Tax Planning

Breakout inflation is not our top concern. Europe explores support for national champions, and the U.S. unemployment rate masks some fragility.

Review the latest Weekly Headings by CIO Larry Adam.

In a challenging year dominated by the COVID-19 pandemic, the municipal market is recovering on the strength of unprecedented federal support.

Data shows there would be little effect for those earning under $400,000.

Should your clients convert some of their traditional tax-deferred money (e.g. IRA or 401K) to an after-tax Roth account? There are some myths that are just plain wrong. Here are the seven situations to consider when advising on this issue.

My theme today is on the pandemic’s future economic impact, especially in the United States.

We've updated this series to include the August release of the Consumer Price Index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $42,177, down 6.7% from 45-plus years ago.

The Federal Reserve has changed its inflation policy. Here’s what it may mean for markets.

Franklin Small Cap Value Fund Portfolio Manager Steve Raineri gives five reasons why he thinks small-capitalization (small-cap) value stocks could perform well as the US economy continues to recover from the COVID-19 pandemic.

It’s open season on capital gains. Four ways advisors can help clients navigate potential unpleasant taxable distributions.

New regulations, including the SECURE, CARES and CalSavers acts, are opening opportunities for advisors to build 401(k) assets. Technology is now available to support the ways in which 401(k) plans have been revolutionized. Advisors who capitalize on this innovation will add assets that are insulated from competitors. In this webinar, you will learn how advisors are recovering years of overpaid corporate taxes for clients in order to gain new AUM while exploring the SECURE Act and R&D Credit. You will also learn:

• How the SECURE, CARES and CalSavers acts have changed the way advisors can oversee 401(k) plans
• How nascent technology makes teamwork easier for you.
• How to uncover overlooked tax credit dollars for your corporate clients and gain additional AUM.
• How federal incentives and state regulations are developing new markets across the US from California to New York and Massachusetts. These are new markets that didn't previously exist.
• How to use regulations, tax credits, and technology for your clients to deepen your advantage.

With the COVID-19 crisis far from over, we expect increased policy stability in the U.S. next year, no matter who wins in November.

The Northern Trust Economics team forecasts the U.S. economy’s recovery from COVID-19.

A former AQR research head says Biden-Harris propose to tax 401(k) plans at both contribution and distribution.

The headline number for August came in at 100.2, up 1.4 from the previous month. The index is at the 56th percentile in this series.

The legendary fund manager, Bob Rodriguez, doesn’t like either stocks or bonds, but he explains the particular strategy he is pursuing for buying hard assets.

In a low-yield environment, advisors need to use financial planning tools like no-commission annuities to improve after-tax, after-advisory fee bond returns.

As against the widely touted long-run, expected real returns from equities of 6.5%, we show that the true expectation for global stocks is in the range of 4.5 to 5%.

The Fed’s strategic review added to a bevy of policy research revealed last week.

Supply is getting tight. Helium is notoriously difficult and expensive to store, for the very good reason that it escapes every known container over time.

The unintended consequences from recent Fed “policy” changes, not to mention those initiated in prior decades, have been at the very epicenter of some of the national problems we have. The Fed would vigorously deny this course, but the results are plain for all to see.

Different investors will choose different paths in response to the challenge of low rates and high credit uncertainty. Some may want to fight the trend by taking on more risk to achieve a target level of income or return.

Major tech-focused shares fell after helping drive the fastest stock market recovery in history.

While most people generally understand that the stock market and the economy do not move in lock step, there is still an underlying belief that a strong market reflects a strong economy. But according to that logic, our current economy must be historically strong.

The Kansas City Fed’s annual Monetary Policy Symposium at Jackson Hole is a signature event for those of us who follow central banks. The conference typically doesn’t generate much front-page news: the subject matter is usually more technical and conceptual than a broad audience would appreciate. But 2020 is not a typical year.

Prior to Hurricane Laura making landfall in Louisiana and the wildfires in California and parts of the West igniting, the U.S. had already experienced 10 different billion-dollar natural disasters this year.

The Federal Reserve convenes a major economic symposium in late August each year in Jackson Hole, Wyoming, the popular ski resort. Lots of Fed officials, banking big-wigs and other financial market players attend each year, along with a collection of media correspondents who pay thousands of dollars to be there.

Why there’s still value in a value allocation.

Irrevocable trusts are an effective way to minimize the tax consequences of transferring wealth to future generations. My guest today, Michael Roberts, will discuss how they are set up, who they are most effective for and how advisors can advance their relationships with clients by using them.

