Wealth Management Economic Update May 31, 2016

U.S. and World News

  • While there weren’t many resolutions reached at last weekend’s G7 summit of finance ministers and central bankers in Japan, the U.S. issued a fresh warning to the host country against intervening in the currency markets. Japan has been very active in trying to devalue their Yen currency in an attempt to boost growth, a practice that has been frowned upon by the country’s trading partners.
  • medical_000071969633_320Having been hit with substantial losses in Obamacare’s first few years, major health plans are looking for premium boosts of 10% to 20% or more in many states. Proposals for increases need to be approved by state regulators before they can be passed on to customers. In addition to higher than expected costs and a population of new enrollees skewing towards the unhealthy end of the spectrum, many of the relief programs in place to cushion insurers’ losses will come to an end in 2017. While some state insurance commissioners are taking a tough public stance in regard to approving increases, experts say that they will unlikely be able to deny the requests because the losses being sustained are legitimate and they are required by law to ensure plans have funds to pay out claims.

Markets

  • Equity markets moved higher this week. The S&P 500 gained 2.32% and closed at 2099. The Dow Jones rose 2.15% and closed at 17,873. So far in 2016, the S&P is up 3.61% and the Dow is up 3.74%.
  • Interest rates did not move much this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.39% and 1.85%, respectively.
  • The spot price of WTI Crude Oil gained 3.75% this week to close at $49.54 per barrel. WTI Crude is up 21.72% in 2016.
  • The spot price of Gold lost 3.22% this week, closing at $1,212.38 per ounce. Year to date, gold prices are up 14.26%.

Economic Data

  • Initial jobless claims came in at 268,000 which was a decrease from last week’s reading of 278,000. State-level details noted that prior increases in Missouri and Michigan, which were due to temporary auto plant shutdowns, reversed this week. The four week moving average for claims moved up to 278,500.
  • Pending home sales increased by 5.1% during the month of April, much higher than expectations of 0.7%. This was the largest monthly increase in pending home sales since October 2010. By region, sales rose in the West (+11.4%), South (+6.8%) and Northeast (+1.2%), but declined in the Midwest (-0.6%)
  • 1st quarter GDP was revised up to 0.8% from an initial reading of 0.5%. Most of the upward revision was due to larger inventory accumulation and a narrower trade deficit than was reported in the first estimates.

Fact of the Week

  • May 26th marked the 120th Anniversary of the opening of the Dow Jones Industrial Average in 1896. Of the original 12 members of the index, only General Electric remains in the index today. Rounding out the other 11 original companies which were the economic stalwarts of its time were: The American Cotton Oil Company, The American Sugar Refining Company, American Tobacco Company, Chicago Gas Light & Coke Company, Distilling & Cattle Feeding Co., The Laclede Gas Company, National Lead Company, North American Company, Tennessee Coal, Iron & Railroad Company, The United States Leather Company and The United States Rubber 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
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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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

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Wealth Management Economic Update May 9, 2016

U.S. and World News

  • Puerto Rico missed a $422 million bond payment due to its Government Development Bank this week, pushing the island’s debt crisis to a new level. The missed payment is the largest so far by Puerto Rico and is believed by many analysts to be a precursor to additional defaults this summer, when more than $2 billion in bonds come due. U.S. Treasury Secretary Jack Lew warned in a letter to Congress that a U.S. “taxpayer-funded bailout may become the only course available” if the proposed restructuring legislation on the table is not approved.
  • politician_podium76797371_320Texas Senator Ted Cruz and Ohio Governor John Kasich have both officially suspended their presidential campaigns following large losses in the Indiana primary this week. This leaves Donald Trump as the presumptive Republican nominee for the 2016 Presidential Election. Trump’s next step seems to be the selection of a running mate for which he reportedly has a short list. On the Democratic side, Bernie Sanders won the Indiana primary and remains in the race with Hilary Clinton, though his path to nomination is a very narrow one.

