Hurricane season, Libya: O2 Wealth Economic Update, July 10, 2020

U.S. and World News

  • iStock-692343236_370Hurricane season in 2020 has started with the earliest 6th named storm on record set to make landfall in the Northeastern U.S. tonight. Tropical Storm Fay is sustaining winds around 50 mph as of this morning and is expected to bring 2 to 4 inches of rain with some isolated areas expecting to see 7 inches. Tropical Storm Warnings are currently in effect for New Jersey, New York, and Connecticut as the Northeast prepares for flash flooding throughout the night. The storm gained structure and transformed into a Tropical Storm this morning and the potential exists for it to become a Category 1 hurricane which is defined by sustained winds of at least 75 mph.
  • Tensions in Libya escalated further this week after Turkey announced that they will be holding large scale naval exercises off the Libyan coast in anticipation of war in the eastern Mediterranean. One day later, the Egyptian media announced that the Egyptian Army will host their own military drills near the western Libyan border. Turkey has been stepping up its military efforts in Libya recently in support of the government, which is currently battling a civil war. Egypt supports the opposing party in Libya, and this is the first show of force by the Egyptian Army since Turkey began intervening.

Markets

  • Markets rallied this week. The S&P 500 spiked 1.79% and closed at 3,185. The Dow Jones rose 0.98% and closed at 26,075. Year-to-date, the S&P 500 is down -0.38% and the Dow Jones is down -7.44%.
  • Interests rates were unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.63%, respectively.
  • The spot price of WTI Crude oil fell slightly this week. Prices fell -0.37% and closed at $40.50 per barrel. Year to date, Oil prices are down -33.67%.
  • The spot price of Gold rose 1.31% and closed at $1,799.18 per ounce. Year to date, Gold prices are up 18.58%.

Economic Data

  • Initial jobless claims fell by 99,000 to 1.3 million and the four-week moving average of claims fell by 63,000 to 1.4 million. Claims fell by 37,000 in New York, 23,000 in Florida, and by 12,000 in Oklahoma. Claims rose by 39,000 in Texas, 30,000 in California, and by 4,000 in Connecticut.
  • The ISM non-manufacturing index rose by 11.7 points to 57.1 versus expectations for a reading of 50.2
  • Wholesale inventories fell -1.2%, in-line with expectations
  • The producer price index (PPI) fell by -0.2% versus expectations for an increase of 0.4% and the year-over-year rate fell by -0.8%
  • PPI ex-food, energy and trade services rose by 0.3% versus expectations for an increase of 0.1% and the year-over-year rate was flat

Fact of the Week

The money used by the Federal Reserve in its lending programs and asset-buying programs was “digitally created” by the Fed, i.e., the Fed does not technically “print” money (it does not have a printing press) but rather it creates money with the press of a button on a keyboard.  The Fed is forecasted to create$5 trillion of new money between March 2020 and December 2020 (source: Federal Reserve)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com

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Brexit, Hurricane Michael: Wealth Economic Update Oct. 12, 2018

U.S. and World News

  • Former British Prime Minister Tony Blair stated that there is a 50-50 chance of reaching another Brexit referendum as it is doubtful that Theresa May will secure a majority vote for a divorce deal with only six months until the deadline. Many issues remain unresolved before the deadline, including trade issues, security issues, regulatory uncertainty, and whether there will be a border separating Ireland. Japanese Prime Minister Shinzo Abe stated that Britain will be welcome to join the Trans-Pacific Partnership after it leaves the European Union, allowing it to retain its “global strength”.
  • hurricane-1035765586_370Rescuers have begun searching for survivors after Hurricane Michael flattened towns along the coast of the Florida panhandle. The hurricane made landfall early afternoon on Wednesday in Mexico Beach, Florida as a strong Category 4 storm with sustained winds of 155 miles per hour and knocked out power in about 1.5 million homes and businesses in the Southeast region. The storm is responsible for 12 deaths across Florida, Georgia, North Carolina, and Virginia and that number is expected to rise according to FEMA Administrator Brock Long. Offshore oil rigs in the Gulf were evacuated as the hurricane approached Florida, cutting oil production by over 40% and natural gas output by 33%.


