Fed meeting: Wealth Economic Update Sept 26, 2016

U.S. and World News

  • federal_11172872_340The Federal Reserve held its September policy meeting this week and decided to hold the Fed Funds rate at its current level. The decision was not unanimous as there were three dissenting members of the committee that favored raising rates at this meeting. The statement given after the decision included the language “near-term risks to the economic outlook appear roughly balanced” which many interpret as a rate hike being near. The next policy meeting will be held in November but given that it will take place before the Presidential election, it is not expected that a rate hike would occur at that meeting. As a result, the December Fed meeting has become the focus with markets currently pricing in a roughly 50% probability of a hike.
  • The Bank of Japan also held interest rates steady, although speculation was that they could cut rates further into negative territory as opposed to raising them. While they did not move rates, the BOJ did modify its policy framework in an attempt to spur more economic growth. Among the changes, the central bank said it would introduce yield curve controls, eliminate the maturity range of its bond purchases and confirmed that cutting rates further remains an option down the line.

Markets

  • This week the S&P 500 finished up 1.19% and closed at 2,165. The Dow Jones rose 0.76% and closed at 18,261. So far in 2016, the S&P is up 7.51% and the Dow is up 6.83%.
  • Interest rates were down slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.18% and 1.62%, respectively.
  • The spot price of WTI Crude Oil rose 3.84% this week to close at $44.68 per barrel. WTI Crude is up 11.56% in 2016.
  • The spot price of Gold was up 2.14% this week, closing at $1,338.38 per ounce. Year to date, gold prices are up 26.13%.

Economic Data

  • Initial jobless claims came in at 252,000, down from last week’s reading of 260,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
  • Housing starts declined -5.8% in August, worse than expectations of a -1.7% drop. Starts on single family (-6.0%) and multi-family (-5.4%) were both weak in the month.
  • Existing home sales declined -0.9% in August, missing expectations of a 1.1% increase. On a regional level, existing home sales declined in the South (-2.7%), West (-1.6%) and Midwest (-0.8%), while sales rose in the Northeast (+6.1%).

Fact of the Week

  • The 6.22 million tax returns from 2014 that reported at least $200,000 of adjusted gross income (AGI) represented 4.2% of all returns filed, received 34.2% of all AGI nationwide and paid 58.2% of all federal income tax paid during that year. (Source: Internal Revenue Service)

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
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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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Russia-US-Syria: Wealth Economic Update Sept 19, 2016

U.S. and World News

  • syria_aleppo_340The United States and Russia have agreed on a cease-fire in Syria with support from Syrian President Bashar Assad, and as part of the deal, Syria will continue to strike at the Islamic state for one week until the U.S. and Russia take over. The cease-fire was successful in its first full day with no recorded combat deaths and a cautious effort to deliver aid to fortified areas has begun. However, the ability of the U.S. and Russia to work together on the fight against ISIS has been questioned as they have begun to accuse one another of failing to do their part in the agreement.
  • Greece has stated that it plans to tell its creditors that it is unable to comply with the labor reforms set by the IMF for its €86 billion bailout. The terms of the labor reform is a ban on the right of workers to collectively negotiate wages and conditions.
  • The Bank of Japan plans to continue the use of negative interest rate policy for monetary easing. Negative interest rate policy has been in use by the BOJ since February in an effort to meet their 2% inflation target. The policy has come with repercussions such as a stronger Yen and lower margins for financial institutions.
  • The market currently has priced in a 20% probability of a 0.25% rate increase from the Federal Reserve next week.

Markets

  • After a volatile week, the S&P 500 finished up 0.59% and closed at 2,139. The Dow Jones rose 0.25% and closed at 18,124. So far in 2016, the S&P is up 6.26% and the Dow is up 6.04%.
  • Interest rates were up slightly from last week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.20% and 1.69%, respectively.
  • The spot price of WTI Crude Oil fell 5.82% this week to close at $43.21 per barrel. WTI Crude is up 16.60% in 2016.
  • The spot price of Gold was down 1.33% this week, closing at $1,310.21 per ounce. Year to date, gold prices are up 23.48%.

Economic Data

  • Initial jobless claims came in at 260,000, up slightly from last week’s reading of 259,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000.
  • Retail sales declined by 0.3% in August compared to consensus estimates of a decline of 0.1%. The decline in oil prices transitioning to lower gasoline station sales is part of the reason for this.
  • The Consumer Price Index (CPI) increased by 0.2% in August compared to consensus estimates of 0.1%. The increase reflects increased prices in medical care commodities and services.

