Posts made in October 2019

The Week on Wall Street
The S&P 500 came within 0.1% of a record close Friday. Stocks were lifted last week by positive news on U.S.-China trade negotiations, plus earnings announcements.

The Nasdaq Composite posted the largest weekly gain of the three major U.S. stock indices. It rose 1.90%. Last week also brought gains of 0.70% for the Dow Jones Industrial Average and 1.22% for the S&P. The MSCI EAFE, a benchmark for developed stock markets outside the U.S., rose 1.14%.[1][2][3]
Another Hint of Progress in Trade Talks
Friday, the Office of the U.S. Trade Representative stated that parts of a new trade deal with China were near completion. No specifics were given as of Friday’s close, but the USTR noted that negotiators had “made headway” on key issues.

Analysts think both sides may cancel certain tariffs as part of a deal. President Trump has said that he would like to sign a new trade accord with China’s President, Xi Jinping, next month.[4]

A Gain for Consumer Sentiment
Rising to a final October mark of 95.5, the University of Michigan’s Consumer Sentiment Index advanced 2.3 points month-over-month. During August and September, the index’s level varied from 89.8 to 93.2.[5]

What’s Next
The Federal Reserve meets this week. Will it make another interest rate cut? And if it does, could that be the last rate cut for a while? Traders will study the language of the statement and listen carefully to Fed chair Jerome Powell’s Wednesday press conference for clues.

[1] www.marketwatch.com/story/us-stock-futures-step-cautiously-higher-setting-investors-up-for-fresh-run-at-records-2019-10-25

[2] www.wsj.com/market-data

[3] quotes.wsj.com/index/XX/990300/historical-prices

[4] reuters.com/article/us-usa-trade-china/u-s-china-close-to-finalizing-parts-of-phase-1-trade-pact-ustr-idUSKBN1X40EF

[5] investing.com/economic-calendar/michigan-consumer-sentiment-320

We recently talked about how important it is to check your withholding status, especially if you’ve experienced a life change, like buying a home, getting married or divorced, or growing your family. The IRS makes it easy to check your withholding status online with their Withholding Calculator.

The Withholding Calculator can help you determine whether you should submit a new W-4 to your employer, and you can also use the results to adjust your income tax withholding. If you have a more complex tax situation, you may need to use Publication 505, Tax Withholding and Estimated Tax form. This form can help you determine your self-employment tax, the alternative minimum tax, or tax on unearned income by dependents. Publication 505 can also help if you receive non-wage income, including capital gains, royalties, dividends, and more.

It’s important to check your withholding to make sure you are deducting the right amount of taxes. These handy tools can help.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[7]

[7] www.irs.gov/newsroom/there-are-two-ways-taxpayers-can-check-their-withholding-on-irsgov

The Week on Wall Street
Earnings helped give the Nasdaq Composite and S&P 500 a slight lift last week, offsetting investor disappointment over the small scope of the preliminary U.S.-China trade deal reached on October 11. Blue chips took a small weekly loss.
The Nasdaq and S&P respectively gained 0.40% and 0.54% on the week. The Dow Jones Industrial Average retreated just 0.17%. Outdoing these three benchmarks, the MSCI EAFE index tracking stocks in developed overseas markets rose 1.35%.[1][2]

The Early Earnings Picture
According to stock market analytics firm FactSet, 15% of S&P 500 companies had reported results through Friday’s close. Of those companies, 84% announced that net profits topping projections, and 64% said that revenues had exceeded forecasts.

One big question is whether overall earnings for S&P 500 firms will show year-over-year growth. There was no year-over-year earnings gain evident in either Q1 or Q2.[3]

Retail Sales Declined Last Month
Shoppers scaled back their purchases in September. The Census Bureau announced a 0.3% dip for retail sales, the first decrease in seven months.

Auto sales can influence this number, and car and truck buying fell 0.9% last month. A fall pickup in that category may help encourage another monthly advance.[4]

What’s Next
If you buy your own health coverage, note that the open enrollment period for 2020 health insurance plans begins on November 1 in most states. The open enrollment window closes on December 15.[5]

[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] insight.factset.com/sp-500-earnings-season-update-october-18-2019

[4] www.reuters.com/article/us-usa-economy-retail/weak-u-s-retail-sales-cast-gloom-over-economy-idUSKBN1WV1NG

[5] www.businessinsider.com/what-is-open-enrollment-your-opportunity-to-buy-health-insurance

Every year, the IRS recommends doing what they call a “Paycheck Checkup.” This includes checking your withholding status to make sure enough taxes are being taken out of your paycheck. You should do a Paycheck Checkup in the beginning of the year, but it can be done in any season.

