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Tax Tips – IRS Develops ‘Get Ready’ to Help You Prepare for Tax Reform*

The IRS is offering a new publication to help taxpayers better understand tax reform. Called Tax Reform Basics for Individuals and Families, Publication 5307 explains the Tax Cuts and Jobs Act, enacted late last year for 2018, and how it will affect tax filings. The publication targets individual taxpayers and families and what they can expect on their 2018 federal tax returns.

Publication 5307 provides information on:

  • Increasing the standard deduction
  • Suspending personal exemptions
  • Increasing the child tax credit
  • Adding a new credit for other dependents
  • Limiting or discontinuing certain deductions

To download or read the publication, go to https://www.irs.gov/pub/irs-pdf/p5307.pdf.

For more information about preparing for tax filing, go to https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-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 advisor.

Tip adapted from the IRS.gov[18]

[18] www.irs.gov/newsroom/new-irs-publication-helps-taxpayers-get-ready-for-tax-reform

Markets Rebound – WEEKLY UPDATE – DECEMBER 3, 2018

U.S. markets ended a volatile month on a high note Friday. All three major indices posted impressive increases for the week, buoyed by news from the Fed Reserve and international trade.[1] The S&P 500 jumped 4.85%, and the NASDAQ finished up 5.64% – both gains are almost 7-year highs.[2] Meanwhile, the Dow experienced a 2-year high, increasing 5.16%.[3] Internationally, the MSCI EAFE rose 0.95%.[4]

To better understand last week’s sharp rebound, let’s take a closer look at details surrounding comments by Fed Chairman Jerome Powell and various international developments.

Fed Developments

Last Wednesday, Powell inspired optimism in investors by claiming that interest rates are close to the current neutral range of 2.5-3.5%. His comments seemed to suggest that the Fed may throttle back interest rate hikes.[5] However, minutes released on Thursday from the central bank’s meeting contained no indication that the Fed had changed its policy. Therefore, we can only assume the Fed still plans on a fourth rate hike in 2018, and increases may continue during 2019, but we need to wait for more clarity from the Fed.[6]  

The G20 Summit

At the annual G20 summit, leaders from the world’s 19 biggest economies and the European Union assembled in Buenos Aires. This group represents 85% of the world’s economic output and 2/3 of its population.[7] Here are a few key takeaways from the summit:

  • United States-Mexico-Canada Agreement
    On November 30, President Trump met with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto. They signed the anticipated United States-Mexico-Canada Agreement (USMCA) to replace NAFTA. With the recent U.S. tariffs on Canadian steel and aluminum causing tension, the USMCA may start to ease the strain, although some remain skeptical. Plus, the agreement still needs to pass Congress. Its true outcome is still unknown.[8] 
     
  • Trade Talks with China
    President Trump and China’s President Xi met on December 1 to attempt resolving trade issues between the two countries. Since last July, the U.S. has hit Chinese goods with a total of $250 billion in tariffs and has threatened more. In turn, China retaliated by imposing $110 billion in tariffs on U.S. products.[9]  Ultimately, both countries agreed to delay any increases in tariffs for 90 days, while they attempt to iron out remaining disputes. If they cannot reach an agreement, President Trump says he will raise rates from 10% to 25%.[10]
  • Other G20 Concerns
    Low oil prices and oversupply continue to worry investors. The leaders from two of the three largest oil-producing countries, Russia and Saudi Arabia, met to discuss reducing production and raising prices.[11] In addition to trade issues and oil, G20 leaders are grappling with different views on climate change and the new spat between Russia and the Ukraine.[12]

Stay Focused

While the Fed and geopolitical issues dominate the news cycle, we’re here to remind you to keep market fundamentals in mind. As a whole, the economy looks strong through 2018.[13] For example, last week we learned:

  • Consumer confidence remains high, though it fell slightly in November. This dip follows an 18-year sustained peak in positive territory.[14] 
  • Q3 Gross Domestic Product increased a solid 3.5%. Business investments performed better than expected, with corporate profits boosting to a new 6-year high.[15] 
  • Unemployment lowered to 3.7%, the lowest it has been in at least 48 years.[16]

As always, we remain dedicated to helping you navigate your financial life amidst economic and geopolitical news. If you have questions about how this information may affect your portfolio, contact us today.

