Calton & Associates Inc.

Scott Coffee

Registered Representative

10205 Westheimer, Suite 500

Houston Tx, 77042

832.866.9476

www.calton.com

Rates, Tariffs and the Market.
Market Update
(all values as of 08.31.2020)

Stock Indices:

Dow Jones 28,430
S&P 500 3,500
Nasdaq 11,775

Bond Sector Yields:

2 Yr Treasury 0.14%
10 Yr Treasury 0.72%
10 Yr Municipal 0.81%
High Yield 5.38%

Commodity Prices:

Gold 1,973
Silver 28.43
Oil (WTI) 42.82

Currencies:

Dollar / Euro 1.19
Dollar / Pound 1.33
Yen / Dollar 105.37
Dollar / Canadian 0.76
 

 

As expected by economists and the markets, the Federal Reserve raised its short-term key policy rate, the federal funds rate, by 25 basis points to 1.75% – 2.00%. 

Reports from various Federal Reserve district banks reveal that a robust economy, growing tariff pressures, rising wage

Household wealth reached $100 trillion for the first time ever, as reported by the Fed. The $100 trillion mark is double of where household wealth was at the lows of the financial crisis in 2009.

The Supreme Court ruled in June that public sector unions cannot charge fees to government employees who do not support the union and who do not want to pay. The decision is expected to further weaken the influence of unions, which have been in a decades-long decline.

Emerging market currencies faltered against the U.S. dollar as global trade tensions and rising rates in the U.S. added pressure on emerging economies. China’s stock market and currency are both off since tariff contentions began, with the Shanghai Composite Index off 13.9% for the year and the Chinese currency off 3.5% against the U.S.dollar in June alone.

Volatility in the second quarter didn’t deter equity indices, as the S&P 500 was up 2.9% and the Dow Jones was up 0.7%. The tech heavy Nasdaq advanced 6.3% for the quarter, driven by buyers seeking shelter from the imposed tariffs. A stronger U.S. dollar is starting to weigh on the technology sector as earnings may become affected.

Sources: U.S. Commerce Dept., Federal Reserve, U.S. Treasury, https://www.supremecourt.gov, Bloomberg, S&P,Dow Jones, Nasdaq Macro 

 
The Downside of Fixed Income in Your 401(k)

Bonds

These terms apply to the holder of an individual bond, NOT  the holder of a bond Mutual Fund. Most 401(k) accounts only allow you to buy bond Mutual Funds, not individual Bonds. 

Bonds vs. Bond Funds

Bonds are inversely related to interest rates. When interest rates go up the value of existing bonds go down. The reason for this is that the bonds issued at the new higher interest rates are more valuable due to their higher coupon.

 

With a Bond Mutual Fund there is no fixed maturity, and when interest rates move up, as they have been doing this year, there is a high probability that the value of your shares will go down in value.  Individual bonds provide permanence and certainty, a bond mutual fund provides neither.

 

Bond Basics

 

 

 
Moving Your Retirement Assets

 

Rollovers

In-Service Withdrawals

 
By the Numbers...

What Most Tax Payers Earn -Tax Fact

With tax cuts and IRS simplification proposals on the agenda, tax revenue statistics are focal points as certain taxpayers in various age and income groups may or may not see beneficial changes.

The Internal Revenue Service (IRS) keeps careful detail on tax revenue and how it is broken down. Tax revenue data is based on Adjusted Gross Income (AGI) which is compiled and revised during every tax season. 
Of the more than 134 million tax returns filed for tax year 2016, the bulk of returns fell between the $30,000 to $200,000 income ran

ge. The median income group of taxpayers earning $50,000 to $75,000 comprised the largest segment of tax payers nationwide with over 18 million filers. The second largest group includes those earning between $100,000 to $200,000, with nearly 16 million filers in 2016.

Source: IRS

 

Social Security Taps Trust Fund 

The Social Security program’s cost will exceed its income this year for the first time since 1982, forcing the program to access a $3 trillion trust fund to cover future benefits. Social Security is funded by two trust funds, one for retiree benefits and another for disability benefits.

The latest annual report issued by the trustees of Social Security and Medicare revealed that by 2034, the program’s trust fund will be depleted. Depletion means that Social Security recipients will no longer be receiving full scheduled benefits. Recipients would receive about three-quarters of their scheduled benefits after 2034. Congress can eventually act to fortify the program’s finances, but it may be years before it actually takes effect