Markets

  • Equity markets were down marginally this week. The S&P 500 fell 0.33% and closed at 2,057. Likewise, the Dow Jones dipped 0.10% and closed at 17,741. So far in 2016, the S&P is up 1.37% and the Dow is up 2.67%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.78%, respectively.
  • The spot price of WTI Crude Oil dropped 2.81% this week to close at $44.63 per barrel. WTI Crude is up 9.63% in 2016.
  • The spot price of Gold lost 0.38% this week, closing at $1,288.60 per ounce. Year to date, gold prices are up 21.44%.

Economic Data

  • Initial jobless claims came in at 274,000 which was an increase from last week’s reading of 257,000. The Labor Department noted no special factors in the data. The four week moving average for claims ticked up to 258,000.
  • The monthly non-farm payrolls report showed an increase of 160,000 jobs in April, below expectations of 200,000 jobs. With 19,000 of negative revisions to the prior two months’ figures, the three month average of job gains stands at 200,000.
    • The headline unemployment rate remained at 5.0%, missing expectations of 4.9%. The miss was largely due to a 0.2% decline in the labor force participation to 62.8%.
    • Average hourly earnings rose 0.3% in April, in line with expectations. Over the last 12 months, wages have grown 2.5%.

Fact of the Week

  • Of the 5.26 million existing home sales in 2015, 30% (1.58 million) were completed by first-time home buyers. (Source: National Association of Realtors)

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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Wealth Management Economic Update May 2, 2016

U.S. and World News

  • Federal_Reserve_340The Federal Reserve kept interest rates at their current levels following their April policy meeting this week. Kansas City Fed President Esther George lodged his dissent of the decision, favoring a rate increase at this meeting. The post-meeting statement was little changed from the March statement, though the portion about global economic risks was dropped, showing an improvement in developments abroad. The statement’s tone, while dovish, leaves the door open for a rate hike at the next meeting in June.
  • The Bank of Japan also had a policy meeting this week but disappointed markets by holding off on increasing its already massive monetary easing program. After instituting negative interest rates on depositors, the Japanese central bank stated that they preferred to take more time to understand this policy’s effect before taking further action. Japan continues to struggle to achieve its growth and inflation targets, causing the expectation for action at this meeting.
  • Saudi Arabian Prince Mohammed bin Salman unveiled what he calls “Saudi Vision 2030” this week. It is a plan to overhaul the kingdom’s economy in order to reduce its massive reliance on oil revenues, which currently make up 80% of its income. Salman, who is age 31, intends to create the world’s largest sovereign-wealth fund with over $2 trillion in assets; to be partially funded by selling 5% of state controlled Saudi Aramco in an IPO.

Markets

  • Equity markets retreated this week. The S&P 500 fell 1.24% and closed at 2,065. Likewise, the Dow Jones dipped 1.28% and closed at 17,774. So far in 2016, the S&P is up 1.70% and the Dow is up 2.77%.
  • Interest rates fell a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.29% and 1.83%, respectively.
  • The spot price of WTI Crude Oil rose 5.17% this week to close at $45.99 per barrel. WTI Crude is up 12.97% in 2016.
  • The spot price of Gold gained 4.91% this week, closing at $1,293.53 per ounce. Year to date, gold prices are up 21.91%.

Economic Data

  • Initial jobless claims came in at 257,000 which was an increase from last week’s reading of 247,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 256,000.
  • The Case-Shiller home price index rose 0.7% in February, slightly below expectations of 0.8%. All of the 20 cities making up the index saw home price gains. On a year over year basis, home prices as measured by Case-Shiller have risen 5.4%.
  • The headline Personal Consumption Expenditures index (PCE, measure of inflation) rose by only 0.05% in March, below expectations of 0.1%. On a year over year basis, headline PCE has increased by 0.8%.
    • Core PCE (excludes food and energy and is the preferred inflation measure of the Fed) also rose only 0.05% in March, below a 0.1% forecast. Over the last 12 months, core prices have risen only 1.6%, well below the Fed’s 2% inflation target.
  • Real GDP for the 1st quarter of 2016 increased by 0.5% in the initial estimate, below expectations of 0.7%. The report was mixed with consumer spending rising by 1.9% and private investment falling by -3.5%.