Markets

  • Stocks plunged this week following last week’s declines. The S&P 500 fell 4.06% and closed at 2,767. The Dow Jones declined by 4.17% and closed at 25,340. Year to date, the S&P is up 5.06% and the Dow Jones is up 4.27%.
  • Yields pulled back this week after rising rapidly last week. The 5 year and 10 year U.S. Treasury Notes are yielding 3.02% and 3.17%, respectively.
  • The spot price of WTI Crude Oil also fell dramatically, losing 3.81% this week to close at $71.51 per barrel. Year to date, Oil prices are up 18.97%.
  • The spot price of Gold rose 1.20% this week, and closed at $1,218.04 per ounce. Year to date, Gold prices are down 6.51%.

Economic Data

  • Initial jobless claims increased by 7,000 to 214,000 this week. The four-week moving average of claims increased by 3,000 to 210,000. Claims rose by 7,000 in Kentucky, and by 4,000 in North Carolina.
  • The consumer price index (CPI) rose by 0.06% in September versus expectations for a 0.2% increase. The weaker figure was driven by lower energy prices. The year-over-year rate came in at 2.27% versus 2.4% expected.
    • Core CPI rose by 0.12% in September versus expectations of a 0.2% increase. The year-over-year rate in Core CPI remains at 2.2%.
  • The producer price index (PPI) increased by 0.2% in September, in-line with expectations.
    • PPI ex-food and energy rose by 0.2% in September, in-line with expectations.
  • Import prices rose by 0.5% in September month-over-month versus expectations for a 0.2% increase. The higher than expected reading was led by the foods, feeds, and beverages category.
  • The University of Michigan’s index of consumer sentiment declined 1.1 points to 99.0 in the October preliminary reading against expectations for a reading of 100.5.

Fact of the Week

  • A greater percentage of Millennials have all of their pre-tax retirement money invested in cash and bonds (20%) than those that have all of their pre-tax retirement money invested in stocks (19%). 2,593 Millennials (ages 20-36 in 2017) were surveyed in the 4th quarter 2017 (source: Transamerica Retirement Survey).

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com

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NAFTA, Italy, EU: Wealth Economic Update Oct. 5, 2018

U.S. and World News

  • cow-184614299_370On Sunday night, the United States and Canada reached an agreement for the revised North American Free Trade Agreement just before the deadline of October 1st. The new agreement that includes Mexico will be called the U.S.-Mexico-Canada Agreement or USMCA. Canada agreed to open its dairy market to the United States while the United States agreed to keep the dispute-resolution process in the deal which would provide Canada protection from potential tariffs imposed by the United States. President Trump calls the deal the “most important deal we’ve ever made by far” and stated that he is skeptical of congress passing the deal as a result of political motives.
  • Italy has given into pressure put on by the European Central Bank and reduced its growth forecasts. The Euro fell dramatically and the Italian 10-year yield hit a four-year high as the second largest debt laden European country was closely reaching an October 15th deadline for submitting its final budget deal. The new growth forecast for this year was cut to 1.2% from a previous estimate of 1.5% and the budget deficit target was assumed at 2.4% of GDP for 2019, 2.1% for 2020, and 1.8% for 2021. Italy’s stock market declined this morning as a result of the lower growth forecasts.


Markets

  • Stocks continued their slide this week. The S&P 500 fell 0.95% and closed at 2,886. The Dow Jones declined by 0.36% and closed at 26,447. Year to date, the S&P is up 9.44% and the Dow Jones is up 8.73%.
  • Yields rallied dramatically this week, spooking the domestic stock market. The 5 year and 10 year U.S. Treasury Notes are yielding 3.07% and 3.23%, respectively.
  • The spot price of WTI Crude Oil finished the week higher again, gaining another 1.49% this week to close at $74.34 per barrel. Year to date, Oil prices are up 23.67%.
  • The spot price of Gold rose 1.08% this week, and closed at $1,203.77 per ounce. Year to date, Gold prices are down 7.60%.

