All Posts Tagged: income taxes

Investment Insights: One more plan from the tax man

Wade Balliet
Posted by Wade Balliet
Investment Strategy

This weekly report presents insights from our Global Investment Management team.

Markets seem to be having a tough time recovering from the drop we saw over a month ago.

The U.S. Capitol dome at dusk, subtly lit up.The S&P 500 Index fell 3.69% in February, while international markets declined over 4% in both developed and emerging markets, according to MSCI data. Even bond markets struggled amidst the volatility with the Barclays U.S. Universal Index losing 0.95%. March has not been a month of financial market revival as some had hoped – the S&P 500 has remained flat for the month so far, similar to global equity markets. However, there may be some positive events on the horizon for stocks.

Republicans on Capitol Hill and the Trump administration are in discussions for “phase two” of tax cuts, according to White House spokesman Raj Shah. After passing a sweeping overhaul that was the largest in over 30 years, lawmakers are looking to expand on that plan, which could include making the cuts for individuals permanent instead of allowing them to expire in 2025 – corporate tax cuts were already implemented as permanent. The potential second round seems to be focusing on benefiting the middle class, a gesture that comes ahead of midterm elections as lawmakers fight over seats in Congress. Unlike the previous bill that employed a budgetary reconciliation loophole, the new cuts would require bipartisan support – something we consider to be fairly unlikely. Lawmakers are also finalizing a $1.2 trillion bill to fund the federal government through the third quarter.

Trade continues to be a hot topic for world leaders as the administration negotiates a new deal in multilateral trade agreements while simultaneously enacting taxes on U.S. imports. Tariffs of 25% on steel and 10% on aluminum are expected to go into effect on March 23. A study from the Coalition for a Prosperous America estimates the taxes could add 19,000 jobs and only minimally impact U.S. gross domestic product. However, downstream sectors are likely to be negatively affected by the import taxes, and the reactions of U.S. trading partners may be a real detriment. Officials from the European bloc, which is expected to receive a full exemption, said they would enact duties of 25% on a range of U.S. products if they were not spared from the new U.S. tariffs. Countries like China have yet to receive exemption status.

The Federal Reserve ended its March meeting today and, as widely expected, announced the first rate hike of 2018. The probability of a rate hike reached 100% before the meeting and the market is forecasting two more hikes in June and September, according to Bloomberg fed funds futures data. The rate would likely reach 2.25% by the end of the year based on the data. Economic or financial volatility could alter the forecast substantially, along with changes in tone from Fed governors. For now, our team continues to monitor changes in geopolitics and monetary policy closely as they will likely be significant factors to market movements over the near term.

Chart showing various market returns as of 3/20/18

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Investing involves risk, including the possible loss of principal and fluctuation in value. Economic and market forecasts reflect subjective judgments and assumptions, and unexpected events may occur. Therefore, there can be no assurance that developments will transpire as forecasted. The information in this newsletter is for informational purposes only and is not intended to be investment advice or a recommendation. Nothing in this newsletter should be interpreted to state or imply that past results are an indication of future performance.

Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.

International securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Diversification and asset allocation do not ensure a profit or guarantee against loss.

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Avoiding income tax fraud: What to know about the IRS

David Pollino
Security
Sign for Internal Revenue Service on the side of a stone building, with a traffic light (on red) nearby.

Knowing how the IRS operates will help you recognize fraudulent activities.

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Investment Insights: Well that was taxing

Wade Balliet
Posted by Wade Balliet
Investment Strategy
Line of various professional people waiting outside an office.

The benefits should be felt across the spectrum for tax payers, with some ultimately benefiting more than others.

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With tax season comes heightened alert for fraud

David Pollino
Security
Man sitting in bright office while looking at his online tax information with paperwork nearby and a cup of coffee

Here are some basic tips and good practices as you get ready to file your annual income taxes.

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