The H Group Blog

Investment and Financial Planning news from some of the best in the business.

Weekly Review - September 29, 2014

Guest Post - Tuesday, September 30, 2014

Summary

  • Economic news was generally mixed on the week, with housing providing a slightly more optimistic tone. GDP for the 2nd quarter was revised a bit higher as well, casting a more positive light on the prior period.
  • Markets experienced a bit more volatility this week, ending in the negative, with U.S. blue chips the best of a bad bunch. Bonds eked out a small return on slightly lower yields, as the broader market news was strangely overshadowed late in the week by Bill Gross' move from PIMCO to Janus.
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Question of the Week - September 29, 2014

Guest Post - Monday, September 29, 2014

What's a corporate 'tax inversion?'

As implied by the name, tax inversions describe a tax/legal technique used by a handful of U.S. corporations to reduce their income taxes and/or increase flexibility in tapping into untaxed foreign earnings. The U.S. has among the highest corporate tax rates in the world, so this technique has become increasingly popular in the last several years, as has the pressure on the administration and Congress to act—both to stem the tide of inversions, as well as revamp the corporate tax code (and reduce tax rates) to improve global competitiveness. The President has even gone as far as to deem such tax-driven inversion transactions 'unpatriotic.' Companies do what they're economically incented to do in order to maximize profits (their reason for existence), and every provision of the tax code offers side effects, of which this is one.

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Weekly Review - September 22, 2014

Guest Post - Monday, September 22, 2014

Summary

  • Aside from the FOMC meeting–where language was scrutinized but little actually changed–the economic week was mixed. Several regional economic indexes came in with positive results, inflation was virtually unchanged and housing results were a bit disappointing relative to expectations.
  • Equity markets were higher in the U.S. with a lack of hawkish surprise from the Fed and a few other geopolitical risks (notably Scotland) easing, and outperformed foreign markets. Bonds were slightly higher on rates that initially rose and then retreated.
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Question of the Week - September 22, 2014

Guest Post - Monday, September 22, 2014

Should I buy into the hype of IPO stocks like Alibaba? How can I put the risks of an IPO into context for clients?

There was a good deal of hype around Alibaba, the 2nd largest IPO in history, raising nearly $22 billion, which pegged the total value of the company at $168 billion. The gain of over +30% in its first trading day may say something about the company's fundamental prospects, a mispricing of the offering itself or the underlying levels of investor excitement–only time will tell which.

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Weekly Review - September 15, 2014

Guest Post - Monday, September 15, 2014

Summary

  • In a slower week for economic data, results came in tempered to positive (retail sales being a more important release), but included no major surprises. Geopolitically, the highlight originated from a developed market this time, as polls showed a stronger possibility of Scotland's secession from the United Kingdom before this coming week's vote.
  • Equity and fixed income markets were both lower, with little extreme news to move the needle in either direction, but an upcoming Fed meeting and concerns over when rates may be increased have taken the forefront again.
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Question of the Week - September 15, 2014

Guest Post - Monday, September 15, 2014

What's happening in Scotland?

This is an unusual wildcard to include, as it was long considered to be a very low-probability event, but as time's gone on, Scotland's referendum to secede from the United Kingdom looks increasingly popular. According to the most recent polls, it runs the potential of passing—noted by a quick move from ‘yes' support of 25% to near 50%, with a critical share remaining undecided. This has come up as an issue from nationalist elements in Scotland for several decades, but wasn't taken seriously as an option, as the formal union of Scotland and England has lasted since 1707. Even if this doesn't pass, however, British leaders have offered and are likely to offer broader ‘home rule' powers to Scotland to stem this nationalistic tide.

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Weekly Review - September 8, 2014

Guest Post - Monday, September 08, 2014

Summary

  • Economic data for the week came in fairly strong, highlighted by the ISM manufacturing report, which is closely watched by markets. However, the August employment situation report for August was a bit disappointing.
  • U.S. stocks gained on decent economic data and eased geopolitical tensions; bonds lagged on higher rates.
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Weekly Review - September 2, 2014

Guest Post - Tuesday, September 02, 2014

Summary

  • A busy week of economic data releases boosted by an upward revised Q2 real GDP growth rate, a double-digit monthly gain of durable goods orders in July and better than expected consumer confidence going into the back-to-school shopping season.
  • Mixed housing sales data in July combined with more modest price appreciation and higher housing inventory will likely boost future sales.
  • Slightly better results for the recent week's claim numbers; modest personal income growth in July, and smaller spending helped improve savings rate.
  • U.S. equity markets crossed a historical milestone: The S&P 500 index closed above the 2,000 mark for the first time, fueled by strong domestic economic data and a new M&A transaction between Burger King and Canada-based Tim Horton's. This was despite the escalating conflict between Ukraine and Russia and investors' concerns on deflation and low growth in the euro-zone.
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To convert or not to convert

Scott Maxwell - Thursday, August 28, 2014

A popular and sensible strategy that folks use to minimize their tax burden over a lifetime is the Roth conversion. Many of you realize that IRA's come in two flavors, traditional and Roth. The traditional IRA allows one to invest up to 6,500 per year (in 2014, these limits are adjusted over time) and get a tax deduction for their contribution. The Roth has very similar contribution limits but allows for no current tax deduction. Instead, the earnings in a Roth are tax-deferred and under the right circumstances those earnings can be withdrawn tax free! There are lots and lots of rules about the tax deductibility of traditional IRA contributions and the conditions needed to obtain tax free withdrawals from a Roth, our purpose here today isn't to cover those but rather to think a bit about Roth conversions. Read Entire Article Here

Weekly Review - August 25, 2014

Guest Post - Monday, August 25, 2014

Summary

  • Economic data points from the week were quite good, and showed a continued rebound of conditions. Inflation, as measured by CPI at least, rose at a tempered pace we've come to expect.
  • Equities and other risk assets were higher, with positive data economic data noted above and lack of geopolitical disruptions; bonds sagged on higher interest rates as a result of the same.
 Read Entire Article Here

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