Economic Data

  • Initial jobless claims fell by 7,000 to 207,000 this week. The four-week moving average of claims remained unchanged at 207,000. Claims fell by 6,000 in North Carolina, rebounding this week after Hurricane Florence.
  • The ISM manufacturing index fell 1.5 points to 59.8 in September versus expectations for a reading of 60.0.
  • The ISM non-manufacturing index rose by 3.1 points to 61.6 in September versus expectations for a reading of 58.0.
  • Construction spending rose by 0.1% month-over-month in August versus expectations for a 0.4% increase. Private residential construction was weaker in August.
  • Private sector employment rose by 230,000 in September month-over-month versus expectations for a 184,000 gain. This was led by professional and business services.
  • Nonfarm payrolls rose by 134,000 in September month-over-month versus expectations of an increase of 185,000.
    • The Bureau of Labor Statistics noted that Hurricane Florence had an estimated impact of around 50,000-60,000 jobs. The figure was also affected by the number of employees not at work due to weather.
    • These estimates would result in an actual figure of about 190,000
    • The unemployment rate declined to 3.7% versus 3.8% expected
    • Average hourly earnings rose 0.3% month-over-month, in-line with expectations.

Fact of the Week

  • The Small Business Optimism Index reached its all-time high in August, surpassing the mark set in July 1983. The index measures small business owners expectations for hiring, business growth, and profitability. (Source: National Federation of Independent Businesses)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com

Visit Old Second Wealth Management

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China tariffs, Hurricane Florence: Wealth Economic Update Sept. 14, 2018

U.S. and World News

  • After trade discussions broke down three weeks ago, the Trump administration has invited Chinese officials for another round of negotiations. President Trump wrote in a tweet on Thursday that “We are under no pressure to make a deal with China, they are under pressure to make a deal with us”. Meanwhile, an editorial in the China Daily read “The Trump administration should not be mistaken that China will surrender to the U.S demands.” This new round of trade negotiations comes before additional tariffs of 10-25% on $200 billion of Chinese imports are being prepared by the United States. China is expected to retaliate in a similar fashion to these tariffs.
  • hurricane-480386290_370Hurricane Florence, a Category 1 hurricane, made landfall this morning on the North Carolina coast bringing sustained winds of 90 miles per hour and a life-threatening storm surge. The slow moving storm is expected hang over the Carolinas this weekend and drop catastrophic amounts of rain causing a lot of flooding. The power was knocked out in nearly 500,000 homes and hundreds were rescued this morning as the storm made landfall.


Markets

  • Stocks rebounded this week. The S&P 500 rose 1.21% and closed at 2,905. The Dow Jones rose by 0.94% and closed at 26,155. Year to date, the S&P is up 10.09% and the Dow Jones is up 7.50%.
  • Yields rose higher again this week. The 5 year and 10 year U.S. Treasury Notes are yielding 2.90% and 3.00%, respectively.
  • The spot price of WTI Crude Oil increased by 1.83% this week to close at $68.99 per barrel. Year to date, Oil prices are up 14.77%.
  • The spot price of Gold dropped 0.33% this week, and closed at $1,192.99 per ounce. Year to date, Gold prices are down 8.43%.

Economic Data

  • Initial jobless claims fell by 1,000 to 204,000 this week. The four-week moving average of claims moved down by 2,000 to 208,000. Claims rose by 5,000 in California and 2,000 in Michigan. This is the lowest level of jobless claims since 1969.
  • The consumer price index (CPI) rose 0.22% in August versus expectations for a 0.3% increase.
    • Core CPI ex-food and energy rose 0.08% in August versus expectations of a 0.2% increase. The soft reading was led by the apparel category. The year-over-year rate declined to 2.2%.
  • Wholesale inventories rose 0.6% in July versus expectations for a 0.7% increase.
  • The producer price index (PPI) declined by 0.1% versus expectations for a 0.2% increase.
    • Core PPI ex-food and energy rose 0.1% versus an increase of 0.2% expected.
  • Retail sales rose by 0.1% in August versus expectations for a 0.4% increase. The weaker sales growth was a result of lower auto sales.
    • Core retail sales rose 0.1% in August versus an increase of 0.4% expected.
  • Import prices fell 0.6% in August versus expectations for a 0.2% decline
  • Industrial production rose by 0.4% in August versus expectations of a 0.3% increase.
  • The University of Michigan’s index of consumer sentiment September preliminary reading came in at 100.8 versus expectations of 96.6.


