April 2021

Weekly Market Notes – April 26, 2021

April 26, 2021jpmccarthyLeave a comment

For the Week of April 26, 2021

The Markets

Stocks rebounded Friday after dropping Thursday following reports President Biden planned to propose doubling capital gains taxes on individuals earning $1 million or more. But the S&P ended Friday close to its record high amid expectations of a strong earnings report this week. For the week, the Dow fell 0.42 percent to close at 34,043.49. The S&P lost 0.11 percent to finish at 4,180.17, and the NASDAQ dropped 0.25 percent to end at 14,016.81.

Returns Through 4/23/21	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	-0.42	11.86	47.87	14.26	16.30
NASDAQ Composite (TR)	-0.25	8.96	66.30	26.51	24.65
S&P 500 (TR)	-0.11	11.80	51.92	18.33	17.12
Barclays US Agg Bond (TR)	0.13	-2.43	-0.05	5.32	3.31
MSCI EAFE (TR)	-0.41	7.41	45.96	6.58	8.94

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Thirty-Something — The average age of a first-time U.S. homebuyer in 2020 was 36.1 years old (source: New York Fed Consumer Credit Panel, BTN Research).

Need a Charge? — The American Jobs Plan, a $2.3 trillion infrastructure plan proposed by the Biden White House on March 31, includes $174 billion (8 percent of the total plan) to be invested in the domestic electric vehicle market. Funds would be used to build and maintain 500,000 charging stations nationwide (source: Biden White House, BTN Research).

Money In, a Lot More Out — Halfway through fiscal year 2021, i.e., the 6 months ending March 31, 2021, the U.S. government has taken in $1.7 trillion in taxes and spent $3.4 trillion, resulting in a 2021 fiscal year deficit to date of $1.7 trillion with 6 months still to go in the fiscal year. Last year’s fiscal year 2020 budget deficit of $3.1 trillion was our nation’s all-time record (source: Treasury Department, BTN Research).

WEEKLY FOCUS – Without Umbrella Coverage, Your Assets Could Be at Risk

You’ve worked hard to build up your nest egg. But what would happen if you were involved in an accident, which left you liable for an amount above the limits of your homeowners or auto insurance? All your hard-earned assets could be gone over night.

To protect your savings, you may want to consider adding umbrella insurance to your homeowners and auto coverage. Also known as excess personal liability insurance, umbrella insurance provides an extra layer of security, which will pay for a judgment or settlement if you’re found responsible and cover your defense expenses even if you’re not at fault.

If you own property or items that could cause an injury to someone else, such as a pool, a dog, a trampoline, a boat, or a snowmobile, you should consider purchasing umbrella insurance. If you’re a landlord, serve on the board of a nonprofit, coach kids’ sports, or volunteer, you could also benefit from the protection offered by an umbrella policy.

Umbrella insurance is typically sold in increments of $1 million. The price of a policy will vary by risk and where you live. Because the insurance only pays if a claim exceeds the liability limit of your homeowners or auto insurance, coverage is generally affordable. You can expect to pay $150 to $300 per year for $1 million of coverage.

For an additional $100 to $200, you can add excess uninsured or underinsured motorist coverage, which covers you if you’re injured by another driver who doesn’t have enough coverage. For about $1,000 a year, you can tack on an endorsement that will provide additional protection from lawsuits if you serve as an officer or volunteer on a nonprofit board.

To keep premiums low, it’s best to purchase your umbrella insurance from the same provider you purchase your home and auto insurance from. It’s common for an insurance carrier to require you to have $250,000 in auto insurance and $300,000 of homeowners coverage before you can purchase an umbrella plan. (Make sure you don’t have a coverage gap between your original and umbrella policies.)

If you would like to learn more about umbrella insurance and other ways you can protect your finances, call us today to schedule an appointment.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2021. All rights reserved. Securities offered through Securities America, Inc., broker-dealer and member of FINRA and SIPC. Investment advisory services offered through Securities America Advisors, Inc. and/or Arbor Point Advisors LLC, registered investment advisers. Securities America, Inc., Securities America Advisors, Inc., and Arbor Point Advisors LLC are separately owned and other entities and/or marketing names, products or services referenced here are independent. Securities America • 12325 Port Grace Blvd. • La Vista, NE 68128 • 800-747-6111 • securitiesamerica.com SAII# 3564999.1

Weekly Market Notes – April 12, 2021

April 12, 2021jpmccarthyLeave a comment

For the Week of April 12, 2021

THE MARKETS

Despite an unexpected jump in jobless claims, stocks rose Friday amid the accelerating vaccine rollout and reopening optimism. Both the Dow and the S&P hit record closing highs. For the week, the Dow rose 1.99 percent to close at 33,800.60. The S&P gained 2.76 percent to finish at 4,128.80, and the NASDAQ climbed 3.13 percent to end the week at 13,900.19.

Returns Through 4/09/21	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	1.99	11.02	45.57	14.73	16.70
NASDAQ Composite (TR)	3.13	8.05	71.82	27.23	24.73
S&P 500 (TR)	2.76	10.39	50.50	18.70	17.33
Barclays US Agg Bond (TR)	0.40	-2.90	0.37	4.84	3.14
MSCI EAFE (TR)	1.80	6.09	43.85	6.55	9.72

They’re Buying Bonds — The Fed is buying $120 billion of bonds each month – $80 billion of Treasury debt and $40 billion of mortgage-backed securities. On March 31, the Fed confirmed the purchases will continue “until substantial further progress has been made toward the committee’s maximum employment and price stability goals.” (source: Federal Reserve, BTN Research).

