Tariff Increase – Markets – A Rate Cut? – Iran

The stock market’s been melting higher, anticipating an end (or at least a temporary halt) to the China trade war.  Well, last week the markets were a bit disappointed as the U.S. increased the current 10% tariff to 25% on $200 Billion of Chinese Imports.  China immediately responded, not surprisingly, with a $60 Billion Tariff on imports from the U.S.  China’s Tariff directly goes after our agriculture sector adding additional tax to sugar, wheat, chicken, turkey and peanuts.  China also cancelled orders for U.S. pork products.  Keep in mind, consumers end up paying most of the higher tax!!

 

So are we closer to an end of the trade war?  Certainly doesn’t appear that way!!

 

After an initial Dow 600 point decline, the averages did recover, however all were lower for the week, with the Dow losing (.69%).  The S&P 500 down (.76%), the Nasdaq Composite (1.27%) and the Russell 2000 leading the way down, off (2.37%).

 

Across the pond, the MSCI EAFE International Index gained .23% and the Emerging Markets suffered the most for the week, down over 4%.

 

Bonds as measured by the Barclay’s Aggregate Bond Index increased .33%

 

An Interest Rate Cut?

 

This morning, as I was listening to CNBC on my way into the office, it was reported the Federal Funds Futures are pricing in significant odds of a RATE CUT!  As of this morning, the Fed Futures indicated a 50% chance of a rate cut by September and an 87% chance by next January.

 

Looking at our 10 Year US Treasury, the rate on 12/31/2018 was 2.69%.  As of last Friday, the rate was down to 2.39%.

 

I wish I could understand this one.  The unemployment rates are very low, corporate earnings are still all in all good, GDP was above average in the 1st quarter and when I’m out and about, people are certainly spending a lot of money.

 

Does our economy need additional stimulus at this time?  Only one thing is for sure, it’s completely out of our control!!

 

IRAN BACK IN THE NEWS

 

It’s been awhile, which is a good thing, however because of “heightened Iran readiness to conduct offensive operations,” we sent a Carrier Strike Group and Bomber Task Force closer to Iran.

 

President Trump warned Iran to never threaten the U.S. again, or that will be the end of Iran.

 

Is this market moving?  Perhaps because of the other international issues, however most likely this will not turn into something significant at this time.  We have enough going on!

 

 

Question of the Week

 

Social Security Tax:  If your “Provisional Income is above $44,000 for those filing a joint return and above $34,000 filing single, up to 85% of your annual Social Security Retirement Benefit is subject to Federal Income Tax.

 

What types of the following income are included in the Provisional Income Calculation?

  1. Earned Income
  2. Unearned Income
  3. Taxable Interest Income
  4. Tax-Free Interest Income
  5. ½ of your annual Social Security Benefit
  6. All of the above.

 

 

 Answer To Last Week’s Question!

 

401K, 403b, 457b and Roth 401K plans:  If you are over age 50, what is the maximum you can contribute to your qualified plan?

A. 19,000

B. $30,000

C. $25,000

D. $50,000

The correct answer is letter c) $25,000.  This includes a regular elective deferral of $19,000 and the $6000 “catchup” contribution for ages 50 and older.

 

 

For information on our upcoming June 2019 Educational Retirement Income/Tax Workshop, please click HERE.

 

 

 

 

 

 

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