Fact of the Week

  • According to an April 2016 Gallup poll, 37% of college graduates surveyed believe that stocks are the top “long-term investment” available to them, beating out bonds, real estate, gold or CDs. By contrast, only 17% of non-college graduates believe that stocks are the best investment.

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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Wealth Management Economic Update April 25, 2016

U.S. and World News

  • Looking to stave off impeachment proceedings, Brazilian President Dilma Rousseff will travel to the United Nations in New York to rally international support around her. While there, Rousseff will attempt to frame the recent votes by the Brazilian congress to move forward with impeachment as a coup. If the Senate in Brazil votes by simple majority in early May to continue with impeachment, Rousseff will be suspended from her post and replaced by VP Michel Temer. Prior to Rousseff, four of Brazil’s eight presidents since 1950 have failed to serve out their terms, with one impeachment, one resignation, one suicide and one military overthrow.
  • argentina_congress340Argentina has officially returned to the global bond markets following a 15 year hiatus. The country unveiled the biggest sovereign debt issuance by an emerging market nation in 20 years. The country is selling $15 billion in bonds yielding between 6.5% – 8%, however demand was strong, attracting orders worth $65 billion. Most of the cash raised will go toward paying off creditors from Argentina’s previous default, the reason for the 15 year hiatus.

Markets

  • Equity markets continued to climb higher this week. The S&P 500 gained 0.53% and closed at 2,092. Likewise, the Dow Jones rose 0.62% and closed at 18,004. So far in 2016, the S&P is up 3.02% and the Dow is up 4.16%.
  • Interest rates turned higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.36% and 1.89%, respectively.
  • The spot price of WTI Crude Oil rose 8.33% this week to close at $43.72 per barrel. This, despite an OPEC summit in Doha, Qatar last weekend that yielded no change in policy.  WTI Crude is up 9.36% in 2016.
  • The spot price of Gold was virtually unchanged this week, closing at $1,233.61 per ounce. Year to date, gold prices are up 16.26%.

Economic Data

  • Initial jobless claims came in at 247,000 which was a decrease from last week’s reading of 253,000. The Labor Department noted no special factors in the data. This was the lowest level of initial claims since 1973. The four week moving average for claims moved down to 261,000.
  • Housing starts declined by -8.8% in March, worse than expectations of a -1.1% decline. Single family starts declined -9.2% and multifamily starts fell by -7.9%.
  • Existing home sales increased 5.1% in March, beating expectations of 3.9%. The gain marks a big bounce back from the -7.3% decline in February.

Fact of the Week

  • 25 years ago, 89% of American workers expected to be retired by at least age 65. Today, only 57% of American workers expect to be retired by 65. (Source: Employee Benefit Research Institute)

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 April 18, 2016

U.S. and World News

  • Legislators in Washington D.C. have begun working towards a solution for Puerto Rico’s $70 billion debt burden, though the process is not expected to move smoothly due to partisan bickering. Plans are to unveil a bill that would create a seven member oversight board appointed by President Obama as well as create collective action clauses, which would separate creditors into different pools and allow them to vote on modifications to the debt. The proposal stops short of giving Puerto Rico broad bankruptcy authority, forcing the island to work with Washington to find a solution.
  • Brazil’s lower house of Congress has voted to recommend President Dilma Rousseff’s impeachment for allegedly manipulating public finances. Further votes are expected this weekend that could continue momentum for her ouster. If the proceedings reach Brazil’s Senate, the chamber could decide by simple majority to put Rousseff on trial, which would suspend her position for up to six months, requiring Vice President Michel Temer to become acting president.
  • A U.S. appeals court has cleared the way for Argentina to raise as much as $15 billion to pay holdout creditors whom had loaned the country money in the past. The ruling would allow Argentina to re-enter the international capital markets for the first time in more than a decade following a default on its debts in 2001. This marks another victory for President Mauricio Macri, who has been diligently been negotiating with the country’s creditors since he was elected last year and has already passed a number of economic and financial reforms.

