Market Update
(all values as of 07.31.2020)

Stock Indices:

Dow Jones26,428
S&P 5003,271
Nasdaq10,745

Bond Sector Yields:

2 Yr Treasury0.11%
10 Yr Treasury0.55%
10 Yr Municipal0.64%
High Yield5.44%

YTD Market Returns:

Dow Jones-7.39%
S&P 5001.25%
Nasdaq19.76%
MSCI-EAFE-10.64%
MSCI-Europe-10.86%
MSCI-Pacific-10.53%
MSCI-Emg Mkt-3.21%
 
US Agg Bond7.72%
US Corp Bond8.44%
US Gov’t Bond9.35%

Commodity Prices:

Gold1,992
Silver24.54
Oil (WTI)40.43

Currencies:

Dollar / Euro1.17
Dollar / Pound1.30
Yen / Dollar105.01
Dollar / Canadian0.74

How Tax Reform Might Benefit Small Businesses – Fiscal Policy

Should legislation pass that would ensue tax reform and essentially lower existing tax rates, it would be small businesses that would primarily benefit.

The cornerstone of the U.S. economy consists of small businesses with 500 or fewer employees. There are currently 29.6 million small businesses throughout the country representing nearly every single business at 99.9% of all businesses. These small businesses employ 58 million Americans comprising over 47% of the workforce, according to the National Federation of Independent Business.

White house icon. Cartoon illustration of white house vector icon for web

The burden of navigating the complex and nebulous tax laws falls primarily on small business owners. Large corporations have armies of accountants, consultants and tax attorneys that help mitigate the burden and often find ways to reduce tax liabilities with extremely complicated tactics. These same resources are not readily available to small business owners.

The IRS estimates that small business owners spend almost 2,000,000,000 hours per year and $18 billion annually to figure out their taxes.

Sources: National Federation of Independent Business, IRS

 

 

More Homes For Sale, Less Homes Sold – Housing Market Update

Dynamics within the housing market are a result of wages, consumer sentiment, in-terest rates, and the economic environment. Over the past year, the number of homes for sale and the number of homes sold has diverged. The U.S. Department of Housing and Urban Development carefully tracks all home listings and sales on a monthly basis. The most recent data available reveals that for the past year, as of July 2017, there was an increase in the number of homes for sale and a decrease in the number of homes sold. At the end of July, there were 276,000 homes for sale while there were 571,000 homes sold. July 2016 saw 627,000 homes sold with only 237,000 homes for sale nationwide.

Causes of the divergence may be attributable to an increase in new homes or a de-crease in buyers. Further details from the data show that some regions of the coun-try experienced either more homes sold or for sale relative to other regions.

Sources: U.S. Census Bureau, U.S. Department of Housing & Urban Development

 

Aftermath Of The Hurricanes – Economic Dynamic

Hurricanes Harvey, Irma, and Maria have impacted numerous sectors in three distinct geographical areas of the United States. Sectors affected include tourism, housing, energy, transportation, and jobs.

Hurricane Maria exacerbated financial and infrastructure issues in Puerto Rico. A frail power grid and debilitated infrastructure has left the island nation in disarray. Congress will determine if Puerto Rico, a territory of the U.S., will receive the same assistance as Texas and Florida received, following Harvey and Irma.

In the wake of Hurricane Irma, preliminary damage estimates across the state of Florida may exceed $45 billion based on various economists reviewing the storm’s impact. Irma has already prompted new state mandates for all nursing homes to quickly install power generators, which was a deadly issue during the hurricane.

Property taxes are a vital source of state revenue for both Texas and Florida, where such funds pay for schools, roads, and other public services. Texas and Florida are 2 of 7 states that have no state income tax, creating a greater reliance on property taxes. State income tax can act as a buffer against a fall in sales tax revenues with states that impose it.

Florida state revenues could decline as residents spend cash on insurance deductibles and out of pocket damage expenses. About 76% of the state’s revenues come directly from sales tax. Tourists visiting Florida make up 13% of the state’s sales tax revenue, with nearly 113 million tourists visiting the state this past year. Tourism is expected to languish for sometime.

Much of the damage in both Texas and Florida was not due to direct hurricane damage, but from flooding. This complicates the issue since flooding is not covered by most homeowners insurance policies, thus leaving the financial burden to homeowners.

Federal Reserve member William Dudley said that the devastation caused by Hurricanes Harvey and Irma could boost U.S. economic growth in 2018 as rebuilding of infrastructure efforts get underway. The Fed also mentioned that the storms were unlikely to prevent the Fed from its rising rate trajectory or from reducing its $4.5 trillion balance sheet.

Sources: Federal Reserve, Texas.gov, Florida.gov, IRS