Fed Rates: Wealth Economic Update Nov. 28, 2016

U.S. and World News

  • rate518867918Minutes from the November Federal Reserve meeting were released this week and were consistent with Fed Chair Janet Yellen’s recent congressional testimony. Most officials saw a rate increase occurring “relatively soon, so long as incoming data provided some further evidence of continued progress toward the Committee’s objectives.” While this meeting occurred before the Presidential election which seemed to catch markets off-guard, recent data has continued to be strong enough to likely warrant a rate hike in December.
  • OPEC will debate an oil output cut of between 4%-4.5% at its meeting in Vienna next week. The output cut had originally been agreed to on September 28th but the details behind its implementation still need to be worked out. The deal is still no sure thing as some of the member countries are opposed, for example Iran, which was only recently allowed to re-enter the global oil markets and therefore does not want to cut production.

Markets

  • This week the S&P 500 increased 1.45% and closed at 2,213. The Dow Jones rose 1.51% and closed at 19,152. So far in 2016, the S&P is up 10.29% and the Dow is up 12.41%.
  • Interest rates increased significantly higher once again this week as investors foresee higher inflation in the future as a result of a Trump presidency. The Dollar index hit 100 for the first time in almost a year after it rose by more than 1% this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.84% and 2.36%, respectively.
  • The spot price of WTI Crude Oil fell 0.65% this week to close at $46.06 per barrel. WTI Crude is up 4.18% in 2016.
  • The spot price of Gold fell 2.01% this week, closing at $1,183.56 per ounce. Year to date, gold prices are up 11.54%.

Economic Data

  • Initial jobless claims came in at 251,000, an increase from last week’s reading of 235,000. The increase is likely due to a rebound from last week’s decline in claims caused by the Veteran’s Day holiday. The four week moving average for claims moved down to 251,000.
  • Existing home sales increased by 2.0% in October, better than consensus estimates of a     -0.6% decline. Sales of single family units increased by 2.3%, while multi-family unit sales were unchanged from the prior month.
  • New home sales declined by -1.9% in October, below consensus forecasts. Sales declined in the South, Midwest and Northeast regions while rising in the West region.

Fact of the Week

  • 32% of Millennials (defined as the 75 million Americans ages 19-35) are currently living with their parents. (Source: Pew Research Center)

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

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

Visit Old Second Wealth Management

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

 

Presidential Transition: Wealth Economic Update Nov. 21, 2016

U.S. and World News

  • washington_dc-486225108_360President-elect Donald Trump has offered retired Lt. Gen. Michael Flynn the National Security Advisor role. Lt. Gen. Michael Flynn is the former head of the Defense Intelligence Agency and was Trump’s top national security advisor during his campaign. Donald Trump also agreed to cooperate with Vladimir Putin to “tackle international terrorism” after the two discussed the matters by telephone on Monday. An unexpected meeting between Mitt Romney and Donald Trump will take place this weekend regarding the Secretary of State position. SEC Chairman Mary Jo White plans to step down at the end of President Obama’s term and a Republican-appointed leader will assume the role which is expected to result in less regulation on Wall Street.
  • Fed Chair Janet Yellen hinted that the FOMC is on course to raise rates in December and that uncertainty related to the election would not influence the decision. Janet Yellen stated that a rate increase “could well become appropriate relatively soon” and that recent economic data has shown that the economy is “making very good progress”.

Markets

  • This week the S&P 500 increased 0.89% and closed at 2,182. The Dow Jones rose 0.26% and closed at 18,868. So far in 2016, the S&P is up 8.74% and the Dow is up 9.10%.
  • Interest rates increased significantly higher once again this week as investors foresee higher inflation in the future as a result of a Trump presidency. The Dollar index hit 100 for the first time in almost a year after it rose by more than 1% this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.79% and 2.35%, respectively.
  • The spot price of WTI Crude Oil increased by 4.98% this week to close at $45.57 per barrel. WTI Crude is up 3.97% in 2016.
  • The spot price of Gold fell 1.55% this week, closing at $1,208.64 per ounce. Year to date, gold prices are up 13.90%. 

