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WEEKLY QUOTE “Give what you have to somebody; it may be better than you think.” – Henry Wadsworth Longfellow WEEKLY TIP Look at the fees on your retirement accounts. How high are the annual fees and expenses? How are they impacting your return? WEEKLY RIDDLE If you add 1.5 to this number, you will get the same result as you do if you multiply it by 1.5. What number is it? (Hints: it is a whole number, it is not zero, and it is between 1 and 10.) Last week’s riddle: What 9-letter word begins and ends with the letter S and has only one vowel? Last week’s answer: Strengths. | December 27, 2010 SPENDING & WAGES UP, SAVINGS RATE TICKS DOWN Last week, the Commerce Department reported a 0.4% gain in personal spending and a 0.3% gain in personal incomes for November. The personal savings rate edged down 0.1% to 5.3% last month. In combination, those numbers hint at the possibility of stronger retail sales this holiday season - although durable goods orders fell 1.3% for November, much more than the 0.5% dip forecast by economists polled by Bloomberg News.1,2 NEW & EXISTING HOME SALES IMPROVE Existing home sales were up by 5.6% in November, according to the National Association of Realtors. One reason why: the median home price was $170,600 last month. Still, 2010 is on pace to be the poorest year for residential resales since 1997. At the current pace, 9.5 months worth of unsold inventory remains on the market. The Census Bureau reported a 5.5% improvement in new home purchases for November, with the sales pace down 21.2% from a year ago.3,4 IS OIL MARCHING BACK TOWARD $100?1 As crude prices topped $90 on the COMEX last week, the thought occurred to some analysts. Oil prices settled at $91.51 a barrel on Thursday, representing a 26-month high. The chairman of CONSUMER SENTIMENT EDGES UPThe final Reuters/University of STOCKS GAIN MORE THAN 1% FOR THE WEEK2 The markets were closed on Christmas Eve, trading was light last week and there was little volatility affecting the major indexes. The Dow almost replicated the previous week’s advance, rising +0.71% across four days to 11,573.49 at the close Thursday. The NASDAQ gained +0.86% last week to close Thursday at 2,665.60. The S&P 500 advanced 1.03% for the week to finish at 1,256.77 Thursday.6 COMING THIS WEEK: As you might expect with the holidays, the schedule of economic releases is pretty slim. Tuesday, the October Case-Shiller home price index comes out, plus the Conference Board’s December report on consumer confidence. Thursday, we get the report on November pending home sales from the National Association of Realtors as well as the latest initial and continuing claims figures.
Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 12/24/106,7,8,9 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. | ||||||||||||||||||||||||||||||
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This material was prepared by 1. The fast price swings of commodities will result in significant volatility in an investors holdings2. Stock investing involves market risk including loss of principalCitations. 1 - money.cnn.com/2010/12/23/news/economy/personal_income_spending/ [12/23/10] 2 - bloomberg.com/news/2010-12-23/u-s-stock-futures-maintain-losses-as-durable-goods-data-trails-estimates.html [12/23/10] 3 - chron.com/disp/story.mpl/ap/business/7350661.html [12/22/10] 4 - money.cnn.com/2010/12/23/markets/markets_newyork/ [12/23/10] 5 - cnbc.com/id/40785317/ [12/23/10] 6 - cnbc.com/id/40797201 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F23%2F09&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F23%2F09&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F23%2F09&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F23%2F05&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F23%2F05&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F23%2F05&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F22%2F00&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F22%2F00&x=0&y=0 [12/23/10] 7 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F22%2F00&x=0&y=0 [12/23/10] 8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/23/10] 8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/23/10] 9 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00] | |||||||||||||||||||||||||||||||
Monday, December 27, 2010
WEEKLY ECONOMIC UPDATE - December 27, 2010
Thursday, December 23, 2010
THE BUSH-ERA TAX CUTS LIVE ON
With the President’s signature, most of them will remain in place through 2012.
