French Election, Brexit: Wealth Economic Update Apr. 21, 2017

U.S. and World News

  • france360France will be holding what is presumed to be the 1st round of its Presidential Election on Sunday. The current four top candidates in the polling are only separated by 4% points, making the race extremely tight. Under French election rules, if no candidate secures a majority (which seems all but a certainty), the two highest vote-getters will square off in a run-off election scheduled for May 7th. The four candidates include two broadly pro-market, liberal reformers (Emmanuel Macron and Francois Fillon) and two populist eurosceptics who promise labor market and trade protectionism (Marine Le Pen and Jean-Luc Melenchon). Macron and Fillon have put greater focus on domestic issues like tax reform, unemployment and the national debt. Meanwhile, both Le Pen and Melenchon focused on immigration control and have proposed taking France out of the European Union with Le Pen being more staunchly opposed to France remaining in the euro. Global markets will be watching the results of this election closely.
  • British Prime Minister Theresa May has called a snap general election in the U.K., with the vote to be held on June 8th. With her Conservative party holding a sizeable lead in polls, May is taking the opportunity to try to gain a significant majority as Brexit negotiations get underway. May said that the vote was necessary to secure a mandate going into a “moment of enormous national significance”, also stating that Westminster was currently too dividend to take on this task.

Markets

  • Markets rebounded a bit this week. The S&P 500 rose 0.87% and closed at 2,349. The Dow Jones gained 0.51% for the week and closed at 20,548. Year to date, the S&P is up 5.54% and the Dow is up 4.71%.
  • Interest rates ended the week where they began and remain at low levels. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.24%, respectively.
  • The spot price of WTI Crude Oil dropped 6.86% this week, closing at $49.58 per barrel. Year to date, Oil prices have fallen 7.80%.
  • The spot price of Gold was little changed this week, closing at $1,284.72 per ounce. Year to date, Gold prices are up 11.96%.

 Economic Data

  • Initial jobless claims rose by 10,000 from last week, coming in at 244,000. The Labor Department noted no special factors affecting the data this week. The four week moving average for claims dropped to 243,000.
  • Housing starts declined -6.8% in March which was a larger drop than the expected -3.0%. The report was broadly weak with both the single-family category (-6.2%) and the multi-family category (-7.9%) seeing declines.
  • Existing home sales rebounded in March, increasing 4.4% vs. forecasts of 2.2%. This marks a full retracement of February’s -3.9% drop. Both sales of existing single family units (4.3%) and condos/co-ops (5.0%) rose during the month. On a regional level, existing home sales increased in the Northeast (10.1%), Midwest (9.2%) and South (3.4%) but declined in the West (-1.6%).

Fact of the Week

  • Of U.S. metropolitan areas with populations of at least 1 million, Salt Lake City has the lowest unemployment rate at 3.0% and Cleveland has the highest at 6.6%. The nationwide unemployment rate current stands at 4.5%. (Source: Department of Labor)

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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Trump, China, NATO: Wealth Economic Update Apr. 14, 2017

U.S. and World News

  • Investors were forced to recalibrate their expectations this week as President Trump reversed several of his positions that he held during the campaign. Trump began by telling the Wall Street Journal that China is no longer a currency manipulator, a claim he had made many times throughout the campaign trail. He then went on to say that he respects Fed Chair Janet Yellen, leaving the door open for her to be reappointed when her term expires, despite Trump previously saying that she should be “ashamed of what she’s doing to the country.” Trump also reversed course on the Export-Import Bank, now supporting it for the backing that it lends to small companies. Finally, Trump said that NATO was no longer obsolete since it is fighting terrorism.

Markets

  • Interest rates continued their recent downward trend this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.77% and 2.24%, respectively.
  • The spot price of WTI Crude Oil rose 1.80% this week, closing at $53.18 per barrel. Year to date, Oil prices have fallen 1.01%.
  • The spot price of Gold increased by 2.47% this week, closing at $1,285.50 per ounce. Year to date, Gold prices are up 12.02%.