Fact of the Week

  • More than 1 in 3 employed Americans (36%) work for companies that do not offer an employer-sponsored retirement plan, a total of 55 million workers lacking access to a plan (source: AARP, DOL).

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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Interest rate outlook: Wealth Economic Update September 12, 2016

U.S. and World News

  • European Central Bank President Mario Draghi

    European Central Bank President Mario Draghi*

    The European Central Bank decided to hold interest rates at their record low levels and refrained from adding any new stimulus to the economy. Investors had anticipated that ECB President Mario Draghi would take more action or at least provide clearer indications of future actions. However Draghi stated, “Our program is effective and we should focus on its implementation.”

  • Markets were hit with their worst day in months on Friday, largely believed to be due to comments made by historically dovish Boston Fed President Eric Rosengren. Rosengren stated that “a reasonable case can be made” for raising interest rates and that the Fed faced increasing risks if it waited too much longer to hike. He did not specifically address September’s policy meeting but these comments, coupled with the ECB’s inaction have led many investors to believe that a September rate hike is very much on the table.

Markets

  • This week the S&P 500 was down 2.36% and closed at 2,128. The Dow Jones fell 2.15% and closed at 18,085. So far in 2016, the S&P is up 5.64% and the Dow is up 5.78%.
  • Interest rates moved up during the week, particularly following Boston Fed President Rosengren’s comments. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.22% and 1.67%, respectively.
  • The spot price of WTI Crude Oil rose 3.21% this week to close at $45.70 per barrel. WTI Crude is up 14.11% in 2016.
  • The spot price of Gold was up 0.20% this week, closing at $1,327.83 per ounce. Year to date, gold prices are up 25.14%.

Economic Data

  • Initial jobless claims came in at 259,000, moving down from last week’s reading of 263,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 261,000. 

Fact of the Week

  • The average interest rate paid by the U.S. government on its debts was 2.26% as of July 31st. This has come down more than 2% from an average 4.38% the government paid eight years ago. Every 1% increase in the cost of debt for the nation’s estimated $14 trillion in debt is equal to an additional $140 billion in annual interest payments. (Source: Treasury Department)

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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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*Image of Mario Draghi, Photo credit: World Economic Forum, via Wikimedia Commons. License: Creative Commons Attribution-Share Alike 2.0 Generic license. (See, https://commons.wikimedia.org/wiki/File:Mario_Draghi_-_World_Economic_Forum_Annual_Meeting_2012.jpg).

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Brazil impeachment: Wealth Economic Update September 6, 2016

U.S. and World News

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

Markets

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

Economic Data

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

Fact of the Week

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

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

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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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Fed Symposium: Wealth Economic Update Aug 29, 2016

U.S. and World News

  • jackson_hole_wyoming_14105333_340The annual Federal Reserve Bank of Kansas City economic symposium in Jackson Hole, Wyoming began on Thursday and will run through Saturday.  Central bankers and economists from around the world have gathered at the event which this year has the title of, “Designing Resilient Monetary Policy Frameworks for the Future.” Federal Reserve Chairwoman Janet Yellen delivered her keynote speech on Friday which had been highly anticipated by market participants. Yellen stated that the “case for an increase in the Federal Funds rate has strengthened in recent months,” which was viewed as somewhat hawkish. She tempered that with the comment, “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy,” referencing potential risks overseas. Overall, there was no clear direction given on the path of interest rate policy.
  • Brazil’s senate has begun the impeachment trial of suspended President Dilma Rousseff this week. The process is likely to wrap up late next week with a final impeachment vote being held. The likelihood appears to be high that Rousseff will be removed from office on charges that she doctored government fiscal accounts in order to get re-elected in 2014. Brazilian markets have rallied lately on the prospect of the right-wing Vice President and acting President Michel Temer permanently taking over from the leftist Rousseff. Temer would face the tall task of having to drag Brazil’s economy out of its worst recession since the Great Depression and bringing down a massive budget deficit.

Markets

  • This week the S&P 500 was down 0.67% and closed at 2,169. The Dow Jones fell 0.85% and closed at 18,395. So far in 2016, the S&P is up 7.57% and the Dow is up 7.41%.
  • Interest rates increased this week following Janet Yellen’s speech at Jackson Hole on Friday. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.23% and 1.62%, respectively.
  • The spot price of WTI Crude Oil dipped 2.49% this week to close at $47.31 per barrel. WTI Crude is up 18.13% in 2016.
  • The spot price of Gold was down 1.48% this week, closing at $1,321.60 per ounce. Year to date, gold prices are up 25.55%. 