Fact of the Week

  • In a “private letter ruling” issued on August 20th, the IRS approved the use of a program to help aid employees that have student debt. The program would allow employees that make student loan payments to still receive an employer contribution in their 401(k) as if the loan payment was a pre-tax 401(k) contribution. (Source: IRS)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com

Visit Old Second Wealth Management

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China tariffs, Manafort, Cohen, Hurricane Lane: Wealth Economic Update Aug. 24, 2018

U.S. and World News

  • The amount of tariffs imposed by both the United States and China have now totaled a combined $100 billion each on a variety of products after the planned $16 billion round of United States tariffs kicked in on Chinese products this week and were immediately answered with reciprocity by China. U.S-China trade talks ended on Thursday after making no progress and China stating that they will continue to hit back at the United States as more U.S tariffs are imposed.
  • gavel-827092426_370On Tuesday, Donald Trump’s former campaign manager Paul Manafort was found guilty on eight financial related crimes. Five of the crimes were for tax fraud, two for bank fraud, and one for failing to disclose a foreign bank account. As a result, Paul Manafort faces years in prison. President Trump’s former attorney Michael Cohen plead guilty on eight counts of crimes similar to Manaforts and also admitted to paying off an adult film actress and a former Playboy model so that they would not spread the story of their alleged affairs with Trump.
  • Hurricane Lane, a Category 2 slow moving storm, has already dumped over 30 inches of rain on Hawaii’s Big Island as it makes its way north towards Maui and turns west towards Oahu. Police warned all tourists to leave Waikiki Beach and so far, about 1,500 people are in emergency shelters. Hawaii was last hit by a major storm in 1992.


Markets

  • • Stocks rose again this week, reaching record levels last seen in January. The S&P 500 rose by 0.88% and closed at 2,875, an ALL TIME HIGH. The Dow Jones increased by 0.51% and closed at 25,790. Year to date, the S&P is up 8.80% and the Dow Jones is up 5.84%.
  • Yields declined this week and the curve flattened further. The 5 year and 10 year U.S. Treasury Notes are yielding 2.72% and 2.81%, respectively.
  • The spot price of WTI Crude Oil rebounded this week, gaining 5.21% and closing at $68.61 per barrel. Year to date, Oil prices are up 14.14%.
  • The spot price of Gold gained 1.83% this week, and closed at $1,205.89 per ounce. Year to date, Gold prices are down 7.44%.

Economic Data

  • Initial jobless claims fell by 2,000 to 210,000 this week. The four-week moving average of claims moved down by 2,000 to 214,000. Claims rose by 3,000 in California and fell by 2,000 in Michigan. The pace of layoffs remains very low.
  • Existing home sales fell 0.7% month-over-month in July to a seasonally adjusted annualized figure of 5.34 million units against expectations of a 0.4% increase. Sales were the weakest in the Northeast region.
  • Sales of new single-family homes fell 1.7% in July to a seasonally-adjusted annualized rate of 627,000 units versus consensus expectations of 645,000. The previous three months were revised lower by a net 13,000. July sales fell sharpest in the Northeast region.


Fact of the Week

  • This week marked the longest bull market in history, after the market bottomed on March 9th, 2009. Or did it? The S&P 500 saw drawdowns in 2011 and 2015 in which over 60% of stocks were down at least 20%, with the 2011 instance seeing only a -19.4% in the headline index, not meeting the somewhat arbitrary -20% threshold. Meanwhile, Small Cap stocks as measured by the Russell 2000 experienced declines of -30.7% and -27.1% in 2011 and 2015 respectively. So is this really the longest bull market in history? (Source: Strategas)

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
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@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.