 Economic Data

  • Initial jobless claims declined by 1,000 from last week, coming in at 234,000. The Labor Department noted no special factors affecting the data this week. The four week moving average for claims dropped to 247,000.
  • The University of Michigan consumer sentiment index rose 1.1 point to 98.0 in the preliminary April report. This is approaching the cycle high of 98.5 reached in January. Both consumers’ assessment of current conditions and expectations for the future improved in the report.
  • Retail Sales decreased -0.2% in March, in line with expectations. The headline retail sales figure was weighed down by lower motor vehicle & parts (-1.2%) and gasoline (-1.0%) sales. Core retail sales (excludes autos, gas, and building materials) saw a better than expected 0.5% increase.
  • The Consumer Price Index (measure of inflation) declined -0.3% in March vs. forecasts of a flat CPI. The decline was due to a -3.2% drop in energy prices during the month. Over the last 12 months, headline CPI has increased 2.4%.
    • Core CPI (excludes food and energy prices) declined -0.1% in March vs. expectations of a 0.2% increase. The decline was led by lower communications, apparel and lodging prices. This was the first outright decline in Core inflation since 2010. The 12 month increase in Core CPI declined to 2.0% as a result.

Fact of the Week

  • Net interest costs of the federal government make up 7% of total federal outlays in 2017. It is estimated that with higher interest rates in the future and rising federal debt levels, net interest costs will be pushed to 21% of total federal spending by the year 2047. (Source: Congressional Budget Office)

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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Syria, Gorsuch: Wealth Economic Update Apr. 7, 2017

U.S. and World News

  • Following a poison gas attack against a rebel-held area of Syria which included use of the banned nerve agent sarin, President Trump was forced to pivot from his prior stance on Syria and its President Bashar al-Assad. Trump said that the attack, which included children among its victims, crossed “many, many lines” and that his “attitude toward Syria and Assad has changed very much.” In what was seen as a direct response, the U.S. launched 59 Tomahawk missiles against an airbase in Syria. This sets up further potential conflict with Russia, Assad’s primary backer, as the Kremlin has already stated the missile launch will deal a “significant blow to Russian-U.S. relations” and represented an “act of aggression” against a sovereign state.
  • Facing significant Democratic opposition, Republicans voted to enact the “nuclear option”, which reduces the threshold for Supreme Court nominations in the Senate from 60 to a simple majority. Having done that, the path was cleared for Neil Gorsuch to be confirmed to the Supreme Court by the Senate on Friday. With the Republicans choosing to lower this threshold, future presidents will have a much easier time getting their Supreme Court nominees confirmed, potentially changing whom they decide to appoint.
  • Minutes from the March Federal Reserve meeting were released this week and contained a relatively upbeat assessment of economic conditions and references to the potential upside from fiscal policy measures. The minutes also showed discussion regarding allowing the Fed’s balance sheet to ‘run-off’ at some point in the future. Additionally, some participants characterized stock market valuations as ‘quite high’ in light of the run-up in indices in recent months. The market is currently pricing in a 13% probability of a rate hike at the Fed’s May meeting and a 62% probability of a rate hike by their June meeting.

Markets

  • Markets were relatively flat this week. The S&P 500 fell 0.24% and closed at 2,356. The Dow Jones was flat for the week and closed at 20,656. Year to date, the S&P is up 5.80% and the Dow is up 5.20%.
  • Interest rates bounced around this week but ended close to where they began. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.92% and 2.38%, respectively.
  • The spot price of WTI Crude Oil rose 3.18% this week, closing at $52.21 per barrel. Year to date, Oil prices have fallen 2.81%.
  • The spot price of Gold increased by 0.48% this week, closing at $1,255.21 per ounce. Year to date, Gold prices are up 9.39%.

Economic Data

  • Initial jobless claims declined by 25,000 from last week, coming in at 234,000. Most of the improvement came from the Midwest and Mid-Atlantic regions, where claims in recent weeks were elevated due to Winter Storm Stella. The four week moving average for claims dropped to 250,000.
  • The March employment report showed a gain of 98,000 jobs in the month, well below expectations of 180,000. Additionally, the prior two months’ figures were revised down a combined 38,000. The retail sector disappointed again, losing 30,000 jobs in the month however the overall report may have been negatively affected by severe weather. Over the last three months, job gains have averaged 178,000 per month.
    • The headline unemployment rate moved down 0.2% to 4.5%, which was better than expected. The labor force participation rate held steady at 63.0%.
    • Average hourly earnings rose by 0.2%, which was in line with forecasts. Over the last year, wages have grown 2.7%.