Economic Data

  • Initial jobless claims came in at 235,000, a decrease from last week’s reading of 254,000 and the lowest level since the early 1970’s. The largest declines were in California, Missouri, and Illinois. The four week moving average for claims moved down to 253,000.
  • Housing starts rose 25.5% in October, which was the largest increase since July of 1982 and significantly higher than expectations of a 10.4% increase. The multifamily home starts increased by 68.8% and single family starts increased by 10.7%.
  • Retail sales increased by 0.8% in October which was above consensus expectations of a 0.5% gain. Core retail sales (excluding autos, gas, and building materials) was also up 0.8% versus consensus expectations of a 0.4% increase.
  • The consumer price index (CPI) gained 0.4% in October and 1.6% from one year ago, which was in line with expectations, and heightened by higher energy prices. The core CPI (excluding food and energy) rose by 0.15% in October versus expectations of 0.2% and increased 2.17% from one year ago. 

Fact of the Week

  • A child born in 2016 that begins kindergarten in the fall of 2021 would attend college between the years of 2034 and 2038. If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years (+5.2% per year) continued into the future, the aggregate 4-year cost of the child’s college education (including tuition, fees, room & board) would total $490,502 or $122,625 per year (source: College Board).

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

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

Visit Old Second Wealth Management

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

 

Election 2016: Wealth Economic Update Nov. 13, 2016

U.S. and World News

  • 2016election_360Donald Trump has been elected the 45th president of the United States, defeating Democratic nominee Hillary Clinton. Markets initially reacted in an extreme manner to the downside in the premarket session as this result was not expected or priced in. The downturn was short-lived however, as markets turned solidly green the day following the election and continued its upward momentum through the end of the week.
  • In addition to Trump’s victory, the Republican Party was able to secure majorities in both the House and Senate. This will mark the first time that the Republican Party has held the Presidency and both houses of Congress since George W. Bush took office in 2001. Control of both the House and Senate will give the Republican Party greater freedom to implement its policy platform which stands for less regulation of banks and a repeal of Obamacare.
  • Potential scandal has returned to Brazil after evidence surfaced that new president Michel Temer may have accepted bribes from a construction company. This comes shortly after the impeachment of former president Dilma Rousseff for her role in using illegal loans from state banks to hide the fragile state of Brazil’s finances during her re-election bid in 2014. If the court rules that Temer did accept bribes, he could be removed from office.

Markets

  • This week the S&P 500 rallied 3.87% and closed at 2,164. The Dow Jones rose 5.51% to close at an ALL-TIME HIGH of 18,848. So far in 2016, the S&P is up 7.80% and the Dow is up 10.50%.
  • Interest rates surged higher this week following the results of the U.S. Presidential Election. The 5 year and 10 year U.S. Treasury Notes now yield 1.56% and 2.15%, respectively.
  • The spot price of WTI Crude Oil was down 1.95% this week to close at $43.21 per barrel. WTI Crude is up 7.89% in 2016.
  • The spot price of Gold fell 6.07% this week, closing at $1,225.90 per ounce. Year to date, gold prices are up 15.53%.

Economic Data

  • Initial jobless claims came in at 254,000, a decrease from last week’s reading of 265,000. The Labor Department noted no distortions to the data this week. The four week moving average for claims moved up to 260,000.
  • The University of Michigan consumer sentiment index rose to 91.6 in the November estimate, better than consensus expectations. Both consumers’ future expectations and their assessment of current economic conditions rose during the period. All of the data collected was prior to the U.S. Presidential Election.

Fact of the Week

  • The S&P 500 has now correctly predicted 20 of the past 23 presidential election winners going back to 1928 and every election since 1984. This is based on the three month returns for stocks leading up to the election. If the stock market index is higher in the three month period before the election, it’s a predictor that the incumbent party (in this case Democratic) wins the Presidency and vice versa. The S&P 500 fell -1.9% in the three months leading up to Tuesday’s election, thus continuing the trend as the incumbent party was defeated. (Source: Strategas Research Partners)

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

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

Visit Old Second Wealth Management

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

 

Election: Special Wealth Management Update Nov. 9, 2016

usa_360

U.S. voters have spoken, and despite the popular vote favoring Democratic candidate Hillary Clinton, the Republican nominee Donald Trump secured an unexpected electoral victory reminiscent of the 2000 Presidential Election. While there may not be any “hanging chads” there are sure to be many “hanging pollsters” in the aftermath of this result. Online markets predicted an 85% chance of a Clinton win while Nate Silver’s FiveThirtyEight.com forecast Clinton as a 71% favorite in his final prediction.  As it became apparent that the Republican nominee was going to be competitive through the “rust belt”, uncertainty was introduced to the markets.