[1] www.reuters.com/article/us-usa-stocks/wall-street-rises-on-trade-hopes-sp-nasdaq-post-best-weeks-in-7-years-idUSKCN1NZ1EZ

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCOwww.reuters.com/article/us-usa-stocks/wall-street-rises-on-trade-hopes-sp-nasdaq-post-best-weeks-in-7-years-idUSKCN1NZ1EZ

[3] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

www.cnbc.com/2018/11/30/stocks-set-to-open-mixed-as-high-stakes-g-20-puts-trade-in-spotlight.html

[4] www.msci.com/end-of-day-data-search

[5] www.cnbc.com/2018/11/28/markets-see-fewer-rate-hikes-in-powell-comments.html

www.cnbc.com/2018/11/28/forex-markets-dollar-the-fed-us-china-trade-in-focus.html

[6] www.bankrate.com/banking/federal-reserve/fomc-recap/

[7] www.g20.org/en/g20/what-is-the-g20

[8] www.reuters.com/article/us-g20-argentina-usmca/u-s-canada-mexico-sign-trade-deal-trump-shrugs-off-congress-hurdle-idUSKCN1NZ0HE

[9] www.cnbc.com/2018/11/30/timeline-of-us-china-trade-war-as-trump-and-xi-meet-at-g-20-in-argentina.html

[10] www.cnbc.com/2018/12/01/us-china-wont-impose-additional-tariffs-after-january-1-report.html

[11] www.cnn.com/2018/11/30/investing/premarket-stocks-trading/index.html

[12] fortune.com/2018/12/01/g20-statement-2018/

www.usatoday.com/story/opinion/2018/11/30/ukraine-conflict-trump-g-20-push-back-bully-putin-editorials-debates/2147851002/

[13] seekingalpha.com/article/4225786-u-s-good-gets

[14] www.marketwatch.com/story/consumer-confidence-falls-for-first-time-in-five-months-2018-11-27

[15] www.marketwatch.com/story/economy-grew-35-in-third-quarter-pushes-corporate-profits-to-6-year-high-gdp-shows-2018-11-28

[16] www.marketwatch.com/story/wages-may-show-strong-gain-in-november-jobs-report-and-wall-street-wont-like-it-2018-12-01

Tax Tips – How Does Depreciation Deductions Impact Farmers?*

The Tax Cuts and Jobs Act changed how farmers and ranchers can deduct farming equipment for depreciation.

Depreciation deductions allow taxpaying farmers to recoup some of the costs for the use of their property and equipment.

Here are some of the changes to the tax code:

  • New farming equipment and machinery is considered five-year property. If you put equipment or machines in service after December 31, 2017, the period of recovery is five years (from seven years).
  • Grain bins, cotton-ginning equipment, fences, and other land-improvement equipment are exempt from the shorter recovery periods.
  • Used equipment falls under the seven-year rule.
  • Farming equipment put in service after December 31, 2017, does not have to adhere to the 150% declining balance method.
  • New and certain types of used equipment obtained and put in service after September 27, 2017, may qualify for the 100% first-year bonus depreciation but only for the tax years it was first used.
  • You may expense section 179 property. Section 179 property is tangible, purchased (not leased), used more than 50% in your business, put in service in the current tax year, and acquired from someone to whom the farmer is not related. The new tax code increased the maximum deduction to $1 million (from $500,000).

Other provisions are available, and you can find more information on the IRS website.

* 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 advisor.

