We're In No Man's Land And This Is What Investors Should Expect (Gluskin Sheff)
David Rosenberg writes that as long as the U.S. economy doesn't reverse or we don't have outright deflation, the Fed's monthly asset purchase program should end in another 10 months and by next summer it should begin on "the long path of normalizing rates."
"We are in no-man's land when we embark on a long phase of being on hold in terms of steady monetary policy ahead of the eventual rate hikes," he writes. So, what do we typically see in this investing time frame.
1. "The average gain in the S&P 50 is 6%. Median advance was 1.5%. Small price appreciation but the market doesn't shift course - just the slope of the line changes."
2. "Technology, industrials, consumer discretionary, and materials all outperform - the cyclicals. Energy is close to being a market performer."
3. But the rate-sensitives and defensives lag - utilities, consumer staples, telecom and healthcare."
4. "Of the rate-oriented sectors, financials are typically the best performer but still lag the overall market."
5. "Baa corporate bond spreads tend to tighten to 20 basis points so credit arbitrage strategies have a history of being a more appropriate fixed-income strategy than being naked long the Treasury market."
Regular Speed Investors Have Bigger Concerns Than A Rigged Stock Market (Barron's)
Speaking on 60 Minutes, Michael Lewis said "the stock market is rigged," but that doesn't mean that investors should get "too caught up in the supposed disadvantages of operating in a so-called rigged market," writes John Kimelman at Barron's. "For such investors, the biggest concerns right now are not the time advantages possessed by front-running quants but rather the more everyday issues related to valuations, interest rates, and earnings growth."
Advisors Need To Consider These Key Things When Working With Expat Clients (The Wall Street Journal)
Working with expatriate clients can be tricky and advisors need to get them to focus on issues that are in their control but that they ignore, like estate planning and income tax compliance, writes Bryan Hancock of Timberchase Financial in a new WSJ column. "If I'm an American married to a citizen of another country and we have assets in two or three countries, I have a very complex situation," he writes. "I may have created a situation where my heirs are going to have a difficult time collecting all of my assets. It's important to have estate planning documents in both countries that agree with each other." He says advisors need to be just as mindful of tax returns and that clients should have emergency repatriation plans in place.
The Most Bizarre Tax Deductions You've Heard Of (WealthManagement.com)
Meisa Bonelli, president of Millennial Ventures and managing partner of Millennial Tax highlights five of the strangest tax deductions in a new WealthManagement.com piece.
1. Just like roofers can deduct the price of their tools, exotic dancers can deduct the price of their lingerie as long as what they're doing isn't illegal.
2. A New York CPA got a write off on $10,000 for having air conditioner since he had a "doctor's note stating his profuse sweating was a health hazard due to the constant loss of fluids and threat of dehydration."
3. "Professional blood donor Margaret Green set a precedent for a special diet to be allowed as a legitimate IRS deductible expense."
4. Making bail can be tax deductible if its done during the week when you're out with colleagues. Though, Bonelli warns that one business owner's bail was not deductible "because justifiable penalties for wrongdoing are not tax deductible."
Retail Investors Are Gobbling Up The Platinum Coin Market (Reuters)
U.S. retail investors are buying up the government's new platinum coins, reports Frank Tang at Reuters. In the first three weeks, the U.S. Mint sold about 10,000 ounces of the America Eagle platinum coins. This is said to be driven by pent-up demand and concerns about South African supply. "The outright platinum market has actually been performing better than gold and silver, and that has helped attract some investors to the physical platinum market," Roy Friedman, executive vice president at Dillon Gage told Reuters.