Market Action – Justified or Not?
The number of days remaining for the traditional “Santa Claus” rally are dwindling down. A combination of our Federal Reserve Chairman stating that we’ll have 2 additional rate hikes in 2019, the Tariff situation, slowing Corporate Profit/Economic Growth and the partial government shut-down had Markets spinning backwards last week.
For the week, the Dow retreated (6.87%), the S&P 500 (7.05%), the Nasdaq Composite (8.36%) and the Russell 2000 (8.42%).
Bonds as measured by the Barclays Aggregate Bond Index finished the week up .45%
Over the pond, the MSCI International Index was down (2.64%) and the MSCI Emerging Market Equity Index down (1.83%)
Is the Market drop justified? At this point, I believe not. We just had a year where Corporate Profit Growth increased over 20%, the unemployment rates is at an historic low and the consumer remains very healthy and is spending money.
The concern of course, is that a falling Market can lead to a self-fulfilling prophecy towards an economic recession. When investors see their account balances go down quickly, that often causes major concern and consumer spending drops, which can have a “trickle up” impact on Corporate Revenues and Economic Growth.
Keep in mind, the Markets have a long history of going up and falling down more than justified.
At times like this, nothing is more important than making sure the funds you need for consumption are away from this Market slide. Asset Allocation and specific cash positioning are paramount to see you through times like this.
Social Security: Checks will increase by 2.8% in January for Social Security Retirement Benefits.
Medicare: Part B will increase from $134/month to $135.50/month.
Tax Brackets: The range of income in each tax bracket increases for 2019. IRA and Retirement Plan contribution limits are also increased for 2019. To compare the differences please review the 2018 and 2019 Key Financial Data on our website by clicking Retirement Refined, and click on the “Retirement Resources” header and chose either of the Key Data from the dropdown.
Question of the Week?
Although there are many theories as to where and why the practice originated, what country is generally credited with popularizing Christmas tress in the home?
c) Christmas Islands
Answer to Last Week’s Question of the Week
For tax year 2019, what is the total Standard Deduction a couple, married filing a joint tax return, both spouses over 65 is entitled?
d) None of the above
The answer is –
c) $27,000 – The standard deduction is increased in 2019 for a married couple filing a joint return to $24,400. Taxpayers who are 65 and older receive an additional $1300 deduction per person.