Foreign markets began trading on this uncertainty with the Nikkei Index closing down 5.36% and the Hang Seng Index off 2.16%.   Aftermarket traders began moving U.S. futures significantly into the red with the Dow Jones Futures trading down by over 800 points.  As the election results rolled in and electoral votes continued to stack up in favor of Donald Trump, the markets began to more efficiently price the outcome.  With markets stabilizing, European markets were pricing in an increase of 1% for the FTSE index and 1.5% for the DAX and the Dow Jones Futures moving back to pre-election levels.

While the results of the election were certainly a surprise, it was not outside of the scope of possible outcomes.  On the heels of the United Kingdom voting in favor of “Brexit” when polling data pointed toward a “Remain” outcome, the potential for a “Closet Trump Vote” was in the cards.  While the initial surprise rattled market expectations, investors quickly processed the information and markets recovered.

We at Old Second Wealth Management  focus on long term investing, and market volatility predicated from binary events often create opportunity to invest.  Additionally, the changing landscape of Washington may create further opportunities or challenges within the investment markets.  If you have any questions or concerns, please do not hesitate to reach out to you Old Second Relationship Manager or Investment Officer.

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

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

Visit Old Second Wealth Management

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

 

Rates, Emails, Cubs: Wealth Economic Update Nov. 7, 2016

U.S. and World News

  • On Wednesday, the Fed decided not to make any interest rate changes, nor did they make it clear that there would be a rate increase next month. However, in the post-meeting statements they did cite that the case for an increase “continued to strengthen”. The market currently is strongly anticipating a rate increase in December.
  • email_34506084_360FBI Director James Comey announced that potentially incriminating emails were discovered on ex-Democratic Congressman Anthony Weiner’s laptop. Federal investigators issued a search warrant to investigate all emails related to Hillary Clinton’s private email server. This has caused the polls to come very close going into the election Tuesday. Subsequent to his original letter to Congress stating the FBI would examine the emails, Mr. Comey announced “Based on our review, we have not changed our conclusions that we expressed in July with respect to Secretary Clinton.”

Markets                     

  • This week the S&P 500 dropped 1.89% and closed at 2,085. The Dow Jones fell 1.47% and closed at 17,888. So far in 2016, the S&P is up 3.88% and the Dow is up 4.91%.
  • Interest rates decreased 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 was down 9.49% this week to close at $44.11 per barrel. WTI Crude is up 19.10% in 2016.
  • The spot price of Gold rose 2.31% this week, closing at $1,304.91 per ounce. Year to date, gold prices are up 22.98%.

Economic Data

  • Initial jobless claims came in at 265,000, an increase from last week’s reading of 258,000. The Labor Department noted that the increase was mostly from Missouri and Kentucky where there has been temporary auto plant shutdowns. The four week moving average for claims moved up to 258,000.
  • The U.S. added 161,000 jobs during the month of October which was slightly less than expected and previous months were revised up. The unemployment rate moved to 4.9% from 5%. The average hourly earnings rate rose 0.4% which was slightly more than expected and the year-over-year rate is now at 2.8% which is a new cyclical high.
  • The PCE price index increased 0.21% month-over-month and 1.2% year-over-year which was in line with estimates.
  • The ISM manufacturing index increased to 51.9 in October which was slightly better than expectations. The ISM report indicates that the domestic manufacturing sector continues to expand at a moderate pace.

Fact of the Week

  • The Chicago Cubs have won the World Series for the first time since October of 1908 when:
    • Only 46 states existed
    • The Ford Model T was just invented
    • Wrigley Field had not yet been built
    • The FBI was established
  • Wednesday night, Dexter Fowler was the first player ever to hit a leadoff home run in a game 7 World Series game

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

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

Visit Old Second Wealth Management

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

 

Greek reforms: Wealth Economic Update Oct 31, 2016

U.S. and World News

  • greece_52645812_360Eurozone officials have approved a €2.8 billion tranche of financial aid for Greece after the debt-laden country delivered the needed economic reforms to unlock the latest round of cash. The reforms included progress in pension restructuring, bank governance and revenue collection. So far, Greece has received €31.7 billion of its €86 bailout granted in July 2015, its third bailout since 2010.
  • The People’s Bank of China is making changes to its Macro Prudential Assessment risk program to broaden its regulatory oversight to include wealth management products sold by banks and not counted on their balance sheets. The move marks another step in the PBOC’s efforts to control rising leverage in China’s financial system and highlights the worries that many have that unsustainable debt levels could derail an already slowing economy.