Fact of the Week

  • The IRS audited just 0.7% of individuals’ tax returns in 2016. The number of people audited in 2016 (just over 1 million) dropped for the 5th consecutive year. The IRS claims that for every $1 spent conducting an audit, they are able to recuperate $4 in previously unpaid taxes. (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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Brexit: Wealth Economic Update Mar. 31, 2017

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

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

PLAY BALL!!

 

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

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

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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.

 

NKorea/Japan, Healthcare: Wealth Economic Update Mar. 10, 2017

U.S. and World News

  • Global tensions are rising in the wake of North Korea firing four ballistic missiles into nearby waters over the weekend. Three of those missiles landed in Japan’s exclusive economic zone, causing the country to move to the highest possible alert level. Japanese Prime Minister Shinzo Abe declared, “This clearly shows North Korea has entered a new stage of threat.” Fearing a rapid escalation, China has called upon North Korea to stop its nuclear and missile tests and for South Korea and the U.S. to cease their joint military drills in the area.
  • Republican leaders in Congress unveiled their plan to repeal and replace Obamacare this week. Along with the end of the health insurance mandates, the proposal would restructure the Medicaid program and create a new tax credit tied to a person’s age and income for those who cannot get insurance through their employer. President Trump is “proud to endorse” the plan and called for its speedy passage despite some opposition within the Republican Party.

Markets

  • Markets fell a bit this week. The S&P 500 lost 0.40% and closed at 2,373. The Dow Jones followed suit by dipping 0.40% and closing at 20,903. Year to date, the S&P is up 6.41% and the Dow is up 6.36%.
  • Interest rates rose quite a bit this week as odds of a Fed rate hike next week have all but hit 100%. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.10% and 2.58%, respectively.
  • The spot price of WTI Crude Oil plunged 9.38% this week, closing at $48.33 per barrel. Year to date, Oil prices have fallen 10.03%.
  • The spot price of Gold decreased by 2.43% this week, closing at $1,204.74 per ounce. Year to date, Gold prices are up 4.99%.

Economic Data

  • Initial jobless claims bounced 20,000 higher from last week, coming in at 243,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 237,000 which is a near a 40-year low.
  • The February jobs report showed an increase of 235,000 new jobs created in the month, better than expectations of 200,000. The prior two months’ figures were revised up by a combined 8,000 which brings the three month average for job gains to 209,000 per month. The report was generally very positive, one blemish however was the 26,000 retail jobs lost during the month, continuing that sector’s recent struggles.
    • The headline unemployment rate ticked down to 4.7%, in line with expectations. The 0.1% decrease in the unemployment rate occurred despite a 0.1% increase in the labor force participation rate to 63.0%.
    • Average hourly earnings rose 0.2% in February, below forecasts of 0.3%. Over the last 12 months, wages have increased 2.8%.

Fact of the Week

  • The Standard & Poor’s 500 (S&P 500) index turned 60 years old this week. The index is widely regarded as the most accurate gauge of large American stocks and it is market capitalization weighted as opposed to the Dow, which is weighted by price, or other indexes that have an equal weighting. The S&P 500 is by far the biggest index in the world, with about $2.4 trillion being tracked by it.

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.

 

Trump speech, Fed, Sessions: Wealth Economic Update Mar. 6, 2017

U.S. and World News

  • politician_podium76797371_320President Trump delivered his first address to a joint session of Congress this week and spoke on a number of initiatives that the administration aims to put through. Trump pledged to overhaul the immigration system, improve jobs and wages for Americans, and promised “massive” tax relief to the middle class and tax cuts for businesses. Trump also laid out some general principles for an Obamacare replacement. Details on these items were absent from the address but Trump did say that he plans to ask Congress for $1 trillion in infrastructure investment, guided by the principle “Buy American and Hire American.”
  • The Federal Reserve came more into focus this week as Fed officials have indicated that there is a strong likelihood of a March interest rate hike. San Francisco Fed President John Williams said that an interest rate hike in March will be under “serious consideration” and New York’s William Dudley feels the case for tightening at the next meeting “has become a lot more compelling.” The market is now assigning a 94% chance of a Fed Funds Rate hike in March.
  • Attorney General Jeff Sessions has announced that he will recuse himself from any investigations related to President Trump’s election campaign amid backlash over his testimony about his contacts with Russia. At Sessions’ confirmation hearing, during which he was under oath, he failed to disclose meeting with Russia’s ambassador on multiple occasions when asked about contact with the Russian government during Trump’s campaign.

