How will budget talks affect your tax rate?
Do you want to pay higher taxes? I know I don’t! But if you happen to be among the fortunate few that earn more than $250,000 a year, new polls suggest your neighbors want you to pay up.
According to the latest New York Times/CBS News poll, 72% of adults approve of increasing federal taxes on households making more than $250,000 starting in 2013. At the same time, a separate poll from ABC News and the Washington Post showed that 72% of respondents want to raise taxes on the rich to help reduce the federal deficit. The desire to see America’s wealthiest citizens paying higher taxes even spans political boundaries, with 55% of Republicans, 74% of independents and 83% of Democrats all calling for an increase.
So will increasing taxes on the rich fix the budget? This is not a question we will even try to answer in this brief commentary. It is worth noting however, that less than 3% of all American households earn more than $250,000 per year, and as it stands today, the U.S. tax system is already highly disproportionate. The top 1% of income earners pay 40% of all federal income taxes, the bottom 50% pay only 3%, and more than one-third of U.S. earners pay no federal income tax at all.
As new data from the Congressional Budget Office shows, raising all six income tax rates by 1 percentage point would yield an additional $480 billion over 10 years, while raising the top two rates by 1 percentage point would yield only $115 billion. So what is better: Increasing taxes a little bit for everyone or a lot for just a few? Perhaps another question to ask is whether America has a spending problem or a revenue problem? Again, these are not questions we can answer in this forum.
The point of sharing this information with you is not to fuel a political debate. The nation is already sharply divided on this issue. The reason we draw your attention to this matter is because directly or indirectly, it affects every American. And, at the rate things are going, there is a good chance we will see higher taxes in the future. Taking into consideration how taxes can affect your investments, both now and in the future, is an important element to preparing sound financial strategies. As always, we will monitor how the landscape changes and do our best to help you adapt to changing conditions.
ECONOMIC CALENDAR: Tuesday – S&P Case-Shiller Home Price Index, Consumer Confidence
Wednesday – Durable Goods Orders, FOMC Meeting Announcement
Thursday – GDC, Jobless Claims, Pending Home Sales Index Friday – Personal Income and Outlays, Chicago PMI, Consumer Sentiment, Ben Bernanke Speaks
HEADLINES:
U.S. stocks advanced for a third straight session Thursday, with the Dow closing at almost a 3-year high following a slew of strong earnings.
Sales of existing homes increased in March. Home sales rose at an annual rate of 5.1 million in March, up 3.7% from February, the National Association of Realtors said Wednesday. However, sales were 6.3% lower than in March 2010.
With a 4% gain so far this month, following March’s 10% rise, benchmark oil futures are keeping up with a long-running trend – advancing in March, April and May before taking a breather in June.
Toyota Motor Corp.'s global car production, disrupted by parts shortages from Japan's earthquake and tsunami, won't return to normal until November or December, imperiling its spot as the world's top-selling automaker.
US debt is over 14 Trillion, and counting..What’s next?
Standard & Poor's on Monday downgraded it’s outlook for the United States, citing a "material risk" that policymakers may not reach agreement on its large budget deficit. The US debt is over 14 Trillion (and counting) http://www.usdebtclock.org/
While S&P maintained the country's top AAA credit rating, it said that authorities have not made clear how they will tackle long-term fiscal pressures.
S&P said the move signals there's at least a one-in-three chance that it could cut its long-term rating on the United States within two years.
In spite of a rocky start to earnings season, promising economic news helped reassure investors this week. Stocks even managed to post modest gains on Friday in response to the hopeful signs.
Aside from food and gas prices, the Labor Department reported that consumer prices rose just 0.1% in March, lower than the predicted 0.2%. With prices inflating slower than expected, Americans got a break. And in today’s economy, consumers need every break they can get. When prices are lower, people tend to feel better and spend more – good news since consumer spending accounts for about 70% of the total U.S. economy.
