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

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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

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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

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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

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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.

 

Wealth Management Economic Update March 14, 2016

U.S. and World News

  • European Central Bank President Mario Draghi announced additional easing this week in an effort to spur growth in the still struggling European Union. Draghi announced several cuts to interest rates, including lowering the deposit rate further into negative territory to -0.4% from -0.3%. Additionally, the ECB announced that its Asset Purchase Program would be extended until at least March 2017, that the amount of bonds purchased each month would be increased from €60 billion to €80 billion and that corporate bonds would now be part of the purchases. Markets reacted favorably initially following the announcement, however they fell back when during his post-meeting press conference, Draghi indicated that interest rates were unlikely to fall further.
  • north-korea_320Tensions continue to escalate in North Korea as leader Kim Jong-un has ordered his country’s scientists to conduct more nuclear tests and urged them to boost the nation’s nuclear attack capability. Further unconfirmed reports from Pyongang have the country in possession of miniaturized nuclear warheads to mount on ballistic missiles. North Korea has also threatened military steps against South Korea in addition to firing short-range ballistic missiles off its eastern coast.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 1.16% and closed at 2,022. Likewise, the Dow Jones rose 1.31% and closed at 17,213. So far in 2016, the S&P is down 0.60% and the Dow is down 0.57%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.50% and 1.99%, respectively.
  • The spot price of WTI Crude Oil gained 7.10% this week to close at $38.47 per barrel. WTI Crude has fallen 1.69% in 2016.
  • The spot price of Gold decreased 0.76% this week, closing at $1,249.45 per ounce. Year to date, gold prices are up 17.75%.

Economic Data

  • Initial jobless claims came in at 259,000 which was a decrease from last week’s reading of 278,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 267,500.

Fact of the Week

  • The cost of tuition, fees, room and board at an average in-state public college has increased 5.6% per year over the last 30 years, bringing those costs to $19,548 for the 2015-2016 school year. Had these costs only risen by the rate of inflation (as measured by the Consumer Price Index) over the last 30 years (2.7% per year), then a year of college would cost $8,515 for the current year. (Sources: College Board, 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
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 7, 2016

U.S. and World News

  • Last weekend’s G20 summit failed to yield a comprehensive plan for spurring global growth. World leaders met in Shanghai and called for more fiscal measures and structural reforms to revive the global economy but also cited a number of risks to growth, including a potential British exit from the European Union. In a joint statement, the G20 leaders said, “Monetary policies will continue to support economic activity and ensure price stability but monetary policy alone cannot lead to balanced growth.”
  • North Korean leader Kim Jong Un has ordered his country to be ready to use its nuclear weapons at any time and to turn its military posture to “pre-emptive attack” mode. Un told his military that this was necessary due to “growing threats from enemies.” The comments mark further escalation of tension on the Korean peninsula after the U.N. Security Council imposed harsh new sanctions against North Korea.

Markets

  • Markets continued to gain back ground this week. The S&P 500 added 2.71% and closed at 2,000. Likewise, the Dow Jones rose 2.24% and closed at 17,007. So far in 2016, the S&P is down 1.73% and the Dow is down 1.85%.
  • Interest rates rose along with the equity markets this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.38% and 1.88%, respectively.
  • The spot price of WTI Crude Oil gained 10.71% this week to close at $36.29 per barrel. WTI Crude has fallen 7.26% in 2016.
  • The spot price of Gold increased 2.90% this week, closing at $1,258.95 per ounce. Year to date, gold prices are up 18.65%.

Economic Data

  • Initial jobless claims came in at 278,000 which was an increase from last week’s reading of 272,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 270,250.
  • The February employment report showed 242,000 non-farm jobs created, beating expectations of 195,000. The prior two months’ figures were revised up a combined 30,000, bringing the three month average for job gains to 228,000.
    • The headline unemployment rate remained at 4.9%, in line with expectations. The unemployment rate held steady despite the solid addition of new jobs due to a 0.2% increase in the labor force participation rate to 62.9%. Participation is now up 0.5% in the last six months.
    • Wage growth disappointed in the month, falling -0.1% while estimates were for 0.2% growth. Over the last 12 months, wage growth now stands at 2.2%, down from 2.5% in the prior month.

Fact of the Week

  • Since the inception of the Dow Jones Industrial Average in May of 1896, there have been 23 trading days taking place on ‘Leap Day’, including this past Monday. Of those 23 trading days, 16 have been negative, including 13 of the last 17 Leap Days. The average return for the Dow Jones on Leap Days is -0.1%. (Source: Crossing Wall Street)

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 February 29, 2016

U.S. and World News

  • britain_000085343391_320Despite last week’s report that an agreement between Britain and European Union was on track, British Prime Minister David Cameron has announced a historic referendum to decide whether the United Kingdom should remain in the EU. Though Cameron himself strongly favors remaining in the economic bloc, he lost the backing of London Mayor Boris Johnson, who became the most high profile supporter of a British exit, or Brexit. The referendum is set to take place on June 23rd and the announcement set off a plunge in the value of the British Pound.
  • Finance ministers and central bank governors from the world’s 20 leading economies have convened in Shanghai to discuss a response to the dim global economic landscape. G20 participants will discuss many issues including the plunge in commodity prices, increased market volatility, exchange rates and the slowdown of China’s economy.