Markets

  • The markets rose this week as 1st quarter earnings reports started coming in. The S&P 500 gained 1.62% and closed at 2,081. Likewise, the Dow Jones rose 1.82% and closed at 17,897. So far in 2016, the S&P is up 1.80% and the Dow is up 2.71%.
  • Interest rates turned higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.21% and 1.75%, respectively.
  • The spot price of WTI Crude Oil rose 1.76% this week to close at $40.42 per barrel. WTI Crude is up 1.10% in 2016.
  • The spot price of Gold declined 0.53% this week, closing at $1,234.08 per ounce. Year to date, gold prices are up 16.30%.

Economic Data

  • Initial jobless claims came in at 253,000 which was a decrease from last week’s reading of 267,000. The Labor Department noted no special factors in the data. This marks 58 consecutive weeks of initial claims below 300,000, the longest streak since 1973. The four week moving average for claims moved down to 265,000.
  • The headline Consumer Price Index (measure of inflation) rose 0.1% in March, below expectations of a 0.2% gain. Over the last 12 months, overall inflation has risen 0.9%, which is lower than the forecasted 1.0%.
    • Core CPI (excludes food and energy) increased by 0.1%, which was also below estimates of 0.2% gains. Core prices have now risen 2.2% over the last 12 months.
  • Retail sales declined -0.3% in the month of March, missing estimates of a 0.1% gain. A 2.1% decline in motor vehicle sales and 0.9% decline in clothing purchases were largely responsible for the miss.
  • The University of Michigan’s index of consumer sentiment dropped to 89.7 in April compared to 91.0 in March, and against consensus expectations for a minor increase. The decline was mainly driven by a lower assessment of both current conditions and consumer expectations.

Fact of the Week

  • The average national price of gasoline fell from $2.26 to $2.00 in 2015. Lower gas prices saved Americans $126 billion in 2015, an average of $1,084 per household. (Source: Financial Times)

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 April 11, 2016

U.S. and World News

  • papers_000071022187_320Details from the Panama Papers, 11.5 million documents leaked from Panama-based law firm Mossack Fonseca, have been causing a stir across the globe with details of corporations and wealthy individuals utilizing offshore shell companies in order to hide funds from authorities. The first casualty from the bombshell documents was Iceland’s Prime Minister, David Gunnlaugsson, who resigned after the leak revealed his wife’s ownership of a shell company set up in the British Virgin Islands. Several other high profile people and world leaders are named in the documents, including President Macri of Argentina, President Poroshenko of Ukraine, King Salman of Saudi Arabia and soccer star Lionel Messi. In the wake of the Panama Papers leak, the U.S. Treasury Department announced that it finally intends to issue a long-delayed rule forcing banks to seek the identities of people behind these types of shell-company accounts.
  • Minutes released from the March Federal Reserve meeting were in line with the post-meeting statement and Janet Yellen’s most recent public remarks. Policymakers saw downside risks to growth stemming from developments overseas and in the credit markets. Several members also expressed concern about low inflation both in the U.S. and abroad and deemed that a more cautious approach to interest rate policy was warranted.
  • Puerto Rico Governor Alejandro Garcia Padilla has signed an emergency bill allowing the government to stop debt payments until January 2017. The action throws the current restructuring plans for the U.S. territory into doubt. Creditors claim that the moratorium on debt payments violates prior agreements as well as the island’s constitution. The action buys the Padilla administration some time and increases pressure on Congress to help Puerto Rico find a way out of its $72 billion in debt.

Markets

  • Markets slumped a bit as the 2nd quarter of 2016 kicked off. The S&P 500 fell 1.15% and closed at 2,048. Likewise, the Dow Jones dropped 1.15% and closed at 17,577. So far in 2016, the S&P is up 0.78% and the Dow is up 1.58%.
  • Interest rates continued to fall this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.15% and 1.72%, respectively.
  • The spot price of WTI Crude Oil rose 7.45% this week to close at $39.53 per barrel. WTI Crude is down 1.13% in 2016.
  • The spot price of Gold increased 1.44% this week, closing at $1,240.14 per ounce. Year to date, gold prices are up 16.87%.