Economic Data

  • Initial jobless claims came in at 261,000, edging down 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 264,000.
  • New single-family home sales rose by 12.4% in July, bringing the seasonally adjusted annualized rate to the highest level since late 2007. New home sales increased in the South, Northeast and Midwest, while remaining flat in the West region.
  • Existing home sales declined by -3.2% in July, more than an expected 1.1% decline. Single family sales decreased by 2.0%, while multi-family sales fell 12.3% following solid gains in June.

Fact of the Week

  • The average rate of return on the Dow Jones Industrial Average during the 26 Summer Olympic Games dating back from 1900 through 2012 was an impressive 4% from the opening to closing ceremonies, with positive returns seen 68% of the time. This year’s Games which just concluded continued this trend as the Dow Jones was up 1.65% during the two weeks of the Rio Olympics. (Source: Bespoke Investment Group)

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
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Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
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Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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July Fed Meeting: Wealth Economic Update Aug 22, 2016

U.S. and World News

  • Minutes from the July Federal Reserve meeting were released this week and showed that the Committee continues to be patient regarding further interest rate increases. Several members noted that inflation continued to be low and saw little risk of waiting for inflation data to firm up before taking further tightening action. Committee members also noted that while markets rebounded from the surprising Brexit vote, they continued to see a variety of risks overseas.
  • China_Great_Wall_340China’s State Council has approved the launch of the Shenzhen-Hong Kong Stock Connect, which will serve as a trading link between the two area’s stock markets. It will be operational in about four months and will be similar to the existing Shanghai-Hong Kong link that was launched in late 2014. It is expected that this new agreement will further open up China’s market to outside investors.
  • In a live broadcast, suspended Brazilian President Dilma Rousseff said that, “Impeachment without a crime, if consummated, would be a coup.” Rousseff also called for early elections in an attempt to unite the country that is currently in recession. Rousseff was suspended in May on accusations that she doctored government fiscal accounts in order to get re-elected in 2014. It’s widely expected that she will be impeached and permanently removed from office later this month.

Markets

  • This week the S&P 500 was up 0.06% and closed at 2,184. The Dow Jones rose 0.02% and closed at 18,553. So far in 2016, the S&P is up 8.28% and the Dow is up 8.31%.
  • Interest rates increased this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.16% and 1.58%, respectively.
  • The spot price of WTI Crude Oil gained 9.17% this week to close at $48.57 per barrel. WTI Crude is up 21.27% in 2016.
  • The spot price of Gold rose 0.41% this week, closing at $1,341.47 per ounce. Year to date, gold prices are up 26.42%.

Economic Data

  • Initial jobless claims came in at 262,000, moving down from last week’s reading of 266,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 265,000.
  • The headline Consumer Price Index (measure of inflation) was unchanged in July, in line with forecasts as a decline in energy prices offset moderate gains in other components. Over the last 12 months, headline CPI has risen 0.8%.
    • Core CPI (excludes food and energy prices) showed gains of 0.1% in July, less than the expectation of 0.2%. Over the last year, ‘core’ prices have risen 2.2%.
  • New housing starts increased by 2.1% in July, beating consensus expectations of a -0.8% decline. Single family starts increased 0.5% in the month, while multi-family starts increased by 5.0%.

Fact of the Week

  • Of the households headed by a currently employed individual (i.e, a “working” household), 44% do not have any money invested on a pre-tax basis in a defined contribution plan, e.g., a 401(k) retirement plan. (Source: Government Accountability 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
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Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
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Brazil impeachment trial: Wealth Economic Update Aug 15, 2016

U.S. and World News

  • brazil_17780429_340The Olympic Games have begun in Brazil but that did not stop the country’s Senate from voting to put suspended President Dilma Rousseff on an impeachment trial. Rousseff had been suspended from her post for allegedly illegally financing government spending. The decision to proceed with impeachment hearings could seal her fate and lead to her successor Michel Temer taking the post on a permanent basis as early as this month.
  • Vladimir Putin has promised to respond in kind to what he called Ukraine’s “terror” tactics in the disputed region of Crimea. Fighting between Ukrainian government forces and Russian-backed rebels has intensified once again with two servicemen being killed in clashes in the last week. Putin also threatened to cancel the peace negotiations at next month’s G20 meeting and called the talks “pointless”.
  • On Thursday, in an event that hadn’t occurred since December 31, 1999, the S&P 500, the Dow Jones Industrial Average and the NASDAQ indices all set all-time highs on the same day. This accentuates a strong comeback in equity markets from historically the worst start to a year which saw those same indices decline more than 10% through mid-February.