With US elections about two months away, investors are intensifying their focus on the presidential and congressional contests. Historically, political transitions haven’t had much impact on the economy and markets, but this time could be different.

Tina is an old friend of mine, but she is also a sad case of hubris, over-confidence and misguided pride. I first met Tina about 38 years ago but, more recently, I have been reminded of her presence every single day. Sometimes valuations get so much out of whack that I get goose bumps all over, and this is one of those situations.

The Franklin Templeton-Gallup Economics of Recovery Study has unveiled many insights about US consumer attitudes and behavior in the wake of COVID-19. Our Fixed Income CIO Sonal Desai examines findings from the survey’s second pulse, including encouraging signs confidence has found a floor.

Risk is running rampant in financial markets. Stocks trade at dot-com-era valuations, the IPO pipeline is full, SPACs are back, Bitcoin’s headed toward a record. And right on cue, here come the crypto opportunists.

Five companies now comprise 26% of the market capitalization of the S&P 500® Index, making for the most concentrated U.S. equity market in the last 40 years. What are the potential dangers of this for investors?

The recent imbalances in the stock market can lead to vulnerability; rebalancing portfolios may be valuable to help balance exposure to U.S. capitalization-weighted benchmarks relative to international stocks.

Led by technology and large-cap companies, the S&P 500 is on pace to post its best summer performance in over 80 years.

Despite reaching all-time highs above $2,000 per troy ounce this summer, gold prices might still have room to run, according to Franklin Equity Group’s Steve Land. In addition, he shares some reasons why the current environment could present new opportunities for gold-focused miners to redefine themselves as stronger businesses.

Valid until the market close on September 30, 2020.

The S&P 500 closed August with a monthly gain of 7.01% after a gain of 5.51% in July. At this point, before the close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. All five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), Vanguard FTSE All-World ex-US ETF (VEU), and iShares Barclays 7-10 Year Treasury (IEF), Vanguard REIT Index ETF (VNQ), and Invesco DB Commodity Index Tracking (DBC) — are signaling "invested", an increase from last month's triple "invested" signal.

In a new quarterly letter to GMO clients, head of asset allocation Ben Inker highlights the sea change in the utility of government bonds and Matt Kadnar, member of GMO’s Asset Allocation team, weighs in on today’s low bond yields.

Active nontransparent ETFs (ANTS) have been much in the news lately, and many wealth managers have asked, “How does this affect my practice and my clients?”

The Fed updated its monetary policy framework, moving to a flexible average inflation target. That means that the central bank will target an average inflation rate of 2% (as measured by the PCE Price Index) over time.

The Fed’s new take on inflation was a long time coming, while Japan’s downturn drags on and U.S. housing stays strong.

Personal Income (excluding Transfer Receipts) in July rose 1.03% and is down 1.7% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) MoM was up 0.71%. The real number is down 2.7% year-over-year.

With the release of this morning's report on July Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.18% month-over-month change in disposable income was at -0.15% when we adjust for inflation. This is an increase from last month's 1.36% nominal and 1.83% real decreases last month. The year-over-year metrics are 8.96% nominal and 7.89% real.

The move away from a precise 2% target likely means short-term rates will stay lower for longer.

Our Emerging Markets Equity team’s Michael Lai and Elizabeth Wu take a look at a new breed of innovative enterprises in China that could transform health care outcomes in the years ahead.

Investors flock to municipals to meet safety, income and after-tax return goals. But investors should consider how they gain exposure to the asset class.

With multiple future scenarios as to how climate change may play out, there are also multiple potential consequences in store for investments. This post takes a detailed look at climate-change risk management.

This November’s US presidential election pits Donald Trump against Democratic nominee Joe Biden, a longtime politician who represents a more progressive policy approach. Our Head of European Fixed Income David Zahn breaks down the implications of the US election for Europe, and why many of Biden’s policies line up more closely with European views.

Esports has taken hold around the world as more people are turning to interactive gaming as a form of entertainment, resulting in ballooning cash prizes and front-page news coverage.

The US economy got crushed in the second quarter, with the worst decline in real GDP for any quarter since the Great Depression. However, the long road to recovery has started and, for now, we're penciling in real GDP growth at a 20% annual rate for the third quarter. Of all the parts of the US economy that have weathered the COVID-19 storm, none has been as resilient as the housing market.