Check your withholding status if you have:
• Gotten married or divorced
• Had or adopted a child
• Bought a house
• Retired
• Filed for bankruptcy
• Got a new job or lost a job

The IRS also recommends checking on any streams of taxable income that are not subject to withholding, such as interest, dividends, capital gains, self-employment income, or IRA distributions. You should also check your withholding if you’ve experienced changes to your medical expenses, taxes, charitable gifts, education credits, dependent care expenses, and more. These life changes might affect your deductions or tax credits. These Paycheck Checkups will help make sure you’re in a good place when it’s time to file taxes.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[10]

[10] www.irs.gov/newsroom/all-taxpayers-should-check-their-withholding-asap

The Week on Wall Street
Stock prices pushed higher last week, as investors remained hyper-focused on any new developments with the U.S. trade negotiations with China.

The Dow Jones Industrial Average picked up 0.91%, while the Standard & Poor’s 500 rose 0.62%. The Nasdaq Composite index gained 0.93% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 2.28%.[1][2][3]

Trade Winds
For nearly two years, investors’ moods have seemed to swing with each twist in the ongoing trade saga between the U.S. and China. Last week was no different.

On Tuesday, stock prices fell sharply on concerns that U.S.-China trade tensions had escalated. The White House announced the addition of 28 new Chinese companies to its list of firms that are banned from doing business in the U.S. Later in the day, White House officials confirmed that they had implemented travel bans on selected Chinese officials.[4][5]

But prices bounced back Thursday and surged higher Friday on White House reports that suggested the trade talks between the two countries were “going really well.” Near the close Friday, the White House confirmed that the U.S. has come to a “very substantial phase one deal” with China.[6][7]

Quarterly Earnings
Investors may start to get a better glimpse into third-quarter earnings this week, as more than 150 companies are expected to report on their operations.[8]

As “earnings season” get underway, some attention may shift from the U.S.-China trade negotiations and toward company reports.
What’s Next
Some U.S. financial markets will be open, and some will be closed, on Monday, October 14, in observance of the federal holiday Columbus Day. The U.S. bonds markets and most banks will be closed. But the New York Stock Exchange and the NASDAQ will be open for regular hours.

[1] www.wsj.com/market-data

[2] www.wsj.com/market-data

[3] quotes.wsj.com/index/XX/990300/historical-prices

[4] www.yahoo.com/news/1-u-imposes-visa-restrictions-195007427.html

[5] finance.yahoo.com/news/u-bans-travel-chinese-officials-185734111.html

[6] www.cnbc.com/2019/10/10/trump-says-china-trade-talks-are-going-very-well.html?&qsearchterm=really%20well%20trump

[7] www.cnbc.com/2019/10/11/trump-says-us-has-come-to-a-substantial-phase-one-deal-with-china.html

[8] www.zacks.com/earnings/earnings-calendar

Unfortunately, getting your identity stolen and personal information compromised is all too common. Thieves steal other people’s identity for many reasons, including filing a fraudulent tax return (to claim the refund), committing credit card fraud, or trying to get a job. Here are a few things to know when protecting yourself against identity thieves:
• The IRS will never contact you via email or phone to request personal information. If you receive a scam email claiming to be the IRS, report it to phishing@irs.gov.

• People can steal your identity by stealing your wallet or purse, receiving information they need over the phone or email, finding your personal information in the trash, or accessing information you provide to an unsecured website (only ever enter credit card information on secure websites that start with “https://”).

• Your identity may have been stolen if a letter from the IRS indicates that more than one tax return was filed for you.
Read more tips here.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[13]

[13] www.irs.gov/newsroom/top-tips-every-taxpayer-should-know-about-identity-theft

The Week on Wall Street
The fourth quarter started with a mixed week for equities. The Dow Jones Industrial Average lost 0.92% for the week; the S&P 500, 0.33%. In contrast, the Nasdaq Composite improved 0.54%. Overseas stocks pulled back: the MSCI EAFE index dipped 2.60%.[1][2]
The Institute for Supply Management’s Manufacturing Purchasing Manager Index fell to 47.8 in September, its lowest level in ten years. Traders worried that the number reflected weakening business confidence. ISM’s latest Non-Manufacturing PMI also declined, but the 52.6 reading indicated growth in the service sector last month.[3][4]

The Department of Labor said that employers added 136,000 net new workers in September. Unemployment was at 3.5%, a level last seen in December 1969. The U-6 jobless rate, which counts both the unemployed and underemployed, fell to a 19-year low of 6.9%. Monthly job creation has averaged 161,000 so far in 2019, down from 223,000 in 2018. This may reflect the challenge companies face trying to fill job openings in an economy with so little unemployment.[5]

The next earnings season is just ahead. Before it begins, let’s take a look back at the third quarter.