Tip adapted from the IRS.gov[17]

[17] www.irs.gov/newsroom/tax-reform-changes-to-depreciation-deduction-affect-farmers-bottom-line

Why Did Stocks Drop? – WEEKLY UPDATE – NOVEMBER 26, 2018

Last week was a tough one for markets. The S&P 500 dropped 3.79% and experienced its worst results during a Thanksgiving week since 1939.[1] While the index officially entered correction territory on Friday, it closed 10.2% below its most recent record high.[2] Meanwhile, the Dow and NASDAQ continued the downward trend, losing 4.44%, and 4.26%, respectively.[3] International stocks in the MSCI EAFE also declined, posting a 1.12% loss.[4]

Reading these results may feel quite unpleasant and elicit concerns about what is ahead. As is often the case, the story behind the numbers can help us understand the complexity and what this performance means.

Why did stocks drop?

Plummeting oil prices were one of the biggest drivers behind the market’s losses, as investors worried that too much oil is available.[5] These concerns have contributed to oil experiencing seven weeks of losses in a row and dropping more than 20% so far this month.[6]  

While oil was a key focus last week, many other details were also on investors’ minds. Major tech companies continued to struggle and posted sizable losses for the week.[7] In addition, the markets still don’t know how the Brexit deal, political challenges in Europe, and ongoing trade tension will all work out.[8]  

Examined together, these challenges can create questions about the strength of global growth.[9]  

Will the market losses continue?

No one can predict the future, but a few data points and perspectives can help deepen understanding of the current environment. We believe the following two details are important for you to know:

  1. Trading was light last week: The days before and after Thanksgiving had trading volume that was much lighter than normal, which often happens during this time period.[10] This lower volume can exacerbate pricing trends, such as the declines we saw with oil.[11] As a result, Friday’s performance may be less significant than it seems on the surface.[12]

    2. Black Friday shopping was strong: Brick-and-mortar stores had people lined up for discounted buys, and online purchases were 28.6% higher than in 2017. The holiday season is very important for retailers, and these initial results indicate consumer spending may remain strong through year’s end.[13]   

In the coming weeks, we will gain a clearer understanding of many market influences. President Trump and Chinese President Xi are scheduled to meet this week at the G20 summit to discuss trade. Right now, the markets may be assuming these talks won’t solve the trade tension and that an economic slowdown could be ahead. Investors may also doubt whether oil-producing countries can slow production fast enough to counter reduced demand.[14]  

Other experts believe we are experiencing a disconnect between what investors are feeling and what is truly happening in the economy. As a result, a so-called “Santa Claus” rally could occur as consumer spending continues during the holiday season.[15] 

But these perspectives are opinions, not a crystal ball. No one can say for sure how these complex scenarios will play out. Rather than rely on guesswork or headlines, we’ll continue to look for clear trends and insight that support your long-term goals. If you have questions or want to talk about your current investments and strategy, we are here for you.

[1] www.bloomberg.com/news/articles/2018-11-22/asia-stocks-to-slip-end-weekly-drop-pound-jumps-markets-wrap?srnd=markets-vp

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

[2] www.reuters.com/article/us-usa-stocks/wall-street-drops-sp-500-confirms-correction-idUSKCN1NS1FA

[3] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[4] www.msci.com/end-of-day-data-search

[5] www.reuters.com/article/us-usa-stocks/wall-street-drops-sp-500-confirms-correction-idUSKCN1NS1FA

[6] www.reuters.com/article/us-global-oil/oil-plunges-nearly-8-percent-despite-talk-of-output-cut-idUSKCN1NS012

[7] www.cnbc.com/2018/11/23/stock-markets-dow-set-for-losses-as-trading-resumes-for-half-day.html

[8] www.bloomberg.com/news/articles/2018-11-22/asia-stocks-to-slip-end-weekly-drop-pound-jumps-markets-wrap?srnd=markets-vp

[9] www.bloomberg.com/news/articles/2018-11-22/asia-stocks-to-slip-end-weekly-drop-pound-jumps-markets-wrap?srnd=markets-vp

[10] www.marketwatch.com/story/when-does-the-stock-market-close-on-black-friday-2018-11-23?dist=markets

[11] www.marketwatch.com/story/6-key-reasons-the-bottom-is-falling-out-of-oil-prices-on-black-friday-2018-11-23

