REED BETWEEN
THE LINES
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REED BETWEEN
THE LINES
Market Updates & Insights
Subscribe
REED BETWEEN
THE LINES
Market Updates & Insights
Subscribe
REED BETWEEN
THE LINES
Market Updates & Insights
Subscribe

Reed Between the Lines

The Latest:

Santa Claus’s Turbulent Ride?

Market Update for December 06, 2017

FISCAL BRINKMANSHIP IS ON THE RISE

You thought fiscal brinksmanship was all over? Guess again. It’s actually on the rise.

Congress needs to address budget issues by the end of this week, or the government will shut down this Saturday (December 9th). We do not anticipate such an outcome; odds are Congress will kick the can down the road with extensions (i.e., the continuance of a continuing resolution (CR)).

We have two historical trends working against each other. Normally, we see a Santa Claus rally in December. However, we also head down a rocky road when the government nears a fiscal cliff, like needing to pass a budget in order to not shut down the government. Time will tell just how much turbulence Santa Claus will experience in the days and weeks ahead.

There are a few important points highlighted in a recent Bloomberg article about the proposed tax plan and Congress’ response. Many of these items are on the minds of our clients, so please consider.

  • Debt Levels - Noise is elevating around the tax plan’s increase to debt levels.
  • The Approval Process - The House and Senate versions of the tax plan need to go through reconciliation (Congress Conference Committee), then the House and Senate will each have to approve it before it goes to the President for signing. This is all expected to occur in the next few weeks.
  • Healthcare - Regarding healthcare, moderate Republicans like Susan Collins (R-Maine) voted for the tax plan based on promises to repair the Affordable Care Act. Being that the tax proposal eliminates the insurance mandate, there has been speculation that this would allow millions to drop out of the insurance pools, thereby wrecking the system as costs would increase more for those that remain. It will be very interesting to see what assurances Ms. Collins (and others) have bargained for and what actually occurs…allegedly by year-end.
  • The Public - According to public polling, the current tax plan has a 29% approval rating.
Exhibit #1
 
 

Reed-ing Between the Lines

It is easy to get caught up in the politics of policy development. Many politicians and interest groups will make claims to increase their leverage. While it is customary for markets to get rocky during times like these, the odds are still in place that corporate taxes will be decreased, that the government will not shut down, and that equity markets may continue to rise. We advocate staying the course. Jumping off Santa’s sleigh at this time, begs the question of when to get back on.

 
 
Santa Claus’s Turbulent Ride?

As politicians jockey for a final tax package and a potential government shut-down looms, will the traditional December Santa Claus rally for stocks get entangled?
RBTL via CartoonStock.com
 
 

ON THE LIGHTER SIDE

One of my favorite authors is Malcolm Gladwell because of his deep dive on issues. An underlying thread in many of his observations is that we all have subconscious biases that form our views and actions. This is something that psychologists can help us understand. This idea also relates to the pitfalls of behavioral finance, which we counsel clients on as we make investment decisions. The mind is powerful, working in ways we don’t always realize. I was reminded of this in a BBC news article that came across my desk today. Please read this article to see how your eyes, ears and mind responds. What do you hear? The results may shock you.


Happy Holidays!


 

Tags:  Congress, Debt Levels, December, 2017, Equity Markets, Government Shutdown, Happy Holidays, Healthcare, Market Commentary, Market Trends, News and Markets, Proposed Tax Plan, Reed Between the Lines, Santa Claus Rally, Tax Reform

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“Reed Between the Lines”
Reed Between the Lines

The most basic meaning of the idiom “read between the lines” is “to perceive or detect a hidden meaning.” Its etymology is linked to an early method of transmitting code that hid secret information in invisible ink between the lines of a document. The recipient would then learn the information by reading between the lines.

“Reed Between the Lines” is a periodic market update and thought provoking commentary that digs at the deeper meaning behind wealth management and market behavior.

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