Economic Data

  • Initial jobless claims came in at 267,000 which was a decrease from last week’s reading of 276,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 267,000.

Fact of the Week

  • For every 100 American workers, there are 24 retired Americans age 65 or older. By contrast, for every 100 European workers, there are 42 retired Europeans age 65 or older. (Source: European Commission)

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Wealth Management Economic Update April 4, 2016

U.S. and World News

  • In a speech at the Economic Club of New York, Fed Chair Janet Yellen emphasized downside risks to the U.S. economic outlook which derive from slower global growth. On inflation, Yellen acknowledged the recent uptick in core prices but said it is “too early to tell if this recent faster pace will prove durable.” The dovish comments follow the decision earlier in the month by the Fed to leave interest rates unchanged and lower its forecasts for future hikes.
  • turkey_istanbul_360The European Union will start implementing its controversial plan for asylum seekers on Monday by transferring the first group of migrants back to Turkey. Under the deal, EU countries have pledged to take in one screened refugee directly from Turkish soil for each Syrian refugee returned to Turkey. In addition, Turkey will receive nearly $7 billion and other concessions to help the country stem the migrant tide and deal with the 2.7 million Syrians currently living in the country.

Markets

  • Markets resumed their rally and finished the 1st quarter on a positive note. The S&P 500 gained 1.84% and closed at 2,073. Likewise, the Dow Jones rose 1.58% and closed at 17,793. So far in 2016, the S&P is up 1.95% and the Dow is up 2.76%.
  • Interest rates moved down this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.78%, respectively.
  • The spot price of WTI Crude Oil fell 7.05% this week to close at $36.68 per barrel. WTI Crude is down 8.25% in 2016.
  • The spot price of Gold increased 0.40% this week, closing at $1,221.95 per ounce. Year to date, gold prices are up 15.16%. 

Economic Data

  • Initial jobless claims came in at 276,000 which was an increase from last week’s reading of 265,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 263,000.
  • The monthly non-farm payrolls report showed 215,000 jobs added in March, beating estimates of 205,000. With only modest backward revisions, the three month average for job gains now stands at 209,000.
    • Despite the strong job gains, the headline unemployment rate ticked up 0.1% to 5.0% which was higher than expected. This was mostly due to a 0.1% increase in the labor force participation rate which now stands at 63.0%. The participation rate has now risen 0.6% since September.
    • Average hourly earnings rose 0.3%, more than the expected 0.2%. Wage growth over the last 12 months now stands at 2.3%.
  • The Case-Shiller Home Price Index rose 0.8% in January, better than expectations of  0.7%. All 20 cities in the index showed gains in home prices for the month. Over the last 12 months, home prices as measured by the index have risen 5.8%.
  • The headline PCE Index (measure of inflation) declined by -0.1% in February, in line with expectations. Headline prices have only risen by 1.0% over the last year, being dragged down by slumping energy prices.
    • The Core PCE Index (excludes food and energy, Fed’s preferred measure of inflation) was up 0.15%, slightly below estimates of 0.2%. Over the last year, core prices have risen 1.7%, lower than the forecast of 1.8% and the Fed’s target of 2.0%.

Fact of the Week

  • According to the Social Security Administration, 35% of American men and 40% of American women elect to take their Social Security retirement benefits at age 62, the earliest age a worker can access those benefits. Those who do take benefits at 62 are taking a permanent 25% discount to what the benefit would be at full retirement age.

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

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Wealth Management Economic Update March 28, 2016

U.S. and World News

  • Brussels_Belgium_360Terrorism ripped through the Belgian city of Brussels this week as explosives were placed at the capital’s airport and metro station, killing 31 and wounding 300 more. Terrorist group ISIS claimed responsibility for the Brussels attacks that took place just four months after another major attack in Paris. One suspect believed to have been involved in the attacks has been arrested and is being questioned. The most recent attacks again shine the spotlight on the European migrant crisis and put Europe’s open borders policy into question.
  • This week President Obama became the first sitting U.S. president since Calvin Coolidge in 1928 to visit Cuba in a historic visit. Obama met with Cuban President Raul Castro in a symbolic measure that indicated the end of the Cold War era conflict between the two nations. Despite the opening up of limited trade between the two countries, vast ideological differences remain.

