Wow! 4 Months Left for 2018

Wow! 4 Months Left for 2018

 

Last week, the Standard and Poor’s 500 hit a new all-time record high ending the first 8 months of the year up an impressive 9.51%. All other US Stock Market Indexes were also up last week. Over the pond, the MSCI EAFE International Index and the MSCI Emerging Market Indexes are down (2.28%) and (7.18%) year-to-date, respectively. Bond as measured the Barclays Aggregate bond index were down (.12%) last week and year-to-date down (.96%).

 

The final 4 months of the year should prove to be very interesting:

  • How many more times will the Federal Reserve Raise Interest Rates?

  • Will the Trade War recede, further escalate or be settled?

  • It’s Mid-term Election Time. (This speaks for itself with possibilities)

  • Will US Economic Data Points continue to point to expansion?

  • Will the US Dollar continue to appreciate against most other currencies and how will this impact investments going forward?

  • Will Brett Kavanaugh be confirmed to our lands highest court?

  • Will the current concerns about Emerging Markets recede or escalate?

  • Will longer term interest rates move up, erasing concerns about an inverted yield curve?

 

I’m sure you can add more to the list. Even with all of the possibilities, lets remind ourselves that the current state of the consumer is very strong which bodes well for Corporate Profits!!

 

 

Economic Data

 

Last week the 2nd reading of US GDP was released and the number was increased from 4.0% to 4.2%. On the inflation front, the US Personal Consumption Expenditures Price Index (PCE) came in at 1.98% Year-over-year in July, very close the Fed’s 2.0% Target.

 

This week’s data features Manufacturing data, International Trade and an important Motor Vehicle Sales Report. The Motor Vehicle report is worth paying attention, as we’ll see how the tariff situation is impacting Auto’s so far!

 

 

Trump and Retirement Accounts


President Trump signed an Executive Order that Congress will now review Required Minimum Distributions (RMDs) and Group Retirement Plans.

 

As most are aware, the year you turn 70 ½ is the year of your first required IRA/401K/403B distribution. There are a few situations where you can postpone the first distribution, however the life expectancy factors that are used to calculate your RMD were last updated in 2002.

 

Since then, life expectancies have increased which may cause current factors to change. I’m all in favor of moving the 70 ½ requirement to a higher age, as this can provide greater tax planning flexibility.

 

On the Retirement Plan front, only related small businesses, such as members of a Trade Association can join forces to participate in multiple Employer Retirement Plans which typically reduce the employer cost. Congress will look into ways that “other” types of small business can participate in a Qualified Retirement Plan with minimal cost.   I don’t totally buy the fact the reason small business don’t offer a plan is cost. A Simple IRA is for businesses with fewer than 100 employees and has virtually no set up and annual administration cost!!

 

 

 Question of the Week

 

52% of the 2.4 Million New Jobs created in the US in the 12 months ending July 31, 2018 were produced in just 6 states. Which state produced the largest number of new jobs?

a) California

b) Florida

c) New York

d) Texas

e) Washington

f) New Jersey

 

Answer to Last Week’s Question of the Week!

 

Rank in order, which Generation had the largest percentage of  the United States Population as of 2017.

a) Baby Boomers, Millennials, Generation Xers

b) Generation Xers, Baby Boomers, Millennials

c) The Silent Generation, Millennials, Baby Boomers

d) Millennials, Baby Boomers, Generation Xers

 

 

 The answer is –
a) Baby Boomers, Millennials and Generation X. The difference between Baby Boomers and Millennials is under 1%. On a side note, Generation Z, those born 1997 and later is even larger!!