Retirement Blog 4/1/2024

Stocks, Stocks and more Stocks!

Stocks finished the 1st quarter of 2024 on a high note. 

Year-to-date, here is where our major indexes stand:

All but 1 sector of the S&P 500 finished in the black.  Here is where the sectors stand:

The first quarter witnessed sectors, in addition to Communication Services and Technology, participating in the upside.  This is what many investors believe is necessary for the rally to continue.

It may be slightly early to conclude market participation will continue to widen within various sectors.  Many mutual fund managers are forced to rebalance their portfolios prior to quarter end, to adhere to certain sector weights.  They may have been selling some of their technology gains and purchasing underperforming sectors.  What happens over the next few weeks will let us know the reality.

Let’s continue to keep an eye on oil, as WTI oil rose 3% for the week and is now higher by 15.91% for the year.  Higher oil may lead to higher headline inflation numbers over the next couple of months.

Fixed income did not share in the positive stock market, as inflation concerns have many thinking, the Fed may not be willing to cut rates as much as previously forecast.

The Bloomberg US Aggregate Bond Index is down (.77%) in the 1st quarter.

Jobs and the Fed

Last Friday with the markets closed, the Fed’s favorite inflation gauge, the Personal Consumption Expenditure Index (PCE) was reported increasing .3% for the prior month.  Annualized, that is well above the Fed’s target of 2%.  On a positive note, the annualized number over the last 12 months came in a 2.8%.

This week the Fed and investors will be waiting for the jobs report for March.

On Tuesday we’ll hear the JOLTS report (number of job openings), followed on Friday by the all-important job gain/loss report. 

How many rate cuts do you/we foresee in 2024?  As always, time will tell!

Election and Income Taxes

Talking politics in my industry is said to be a no/no.  Well, I don’t participate in the no/no.

This upcoming election will make a difference to the amount of income taxes most of us pay.  At the end of 2025, if Congress does nothing, tax rates will revert back to prior law.

Prior to the 2017 Tax Cut and Jobs Act, income tax rates were as follows:

            10% – 15% – 25% – 28% – 33% – 35% – 39.6%

The 2017 law reduced rates to the following:

            10% – 12% – 22% – 24% – 32% – 35% – 37%

The current administration has stated continuously, if one makes more than 400K you are not paying your fair share.  What really is one’s fair share?

For 2024, if you file a joint income tax return and earn 400K in taxable income, you are squarely in a 32% income tax bracket.  If you file single, you are in a 35% bracket.  This does not include the additional “Medicare” tax paid with these income levels.

We have many issues in this country, from needing a quality immigration system. Controlling, and planning to reduce our national debt. Securing Social Security and Medicare for those who have already paid their fair share. Making sure those who are willing to work hard to achieve success have an opportunity to do so.  I’m sure you can name several more!

For fiscal year ending September 30, 2023, we spent approximately $640 billion in interest alone.  This year, it’s expected to be $800 billion plus.  Perhaps it’s just me who sees this as a real issue percolating like an old coffee pot.

Do I believe Biden or Trump will deal with our debt in a responsible manner?  NO!

Tax Return Reminder

This is a reminder for clients to send over your completed 2023 income tax returns.  Upon doing so, we’ll review your 2024 tax projections to see if there are ways to reduce Uncle Sam’s share of your wallet!

Video Podcast Series Upcoming

This summer, be on the look-out our new Video Podcast Series featuring educational information on several financial planning topics.  We are in the process of filming 24 educational Podcasts.  Beginning this summer, we’ll release 2 per month. 

Topical information to be released over the next few weeks.

Please feel free to share our weekly retirement blog with friends, family, and colleagues.

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