Vegas shooting, Catalonia, Hurricane Maria: Wealth Economic Update Oct. 6, 2017

U.S. and World News

  • mandalay_bay_360During a country music concert in Las Vegas, Stephen Paddock perpetrated the deadliest mass shooting in U.S. history from his hotel suite at the Mandalay Bay hotel, killing 58 people and wounding more than 500 more. Paddock had a large cache of rifles, thousands of rounds of ammunition and two ‘bump-stocks’ that convert semi-automatic firearms into fully automatics. Police are still seeking clues to explain Paddock’s motives and legislators are reviewing current gun laws and how he was able to assemble such a deadly arsenal. Gun stocks rallied following the massacre on reports of people stocking up on firearms ahead of potential legislation.
  • Catalonia is once again pushing for its independence from Spain as more than 90% of Catalan voters favored breaking off in a referendum deemed by Spanish officials as illegal. Catalan leader Carles Puigdemont is calling for international mediation for the dispute with Madrid, stating its referendum was valid and must be implemented. Puigdemont is also calling for a removal of Spanish security forces that have been clashing with citizens for weeks and has said that the Catalonia region will declare independence within a “matter of days.”
  • According to the island’s treasury secretary, Puerto Rico will need “tens of billions” of dollars in aid from the U.S. as it struggles to bounce back from the devastation of Hurricane Maria. President Trump visited the island this week to assess the recovery efforts. While Trump said early in the visit, “I hate to tell you, Puerto Rico, but you threw our budget a little out of whack,” he also implied that there would be an easing of Puerto Rico’s massive debt load stating, “They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out. You’re going to say goodbye to that.”

Markets

  • Markets rallied 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 1.25% and closed at 2,549. The Dow Jones rose 1.70% for the week and closed at 22,774. Year to date, the S&P is up 15.67% and the Dow is up 17.42%.
  • Interest rates continued to push higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.97% and 2.37%, respectively.
  • The spot price of WTI Crude Oil decreased by 4.68% this week, closing at $49.25 per barrel. Year to date, Oil prices have fallen 8.32%.
  • The spot price of Gold ended the week lower by 0.24%, closing at $1,276.68 per ounce. Year to date, Gold prices are up 11.26%.

 Economic Data

  • Initial jobless claims decreased by 12,000 from last week, coming in at 260,000. Jobless claims pulled back in hurricane-affected states. The four week moving average for claims fell to 268,000.
  • The September employment report showed a loss of 33,000 jobs during the month, widely missing expectations of an 80,000 payroll increase. The miss appears to be completely related to distortions caused by the multiple hurricanes that hit the country during the month. The prior two months figures were revised down a combined 38,000, bringing the three month average of job gains down to 91,000.
    • The headline unemployment rate fell to 4.2%, beating expectations of 4.4%. It doesn’t appear as though the hurricanes had an effect on the unemployment rate and the labor force participation rate increased from 62.9% to 63.1%.
    • Average hourly earnings rose by 0.5% in September, better than forecasts of 0.3%. Over the last 12 months, average wages have increased 2.9%.

Fact of the Week

  • Harvard University’s $37.1 billion endowment fund, which is the largest university endowment fund in the world, gained just 8.1% in the 12 months ending on June 30th. This compares to a 17.9% return for the S&P 500 over the same time period; a performance that the CEO of Harvard’s management company called “disappointing”. (Source: Harvard Management Company)

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.

 

North Korea, Hurricane Maria, Tax Plan: Wealth Economic Update Sept. 29, 2017

U.S. and World News

  • jets-525969835_360China has requested that President Trump and Kim Jong Un end the ongoing war of words after the foreign minister of North Korea referred to Trump’s latest warning of “they won’t be around much longer!” as a declaration of war. North Korea has responded by threatening to shoot down any American warplanes beyond North Korean airspace while Washington stated that North Korea’s interpretation of Trump’s words was “absurd”. China, North Korea’s most important ally, has ordered all North Korean companies operating in China to shut down by January 1st, as part of recently passed sanctions by the United Nations.
  • Hurricane Maria is estimated to have caused $85 billion in insured losses after it made landfall in Puerto Rico last weekend. Most of the island was destroyed, and bondholders are attempting to put together a $1 billion restructuring deal consisting of private money to aid the struggling U.S. territory. The price of Puerto Rican debt has fallen to record lows as a result of the devastation.
  • President Trump has unveiled his tax reform plan which aims at lowering corporate and personal tax rates. The plan includes a proposal that allows a one-off low tax rate for corporations repatriating profits from overseas. The tax plan is also said to make the tax code simpler and create millions of new jobs for Americans.