Lowest Paid, Hardest Hit — 82 percent of the net job losses in the United States in 2020 were suffered by workers in the bottom 25 percent of wage earners (source: Economic Policy Institute, BTN Research).

Wealthiest — The top 10 percent of U.S. households (as measured by net worth) own 70 percent of all assets nationwide as of Dec. 31, 2020, i.e., $85.6 trillion out of $122.9 trillion. The bottom 50 percent of U.S. households own just 2 percent of all assets as of Dec. 31, 2020, i.e., $2.5 trillion out of $122.9 trillion (source: Federal Reserve, BTN Research).

WEEKY FOCUS – What You May Not Know About Estate Taxes

You have worked hard, managed your finances well, and invested wisely to protect your future and care for your family. It’s crucial not to lessen your vigilance when it comes to your estate. Unfortunately, the Tax Cuts and Jobs Act (TCJA) passed in 2017 has lulled some individuals into a false sense of security.

In 2021, a person’s estate is exempt from federal taxes as long as it is under $11.7 million. (The amount over the exemption can be taxed at up to 40 percent.) But the current exemption, which doubled under TCJA, is set to expire in 2026 barring further legislation. And the Biden administration has already proposed cutting much of the estate tax exemption.

Even estates well within the federal exemption may still be impacted by state death taxes. In 2021, Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii, and Washington, D.C., all levy estate taxes on estates above $1 to $5.9 million. Among the list, the highest estate tax rates vary from 12 to 20 percent.

Another six states levy an inheritance tax: Nebraska, Iowa, Kentucky, Pennsylvania, Maryland, and New Jersey. The states’ highest inheritance tax rates vary from 10 percent (Maryland) to 18 percent (Nebraska). All six states exempt spouses from paying inheritance tax; some extend at least a partial exemption to immediate relatives.

Although some states reduced or eliminated estate tax burdens to retain wealthy residents over the past decade, pandemic-related budget woes may reverse that trend. For example, the District of Columbia reduced its estate exemption from $5.67 million in 2020 to $4 million in 2021. And a taxable $10 million estate could owe nearly $1 million in estate tax to D.C.

There may be ways to reduce an estate’s taxes or fees: various types of trusts; transferring assets into a Limited Liability Company or Family Limited Partnership; gifting assets; putting money into a life insurance policy; even moving to another state. Estate planning can be complex, and it’s crucial to get it right. We would be happy to work with you, your attorney and tax professional to find solutions for your situation. We do not provide tax or legal advice; please consult an accountant or attorney for more information.

*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2021. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3543659.1

April 2021 Monthly Outlook – Reasonable Man

April 5, 2021jpmccarthyLeave a comment

“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself.”

The first quarter of 2021 was a positive one for the equity markets, while the fixed income markets saw declines due to a spike in interest rates. Like an ocean, which can look relatively calm on the surface but with significant undercurrents happening below, within the equity market, we saw a sizeable shift from “stay at home” stocks, which drove the market in 2020, into more “opening up” stocks. The same was true in fixed income, where highly rated government and corporate bonds declined more than lower quality and floating rate bonds.

We saw similar trends during late 2020 and early 2021, only to see them quickly reverse when new covid-induced lockdowns slowed the re-opening process. With vaccinations rising rapidly and warmer weather ahead, we are now more confident the trends under the surface will be more sustainable. As such, we have been adjusting portfolios accordingly. One potential headwind is the risk of rising inflation. We are already seeing the bond market price in higher inflation via the rise in interest rates. Measures of prices on goods is clearly showing higher prices in a number of categories. There is a great deal of pent up demand in the economy, with consumers flush with cash from government stimulus payments and a strong desire to get out of the house. While the Federal Reserve has indicated it is not worried about inflation at the moment, if demand-driven inflation proves to be persistently strong, the Fed timing for policy liftoff may potentially be pulled forward. Much of the recovery in the financial markets since the Covid low last March has been driven by an extremely accommodative monetary policy by the FED. The market may not react well if the FED has to start to drain the “punch bowl”.

Source: Goldman Sachs GIR, Commerce Dept, Labor Dept. As of Mar 24, 2021 Relative to the December meeting, more Fed committee members expected higher rates by 2023 YE.

Looking ahead, the market has clearly priced in a high degree of reopening, as reflected in rotation from Growth into Value and Cyclical stocks and sectors, as well as interest rates and inflation expectations. Earnings season will kick off in a few weeks and all eyes will be on company commentary for the summer months as a true gauge of demand and whether the market has re-priced economically sensitive themes too aggressively or too conservatively. Stay tuned.

I consider myself a reasonable man and will therefore adapt according to what the world as we move forward.

P.S. Thank you for your referrals. They are making a big difference in my practice. Feel free to share my name with your friends on Facebook or LinkedIn.

I want to extend a special thanks to clients & colleagues who have recently referred us to family and friends: Christine H, Donna K, Eileen M, Peter B and Brian L

April Calendar of Events (comments and additions for future months are always welcome)

April is National Autism Awareness month. Let’s all get educated on this issue and works towards acceptance and inclusion of people dealing with autism.

April 4^th Easter Sunday – Have a blessed and Holy Easter

April 10^th Christian’s wife Maecy birthday

April 12 & 13^th We adopted our 4 legged children Coco (2010) and Buddy (2013). Sadly Buddy passed on 4/13/2019

April 15^th Tax Day. Remember to make those IRA or Roth contributions. NOTE: Tax day extended to May 17, 2021

April 22^nd Earth Day – let’s all recycle, turn out lights when we leave rooms, and do all we can for our environment

April 25^th My daughter Satya’s birthday

Sources: Nottingham Advisors, Goldman Sachs, Federal Reserve Board

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful. Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice. You should discuss any tax or legal matter with the appropriate professional.