Presented by Kip A. Hoover
A holiday gift for taxpayers? After a 277-148 passage in the House and an 81-19 approval in the Senate, President Obama signed the 2010 Tax Relief Act into law on December 17, extending the Bush-era tax cuts.1 Here is the impact of the new legislation:
Current federal income tax rates are preserved for everyone. The federal income tax brackets will remain at 10%, 15%, 25%, 28%, 33% and 35% for 2011 and 2012.2
Unemployment insurance extends for 13 more months. This is retroactive, so the federal extension of long-term jobless benefits applies from December 2010 through December 2011.2
A payroll tax holiday occurs in 2011. The payroll taxes that employees pay will drop from 6.2% to 4.2% next year. (There will be no payroll tax cut for employers in 2011, only employees.) As envisioned, this will result in a savings of about $1,000 next year for a wage earner bringing home $50,000. This replaces the Making Work Pay credit.3,4,5
Estate taxes will be milder than at any time in the past 80 years. For 2011, the federal estate tax drops to 35%. The estate tax exemption rises all the way to $5 million. President Obama had earlier characterized these parameters as too generous, but he and Congressional Democrats ultimately accepted them.2
Tax breaks for middle-class and working-class families won’t sunset. As a result of the new law, the child credit, the child and dependent-care credit, the EITC, and a $2,500 tax credit for higher education expenses will all be around in 2011.5,6
No marriage penalty. The new law wards off the comeback of the marriage penalty so that married couples may take a more generous standard deduction.6
Taxes on capital gains and dividends top out at 15%. Passage of the 2010 Tax Relief Act means rates will top out at 15% through 2012.7
Businesses may expense 100% of their investments in 2011. In fact, qualified investments made after September 8, 2010 and before January 1, 2012 are eligible for this bonus depreciation. In addition, 50% expensing will be available for qualified property placed in service during 2012, and so-called “long-lived” property and transportation property may be eligible for 100% expensing if it goes into service prior to 2013.7
The tax break for IRA gifts to charity returns. The IRA charitable rollover, as it was informally called, was much beloved by non-profits and IRA owners, but it went away in 2010. In basic terms, it allowed someone 70½ or older donate up to $100,000 in IRA assets annually to one or more qualified charities. This opportunity is back for 2011 – and the especially good news is that Congress included a special rule in the new tax bill allowing IRA gifts made in January 2011 to count for 2010.8
An AMT patch, of course. Congress decided it might as well take care of that. It passed an AMT (Alternative Minimum Tax) fix as part of the 2010 Tax Relief Act, thereby exempting about 20 million middle-income households from a potential $3,900 average leap in federal income taxes.6
What’s the price tag of all this short-term tax relief? It is sizable. The federal deficit is projected to increase by about $858 billion over the next two years as a consequence.5
Kip A. Hoover may be reached at 440-729-0036 or kip.hoover@lpl.com.
www.teichmanfinancial.com
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.
Citations.
1 - edition.cnn.com/2010/POLITICS/12/17/tax.deal/ [12/17/10]
2 - online.wsj.com/article/SB10001424052748703296604576005430598327972.html [12/7/10]
3 – npr.org/2010/12/10/131969824/some-worry-payroll-tax-cut-threatens-social-security [12/10/10]
4 – businessweek.com/news/2010-12-10/u-s-tax-vote-may-be-too-late-to-cut-payroll-levy.html [12/10/10]
5 –startribune.com/politics/112046564.html? [12/16/10]
6 –businessweek.com/ap/financialnews/D9K5IEN81.htm [12/17/10]
7 –tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf [12/16/10]
8 – online.wsj.com/article/SB10001424052748703395904576025610771041244.html [12/17/10]
9 – montoyaregistry.com/Financial-Market.aspx?financial-market=roth-ira-rules-and-regulations&category=1 [12/18/10]
Monday, December 20, 2010
WEEKLY ECONOMIC UPDATE - December 20,2010