Markets

  • Markets rallied 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 0.72% and closed at 2,519. The Dow Jones rose 0.25% for the week and closed at 22,405. Year to date, the S&P is up 14.10% and the Dow is up 15.30%.
  • Interest rates extended their rally this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.93% and 2.34%, respectively.
  • The spot price of WTI Crude Oil increased by 1.82% this week, closing at $51.58 per barrel. Year to date, Oil prices have fallen 3.98%.
  • The spot price of Gold ended the week lower by 1.33%, closing at $1,280.01 per ounce. Year to date, Gold prices are up 11.55%.

 Economic Data

  • Initial jobless claims increased by 12,000 from last week, coming in at 272,000. The increase was attributed to the southeast region as a result of Hurricane Irma. The four week moving average for claims rose to 278,000.
  • Real GDP growth for Q2 was revised up to 3.1% from 3%. The revision was attributed to a faster pace of inventory accumulation.
  • Sales of new single-family homes fell by 3.4% in August to a seasonally-adjusted annualized rate of 571k units, below expectations. The south region in areas affected by the hurricane contributed to 75% of the decline.
  • The core PCE price index (excluding food and energy) increased 0.1% last month, below expectations of a 0.2% increase.

Fact of the Week

  • After adjusting numerical data from the past for the impact of inflation, the median household income in 2016 ($59,039) is the highest ever recorded in the United States, surpassing the previous median income record high ($58,665) set in 1999 (source: Federal Reserve Bank of St. Lous).

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.

 

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

U.S. and World News

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

Markets

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

 Economic Data

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

Fact of the Week

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

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

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

Visit Old Second Wealth Management

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

Brazil impeachment: Wealth Economic Update September 6, 2016

U.S. and World News

  • brazil_91582989_340Brazil’s senate has voted 61-20 to impeach suspended President Dilma Rousseff. She was on trial for her role in altering government fiscal accounts by using illegal loans from state banks to hide the true fragile state of Brazil’s finances in order to get re-elected in 2014. Acting President Michel Temer has been sworn in as her replacement. Rousseff claims the ouster was a parliamentary coup and pledged to appeal her impeachment, calling on supporters to fight the conservative agenda she believes has been empowered by her dismissal.
  • President Obama has appointed a seven member board that will oversee the financial restructuring for debt-laden Puerto Rico. Obama drew from a list of candidate in finance and academia who were recommended by leaders in Congress. Puerto Rico’s governor, Alejandro Garcia Padilla, was also named to the board but since he is not seeking a second term, he will be replaced by his successor in November.

Markets

  • This week the S&P 500 was up 0.56% and closed at 2,180. The Dow Jones rose 0.62% and closed at 18,492. So far in 2016, the S&P is up 8.16% and the Dow is up 8.06%.
  • Interest rates were down marginally this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.60%, respectively.
  • The spot price of WTI Crude Oil fell 7.05% this week to close at $44.28 per barrel. WTI Crude is up 10.56% in 2016.
  • The spot price of Gold was up 0.29% this week, closing at $1,324.98 per ounce. Year to date, gold prices are up 24.87%. 

Economic Data

  • Initial jobless claims came in at 263,000, a minor increase from last week’s reading of 261,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 263,000.
  • The monthly employment report showed a gain of 151,000 jobs during August, below the expected 180,000. Figures for the prior two months were revised down a combined 1,000 jobs, bringing the three month average for job gains to 232,000.
    • Headline unemployment remained at 4.9% and the labor force participation rate was also unchanged at 62.8%.
    • Average hourly earnings rose 0.1% in August, missing expectations of 0.2%. On a 12 month basis, wages have risen 2.4%, down from 2.7% in July.
  • Personal Consumer Expenditures (PCE, measure of inflation) was flat in July, in line with expectations. Over the last year, headline inflation has risen 0.8% as measured by PCE.
    • Core PCE (excludes food and energy prices, preferred measure of inflation by the Fed) rose 0.1% and is now up 1.6% year over year, both in line with estimates.
  • The Case-Shiller home price index moved down -0.1% in June, which was in line with consensus expectations. Results were mixed with 11 of the 20 surveyed cities seeing price increases. Over the last 12 months, home prices have risen 5.1%.