2017 Summary: Wealth Economic Update Jan. 2, 2018

U.S. and World News

  • wallst-462756183_380Trading in 2017 has concluded, wrapping up a very positive year in global stock markets despite facing a laundry list of headwinds and fears. In a year that included the inauguration of a new President, nuclear tension with North Korea, fears of Populism spreading in Europe, numerous terrorist attacks domestically & abroad, pessimism over tax overhaul, multiple devastating hurricanes, renegotiations of several global trade agreements and three Fed rate hikes; the U.S. benchmark index, the S&P 500, set 62 new all-time highs on its way to a 8% total return in 2017. The technology weighted Nasdaq Composite returned 29.7% and the Russell 2000 (small cap U.S. stocks) lagged but still gained 14.7%.  International markets also enjoyed strong gains in 2017 with developed international stocks returning 25.2% (MSCI EAFE Index) and emerging market stocks returning 36.9% (MSCI Emerging Markets Index). Looking forward to next year, markets will be focused on the effects of the new tax reform law on both businesses and individuals, the path of the Federal Reserve under new incoming Chairman Jerome Powell and the effects of synchronized global growth on inflation and asset valuations.

Markets

  • Markets ended 2017 on a bit of a down note. The S&P fell 0.33%, closing at 2,674. The Dow Jones dipped 0.14% for the week and closed at 24,719. In 2017, the S&P gained 21.82% and the Dow returned 28.11%.
  • Interest rates pulled back this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.21% and 2.41%, respectively.
  • The spot price of WTI Crude Oil rose by 2.81% this week, closing at $60.11 per barrel. During 2017, Oil prices rose 11.90%.
  • The spot price of Gold ended the week up by 2.28%, closing at $1,303.28 per ounce. In 2017, Gold prices were up 13.58%.

Economic Data

  • Initial jobless claims were flat from last week, coming in at 245,000. The largest increases were in Texas (4k), New York (4k) and Kentucky (3k). The four week moving average for claims rose to 238,000.
  • The Case-Shiller home price index rose by 0.7% in October, slightly beating expectations of 0.6%. Prices rose in all 20 cities measured with Las Vegas (+1.4%), San Francisco (+1.2%), New York (+0.8%), and Charlotte (+0.8%) showing the largest monthly increases. Over the last 12 months, home prices as measured by the index have risen 6.4%.

Fact of the Week

  • The largest drawdown in the S&P 500 during 2017 was a mere -3% pullback seen from March to mid-April. This was the smallest intra-year drawdown in the S&P 500 since 1995 which also only saw a -3% pullback. The next year in 1996, the S&P 500 did see an -8% drawdown at one point but wound up gaining 20% by year’s end. (Source: Strategas Research Partners)

    Happy New Year!

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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Economy, Fed Chair: Wealth Economic Update Nov. 3, 2017

U.S. and World News

  • commerce-639109564_360The Federal Reserve met this week and left interest rates unchanged, as was widely anticipated. The assessment for growth was upgraded to “solid” for the first time since January 2015, despite some lingering effects from the recent hurricanes. No other major changes were made to their assessment of the economy, paving the way for a December rate hike for which the market is currently pricing in a 92% probability.
  • President Trump has nominated Jerome Powell to become the Fed Chairman when current Chair Janet Yellen’s term expires in February. He is seen by many as the “safe choice” because he’s not expected to veer to far from current Fed policy. It’s expected that Powell will continue on the path of gradual interest rate increases and balance sheet reduction.

Markets

  • Markets climbed higher this week with both the S&P 500 and Dow Jones Industrial Average setting new All-Time Highs during the week. The S&P rose 0.29% and closed at 2,588. The Dow Jones rose 0.45% for the week and closed at 23,539. Year to date, the S&P is up 17.50% and the Dow is up 21.41%.
  • Interest rates pulled back this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.99% and 2.33%, respectively.
  • The spot price of WTI Crude Oil increased by 3.32% this week, closing at $55.69 per barrel. Year to date, Oil prices have risen 4.41%.
  • The spot price of Gold ended the week lower by 0.27%, closing at $1,269.98 per ounce. Year to date, Gold prices are up 10.67%.

