I am the founder and Chief Investment Officer of Trader Wealth Management, LLC. Most of my career was spent managing portfolio risk at the Chicago Board of Trade, successfully navigating the markets to generate profits through all sorts of crisis, wars and economic turmoil. This experience convinced me there was a better way to invest, so I launched Trader Wealth Management to use my expertise in risk management to grow and preserve my clients’ and my own wealth. I invest alongside my clients,...
Now that the Supreme Court has approved the Affordable Care Act, all of the unusual provisions which everyone forgot to read will soon become reality. According to the Wall Street Journal, a new tax that affects the net investment income of joint filers with an adjusted gross income of more than $250,000, or $200,000 for single filers, will be applied to long term capital gains and dividends. The rate will jump from 15 percent to 18.8 percent if Congress approves an extension of the Bush tax cuts. If not, the rate will rise to 23.8 percent for capital gains and 43.4 percent for dividends. These increases will not be good for dividend paying stocks. Experts indicate that investors may begin pursuing municipal bonds which are not included in adjusted gross income and whose dividends are not taxable.
China’s PMI hits 7 month low
Reuters is reporting that factory downturn in China worsened in June as the Purchasing Manager’s Index (PMI) hit a seven month low. The Index measures manufacturing activity. A measure of 50 or above indicates an economy is growing while below 50 means it is contracting. The official Chinese index fell to 50.2 in June, above forecasts of 49.8 but below May’s 50.4. This is the worst reading since November and a sharp fall in export orders and shrinking new orders suggests the global downturn is impacting China.
Stocks stronger at mid-year than expected
Despite a volatile first half, 2012 is turning out better for investors than expected. According to the Associated Press, stocks are up 8 percent mid-year despite the European crisis, the Facebook snafu, and a slowdown in China. Experts indicate that stocks in the US are up compared to other markets because gasoline prices have dropped and homes are up modestly in value. It’s also believed that P/E ratios for many companies indicate that stocks are cheap. But many factors may continue to create volatility in the markets. The Dow was up 277 points on Friday, closing at 12,880. Asian stocks closed up on Monday. European markets are also positive.
Eurozone unemployment rate hits new record in May
The Eurozone unemployment rate hit 11.1 percent in May, up from 11 percent the month before. This is the highest unemployment rate since the Eurozone was formed in 1999. According to the Associated Press, 17.6 million people in Europe were out of work in May. This is 1.8 million higher than a year ago. Spain has the highest unemployment rate at 24.6 percent and Germany the lowest at 5.6 percent.
Barclays chairman forced to resign
Last week the UK and US regulators fined Barclays 290 million pounds for trying to manipulate the inter-bank lending or Libor rate. Over the weekend, Marcus Agius, Barclay’s chairman resigned, according to the Financial Times. Approximately 20 banking institutions on three continents are being investigated in connection with the inter bank lending rates.
Americans spending less on Fourth of July
In a survey released by Visa, one-fifth of Americans said they don’t plan on celebrating the Fourth of July and those who do plan to celebrate will spend less. USA Today reports that half of those celebrating will watch or light fireworks and 68 percent will host or attend a barbecue. Midwesterners plan to spend the most at $211 and those in the Northeast will spend the least at $171. Happy grilling.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine Balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.