Fact of the Week

  • As of August 18th, the U.S. national debt stood at $19.445 trillion. It had taken 293 days (since 10/30/15) to add the latest $1 trillion of debt. It took America 205 years (1776 to 1981) to accumulate its first $1 trillion of debt. (Source: Treasury 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
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.

 

New British PM: Wealth Economic Update July 18, 2016

U.S. and World News

  • Theresa May, British Prime Minister

    Theresa May, British Prime Minister*

    Just three weeks after the U.K. voted in favor of leaving the European Union, Theresa May took over from David Cameron to become the 54th British Prime Minister. Financial markets appeared to approve of the selection although many analysts have said the implications for the U.K. economy could be much bigger due to uncertainty about her policies. May has wasted no time readying her Brexit team as she has appointed a Chancellor, foreign secretary, a Brexit “Tsar” and a trade negotiator.

  • Staying in the U.K., the Bank of England surprised the market by choosing to hold off on any easing action this week. It was believed that BOE Governor Mark Carney would cut rates 25 basis points or increase its bond buying program in the wake of the Brexit vote in order to ward off a possible recession.

Markets

  • This week the S&P 500 was up 1.51% for the week and closed at 2,162. The Dow Jones gained 2.04% and closed at 18,517. So far in 2016, the S&P is up 6.94% and the Dow is up 7.68%.
  • The 5 year and 10 year U.S. Treasury Notes are now yielding 1.11% and 1.56%, respectively.
  • The spot price of WTI Crude Oil gained 1.17% this week to close at $45.94 per barrel. WTI Crude is up 9.69% in 2016.
  • The spot price of Gold lost 2.21% this week, closing at $1,336.15 per ounce. Year to date, gold prices are up 25.92%.

Economic Data

  • Initial jobless claims came in at 254,000 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 down to 259,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.2% in June, below estimates of 0.3%. This was boosted by a 1.3% increase in energy prices, although food prices decline -0.1%. Over the last 12 months, headline CPI has risen 1.0%.
    • The Core CPI (excludes food and energy) rose 0.2%, in line with expectations. Rent inflation remained firm, rising 0.3% in the month. Over the last year, core prices have risen 2.3%.
  • Retail sales increased by 0.6% in June, soundly beating estimates of 0.1%. Sales were boosted in part by higher gasoline sales as fuel prices rose.

Fact of the Week

  • As of 6/30/2016, there was $11.7 trillion of sovereign debt that carries a negative interest rate (ie. investors loaned governments money with the guarantee that they would be paid back less if they held the bond to maturity). This represents over 30% of the world’s sovereign debt. Countries issuing negative yield debt include Japan, Germany, Sweden, Denmark and Switzerland. (Source: Fitch Ratings)

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.

 

Brexit aftermath: Wealth Economic Update July 5, 2016

U.S. and World News

  • pont_fawr_bridge_Wales_84636501_340The U.K. now faces the challenge created by its vote to leave the European Union and Chancellor George Osborne cautioned it would not be “plain sailing” in the days and weeks ahead. In the fallout from the shocking vote, there have been rumblings of a “re-do” vote or a renewed independence vote in Scotland, but neither is likely to gain too much traction. The process for the U.K. to leave is will officially begin when Parliament invokes Article 50, the timing of which has yet to be determined. Candidates for the Prime Minister post that David Cameron resigned from are beginning to emerge, though prominent Brexit figurehead and former London Mayor Boris Johnson has dropped out of the running.
  • Puerto Rico today defaulted on $800 million of debt payments it had constitutionally guaranteed to make to general obligation bond holders. These bond holders were supposed to receive priority before the Puerto Rican government paid out anything to state employees like police and teachers, however Governor Garcia Padilla ruled to continue running essential services on the island. This marks the first time that a U.S. state or territory has failed to pay general obligation bonds since the Great Depression. In response, Washington has pushed through a law signed by President Obama that would create a federal oversight board to oversee the restructuring of Puerto Rico’s over $70 billion of additional debt. The plan involves 1 out of every 3 dollars the island earns in revenue being used to pay off creditors.