[12] www.reuters.com/article/us-usa-stocks/wall-street-drops-sp-500-confirms-correction-idUSKCN1NS1FA

[13] www.marketwatch.com/story/stocks-poised-to-open-lower-in-black-friday-trade-notch-weekly-loss-of-more-than-3-2018-11-23?dist=markets

www.reuters.com/article/us-usa-stocks/wall-street-drops-sp-500-confirms-correction-idUSKCN1NS1FA

[14] www.reuters.com/article/us-global-oil/oil-plunges-nearly-8-percent-despite-talk-of-output-cut-idUSKCN1NS012

[15] www.marketwatch.com/story/stocks-poised-to-open-lower-in-black-friday-trade-notch-weekly-loss-of-more-than-3-2018-11-23?dist=markets

Tax Tips – IRS Provides Resources to Help Small Businesses with Taxes*

The IRS offers small business leaders helpful information on taxes.

Last year’s Tax Cuts and Jobs Act may have helped bolster revenue for many businesses, but understanding tax reform can be challenging.

Many small business owners may be able to take advantage of new 20% tax deductions on their qualified business income. To learn more, go to https://www.irs.gov/tax-reform.

The agency also provides detailed information on technical aspects of the tax law. The Tax Reform Guidance page provides a list of guides.

The drop-down articles provide some easy links to information and the Frequently Asked Questions answers common tax questions: https://www.irs.gov/newsroom/tax-reform-resources.

Publication 15, Circular E, Employer’s Tax Guide provides a more in-depth overview of employers’ tax responsibilities.

Tax Reform News has links to news articles and fact sheets about tax laws.

Other details may apply, and you can find more information on the IRS website.

* 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 advisor.

Tip adapted from the IRS.gov[10]

[10] www.irs.gov/newsroom/irs-resources-can-help-small-businesses-better-understand-how-tax-reform-affects-their-bottom-line

Analyzing Data Amid Declines – WEEKLY UPDATE – NOVEMBER 19, 2018

Markets experienced more volatility last week, as perspectives on trade, tech, and retail pulled investor sentiment back and forth. Although domestic indexes were up on Friday, November 16, they still posted losses for the week.[1] In all, the S&P 500 dropped 1.61%, the Dow declined 2.22%, and the NASDAQ gave back 2.15%.[2]  International stocks in the MSCI EAFE ended the week down 1.51%.[3]

A major topic over the past couple weeks has been the ongoing, significant declines in oil prices. Last week, we did experience one turnaround – on Friday, signs that oil production may decrease next month helped oil prices start to rebound. This pricing increase contributed to S&P 500 energy stocks rising 1.1%.[4] 

In addition to oil’s current trajectory, let’s examine some of the key October data we received last week:

1. Retail Sales Beat Projections
October’s retail sales were the highest in 5 months – up 4.6% from this time last year.[5] While some of this growth comes from rebuilding efforts after the latest hurricanes, the overall data suggests that consumer spending remains strong. As a result, we may be able to expect ongoing economic growth.[6] 

2. Inflation Picked Up
The consumer price index had its largest monthly increase since the beginning of 2018. From gas to rent to cars, U.S. retail prices rose in October. Inflation is still relatively stable, however, which should mean that the Federal Reserve will continue on its current, gradual path of interest-rate increases.[7] 

3. Industrial Production Increased
Industrial production only grew by 0.1% in October, but the latest data also indicated that previous months were higher than originally thought. In fact, mining reached its highest point ever in August as production of oil and gas surged. Ultimately, this report paints a somewhat mixed picture for manufacturing: For now, output remains solid, but manufacturers have several concerns, including trade and global growth. Production has slowed since August, and we’ll now have to wait to learn whether this decline continues or rebounds.[8] 

Examined together, last week’s data may show that the economy still has strength, but questions remain. We will continue to monitor these and many other reports to help gain a clearer perspective on what may lie ahead.

As we look to this week, we want to take a moment to say thank you for being one of our valued clients. We recognize the trust you place in our team and are thankful for your relationship during this holiday – and every week of the year.