Markets

  • This week the S&P 500 was up 0.12% and closed at 2,184. The Dow Jones rose 0.33% and closed at 18,576. So far in 2016, the S&P is up 8.21% and the Dow is up 8.29%.
  • Interest rates dipped a bit this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.10% and 1.51%, respectively.
  • The spot price of WTI Crude Oil gained 6.96% this week to close at $44.71 per barrel. WTI Crude is up 11.64% in 2016.
  • The spot price of Gold was unchanged this week, closing at $1,335.97 per ounce. Year to date, gold prices are up 25.90%.

Economic Data

  • Initial jobless claims came in at 266,000, edging down 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 up to 263,000.
  • Retail sales were flat in July, missing expectations of a 0.4% acceleration. Solid increases in vehicle and parts sales were offset by lower gas station sales as fuel prices declined. Core retail sales (excludes autos, gasoline and building materials) also showed no gain, underperforming estimates of 0.3%.
  • The University of Michigan consumer sentiment index moved up to 90.4 from 90.0 in the initial August release. This was a bit below expectations of a 91.5 reading. Within the report, consumers’ assessment of current economic conditions declined while their expectations of the future improved.

Fact of the Week

  • Americans spent $3.63 billion less at gas stations in June 2016 compared to June 2015, but they spent $2.55 billion more at restaurants and bars in June 2016 than in June 2015 (Source: Census Bureau).

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

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

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Post-brexit: Wealth Economic Update Aug 8, 2016

U.S. and World News

  • london_big-ben_49186880_340U.K. Prime Minister Theresa has outlined her plan to reshape the British economy for a post-Brexit world. Her goal is to revive industrial productivity growth in the country by encouraging innovation and focusing on sectors and technologies that will give Britain a competitive advantage. Meanwhile, the Bank of England announced more easing measures in a continued effort to spur growth. Benchmark interest rates were cut and the central bank’s bond buying program was expanded and will now include corporate bonds.
  • Japanese Prime Minister Shinzo Abe announced a fresh stimulus package that ranks among the country’s largest since the global financial crisis. The package totals ¥28 trillion ($274 billion) and was approved in response to growing consensus that monetary policy alone won’t be able to revive Japan’s economy. Included in the package that’s expected to lift GDP 1.4% are childcare benefits, $150 handouts to 22 million low income citizens, a loan of ¥10.7 trillion for infrastructure projects and ¥7.5 trillion for direct fiscal spending.
  • India’s upper house of parliament unanimously approved the creation of a national sales tax, nearly a decade after the move was first proposed. This is considered to be the biggest legislative victory for Prime Minister Narendra Modi since he took office in 2014. The tax bill seeks to streamline the country’s fragmented tax system by imposing a single national tax, something businesses have been lobbying for as it would reduce costs and could boost economic growth by 2%. The bill now must be ratified by at least half of all states in India, a process projected to be concluded before the end of the year.

Markets

  • This week the S&P 500 was up 0.49% and closed at an All-Time High of 2,183. The Dow Jones rose 0.65% and closed at 18,544. So far in 2016, the S&P is up 8.08% and the Dow is up 7.94%.
  • Interest rates popped up this week, particularly following the strong July employment report. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.13% and 1.59%, respectively.
  • The spot price of WTI Crude Oil gained 0.91% this week to close at $41.98 per barrel. WTI Crude is up 4.77% in 2016.
  • The spot price of Gold fell 1.13% this week, closing at $1,336.00 per ounce. Year to date, gold prices are up 25.91%.

Economic Data

  • Initial jobless claims came in at 269,000 which is higher than last week’s reading of 266,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved up to 260,000.
  • The July employment report showed an increase of 255,000 non-farm payrolls, beating expectations of 180,000. The prior two months’ figures were revised up a total of 18,000, bringing the three month average for job gains to 190,000.
    • The headline unemployment rate remained at 4.9%, narrowly missing estimates of 4.8%. The small miss was due to the labor force participation rate rising by 0.1% to 62.8%.
    • Average hourly earnings rose by 0.3% in July, beating expectations of 0.2%. Over the last 12 months, wages are up 2.6%.
  • The PCE Price index (measure of inflation) rose 0.1% in June, lower than expectations of 0.2%. Over the last 12 months, the PCE index is up 0.9%.
    • The Core PCE Price Index (excludes food and energy, the Fed’s preferred measure of inflation) rose 0.1% in June, in line with expectations. Over the last year, core prices are up 1.6%.