Markets

  • After falling dramatically again on Monday, markets roared back the remainder of the week and regained most if not all of the post-Brexit losses. The S&P 500 was up 3.27% for the week and closed at 2,103. The Dow Jones gained 3.18% and closed at 17,949. So far in 2016, the S&P is up 4.00% and the Dow is up 4.37%.
  • Interest rates moved lower again this week despite the rally in the equity markets. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.00% and 1.44%, respectively.
  • The spot price of WTI Crude Oil gained 3.48% this week to close at $49.30 per barrel. WTI Crude is up 17.71% in 2016.
  • The spot price of Gold gained 1.95% this week, closing at $1,341.35 per ounce. Year to date, gold prices are up 26.41%.

Economic Data

  • Initial jobless claims came in at 268,000 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 down to 266,750.
  • The Case-Shiller home price index rose 0.5% in April, slightly missing expectations of 0.6%. Prices increased in 16 of the 20 cities represented in the index. Over the last 12 months, home prices as measured by the index have risen 5.4%.
  • The headline PCE Index (measure of inflation) rose by 0.2% in May, in line with consensus expectations. The increase was in part due to a 1.4% rise in energy goods and services prices. Over the last 12 months, headline PCE has increased 0.9%.
  • The Core PCE Index (excludes food and energy, preferred measure of inflation by the Federal Reserve) also increased 0.2% in May and was in line with expectations. Over the last 12 month, Core PCE has risen 1.6%, still well short of the Fed’s 2% inflation target.

Fact of the Week

  • According to the Social Security Trustees 2016 report, the trust fund backing the payment of Social Security benefits would be zero in 2035. A zero trust fund does not mean that Social Security payments would also go to zero, but rather would drop to 77% of their originally promised level (or a 23% cut to benefits). In the 2009 report, the projection had been that that the trust fund would hit zero in 2042.

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 Vote: Wealth Economic Update June 27, 2016

U.S. and World News

  • london_big-ben_49186880_340The United Kingdom has voted to Leave the European Union in the historic Brexit vote held on Thursday. For more information on this event, please see the special Brexit update here.
  • Acting Brazilian President Michel Temer has authorized a payment of $850 million from the federal government to the state of Rio de Janeiro, which is struggling with a fiscal crisis less than two months before the Olympic Games are slated to begin. This is in addition to fears about the Zika virus and other major public health concerns leading up to the Olympics. Rio declared a state of financial emergency last week as a result of deteriorating finances, which have forced deep cuts to services like education, healthcare and policing.
  • Just a week before $2 billion in bond payments come due, Puerto Rico’s governor Alejandro Garcia Padilla reiterated that the island will default on its general obligations even if services are cut off. Padilla is currently in Washington lobbying for Congressional approval of a bill that would establish the framework for Puerto Rico to restructure its $70 billion in debt.

Markets

  • Equity markets rallied early in the week before dropping dramatically after the results of the Brexit Referendum. The S&P 500 was down -1.62% for the week and closed at 2037. The Dow Jones dropped 1.55% and closed at 17,400. So far in 2016, the S&P is up 0.74% and the Dow is up 1.18%.
  • Interest rates moved lower again this week following the Brexit vote. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.07% and 1.56%, respectively.
  • The spot price of WTI Crude Oil lost 2.04% this week to close at $47.57 per barrel. WTI Crude is up 13.59% in 2016.
  • The spot price of Gold gained 1.32% this week, closing at $1,315.75 per ounce. Year to date, gold prices are up 24.00%.

Economic Data

  • Initial jobless claims came in at 259,000 which was a decrease from last week’s reading of 277,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 267,000.
  • Existing home sales increased by 1.8% in May, which was in line with consensus and reached a new post-crisis high. Single family home sales rose 1.9% in the month, while multi-family sales increased 1.6%. By region, existing home sales rose in the Northeast (+4.1%), South (+4.6%) and West (+5.4%), but fell in the Midwest (-6.5%).

Fact of the Week

  • During the 25 years from 1991 to 2015, the average interest rate on a 10 year US Treasury note was 4.7%. As of close on Friday June 24th, the 10 year US Treasury note had a yield of 1.56%. (Source: Treasury 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
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 June 13, 2016

U.S. and World News

  • Saudi Arabia has approved a plan to reduce public spending and to generate income without depending on oil. The plan is expected to boost non-crude revenues to $141 billion by 2020, create 450,000 non-government jobs, and help fund a large part of production of goods and services worth $72 billion.
  • The U.S. House of Representatives has passed legislation that will assist Puerto Rico with its debt crisis ahead of a $1.9 billion debt payment that it may not be able to pay. The bill consists of the U.S. putting a federal control board in charge of managing the restructuring of Puerto Rico’s $70 billion in debt. The bill now requires the Senate’s approval and will be started in the next few weeks.
  • zurich_switzerland_340A proposal to introduce a guaranteed basic income for every person living in Switzerland has been rejected by the country. Only 23.1% of the voters were for the proposal with the argument that a monthly income of 2,500 Swiss francs per citizen would promote dignity and public service, while 76.9% were against it saying that it would cost too much and cause damage to the economy.