S&P 500 Ends Quarter Higher
In a statistical coincidence, the Dow Jones Industrial Average and S&P 500 gained the same percentage in the quarter: 1.19%. The Dow settled at 26,916.83 on September 30; the S&P, at 2,976.74. Both indices registered their third straight quarterly advance. The Nasdaq Composite went sideways for Q3, ending the quarter 0.09% lower at 7,999.34.[6][7]

U.S.-China Trade Disagreement Continued
On August 1, the U.S. announced tariffs on an additional $300 billion of Chinese products – some would be effective September 1; others, effective by December 15. Four days later, China devalued its main currency, the yuan, to a level unseen in 11 years – a move that immediately sent U.S. stocks 3% lower. (Devaluing the yuan made Chinese goods cheaper for buyers paying for them in dollars, effectively offsetting the impact of U.S. tariffs.) As September concluded, however, word came that trade representatives from both nations would resume talks on October 10.[8][9][10]

The Fed Made a Move
The Federal Reserve lowered the country’s short-term interest rate by a quarter-point on September 18, to a range of 1.75% to 2.00%. Federal Reserve Chairman Jerome Powell, speaking to the media after the decision, called the outlook for the U.S. economy “favorable.” At the same time, he noted “a lot of uncertainty” surrounding the near-term economy and the Fed’s monetary policy views.[11]

What’s Next
Trade representatives from the U.S. and China return to the negotiating table on Thursday; their meeting is scheduled to conclude on Friday. Any news stemming from their talks could quickly affect equity markets, both here and abroad.
[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] finance.yahoo.com/news/ism-manufacturing-101500823.html

[4] www.investing.com/news/economic-indicators/newsbreak-ism-services-index-tumbles-to-3year-low-1991459

[5] www.usatoday.com/story/money/2019/10/04/september-jobs-report-economy-added-135-000-145-000-were-forecast/3859017002/

[6] www.barrons.com/articles/the-dow-rose-97-points-because-we-still-want-to-invest-money-in-china-51569879471

[7] www.marketwatch.com/investing/index/comp/historical

[8] www.piie.com/blogs/trade-investment-policy-watch/trump-trade-war-china-date-guide

[9] www.bloomberg.com/news/articles/2019-08-04/asia-stocks-set-to-drop-with-trade-back-in-focus-markets-wrap

[10] www.cnbc.com/2019/09/30/us-stocks-investors-monitor-us-china-trade-impeachment-inquiry.html

[11] www.reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7

There are many tax deductions and credits that taxpayers should be aware of, but what if you can’t reap the full benefits of a deduction in the given filing year? Some deductions and credits may be eligible to roll over into future years. These tax carryovers could save you money on your tax return.

Some deductions or credits may not be fully used in one tax year and are eligible to be carried over into future years, including:
• When you have a net operating loss

• When your total expense for a permitted deduction exceeds the amount you’re allowed to deduct in a given year

• When a credit you qualify for exceeds the amount of tax you owe in a year

• Adoption tax credits

• Foreign tax credits

• Credits for energy efficiency
Track these (or have your software do it), so you don’t forget them from one year to the next.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from Credit Karma[10]

[10] www.creditkarma.com/tax/i/tax-carry-forward/

The Week on Wall Street
Stocks retreated last week. Traders worried that the formal impeachment inquiry of President Donald Trump might distract White House officials from their pursuit of a trade deal with China, and shift the focus of Congress away from consideration of the United States-Mexico-Canada Agreement (USMCA). Also, news broke Friday that the White House was considering restricting levels of U.S. investment in Chinese firms.
The Dow Jones Industrial Average lost less than the Nasdaq Composite and S&P 500. Blue chips declined 0.43% week-over-week, while the S&P fell 1.01% and the Nasdaq dipped 2.19%. The MSCI EAFE index, tracking developed overseas stock markets, lost 0.89%.[1][2][3]

Incomes Grow, Spending Slows
Data released Friday by the Bureau of Economic Analysis showed household incomes rising 0.4% in August. Consumer spending improved just 0.1%, however; that was the smallest personal spending advance in six months.

Another BEA report noted that “real” consumer spending (that is, consumer spending adjusted for inflation) rose 4.6% during the second quarter.[4][5]

A Slip in Consumer Confidence
The Conference Board’s Consumer Confidence Index fell to 125.1 for September. That compares to a reading of 134.2 in August. Lynn Franco, the CB’s director of economic indicators, wrote that “the escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing.”

In contrast, the University of Michigan’s Consumer Sentiment Index ended September at 93.2, an improvement from a final August mark of 89.8.[6][7]

What’s Ahead
On October 10, the Social Security Administration is scheduled to announce the 2020 cost of living adjustment (COLA) for Social Security retirement benefits. Earlier this month, Bureau of Labor Statistics yearly inflation data pointed to a possible 2020 COLA in the range of 1.6%-1.7%.[8]

[1] www.cnn.com/2019/09/27/investing/dow-stock-market-today-oil/index.html

[2] www.wsj.com/market-data

[3] quotes.wsj.com/index/XX/990300/historical-prices

[4] www.marketwatch.com/story/consumer-spending-barely-rises-in-august-as-americans-save-more-2019-09-27

[5] www.investing.com/economic-calendar

[6] www.conference-board.org/data/consumerconfidence.cfm

[7] www.marketwatch.com/story/consumer-sentiment-rebounds-in-september-but-americans-more-anxious-2019-09-27

[8] finance.yahoo.com/news/3-events-could-push-social-100600194.html