Markets

  • This week the S&P 500 dropped 0.67% and closed at 2,126. The Dow Jones rose 0.09% and closed at 18,161. So far in 2016, the S&P is up 5.81% and the Dow is up 6.37%.
  • Interest rates climbed higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.33% and 1.85%, respectively.
  • The spot price of WTI Crude Oil was down 4.35% this week to close at $48.64 per barrel. WTI Crude is up 21.45% in 2016.
  • The spot price of Gold rose 0.71% this week, closing at $1,275.47 per ounce. Year to date, gold prices are up 20.20%.

 Economic Data

  • Initial jobless claims came in at 258,000, a decrease from last week’s reading of 260,000. The Labor Department noted that claims may have been distorted by a bounce back from the effects of Hurricane Matthew which led to closures of filing offices in affected regions in previous weeks. The four week moving average for claims moved up to 253,000.
  • The Case-Shiller home price index showed an increase of 0.2% for August, more than consensus expectations of 0.1%. Of the 20 cities included in the index, 15 showed higher prices in the month. Over the last 12 months, home prices have risen 5.1% as measured by the index.
  • Real Gross Domestic Product rose 2.9% (annualized) during the 3rd quarter, beating expectations of 2.6% growth.
  • The Employment Cost Index (ECI, measure of wage growth) increased by 0.6% in the 3rd quarter, in line with expectations. On a year over year basis, total compensation has risen by 2.2%

Fact of the Week

  • The U.S. economy has been growing for the last 87 months (ie. no recession), an expansion exceeded in length only 3 times since 1900. (Source: National Bureau of Economic Research)

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

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

Visit Old Second Wealth Management

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

 

EU/Saudi bonds: Wealth Economic Update Oct 24, 2016

U.S. and World News

  • The European Central Bank elected to take no further action following their policy meeting this week, disappointing investors who had hope for further clarification on the central bank’s plan of action. At a news conference, ECB President Mario Draghi said that policy maker’s hadn’t even discussed whether to extend its €80 billion per moth bond-purchase program which is due to end in March 2017.
  • saudi_arabia_riyhad_66106939_340Saudi Arabia tapped the global debt markets for the first time this week, selling $17.5 billion in sovereign bonds. The bond issue had high demand as banks and investors flocked to buy debt issued by the emerging market country. In fact, it’s reported that the country received orders totaling $67 billion. The sale of bonds is part of the Saudi’s plan to open up its $650 billion economy to global investment and reduce its over-reliance on oil in the face of lower prices.

Markets

  • This week the S&P 500 rose 0.41% and closed at 2,141. The Dow Jones rose 0.09% and closed at 18,146. So far in 2016, the S&P is up 6.52% and the Dow is up 6.28%.
  • Interest rates edged down slightly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.24% and 1.74%, respectively.
  • The spot price of WTI Crude Oil was up 0.39% this week to close at $50.95 per barrel. WTI Crude is up 16.24% in 2016.
  • The spot price of Gold rose 1.23% this week, closing at $1,266.46 per ounce. Year to date, gold prices are up 19.35%.

Economic Data

  • Initial jobless claims came in at 260,000, an increase from last week’s reading of 246,000. The Labor Department noted that claims may have been distorted by a bounce back from the effects of Hurricane Matthew which led to closures of filing offices in affected regions in previous weeks. The four week moving average for claims moved up to 251,750.
  • The headline Consumer Price Index rose 0.3% in September, in line with expectations. This was boosted by a 2.9% increase in energy prices. Over the last year, headline prices have risen 1.5%.
    • Core CPI (excludes food and energy) rose 0.1% in September, below estimates of 0.2%. Over the last 12 months, Core prices are up 2.2%.
  • Housing starts declined -9.0% in September, substantially missing expectations of a 2.8% gain. The composition of the housing starts was less negative than indicated by the headline figure as the more volatile multifamily category declined 38.0% in the month while more stable single family home starts rose by 8.2%.
  • Existing home sales increased by 3.2% in September, beating expectations of a 0.4% increase. September saw a 4.1% increase in single family starts which more than offset the -3.2% decline in the volatile multi-family home sales category.