 Economic Data

  • Initial jobless claims decreased by 5,000 from last week, coming in at 229,000. The four week moving average for claims fell to 233,000. Overall, the report suggests continued post-hurricane normalization to a trend of low job losses.
  • The October employment report showed a gain of 261,000 jobs in the month, rebounding from last month’s hurricane affected number. However, this was below expectations of 313,000 jobs gained. The prior two months’ figures were revised up by 90,000 which brings the three month average for job gains to 163,000.
    • The headline unemployment rate dipped to 4.1% from 4.2% in September which was the result of the labor force participation rate decreasing by 0.1% to 62.7%.
    • Average hourly earnings were flat for the month, disappointing against expectations of 0.2% growth. Wages have grown 2.4% over the last 12 months.
  • The Employment Cost Index increased by 0.7% in the 3rd quarter, in line with expectations. On a year over year basis, both total compensation (+2.5% from +2.4%) and wage growth (+2.5% from +2.3%) accelerated during the quarter.
  • The Case-Shiller home price index rose by 0.5% in August, in line with expectations. Prices rose in 19 of the 20 cities surveyed, with Atlanta (-0.2%) seeing the only decline. Over the last 12 months, home prices have risen by 5.9%.

Fact of the Week

  • The National Retail Federation estimates that over 179 million Americans celebrated Halloween this week and spent over $9.1 billion on costumes, candy and parties.

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.

 

Hurricane Matthew: Wealth Economic Update Oct 10, 2016

U.S. and World News

  • hurricane_43705814_360Hurricane Matthew has made its way to the United States after inflicting server damage and loss of life in the Caribbean where it has killed at least 339 people in Haiti. A state of emergency and an evacuation mandate has been issued for many areas in the East Coast. While the storm has been downgraded to a Category 3, the National Weather Service has used some of its strongest language since Hurricane Katrina in describing the strength and dangers of the storm.
  • New U.K. Prime Minister Theresa May has provided an updated timeline for Parliament to initiate the “Brexit” process. May stated that the country would invoke Article 50 by the end of next March, which would officially indicate their intent to leave the European Union. Though the vote took place in June, the March timeline for beginning a ‘hard Brexit’ comes earlier than many observers believed would be the case, causing some volatility in the Sterling currency.

Markets

  • This week the S&P 500 dipped 0.60% and closed at 2,154. The Dow Jones fell 0.31% and closed at 18,240. So far in 2016, the S&P is up 7.09% and the Dow is up 6.77%.
  • Interest rates climbed higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.26% and 1.72%, respectively.
  • The spot price of WTI Crude Oil was up 2.88% this week to close at $49.63 per barrel. WTI Crude is up 23.92% in 2016.
  • The spot price of Gold declined 4.50% this week, closing at $1,256.75 per ounce. Year to date, gold prices are up 18.44%.

Economic Data

  • Initial jobless claims came in at 249,000, down from last week’s reading of 255,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 254,000.
  • The monthly employment report showed an increase of 156,000 jobs in September, below expectations of 170,000. The prior two months had their figures revised down a combined 7,000 jobs, bringing the three month average of job gains to 192,000.
    • The headline unemployment rate ticked up 0.1% to 5.0%. This was largely due to a 0.1% increase in the labor force participation rate to 62.9% in September.
    • Average hourly earnings came in a bit below forecast, rising 0.2% in the month compared to the 0.3% being expected. Over the last 12 months, wages have risen 2.6%. 

Fact of the Week

  • The California Public Employees’ Retirement System projected back in 1999 that the investments backing state employees’ pensions would grow from $159.1 billion to $613.5 billion in 2016 due to an assumed 8.25% annual rate of return. In actuality, as a result of market downturns and lower interest rates, the actual fund size in 2016 was just $295.1 billion, representing an annualized 3.70% rate of return. (Source: CalPERS)

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

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