Among the interesting news this week was another round of various financial reports, nearly all good. We’ll take a look at some of the specifics in a moment but first we must also give some notice to the long awaited ‘Republican Tax Plan’, also variously known as other names including the ‘Trump Tax Plan’ the ‘Major Cut Plan and the ‘Cut, Cut, Cut, Plan’.

Unsurprisingly, one of the major media outlets leapt to the conclusion ‘Trump is Dismantling Government as we know it!’ Well. Some of us believe if that were true it would be a good thing.

Of course, tax bills originate in the House and what we have is something like a refined set of talking points. No bill, tax or otherwise, will completely survive its initial contact with lobbyists — which these days, could also include the media. So, it is worth remembering that the first round of any bill, especially a tax bill, is first and foremost a political document.

We are pleased that the bill does seem to offer relief to a large swath of middle-class taxpayers. It will benefit a goodly number of wealthy people also — a point that will be decried by Democrats. What those on the political left always avoid mentioning (or noticing perhaps) is that any lowering of taxes ‘across the board’ will have a proportionate effect. Thus, the ones who pay the most may end up being the most affected.

A key part of the plan is to raise standard deductions while removing or reducing the eligibility of specific exemptions and deductions. Of particular note would be no longer allowing state and local income taxes to be deducted from your federal tax. Most affected would be those living in states that have exceptionally high rates of tax such as California, Illinois, New York, New Jersey and Connecticut. Expect a lot of push-back from these Democrat controlled states.

Meanwhile, the general direction of the economy continues to be pointed up. Here are some sources for that:

The Redbook Index which tracks retail sales (mostly chain stores) turned in a year-on-year growth number of 3.6%. That’s a pretty good number; it beats last month’s 3.5 which in itself was better than the preceding months.

The S&P Corelogic Case-Shiller Home Price Index was up 0.4% on a m/m basis, with the y/y pace up 5.9%.

The Chicago Purchasing Managers Index increased again, up from 65.2 to 66.2. Analysts noted that new orders are strong with a backlog at a 43-year high! (Yes: best number since 1974!)

And Consumer Confidence soared from 119.8 to 125.9, putting this barometer at a 17-year high.

Market Minute 11/3/2017 – And Now You’ve Heard ‘The Rest of the Story’

OK, so there’s no doubt that the markets generally are in an uptrend, and your investment statements are, for most of you, a pleasure to read these days.  We’ve commented that we feel that the ‘Rest of the World’ is the sweet spot this year, and that we anticipate (no guarantee of course!) the same may be true of 2018.  Yesterday’s Bloomberg paper (11/02/2017) seems to agree with this prognostication.

They seem to think that the world ‘can look forward to another year of healthy growth in 2018.  …..It’s a shock to realize the global economy has quietly accelerated to a respectable and sustainable cruising speed.  Market volatility is historically low…. The data we get and the indicators we see are very positive,’ says Clemens Fuest, president of the IFO Institute at the University of Munich.  ‘There is no obvious obstacle.’

‘The synchronized expansion reflects a self-reinforcing turn in the global profit cycle that has boosted business confidence and spending in all corners of the world’ and ‘The expansion is not dependent on just one region or one sector’ according to Richard Turnnill, global chief investment strategist for BlackRock Inc. in London. 

And that’s about how it looks to us.  Markets don’t move in straight lines, so enjoy the current strength. 

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051

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