Fact of the Week

  • At $25,000, George Washington’s presidential salary represented 2% of the U.S. budget in 1789. If that percentage of pay held today, Barrack Obama would be paid over $67 billion a year. (Source: USA Today)

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

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Attempted coup: Wealth Economic Update Aug 1, 2016

U.S. and World News

  • turkey_7947841_340Following the attempted military coup earlier this month, Turkish President Tayyip Erdogan is tightening his grip on the country by ordering the closure of over 2,000 private schools, charities and other institutions in his first action since imposing a state of emergency. Also causing alarm among Turkey’s NATO allies was Erdogan shutting down 130 media outlets and his dismissal of over 1,500 military officers as he attempts to regain complete control over the country.
  • The Federal Reserve held its policy meeting this week, leaving interest rates unchanged but altering the language in its statement. The Committee upgraded their assessment of the U.S. labor market, noting that “job gains were strong in June following weak growth in May.” The other key phrase in their statement was, “Near term risks to the economic outlook have diminished.” While this does not make a rate hike imminent, it indicates that the Fed would like to raise rates sometime this year. Kansas City Fed President Esther George dissented, favoring an increase in interest rates at this meeting.

Markets

  • This week the S&P 500 was down 0.05% and closed at 2,174. The Dow Jones fell 0.75% and closed at 18,432. So far in 2016, the S&P is up 7.56% and the Dow is up 7.25%.
  • Interest rates retreated this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.02% and 1.45%, respectively.
  • The spot price of WTI Crude Oil fell 0.62% this week to close at $41.46 per barrel. WTI Crude is up 3.65% in 2016.
  • The spot price of Gold gained 2.16% this week, closing at $1,351.28 per ounce. Year to date, gold prices are up 27.35%.

Economic Data

  • Initial jobless claims came in at 266,000 which is higher than last week’s reading of 253,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 257,000.
  • The Case-Shiller home price index declined by 0.1% in May, missing expectations of a 0.1% increase. Data was mixed across the cities that are part of the index. Over the last 12 months, home prices as measured by Case-Shiller have risen 5.2%.
  • The initial reading of 2nd quarter U.S. GDP showed 1.2% annualized growth, much lower than the consensus estimate of 2.5% annualized growth. This figure will be subject to multiple revisions.

Fact of the Week

  • National health care expenditures in the United States during 2016 are projected to reach $3.35 trillion, or $10,346 per person. (Source: Centers for Medicare and Medicaid Services)

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

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

Visit Old Second Wealth Management

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

 

UK & Germany: Wealth Economic Update July 25, 2016

U.S. and World News

  • U.K. Prime Minister Theresa May made it clear that she would attempt to secure a very close economic relationship with Germany post-Brexit, but German Chancellor Angela Merkel refuses to negotiate until the U.K. invokes Article 50. If negotiations were to start early, it would give the British incentives to delay notification (the official start of the 2 year negotiation process), which would give them an advantage and could lead to the negotiations being dragged out indefinitely.  
  • A three-month state of emergency has been declared by Turkey’s President Erdogan Wednesday night in order to “protect democratic values” by stopping parliament from passing new laws against supporters of last Friday’s coup. President Erdogan has also suspended or detained roughly 50,000 police officers, judges, civil servants, and teachers this week which has provided some stability, but some uncertainty still remains. The Turkish equity index regained some of its losses and Turkey’s central bank cut its overnight lending rate 0.25% to 8.75%.

Markets

  • This week the S&P 500 was up 0.64% and closed at 2,175. The Dow Jones gained 0.35% and closed at 18,571. So far in 2016, the S&P is up 7.61% and the Dow is up 8.05%.
  • The 5 year and 10 year U.S. Treasury Notes are now yielding 1.12% and 1.57%, respectively.
  • The spot price of WTI Crude Oil fell 5.21% this week to close at $44.22 per barrel. WTI Crude is up 4.29% in 2016.
  • The spot price of Gold lost 1.11% this week, closing at $1,322.64 per ounce. Year to date, gold prices are up 24.65%. 

Economic Data

  • Initial jobless claims came in at 253,000 which is slightly lower than last week’s reading. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 259,000.
  • Existing home sales were up 1.1% in June reaching a post-crisis high versus expectations of a slight decline. This was led by multi-family home sales and homes in the Midwest region.

Fact of the Week

  • The medium square footage of new single family homes built in the United States in 2015 was 2,467 square feet, an increase of 547 square feet over the last 20 years. That’s equivalent to a 23’ x 23’ addition to new homes today when compared to 1995 home construction. Source: Joint Center for Housing Studies of Harvard University.

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

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

Visit Old Second Wealth Management

*Image of Theresa May, Photo credit:UK Home Office, via Wikimedia Commons. License: Creative Commons Attribution 2.0 Generic license.. (See, https://commons.wikimedia.org/wiki/File:Theresa_May_2015_(cropped).jpg).

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