In a speedy round-trip, the S&P 500 hit an all-time high last week; meaning the rally since March is now an “official” bull market.

In the minutes of the July 28-29 FOMC meeting, participants expected no change in policy rates anytime soon, but officials saw a need for more clarity regarding the likely path, such as adopting output-based forward guidance.

The current environment may be more uncertain and riskier than any we have seen in our lifetimes. Yet, corporate bond spreads say the future has never been more certain.

My family office has decided to take Jeffrey Gundlach’s general advice and look at the areas in common stocks that have been damaged but not supported by Fed actions.

With the second quarter of the 2020 reporting season mostly behind us, and with markets testing “all-time” highs, do earnings support the bullish thesis? Such is the fundamental question surrounding the debate over the record deviation between “momentum” and “growth.”

As a result of the Federal Reserve’s efforts to shore up credit markets, the leveraged credit sector has delivered stellar performance since the lows in March.

Berkshire unexpectedly announced that, as of the end of the second quarter, it held a $565 million position in Barrick Gold, the world’s second largest producer of the metal.

Treasury bond yields have been drifting quietly lower since early June. But there is more going on beneath the surface than it might seem at first glance. Real yields—nominal yields less inflation—have declined steeply into negative territory. While nominal yields are near record-low levels from the deep economic decline, inflation expectations are picking up.

Emerging countries have been in the midst of a crisis that is not of their own making. A great majority of these countries are navigating the crisis fairly well.

I realized that it’s been so long since I started my NewsLetter, most of you won’t know its origins. To bring you up to date, here’s the intro to the first one.

Research Affiliates discusses the increase in portfolio tactical shifts and recent research efforts supporting the All Asset strategies in today’s evolving investment environment.

​​​​​​With interest rates at historically low levels, investors still have a pressing need to find reasonable income. In this upcoming webinar, Invesco’s municipal investment leaders representing mutual funds, ETFs and separately managed accounts, will discuss how advisors and investors can use different investment solutions to balance the need for income with the realities of managing risk in an uncertain climate.

This presentation will cover:

• Balancing the need for income with the importance of managing risk amid the market volatility created by the pandemic.
• The prospects for higher tax rates and the increased appeal of tax-advantaged municipal bonds, as the government looks to pay for massive stimulus packages.
• Aligning investor goals with the portfolios objective to find the right municipal income solution to meet their needs.

Many pundits have talked about “the Fourth Industrial Revolution,” but what does it mean? Franklin Equity Group’s Matt Moberg explains how the current pace of innovation is driving productivity gains—and accelerating economic growth.

How do I support the people working for me who are dealing with difficulty at home?

Initial claims for unemployment benefits fell below one million for the first time since mid-March (20 weeks). However, unadjusted claims had already dipped below that level a week earlier. Unadjusted claims totaled 831,000.

Following decades of investment and cost reduction, electricity from renewable energy should be cheaper than most existing fossil- and nuclear-fueled electricity within the next three-to-five years. We believe selectively investing in operators with scale and cost advantages in this sector should be rewarding given the increasing demand for clean energy.

Election Day is eleven weeks from tomorrow. In political time, this is an eternity. However, with the White House, about one-third of the Senate, and the entire House of Representatives on the ballot, this election is significant. Particularly because the two presidential candidates have such stark differences in policy perspectives, especially with respect to taxes.

Given Biden's current lead in the polls and the possibility of Democrats gaining control of the Senate, his tax plan may eventually be passed by Congress. Regardless of your political views, it's not too soon to consider the possible implications for your financial planning.

Everybody is wondering how the stock market can be so high while the U.S. economy is so low. But you don’t hear the same rumbling concerns about the bond market – even though something very similar to ultra-high P/Es is going on in the fixed income side of your portfolio.

A brief monthly update on what's happening in the municipal bond market.

Our Head of Equities Stephen Dover explains why he thinks possible changes to the US political landscape could lead to further bouts of market volatility.

The U.S. stock market seems to be looking through this economic catastrophe. For the five months and one week since the start of the recession—March through August 7, 2020—the U.S. stock market, as measured by the S&P 500, has returned +14.3%.

Washington’s inaction on a fiscal deal and action on tariffs are both perplexing, while schools face complicated choices.

The price of gold had its first down week since early June, ending a spectacular nine-week rally. The yellow metal briefly fell below $1,900 an ounce on Wednesday as stocks neared their all-time closing high and the 10-year Treasury yield jumped on record supply.