Broker Check

Mid-Summer Update

| July 31, 2019
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Markets

  • Recent economic figures show the U.S. economy getting back on a little more solid footing. Stronger jobs numbers, a bounce back in retail sales and consumer confidence are the highlights of recent improvement. These figures and the high probability of an accommodative Fed (cutting rates) have the stock markets close to an all-time high. 
  • The goldilocks economy “not too hot, not too cold” looks like it will continue. Remember this has been a very low growth recovery and as such we are not worried about the economy overheating. See latest chart below.⦁ The goldilocks economy “not too hot, not too cold” looks like it will continue. Remember this has been a very low growth recovery and as such we are not worried about the economy overheating. See latest chart below.

  • A government budget deal for next two years seems close to getting completed. This is one less thing for the market to worry about (no Government shutdowns). This deal does make us worry in the longer term (3-5 years) as budget deficits are skyrocketing.⦁ A government budget deal for next two years seems close to getting completed. This is one less thing for the market to worry about (no Government shutdowns). This deal does make us worry in the longer term (3-5 years) as budget deficits are skyrocketing.
  • Earnings (single largest driver of stock prices) are coming in as expected. 4% earnings growth year over year is the current expectation.
  • Earnings guidance along with trade deals or tariffs will probably be the largest factor in stock market performance for the remainder of the year. We are back to low volatility environment. Be prepared for this to change. It would be normal to experience a -5 % to -10% pullback in prices. As usual we look at these events as opportunities.

Planning

Contributing to a ROTH IRA just got easier

“But wait,” you say, “I make too much to contribute to a Roth.”

Many 401k/403b plans allow Roth contributions, and unlike the IRA, no income limitation applies to Roth 401k contributions made through your employer plan. That’s right. Regardless of how much you make, if your employer allows Roth contributions, in 2019 you can put up to $19,000 in the Roth each year (or up to $25,000 for those age 50 and older).

This is extremely beneficial for your children and grandchildren. Please make sure they are taking advantage of this option.

Potential changes to inherited IRA’s

The proposed Secure Act (still waiting approval from Senate) would require beneficiaries to withdraw all IRA assets 10 years after their benefactor’s (non-spouse) death. The current law allows your beneficiary to take the money over their lifetime. This is potentially a major negative change to current law.

Please feel free to reach out to us to discuss investments or any financial planning issues that we may be able to help you with.

Enjoy the rest of your summer!

Sincerely,

Dan Moskowitz, CFP President

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