Signs show that Americans are also feeling more optimistic. The U.S. consumer sentiment index rose from 67.5 in March to 69.6 in April, beating expectations. This increase could be partially attributed to the addition of jobs for six straight months and an unemployment rate sitting at a two-year low. These positive numbers indicate job gains are helping Americans manage rising fuel costs and maintain a positive outlook.
Industrial production increased for the ninth straight month in a row, rising 0.8% in March, and factory production increased 9.1% in the first quarter. Total industrial production was 5.9% above its year-earlier level. These numbers are all higher than forecast last month, and are a good sign that factories will keep driving the U.S. economy.
These indicators show that prices are down, optimism is up, and factories are producing at higher levels than last year; all signs that our economy is still making progress. Earnings season will kick into high gear this week as Wall Street gets quarterly results from 110 members of the S&P 500, giving us a broad view of how Corporate America is doing.
ECONOMIC CALENDAR: Monday – Housing Market Index Tuesday – Housing Starts, Redbook Wednesday – Existing Home Sales, EIA Petroleum Status Report
Thursday – Jobless Claims, Philadelphia Fed Survey, Leading Indicators Friday – U.S. Market Holiday: Good Friday Observed
HEADLINES:
Congress sent President Barack Obama legislation cutting a record $38 billion from federal spending on Thursday. This measure will finance the government through the September 30th end of the budget year.
Bank of America's first-quarter income fell 39% on higher costs related to its mortgage business and litigation. The bank also settled a claim over faulty mortgage investments and set aside less money to cover bad loans. The earnings fell short of the 28 cents a share estimated by analysts surveyed by FactSet and revenue fell to $26.9 billion from $32 billion in the same period last year.
The first settlement with the Securities and Exchange Commission (SEC) could be reached as soon as next week. The securities regulator is in talks with major Wall Street banks to settle fraud allegations relating to the sale of toxic mortgage bonds to various investors that helped unleash the financial crisis.
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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Will high oil prices and stocks run a collision course?
A barrel of oil is now over $112 a barrel, and gas in our area is over $4 a gallon. Master card reported that gas purchases were down 5 weeks in a row. The higher prices now are already affecting consumer behavior and is acting as an overall ‘headwind’ for our economy. It seems for most analysts that something has to give; it’s either that oil prices moderate, or perhaps the stock market.
Fears of a government shutdown loomed large last Friday night. With less than an hour to spare, Congress pushed through a last-minute spending bill – the seventh in the past six months – which cut $2 billion and allows agencies to spend money through April 15. By that time, lawmakers expect to determine a budget for the remaining six months of the fiscal year. It is interesting to note how awareness of the potential shutdown affected investors.
As a result of the budget impasse, a sharply weaker dollar led investors into oil and commodities, while U.S. stocks fell. As we’ve mentioned before, equity markets don’t like uncertainty, and the exodus we saw on Friday is a classic example of this fact. At a time when concerns regarding the Middle East situation has sent oil prices surging, and the Japanese disaster has impacted supply chains, reaching a deal was extremely important. The last-minute agreement keeps 800,000 government workers on the job and a variety of services, from passport issuing to tax collecting, up and running. It also allows the military to continue receiving their paychecks.
“Both sides had to make tough decisions and give ground on issues that were important to them,” President Obama said. “But beginning to live within our means is the only way to protect those investments that will help America compete for new jobs.” Despite budget concerns, consumer confidence rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs.
As in the past, both international and domestic politics will continue to play a part in peoples investing decisions. The week ahead will likely be no exception as the new budget is voted on. Also next week, a series of labor reports are released and earnings season begins. We’ll let you know how things turn out in our commentary next week.
ECONOMIC CALENDAR: Tuesday – International Trade, Import and Export Prices, Bank of Canada Announcement, Treasury Budget Wednesday – Retail Sales, Business Inventories, EIA Petroleum Status Report, Beige Book
Thursday – Producer Price Index, Jobless Claims Friday – Consumer Price Index, Empire State Mfg, Treasury International Capital, Industrial Production, Consumer Sentiment
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. NA means not available.