[1] www.bloomberg.com/news/articles/2018-11-15/asia-stocks-to-track-u-s-gain-brexit-slams-pound-markets-wrap?srnd=markets-vp

[2] www.reuters.com/article/us-usa-stocks/sp-dow-advance-on-trade-optimism-nvidia-sinks-nasdaq-idUSKCN1NL1K9

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.reuters.com/article/us-usa-stocks/sp-dow-advance-on-trade-optimism-nvidia-sinks-nasdaq-idUSKCN1NL1K9

[5] www.ftportfolios.com/Commentary/EconomicResearch/2018/11/15/retail-sales-rose-0.8percent-in-october

[6] www.cnbc.com/2018/11/15/us-retail-sales-oct-2018.html

[7] www.marketwatch.com/story/consumer-inflation-posts-biggest-jump-in-nine-months-on-higher-cost-of-gas-rent-used-cars-cpi-shows-2018-11-14

[8] www.marketwatch.com/story/industrial-production-inches-up-in-october-as-fed-finds-record-mining-output-2018-11-16

Tax Tips – 100% Depreciation Deduction Benefit for Business Taxpayers*

If you’re a business owner, you can reap the benefits this year of changes in the tax code enacted in December 2017. You can write off most of your depreciable business assets in the year the assets were used.

Here is what you need to know about the new deductions:

  • Business assets with 20-year recovery periods or less may be eligible.
  • Machinery, equipment, computers, appliances, and furniture may qualify for the deduction.
  • Only property that was acquired and put in use after September 27, 2017 qualifies.
  • Eligible property must be included on a return filed on time. Certain exceptions may apply.

The IRS provides information on the types of property that qualifies for the deductions. For more information, go to https://www.gpo.gov/fdsys/pkg/FR-2018-08-08/pdf/2018-16716.pdf.

Other details may apply, and you can find more information on the IRS website.

* 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 advisor.

Tip adapted from IRS.gov[18]

[18] www.irs.gov/newsroom/new-100-percent-depreciation-deduction-benefits-business-taxpayers

The Impact of Oil and Elections – WEEKLY UPDATE – NOVEMBER 12, 2018

Last week, markets experienced a 4-day winning streak before dropping on Friday, November 9. Despite those losses, domestic indexes posted gains for the week.[1] The S&P 500 increased 2.13%, the Dow added 2.84%, and the NASDAQ was up 0.68%.[2] International stocks in the MSCI EAFE had slight growth, ending the week up 0.20%.[3]

From interest rates to corporate profits, investors had a number of topics to consider.[4] In this update, we want to focus on two key details that drove markets: oil prices and midterm election results.

1. Oil Prices Declined
Oil prices continued to fall last week, posting the most consecutive daily declines in at least three decades.[5] In fact, West Texas Intermediate (WTI) futures, a key oil benchmark, is officially in bear market territory. WTI has fallen more than 20% below its highest point over the past year.[6]  

What does this drop mean for markets?
Some investors believe the price declines are another sign that the global economy is slowing down. Historically, people have used oil prices as one way to decipher economic health because they can correlate with global growth. When crude oil prices drop, greater economic challenges are often ahead.[7] 

This recent decline may have a less concerning explanation. The United States sanctioned Iran last week while allowing eight nations to continue buying oil from the country for now.[8] All of these waivers resulted in 1 million more barrels of Iranian oil being on the market than expected, the opposite of the anticipated tightening supply.[9]  

Bottom line: The oil price decline may be more of a symptom of disrupted supply and demand, rather than an indication of the global economy’s health.[10]  

2. Midterm Elections Brought Few Surprises
The long-awaited midterm elections occurred last week, and the results matched expectations for a split Congress.[11] These results contributed to the midweek market rally we experienced.[12]  

How could the results affect markets?
Post-midterm market results are generally strong. Over the past 18 midterm elections, stocks have always had positive returns from their lows in October to the year’s end. Some investors even believe that October’s struggles were a sign of the markets pricing in the election results about a month early.[13]   

