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    During my appearance on CNBC this past Friday, we talked about many things. One of the important subjects was the discussion about rates. It is my opinion that the Fed needs to start raising rates so they have some ‘arrows in the quiver’. If the US economy slows down, they would then be able to lower rates again. With rates currently at zero, the Fed has nowhere to go to counter a slowing economy were it to happen. Therefore, it is important for the Fed to increase rates gradually for the ‘sustainability’ of our economy, even if it creates some uncertainty short term.
    Markets shrugged off a volatile week Friday to close positive, buoyed by a strong jobs report and an easing of uncertainty around the Federal Reserve’s next interest rate decision. For the week, the S&P 500 grew 0.08%, the Dow gained 0.28%, and the NASDAQ added 0.29%.1

    Stocks surged late last week after a strong November jobs report gave investors renewed confidence in the economy. Data shows that the economy gained 211,000 jobs in November, beating the forecast of 200,000. More importantly, the October report was revised upward, giving us back-to-back months of strong labor market growth.2 The unemployment rate remained flat at 5.0%, while wages increased by 2.3% from a year ago.3 Digging deeper into the data, we see that jobs were created in multiple sectors of the economy, supporting broad-based growth.4 The upbeat report may give the Fed what it needs to go ahead with interest rate increases in the coming months.

    Fed chair Janet Yellen also signaled her readiness to raise interest rates in speeches last week. She told Congress that gradual rate hikes are likely to begin in December as long as there are no major shocks that might undermine confidence in the economy. She also warned that waiting too long to raise rates might force the Fed into tightening monetary policy quickly to avoid overheating the economy.5

    However, the news overseas is not so rosy. Markets slid on Thursday when investors here and abroad reacted badly to the European Central Bank’s new stimulus plans. Investors felt that the ECB’s plans were too little, too late, and they responded by selling.6 In China, economic sentiment remains cautious as additional data shows that demand is still weakening and further risks to growth exist.7

    Bottom Line: The jobs report and other domestic data may give the Fed the boost it needs to raise interest rates at the mid-December Open Market Committee meeting. Weighing on the other side are ongoing concerns about global growth; however, as long as nothing major happens between now and the December meeting, the odds seem to favor an interest rate increase.

    Looking at the week ahead, investors will be poring over November retail sales data, consumer sentiment, and inflation reports ahead of the Fed’s meeting on the 15th and 16th. Positive news would likely fuel additional speculation about a December rate hike.8

    Right now, markets appear to have a somewhat unhealthy codependence on central banks. As decoupling between the U.S. and the rest of the world continues, we can expect a seesaw of emotions to drive additional volatility. At the moment, a solid jobs report is being viewed favorably by investors because it takes away some of the uncertainty around interest rate hikes. However, sentiment could sour quickly when some other headline changes the odds. On top of the standard end-of-year shuffling of portfolios, we’re expecting the next couple of weeks to be volatile.


    Year-End Reminders from the IRS

    As we get close to the end of the year, the IRS has a few reminders to help you avoid mistakes:

    • Avoid excess contributions. If you contribute more than the 2015 limit to your individual retirement accounts, you will be subject to a 6% tax on the excess amount for each year that the excess remains in your account. You can withdraw any excess (without penalty) by the due date of your 2015 tax return.
    • Take your required distribution. If you are at least age 70-1/2, you must take a required minimum distribution (RMD) from your Traditional IRA, normally by December 31 each year. However, if you turned 70-1/2 in 2015, you have until April 1, 2016. You face a 50% excise tax on the RMD amounts you fail to take.

    For more information on excess contributions, RMDs, and other year-end tax issues, please contact a qualified tax expert.

    Tip courtesy of IRS.gov

    Please note that you should check with your tax advisor to confirm any tax planning or tax driven transactions before taking any actions.



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