affecting the report. The four week moving average for claims now stands at 292,750.
  • The January nonfarm payroll employment report showed a gain of 257,000 jobs vs. expectations of 228,000. Job gains for November and December were revised up by a combined 147,000, bringing the three month average gain to 336,000 jobs.
    • The headline unemployment rate ticked up from 5.6% to 5.7%. However, the labor force participation rate increased 0.2% to 62.9% which is what pushed the unemployment rate up.
    • Another positive sign was average hourly earnings rising 0.5% vs. expectations of 0.3%. The 1 year growth in average hourly earnings now stands at 2.2%.

Fact of the Week

  • According to World Bank, if the state of California were a country, its $2.2 trillion economy would rank as the 8th largest in the world, ahead of Russia, Italy, India, Canada, Australia and Spain.

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® – (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