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WEEKLY QUOTE “It is not the years in your life but the life in your years that counts.” – Adlai Stevenson WEEKLY TIP With the new year coming, one of your resolutions can be reviewing and/or rebalancing your portfolio, to see that your investments are in sync with your objectives. WEEKLY RIDDLE What 9-letter word begins and ends with the letter S and has only one vowel? Last week’s riddle: You are to put five different letters into five addressed envelopes. If you do this completely at random, what are the chances that only four letters will end up in their correct envelopes? Last week’s answer: There is no chance of that happening. If four of the letters end up in the right envelopes, then the fifth must also be in the right envelope. | December 20, 2010 OBAMA SIGNS TAX DEAL INTO LAW President Obama signed the 2010 Tax Relief Act into law on December 17 after overwhelming passage in the House and Senate. The Bush-era tax cuts are thereby extended. Through 2012, the federal income tax tops out at 35% and taxes on dividends and capital gains top out at 15%. Next year, the estate tax returns at 35% with a $5 million dollar exemption, effectively permitting couples to pass estates as large as $10 million to heirs; tax-free charitable IRA donations also come back in 2011. Employee payroll taxes will drop from 6.2% to 4.2% next year.1,2,3,4,5 A POSITIVE SIGNAL FOR THE FUTUREThe Conference Board’s leading economic indicators index (designed to be a gauge of economic momentum or lack thereof) jumped by 1.1% in November – the biggest gain in eight months. This follows a revised 0.4% advance in the index for October.6 PRODUCER PRICES OUTPACE CONSUMER PRICES Consumer prices inched up 0.1% in November according to the Labor Department’s Consumer Price Index. The core CPI rose 0.1%. The Producer Price Index, on the other hand, rose by 0.8% last month. Consensus polls of economists at Briefing.com had projected a 0.2% rise in the CPI and a 0.5% gain in wholesale prices.7 HOUSING STARTS TURN NORTHThey improved for the first time in three months. The Commerce Department said November’s housing starts were up 3.9% from October levels. The 555,000 annual pace topped the 559,000 consensus projected in a Bloomberg News survey.8 STOCKS ADVANCEIt was a pretty quiet week on Wall Street, and major index performance across the five trading days was as follows: Dow, +0.72% to 11,491.91; S&P 500, +0.28% to 1,243.91; NASDAQ, +0.21% to 2,642.97. As of Friday, the DJIA had traded within a range of 100 points for six straight market days – that hadn’t occurred since January 2006. All three indices ended the week at +10% or better for 2010.9 COMING NEXT WEEK: No notable releases on Monday or Tuesday. Wednesday, we have the latest existing home sales figures and the final estimate of 3Q GDP. Thursday, we get data on consumer spending and durable goods orders for November, new home sales figures for November, the final
Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 12/17/109,10,11,12 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. | ||||||||||||||||||||||||||||||
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This material was prepared by Citations. 1 edition.cnn.com/2010/POLITICS/12/17/tax.deal/ [12/17/10] 2 – online.wsj.com/article/SB10001424052748703296604576005430598327972.html [12/7/10] 3 –tax.cchgroup.com/downloads/files/pdfs/legislation/bush-taxcuts.pdf [12/16/10] 4 – businessweek.com/ap/financialnews/D9K5IEN81.htm [12/17/10] 5 – npr.org/2010/12/10/131969824/some-worry-payroll-tax-cut-threatens-social-security [12/17/10] 6 - bloomberg.com/news/2010-12-17/u-s-leading-indicators-index-gains-most-in-eight-months-in-recovery-sign.html [12/17/10] 7 - thestreet.com/story/10947594/1/inflation-remains-subdued-in-november.html [12/15/10] 8 - bloomberg.com/news/2010-12-16/u-s-futures-fluctuate-starbucks-bank-of-america-climb-freeport-slides.html [12/16/10] 9 - cnbc.com/id/40722779 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F17%2F09&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F17%2F09&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F17%2F09&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F16%2F05&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F16%2F05&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F16%2F05&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F18%2F00&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F18%2F00&x=0&y=0 [12/17/10] 10 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F18%2F00&x=0&y=0 [12/17/10] 11 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/17/10] 11 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [12/17/10] 12 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00] 13 - montoyaregistry.com/Financial-Market.aspx?financial-market=8-retirement-tips&category=3 [12/18/10] | |||||||||||||||||||||||||||||||
Tuesday, December 14, 2010
Weekly Economic Update - December 13, 2010
Kip A. Hoover Presents: | |||||||||||||||||||||||||||||||
