Exclusive Content

If you are a client, sign in below to access exclusive content.



     

    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.

     
     

    Sources

    1a  •  1b  •  1c  •  1d  •  1e  •  2  •  3  •  4  •  5  •  6  •  7  •  8

    The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC
    © Mahoney Asset Management

    INVESTING RISK DISCLOSURE
    Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

    IMPORTANT CONSUMER INFORMATION
    This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.

    Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.

    An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.

    SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
    This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Securities-related services may not be provided to individuals residing in any state not listed above.

    The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.

    Securities offered through
    Newbridge Securities Corporation,
    member FINRA / SIPC

    Investment Advisory Services offered through
    Newbridge Financial Services Group Inc.,
    an SEC Registered Investment Adviser.

    Office of Supervisory Jurisdiction
    1200 North Federal Highway, Suite 400
    Boca Raton, FL 33432

    Toll-Free: 877-447-9625
    Phone: 954-334-3450
    Fax: 954-489-2390