Markets

  • Markets rose this week following President Trump’s address to Congress. The streak of 55 consecutive trading days without a trading range of +/- 1% in the S&P 500 was broken this week. The S&P 500 gained 0.71% and closed at 2,383. The Dow Jones followed suit by rising 0.94% and closing at 21,006. Year to date, the S&P is up 6.84% and the Dow is up 6.79%.
  • Interest rates rose quite a bit this week following the address to Congress and increased rate hike odds. The 5 year and 10 year U.S. Treasury Notes are now yielding 2.01% and 2.48%, respectively.
  • The spot price of WTI Crude Oil was down 1.39% this week, closing at $53.24 per barrel. Year to date, Oil prices have dipped 0.89%.
  • The spot price of Gold decreased by 1.78% this week, closing at $1,234.76 per ounce. Year to date, Gold prices are up 7.60%.

Economic Data

  • Initial jobless claims fell 19,000 from last week, coming in at 223,000 which is the lowest reading since 1973. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 234,000 which is a new 40-year low.
  • The Case-Shiller home price index rose by 0.9% in its latest reading, slightly beating expectations of a 0.7% increase. Prices rose in all 20 cities covered and the largest monthly increases were seen in Chicago (1.5%), Seattle (1.4%) and Tampa (1.4%). Over the last 12 months, home prices as measured by Case-Shiller have risen 5.6%.
  • The Headline PCE index (measure of inflation) rose 0.4% in January, slightly under expectations of 0.5%. Over the last year, prices as measure by PCE have increased 1.9%.
    • Core PCE (excludes food and energy, preferred inflation measure by the Fed) increased 0.3% in January, in line with expectations. Over the last year, Core PCE has risen 1.7%, still a bit below the Federal Reserve’s 2% target.

 

Fact of the Week

  • Over the last 30 years, the proportion of all US workers that were members of a union has fallen from 17.5% to 10.7%. Looking at just private sector workers, union membership has fallen from 14.0% in 1986 to just 6.4% now. (Source: Bureau of Labor Statistics)

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.

 

Interest Rates: Wealth Economic Update Feb. 24, 2017

U.S. and World News

  • commerce-517533970_360Minutes from the January Fed meeting were released this week and comments from many of the participants indicated that it would be appropriate to raise interest rates again “fairly soon” if upcoming data are in line with expectations. Members mostly only saw a modest risk of a significant increase in inflation pressures and thought the Fed would have “ample time” to respond if necessary. The market is currently pricing in a 40% probability that the Fed raises interest rates at their next meeting in March.

Markets

  • Markets rose this week with continued low volatility. The S&P 500 gained 0.73% and closed at 2,367 which is an All-Time High. The Dow Jones followed suit by rising 0.99% and closing at an All-Time High of 20,822. Year to date, the S&P is up 6.08% and the Dow is up 5.80%.
  • Interest rates fell this week and the 5 year and 10 year U.S. Treasury Notes are now yielding 1.80% and 2.31%, respectively.
  • The spot price of WTI Crude Oil was up 1.83% this week, closing at $54.02 per barrel. Year to date, Oil prices have risen 0.56%.
  • The spot price of Gold increased by 1.83% this week, closing at $1,257.19 per ounce. Year to date, Gold prices are up 9.56%.

Economic Data

  • Initial jobless claims rose 5,000 from last week, coming in at 244,000. The Labor Department noted no special factors in the data. The four week moving average for claims now stands at 241,000 which is a new 40-year low.
  • New home sales rose by 3.7% in January which was a smaller rise than expected. New home sales rose in the Midwest, South and Northeast regions but fell in the West.
  • Existing home sales rose 3.3% in January. Sales of single family units rose 2.6% while multi-family unit sales rose 8.3%.

Fact of the Week

  • The Dow finished Friday at a new record high for the 11th consecutive day, the best streak of consecutive new highs since 1987.

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.

 

Keystone, Interest Rates: Wealth Economic Update Feb. 17, 2017

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

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

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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.

 

Travel Ban, One China: Wealth Economic Update Feb. 10, 2017

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

  • Equity market volatility has been very low for the last portion of 2016 extending into 2017. The S&P 500 has now gone 39 consecutive trading days without experiencing an intraday range of greater than +/- 1% which is the longest stretch that has occurred since 1982. (Source: Strategas Research Partners)

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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.