Taking a historical, long-term view, the current arrangement of a Republican president and a split Congress has resulted in 12% annual returns since 1936. The chart below shows how markets have performed through each potential party-control scenario.[14]

 

Although stocks have often done well when Washington experiences gridlock, the current scenario also makes a government shutdown or increased investigations into President Trump more likely. With either of these actions, market volatility could follow.[15]

Bottom line: The election results could help bolster market performance. The split Congress also brings potential for political uncertainty that increases volatility for investors.[16]

In many ways, this week’s market behavior underscores the complex, interconnected relationships between geopolitics and the markets. If you have any questions or would like to dive deeper into how these situations affect your financial life, we’re here to talk.

[1] www.marketwatch.com/story/dow-looks-set-to-sink-by-triple-digits-after-fed-update-as-oil-extends-fall-2018-11-09?dist=markets

[2] http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/11/09/stock-market-us-futures-lower-after-fed-decision.html

[5] www.reuters.com/article/us-usa-stocks/oil-slide-china-worries-send-wall-street-tumbling-idUSKCN1NE1GQ

[6] www.cnbc.com/2018/11/09/stock-market-us-futures-lower-after-fed-decision.html

www.investopedia.com/terms/w/wti.asp

[7] www.marketwatch.com/story/stock-market-investors-wrestle-with-a-glut-of-bearish-signs-as-oil-prices-plunge-2018-11-10

[8] www.reuters.com/article/us-usa-stocks/oil-slide-china-worries-send-wall-street-tumbling-idUSKCN1NE1GQ

[9] www.marketwatch.com/story/stock-market-investors-wrestle-with-a-glut-of-bearish-signs-as-oil-prices-plunge-2018-11-10

[10] www.marketwatch.com/story/stock-market-investors-wrestle-with-a-glut-of-bearish-signs-as-oil-prices-plunge-2018-11-10

[11] www.bloomberg.com/news/articles/2018-11-07/this-time-stocks-got-it-right-now-about-that-october-rout

[12] www.cnbc.com/2018/11/09/stock-market-us-futures-lower-after-fed-decision.html

[13] www.bloomberg.com/news/articles/2018-11-07/this-time-stocks-got-it-right-now-about-that-october-rout

[14] www.cnbc.com/2018/11/05/market-history-shows-investors-should-hope-for-gridlock-on-election-day.html

[15] www.cnbc.com/2018/11/05/market-history-shows-investors-should-hope-for-gridlock-on-election-day.html

[16] www.cnbc.com/2018/11/05/market-history-shows-investors-should-hope-for-gridlock-on-election-day.html

Tax Tips – What Do the Different Filing Statuses Mean?*

What are you? That may sound like a trick question, but we’re talking taxes. The IRS provides five different filing statuses: single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with dependent child.

You can only choose one, right? No, not necessarily.

Is it important which filing status you claim? Yes, it’s very important. Your status will determine how much taxes you’ll have to pay.

Ideally, you should choose a category that allows you to pay the least amount in taxes.

So, what do the different categories mean, and which one should you choose?

  • Single: Use this if you are not married or are divorced or legally separated under your state law.
  • Married filing jointly: If you’re married, you can file a joint return with your spouse. If your spouse dies, you can file in this category during the year of your spouse’s death.
  • Married filing separately: If you’re married, you may file two separate returns. This may allow you to pay less taxes. However, if you’re interested in this option, you should try preparing your taxes both jointly and separately (before filing) to determine which one allows you to pay less taxes. This may also work if both you and your spouse want to retain individual responsibility for each own’s taxes.
  • Head of household: You may use this filing status if you’re not married (in most cases). The IRS has special rules for using this one; you may use this if you paid more than half of the costs for upkeeping the home where you and a qualifying person live.
  • Qualifying widow(er) with dependent child: You can use this status if your spouse died in the previous two years and you have a dependent child.

Check the IRS rules carefully to determine your filing status: https://www.irs.gov/help/ita/what-is-my-filing-status.

Other details may apply, and you can find more information on the IRS website.