HEADLINES:
Crude oil advanced 2.3% Friday, settling at $112 a barrel – its highest price in more than 30 months. In addition to sparking fears about a slowdown in the global economy, investors are also concerned about Libya's civil war and the country’s 80% drop in production.
On April 6 Portugal asked for international assistance, joining Greece and Ireland in receiving bailouts from the European Union and the International Monetary Fund. The country faces around €4.3 billion ($6.2 billion) of bond redemptions in April, followed by a repayment of €4.9 billion in June.
The quarterly earnings season begins next week. Gas and commodity prices have surged this year, and could spell trouble for the rebound in consumer spending and sales growth. Overall, earnings for the companies in the S&P 500 are expected to be up 11.5% over last year. Revenues are expected to rise 8%, remaining unchanged from the fourth quarter.
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Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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What can investors expect after a strong first quarter?
The first quarter of 2011 has been one for the history books. Political turmoil in Northern Africa and the Middle East, as well as multiple catastrophes in Japan rattled many investors, but wasn’t enough to halt the running of the bulls. Despite noteworthy volatility, the Dow rose 6.9% to its best first quarter in 12 years, rebounding 6% from lows hit in mid-March.
January – The year started hesitantly as Americans considered the impact of political transition, both through QE2 measures and the new Republican majority. At the end of the month, political strife in Egypt was affecting world markets. Protests started there on January 25th when thousands of people took to the streets to protest poverty, rampant unemployment, government corruption and the autocratic governance of President Hosni Mubarak.
The price of oil rose with fears about the stability of maritime operations on the Suez Canal. As a major trade route, any interruption or closure has the potential to create a spike in oil and energy prices. Still, on the 31st, the Dow posted its highest close since October 2, 2008.
February – By Valentine’s Day, U.S. stocks climbed to fresh 2 1/2-year closing highs after the resignation of Mubarak removed a layer of uncertainty from global markets. Mubarak’s resignation dramatically reduced geopolitical risk and uncertainty from the region, and crude oil prices dropped to $85.16 a barrel. But the calm would last only a short while before similar issues in Libya made headlines. Although Libya supplies just under 2% of the world's oil supply, oil fears still caused the stock market to suffer its first weekly loss in a month. And while U.S. drivers were already feeling the pinch at the pump, gas prices took their biggest one-day jump in two years adding to concerns about the stability of the economic recovery.
March – On March 11, 2011 an 8.9 earthquake rocked Japan and generated a 30-foot-high tsunami that devastated the country’s northeastern coast. On the heels of this devastating news were reports of several damaged nuclear reactors. Almost immediately, Japan’s recession-burdened stock markets dropped. Many of the nation’s industries, including automotive factories and electronics, were forced to halt operations. Simultaneously, the U.S. participated in establishing a no-fly zone over Libya – a situation that remains unstable. And in the Euro zone, debt woes flared up again as Portugal’s government collapsed and questions about Spain’s solvency persisted. Thankfully, the economic impact of Europe’s debt woes have remained relatively contained to date. Finishing the quarter, the markets struggled to regain their footing after two negative weeks, but by the end of March had managed to recoup losses on positive news regarding 2010’s fourth quarter, increased consumer spending, and higher GDP.
Despite upheaval in the Middle East, Eurozone changes, and an ongoing crisis in Japan, investors appear determined to maintain their confidence. Sending a signal that bodes well for the second quarter, the Dow rose 0.5% on Friday, reaching its highest intraday level since June 6, 2008. Although such positive news should be enjoyed, it is not to say more uncertainty and market volatility won’t arise. Many of the issues introduced in March still linger and remain developing stories. As always though, we are here to help you assess the risks and rewards of investing, to educate you, and to keep you informed. We hope you have a great week!
ECONOMIC CALENDAR: Tuesday – ISM Non-Mfg Index, FOMC Minutes Wednesday – EIA Petroleum Status Report
Thursday –BOE Announcement, ECB Announcement, Jobless Claims
Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the "Forward email" link below. We love being introduced!
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
By clicking on these links, you will leave our server as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.