Fact of the Week

  • American families in the bottom 50% of pre-tax household income are expected to receive 17.7% of national income in 2017. American families in the top 1% of pre-tax household income are expected to receive 15.4% national income in 2017. (Source: Treasury Department)

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

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

Visit Old Second Wealth Management

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

 

Rate Hike?: Wealth Economic Update Oct 17, 2016

U.S. and World News

  • chart_78617071_360Minutes from the September Federal Reserve meeting showed growing support for a rate hike. Several voting members stated that they were anticipating an increase “relatively soon.” However, the committee remains divided as some members thought that there remains some slack in the labor market and think it appropriate to wait for more evidence that the economy was progressing toward the committee’s goals while other members believed the economy was at or near full employment and delaying a rate hike would jeopardize the Fed’s credibility. The Fed will be meeting next in November and then again in December. However, the odds of a November hike remain low due to the meeting being held just before the U.S. election, making the December meeting the primary focus for investors.

Markets

  • This week the S&P 500 dipped 0.95% and closed at 2,133. The Dow Jones fell 0.56% and closed at 18,138. So far in 2016, the S&P is up 6.09% and the Dow is up 6.19%.
  • Interest rates continued to climb higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.29% and 1.80%, respectively.
  • The spot price of WTI Crude Oil was up 1.04% this week to close at $49.63 per barrel. WTI Crude is up 25.67% in 2016.
  • The spot price of Gold declined 0.41% this week, closing at $1,251.98 per ounce. Year to date, gold prices are up 18.00%.

Economic Data

  • Initial jobless claims came in at 246,000, down from last week’s reading of 249,000. The Labor Department noted that claims may have been distorted by the effects of Hurricane Matthew which led to closures of filing offices in affected regions. The four week moving average for claims moved down to 249,000.
  • Retail sales increased by 0.6% in September which was in line with expectations. Sales were boosted by higher gas station sales during the month. However, core retail sales (excludes autos, gas and building materials) were weaker than expected, rising 0.1% against expectations for a 0.4% increase. For the 3rd quarter, core retail sales growth slowed, rising 1.1% on an annualized basis, coming down from a 6.7% pace in the 2nd quarter.
  • The University of Michigan’s consumer sentiment index showed a preliminary October reading of 87.9 which is a decline from last month’s figure and below expectations of 91.8. The report was mixed as consumers’ future expectations fell but consumers’ assessment of their current economic conditions improved.   

Fact of the Week

  • As of June 30, the total US bond market, which includes treasury, municipal, corporate, mortgage and asset-back debt, was worth $40.7 trillion. This amount has more than tripled over the last 20 years as the bond market was worth $12.4 trillion as of 12/31/96. (Source: Securities Industry and Financial Markets Association)

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.

 

Hurricane Matthew: Wealth Economic Update Oct 10, 2016

U.S. and World News

  • hurricane_43705814_360Hurricane Matthew has made its way to the United States after inflicting server damage and loss of life in the Caribbean where it has killed at least 339 people in Haiti. A state of emergency and an evacuation mandate has been issued for many areas in the East Coast. While the storm has been downgraded to a Category 3, the National Weather Service has used some of its strongest language since Hurricane Katrina in describing the strength and dangers of the storm.
  • New U.K. Prime Minister Theresa May has provided an updated timeline for Parliament to initiate the “Brexit” process. May stated that the country would invoke Article 50 by the end of next March, which would officially indicate their intent to leave the European Union. Though the vote took place in June, the March timeline for beginning a ‘hard Brexit’ comes earlier than many observers believed would be the case, causing some volatility in the Sterling currency.