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WEEKLY QUOTE “Many strokes overthrow the tallest oaks.” – John Lyly WEEKLY TIP As interest rates may move higher in the next couple of years, why not pay down credit cards with high interest rates if you have some extra cash? Getting rid of the balance (and the interest on it) is akin to getting a double-digit risk-free return. WEEKLY RIDDLE You are to put five different letters into five addressed envelopes. If you do this completely at random, what are the chances that only four letters will end up in their correct envelopes? Last week’s riddle: What do these words have in common: pig, pony, bob, dove and cotton? Last week’s answer: By adding “tail” to the end of each of these words, you can create other words. | December 13, 2010 CAPITOL HILL COMPROMISE MEETS FLAK House Democrats chanted “just say no” prior to a symbolic vote Thursday against the tax deal worked out between the White House and Republicans – a deal some Democrats see as a sellout. The accord would preserve the Bush-era income tax cuts for two more years, restore the estate tax at 35% with a $5 million exemption, cut payroll taxes by 2% for 2011 and extend unemployment insurance through the end of next year. Late last week, an addition was made to the agreement – an extension of incentives for wind and solar energy developers through the end of 2011.1,2 OIL & GOLD FALL … GASOLINE PRICES RISEGold lost $21.10 last week to close at $1,384.30 per ounce Friday on the COMEX, while oil lost $1.40 across five days to conclude the week at $87.79 a barrel on the NYMEX. Retail gasoline prices just climbed to levels unseen since 2008 – last week, they were 35 cents higher than a year ago with a gallon of regular unleaded averaging $2.98 nationally. Industry analysts think pump prices will soon decline.3,4 CONSUMER POLL SIGNALS HOLIDAY OPTIMISM The preliminary December Reuters/University of WHOLESALE STOCKPILES INCREASE ALMOST 2%The 1.9% October gain topped the 0.9% increase forecast by economists in a Bloomberg News poll. In another sign that economy has picked up steam, the Census Bureau said year-over-year inventory levels have improved by 9.9%.6 ANOTHER WEEK … ANOTHER TWO-YEAR HIGH At Friday’s closing bell, the S&P 500 stood at a fresh two-year peak of 1,240.40 after a 1.28% weekly gain. The blue chips also moved north: the DJIA rose 0.25% last week to settle at 11,410.32 Friday. The tech-heavy NASDAQ advanced 1.78% across five market days, closing at 2,637.54 at week’s end. Have you noticed the year that the Russell 2000 is having? As of Friday’s close, it was +24.22% YTD.7 COMING NEXT WEEK: Tuesday, we have the latest PPI, retail sales and business inventories figures plus an FOMC rate decision. Wednesday, the November CPI will be released, and the November report on industrial production. Thursday, we find out about November housing starts and get figures on initial and continuing claims. Friday, the Conference Board issues its November leading indicators index.
Source: cnbc.com, bigcharts.com, ustreas.gov, bls.gov - 12/10/107,8,9,10 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. | ||||||||||||||||||||||||||||||
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Kip A. Hoover LPL Wealth Advisor 11630 Chillicothe Road Chesterland, Ohio 44026 440-729-0036 440-729-0314 Facsimile Securities offered through LPL Financial, Member FINRA/SIPC This material was prepared by Citations. 1 – online.wsj.com/article/SB10001424052748703296604576005430598327972.html [12/7/10] 2 - washingtonpost.com/wp-dyn/content/article/2010/12/09/AR2010120906439_pf.html [12/9/10] 3 - blogs.wsj.com/marketbeat/2010/12/10/data-points-energy-metals-419/ [12/10/10] 4 – nytimes.com/2010/12/11/business/energy-environment/11oil.html [12/11/10] 5 - bloomberg.com/news/2010-12-10/u-s-consumer-sentiment-rises-more-than-forecast-to-74-2-in-michigan-index.html [12/21/10] 6 - dailyfinance.com/story/wholesale-inventory-reflects-increasing-business-confidence/19753360/ [12/9/10] 7 - cnbc.com/id/40610084 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F10%2F09&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F10%2F09&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F10%2F09&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F9%2F05&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F9%2F05&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F9%2F05&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=DJIA&close_date=12%2F11%2F00&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=COMP&close_date=12%2F11%2F00&x=0&y=0 [12/10/10] 8 - bigcharts.marketwatch.com/historical/default.asp?detect=1&symbol=SPX&close_date=12%2F11%2F00&x=0&y=0 [12/10/10] 9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/10/10] 9 - ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [12/10/10] 10 - treasurydirect.gov/instit/annceresult/press/preanre/2000/ofm11200.pdf [7/12/00] | |||||||||||||||||||||||||||||||
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