Investment Commentary – October 24, 2018

Year to Date Market Indices as of Market Close October 24, 2018
Dow 24,583 (-0.55%)
S&P 2,656 (-0.65%)
NASDAQ 7,108 (2.97%)
Gold $1,235 (-7.05%)
OIL $66.29 (14.75%)
Barclay Bond Aggregate (-2.30%)
Fed Funds Rate 2.25% (last increase was 9/26/18)

JP Morgan Thought of the week

The UK labor market appears to be on relatively firm footing. Last week, we saw the unemployment rate for August remain at a healthy 4.0%, while wage growth (excluding bonuses) over the year picked up to 3.1% – the highest since early 2009. This suggests that the domestic economy is becoming more robust, despite the current uncertainty surrounding the Brexit negotiations between the UK and the rest of the European Union. This increase in wage growth is good news for the consumer and could boost the growth outlook for the UK. If the UK agrees a deal that constitutes a relatively “soft Brexit”, then we could see the Bank of England raise rates faster than the market currently expects.

The Best Way To Handle Required Minimum Distributions

The Tax Cuts and Jobs Act should change the way many people make charitable contributions. Few people will be itemizing expenses because of the doubling of the standard deduction and reduction of deductions allowed. That means fewer charitable contributions will be deductible and the tax benefits from making gifts will be lower.

That’s actually good news for many people. Writing a check is not the most efficient way to give to charity. One of the most efficient ways to give is available only to those ages 70½ and older, and the changes should cause many to gravitate toward what for several years has been one of the smartest ways to give.

It’s known as the qualified charitable contribution (QCD). It was in and out of the tax code as a temporary provisions starting in 2006. But Congress made it permanent in the Protecting Americans from Tax Hikes Act of 2015. Under the QCD you make a charitable contribution directly from your IRA.

Around the web

Earnings uplift: Quarterly earnings season is entering its busiest stretch, and results of the biggest U.S. companies to date have largely exceeded expectations. With more than 15% of the companies in the S&P 500 Index having reported third-quarter numbers so far, 83% have reported net income that topped analysts’ forecasts, according to FactSet.

Steady Fed: Wednesday’s release of minutes from the latest meeting of the U.S. Federal Reserve Board shows that members expect to continue gradually lifting interest rates if the economy keeps growing at its current pace and inflation remains under control. President Trump has recently criticized Fed policymakers, saying they’ve been raising rates too quickly.

GDP ahead: The U.S. government’s initial estimate of third-quarter GDP is expected to be one of the week’s most closely watched economic reports. Economists expect that Friday’s report will show a slowdown in growth relative to the second quarter’s solid 4.2% annual rate.

Other Notable Indices (YTD)
Russell 2000 (small caps) 0.38
EAFE International -9.59
Emerging Markets -17.08
Shiller Annuity Index 5.31

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.