Markets

  • This week the S&P 500 dipped 0.60% and closed at 2,154. The Dow Jones fell 0.31% and closed at 18,240. So far in 2016, the S&P is up 7.09% and the Dow is up 6.77%.
  • Interest rates climbed higher this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.26% and 1.72%, respectively.
  • The spot price of WTI Crude Oil was up 2.88% this week to close at $49.63 per barrel. WTI Crude is up 23.92% in 2016.
  • The spot price of Gold declined 4.50% this week, closing at $1,256.75 per ounce. Year to date, gold prices are up 18.44%.

Economic Data

  • Initial jobless claims came in at 249,000, down from last week’s reading of 255,000. The Labor Department noted no special factors in the data. The four week moving average for claims moved down to 254,000.
  • The monthly employment report showed an increase of 156,000 jobs in September, below expectations of 170,000. The prior two months had their figures revised down a combined 7,000 jobs, bringing the three month average of job gains to 192,000.
    • The headline unemployment rate ticked up 0.1% to 5.0%. This was largely due to a 0.1% increase in the labor force participation rate to 62.9% in September.
    • Average hourly earnings came in a bit below forecast, rising 0.2% in the month compared to the 0.3% being expected. Over the last 12 months, wages have risen 2.6%. 

Fact of the Week

  • The California Public Employees’ Retirement System projected back in 1999 that the investments backing state employees’ pensions would grow from $159.1 billion to $613.5 billion in 2016 due to an assumed 8.25% annual rate of return. In actuality, as a result of market downturns and lower interest rates, the actual fund size in 2016 was just $295.1 billion, representing an annualized 3.70% rate of return. (Source: CalPERS)

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.

 

Oil price soar: Wealth Economic Update Oct 3, 2016

U.S. and World News

  • oil_440The price of oil soared this week reflecting a new cap on oil production of 32.5 million – 33 million barrels a day agreed upon by OPEC. That is a 750,000 barrel a day drop from August and the first time oil output has been capped since the financial crisis. This came as a surprise after most of the past OPEC meetings have resulted in no deal which also leads to some skepticism of the current deal.
  • In order to defend U.S. personnel overseas from the possibility of being sued by citizens of other countries, Barrack Obama has vetoed a bill that would allow Saudi Arabia to be sued for involvement in the September 11th terrorist attacks. The White House and Saudi Arabia have been lobbying to override the veto, but the effort did not pass congress.
  • After there were an insufficient amount of votes to pass a funding bill that would avoid a federal government shutdown, congress sent President Obama a bill to continue government operations until December 9th and $1.1 billion in long-delayed funding to help fight the Zika virus. Also included in the bill is $500 million to help restore Louisiana after they have endured mass flooding, and to assist the water crisis in Flint, Michigan.

Markets

  • This week the S&P 500 rose 0.20% and closed at 2,168. The Dow Jones rose 0.26% and closed at 18,308. So far in 2016, the S&P is up 7.73% and the Dow is up 7.10%.
  • Interest rates edged down slightly this week. The 5 year and 10 year U.S. Treasury Notes are now yielding 1.15% and 1.60%, respectively.
  • The spot price of WTI Crude Oil was up 7.87% this week to close at $47.98 per barrel. WTI Crude is up 10.78% in 2016.
  • The spot price of Gold declined 1.54% this week, closing at $1,317 per ounce. Year to date, gold prices are up 24.12%.

Economic Data

  • Pending home sales fell 2.4% in August. Pending home sales by region were down in the West (-5.3%), the South (-3.2%), and the Midwest (-0.9%) while they were up in the Northeast (+1.3%).
  • New single-family home sales declined by 7.6% in August which was better than consensus expectations for a decline of 8.6%. New home sales by region were a decline in the South (-48k), Northeast (-12k), and Midwest (-2k), and an increase in the West (+12k).
  • Top-line Q2 GDP growth was revised up by 30 basis points to +1.4%, more than consensus estimates. The revision reflected a smaller drag from inventories and trade, and higher business fixed investment than previously estimated.
  • The headline PCE (Personal Consumption Expenditures) price index rose by 0.14% in August and the core PCE index (excluding food and energy) was up 0.18%. This was a lower increase than expected as food an energy prices continued to fall.

Fact of the Week

  • 24% of 1,000 pre-retirees surveyed in the first quarter of 2016 believe they will need to accumulate at least $1 million in order to “live comfortably” during their retirement years, up from 15% in 2005 (source: Employee Benefit Research Institute Retirement Confidence Survey).

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.