* 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 advisor.

Tip adapted from IRS.gov[12]

[12] www.irs.gov/newsroom/here-are-facts-to-help-taxpayers-understand-the-different-filing-statuses

Markets Bounce Back – WEEKLY UPDATE – NOVEMBER 5, 2018

Markets posted strong gains last week after struggling for much of October. The S&P 500 had its best weekly performance since May, and the NASDAQ had its first positive week since September.[1] Despite domestic markets dropping on Friday, November 2, the S&P 500 added 2.42%, the Dow increased 2.36%, and the NASDAQ gained 2.65%.[2] International stocks in the MSCI EAFE were also up 3.34%.[3]

What drove market performance last week?
We received a fair amount of data and reports, with the following details holding particular weight for investors:

  • U.S. – China trade updates were inconsistent.
    Stocks fluctuated widely on Friday, in large part because of contradictory updates on a potential trade deal between the U.S. and China. President Trump said the two countries are a lot closer to an agreement. Larry Kudlow, Trump’s economic advisor, shared a different perspective, indicating the U.S. is not working out a trade deal with China. These conflicting reports contributed to volatility in the markets as investors tried to determine exactly where we stand. [4]                                                         
  • U.S. corporate earnings were strong but imperfect.
    So far, the 3rd quarter earnings season has been a strong one. Of the 74% of S&P 500 companies that have released their data, 78% have beaten their earnings-per-share estimates, and earnings have grown 24.9% year-over-year.[5] However, concerns for at least one major tech company’s projections affected investor behavior.[6] In addition, analysts predict that in 2019, earnings growth will not match the double-digit results we’ve experienced this year. [7]
  • Labor market growth beat expectations.
    The economy added 250,000 jobs in October, a stronger increase than expected. Wages also rose, posting 3.1% growth over the prior year, the fastest annual growth since 2009.[8] Investors interpreted these results to mean that the Federal Reserve would continue raising interest rates at its projected pace.[9]


Where should you go from here?  

If you felt at all whipsawed by last week’s price fluctuations, especially after October’s declines, you weren’t alone. Even if you know that market volatility is normal, it can feel intense in the moment. Right now, many investors are also jumping in and out of popular, crowded stocks, causing market levels to shift more quickly than many people are used to. To navigate these accelerated changes, you need to remove emotion from investing decisions and stick to your long-term vision even more.[10] 

Rather than trying to predict what stocks will do in the immediate future, we are here to help you plan for the financial life and legacy you desire. Please let us know if you have any questions about where you are and how to pursue your future.

[1] www.bloomberg.com/news/articles/2018-11-01/asia-stocks-to-extend-rally-after-trump-xi-call-markets-wrap?srnd=markets-vp

[2] www.marketwatch.com/story/dow-aims-for-4th-gain-in-a-row-ahead-of-jobs-report-apples-stock-sinks-on-outlook-2018-11-02?dist=markets

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=SPX®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=!DJI®ion=usa&culture=en-US

http://performance.morningstar.com/Performance/index-c/performance-return.action?t=@CCO

www.cnbc.com/2018/11/02/stock-market-triple-digit-gains-for-dow-nonfarm-payrolls.html

[3] www.msci.com/end-of-day-data-search

[4] www.cnbc.com/2018/11/02/stock-market-triple-digit-gains-for-dow-nonfarm-payrolls.html

[5] www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_110218.pdf

[6] www.cnbc.com/2018/11/02/stock-market-triple-digit-gains-for-dow-nonfarm-payrolls.html

[7] www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_110218.pdf

[8] www.ftportfolios.com/Commentary/EconomicResearch/2018/11/2/nonfarm-payrolls-rose-250,000-in-october

[9] www.bloomberg.com/news/articles/2018-11-01/asia-stocks-to-extend-rally-after-trump-xi-call-markets-wrap?srnd=markets-vp

[10] www.bloomberg.com/news/articles/2018-11-02/bulls-sit-still-as-u-s-stock-reversals-land-with-record-force?srnd=markets-vp