Markets

  • Markets were down marginally in the holiday shortened trading week. The S&P 500 lost 0.65% and closed at 2,036. Likewise, the Dow Jones fell 0.49% and closed at 17,516. So far in 2016, the S&P is up 0.14% and the Dow is up 1.22%.
  • Interest rates were mostly unchanged this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.38% and 1.90%, respectively.
  • The spot price of WTI Crude Oil fell 4.08% this week to close at $39.46 per barrel. WTI Crude is down 1.30% in 2016.
  • The spot price of Gold decreased 3.06% this week, closing at $1,217.05 per ounce. Year to date, gold prices are up 14.70%.

Economic Data

  • Initial jobless claims came in at 265,000 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 slightly up to 259,750.
  • Existing home sales declined by -7.1% in February, worse than an expected -3.0% drop. Sales of existing single family (-7.2%) and multi-family (-6.6%) fell during the month.
  • New home sales were in line with expectations, rising 2.0% during February. Despite the increase, the West region was the only one to see gains in new home sales while the Midwest, South and North regions saw declines.

Fact of the Week

  • The average holding period of a stock in the United States has fallen from about 8 years as of 1960, to only 1.3 years today. The average holding period of stocks hit its low of 1.0 years in 2010 (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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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

 

Wealth Management Economic Update March 21, 2016

U.S. and World News

  • The Federal Reserve met this week and decided to keep interest rates unchanged, a result which was expected by markets and forecasters. The Fed indicated a more cautious approach to future monetary policy and lowered its internal projections to just two interest rate hikes in 2016, down from the four projected to begin the year. Fed officials pointed to global economic and financial developments as the cause for their concern and noted that while inflation has picked up in recent months, it remains below the committee’s long-run objective.
  • President Obama has nominated Judge Merrick Garland to the Supreme Court following the death of long-serving conservative Justice Antonin Scalia. Merrick would be the 113th Supreme Court justice if confirmed. Standing in his way however, is the Republican controlled Senate which has vowed to not hold any confirmation hearings for any Obama nominee as they believe that the seat should be filled by the next president following this year’s election.

Markets

  • Markets continued to rally this week and have broken into positive territory for 2016. The S&P 500 added 1.37% and closed at 2,050. Likewise, the Dow Jones rose 2.26% and closed at 17,602. So far in 2016, the S&P is up 0.80% and the Dow is up 1.72%.
  • Interest rates fell amid the rally in equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.39% and 1.88%, respectively.
  • The spot price of WTI Crude Oil gained 2.21% this week to close at $39.35 per barrel. WTI Crude has risen 0.56% in 2016.
  • The spot price of Gold increased 0.48% this week, closing at $1,255.40 per ounce. Year to date, gold prices are up 18.31%.

Economic Data

  • Initial jobless claims came in at 265,000 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 slightly up to 268,000.
  • Retail sales declined by -0.1% in February, in line with forecasts, reflecting lower vehicle and gas station sales. Core retail sales (excludes gas and autos) were unchanged in February, lower than forecasts of a 0.2% increase. Additionally, core retail sales during the prior two months were revised down -0.3%, adding to an overall disappointing report.
  • Consumer Price Index (measure of inflation) declined by -0.2% in February, in line with forecasts. This was largely due to a -6% decline in energy prices during the month. Headline inflation is now up 1.0% over the last 12 months.
    • Core CPI (excludes food and energy costs) rose by 0.3%, better than expectations of 0.2%. This brings the increase of core prices to 2.3% over the last 12 months.

Fact of the Week

  • The exchange traded fund (ETF) industry has grown from 80 funds in the year 2000 to now 1,603 funds today managing over $2.1 trillion in assets. (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
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Tamara Wiley, CFP® – (630) 844-3222 twiley@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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