Markets

  • Markets continued to gain back ground this week. The S&P 500 gained 1.61% and closed at 1,948. Likewise, the Dow Jones rose 1.52% and closed at 16,640. So far in 2016, the S&P is down 4.33% and the Dow is down 4.03%.
  • Interest rates rose modestly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.24% and 1.77%, respectively.
  • The spot price of WTI Crude Oil gained 3.43% this week to close at $32.43 per barrel. WTI Crude has fallen 16.08% in 2016.
  • The spot price of Gold decreased 0.27% this week, closing at $1,223.46 per ounce. Year to date, gold prices are up 15.30%.

Economic Data

  • Initial jobless claims came in at 272,000 which was an increase from last week’s reading of 262,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 272,000.
  • The Case-Shiller home price index rose 0.8% in December, slightly lower than expectations of 0.9%. Of the 20 city index, 19 showed price increases during the month. Over the last 12 months, home prices as measured by the index have risen 5.7%.
  • The headline PCE index (measure of inflation) rose by 0.1% in January, better than expectations of flat prices. Over the last 12 months, prices as measured by PCE have risen 1.3% vs. forecasts of 1.1%. Core PCE (excludes food and energy prices, preferred measure of inflation used by the Fed) was up 0.26% in January, narrowly beating expectations of 0.2%. Over the last 12 months, core PCE is up 1.7%, closer to the Federal Reserve’s goal of 2.0% inflation.
  • GDP growth in the 4th quarter of 2015 was revised up to 1.0% from the initial estimate of 0.7%. This was better growth than had been expected by the consensus (0.4%).

Fact of the Week

  • According to the National Association of Home Builders, over the last 30 years, the average size of a new single family home built in the U.S. has increased by 935 square feet to a total of 2,720 square feet. This is roughly the equivalent of adding a 30’ by 31’ room.

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 February 23, 2016

U.S. and World News

  • Helping to at least stabilize the oil markets temporarily, top officials from Russia, Saudi Arabia and several key OPEC members have agreed to freeze crude oil output at January levels. Iran was notably absent from this agreement as the country is planning ramp up oil output to regain market share following years of international sanctions that limited the country’s production.
  • cuba_field_000015487392_320U.S. and Cuban officials have signed an agreement that will reopen airline services between the two nations for the first time in more than 50 years. Meanwhile, President Obama is planning a trip to the island nation next month; marking the first time in more than 80 years a sitting U.S. President will visit Cuba. The trip to Havana would cap off one of Obama’s foreign policy goals of normalizing relations with Cuba and moving toward expanded commercial relations after a 54 year hiatus.
  • Minutes from the Federal Reserve’s January meeting were released this week and were broadly in line with recent comments made by Fed officials. The minutes emphasized continued progress in labor market conditions and positive fundamentals but also noted increased downside risks associated with recent tightening of financial conditions and weaker growth abroad. Fed officials remain data dependent and would like to see more information in order to assess if further rate hikes are warranted.
  • Fears that Britain will leave the European Union had heightened as Prime Minister David Cameron has been engaging in tough negotiations to limit concessions necessary for Britain to stay in the bloc. Diplomats who have been negotiating around the clock during a two-day summit on issues such as welfare curbs and financial regulation have reached a deal late Friday afternoon and it appears now that Britain will remain in the EU.

Markets

  • Markets continued on from last Friday’s rally to finish up on the week. The S&P 500 gained 2.89% and closed at 1,918. Likewise, the Dow Jones rose 2.71% and closed at 16,392. So far in 2016, the S&P is down 5.87% and the Dow is down 5.50%.
  • Interest rates were little changed this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.74%, respectively.
  • The spot price of WTI Crude Oil gained 1.53% this week to close at $29.89 per barrel. WTI Crude has fallen 21.69% in 2016.
  • The spot price of Gold decreased 0.82% this week, closing at $1,227.77 per ounce. Year to date, gold prices are up 15.71%.

Economic Data

  • Initial jobless claims came in at 262,000 which was a decrease from last week’s reading of 269,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 273,250.
  • Housing starts unexpectedly declined by -3.8% in January, below expectations of a 2.0% gain. More severe weather in January compared to December may have been a factor. Both multi-family (-3.7%) and single family (-3.9%) housing starts were weaker than expected.
  • The Consumer Price Index (measure of inflation) was unchanged in January, more than expectations for a -0.1% decline in prices, despite a 2.8% decline in energy prices. Core CPI (excludes food and energy costs) increased by 0.3% in January, the largest gain since March 2006. This was better than expectations of a 0.2% gain. Over the last 12 months, CPI is up 1.4% and Core CPI is up 2.2%.

Fact of the Week

  • According to the Institute of Policy Studies, the 20 wealthiest Americans are worth a combined $732 billion. This is more than combined net worth of the bottom 50% of the U.S. population which stands at 323 million people.

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.