Markets

  • Equity markets were flat again this week. The S&P 500 was down 0.15% for the week and closed at 2096. The Dow Jones dipped 0.33% and closed at 17,865. So far in 2016, the S&P is up 2.55% and the Dow is up 2.53%.
  • Interest rates moved lower further this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.17% and 1.64%, respectively.
  • The spot price of WTI Crude Oil gained 0.66% this week to close at $48.98 per barrel. WTI Crude is up 18.44% in 2016.
  • The spot price of Gold gained 2.43% this week, closing at $1,274.43 per ounce. Year to date, gold prices are up 20.10%.

Economic Data

  • Initial jobless claims came in at 264,000 which was a decrease from last week’s reading of 267,000 reaching a post crisis low. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 270,000.
  • The University of Michigan’s index of consumer sentiment dropped to 94.3 from 94.7 in the June preliminary release which was in line with consumer expectations.
    •  Consumer sentiment remains new post-crisis highs, despite the negative jobs report last week.

Fact of the Week

  • Of the 10 largest cities in the United States, only Chicago has seen its population decline since the year 2000. 8 of the 10 largest cities have experienced population gains of at least +100,000, growth that only the cities of Chicago and Philadelphia were unable to achieve. (Source: Census Bureau).

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 May 16, 2016

U.S. and World News

  • President Dilma Rousseff has been suspended from office after an overwhelming 55-22 senate vote to start an impeachment trial and Vice President Michel Temer will assume the role as President for up to six months while the trial is ongoing. Former Central Bank Chief Henrique Meirelles who is liked among investors, will assume the role as Finance Minister. Despite the majority, Rousseff continues to ignore calls to resign and states that she will prevail in the trial.
  • The U.S congress continues to work towards a solution to fix Puerto Rico’s debt situation after the U.S territory released its fiscal 2017 forecast which indicated that their economy would likely contract for the fifth year in a row. The House of Representatives will reveal a plan in the near future that will stipulate how Puerto Rico’s many creditors will be prioritized.
  • oil_drill_saudi_000023179128_320Saudi Arabia has named Khalid al-Falih as the new oil minister, replacing Ali al-Naimi who has been oil minister since 1995. Khalid al-Falih is currently the chairman of Aramco, a state owned oil company. Al-Falih stated that he does not intend to bring changes to Saudi Arabia’s current strategy of defending market share and maintaining stable petroleum policies.

Markets

  • Equity markets declined this week. The S&P 500 fell 0.51% and closed at 2047. Likewise, the Dow Jones dipped 1.16% and closed at 17,535. So far in 2016, the S&P is up 0.13% and the Dow is up 0.63%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.70%, respectively.
  • The spot price of WTI Crude Oil gained 3.61% this week to close at $46.27 per barrel. WTI Crude is up 13.66% in 2016.
  • The spot price of Gold lost 1.16% this week, closing at $1,274.06 per ounce. Year to date, gold prices are up 20.07%.

Economic Data

  • Initial jobless claims came in at 294,000 which was an increase from last week’s reading of 274,000. The increase was expected and is estimated to be attributed to seasonal factors in New York State. The four week moving average for claims ticked up to 268,000.
  • Retail sales increased 1.3% (mom) in April and beat expectations for the month. The gain reflected both higher energy prices and department store sales. Non-store retailers (online shopping) grew at a rapid monthly pace of 2.1%.
    • The Producer Price Index (PPI) increased by 0.2% (mom) in April which was supported by higher energy prices as food prices were down (-0.4%). PPI excluding food and energy rose 0.1% for the month.
  • The University of Michigan Sentiment Index preliminary release for May climbed to 95.8 from 89.0 with expectations of only a small increase. The rise in the index was driven by a rise in forward-looking consumer expectations.

Fact of the Week

  • According to the National Endowment for Financial Education, 45% of the 118 million households in the United States live “paycheck-to-paycheck”.

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.