Vorisek Financial Weekly Update for December 20, 2017

WMR Logo.jpg

Good morning!

Tax Reform 2017 has not crossed the goal line yet, but after Friday’s (12/15/17) release by the Conference Committee of its 503-page document, it likely is in the “red zone.”  Highlights from the final tax bill include: a top individual tax rate of 37%, down from 39.6% today; a near doubling of the standard deduction, up to $24,000 for married filers; the deductibility of new mortgage interest expense is limited to combined debt of no more than $750,000 on a first and second home; a $10,000 limit on the deduction of state and local taxes, applicable to both individuals and married filers; a doubling of the amount that can be passed estate tax free to $11.2 million per decedent; a top corporate tax rate of 21% effective in 2018, down from 35% today (source: BTN Research).     

The bill’s release included an estimate from the Joint Committee on Taxation that the new law would add $1.456 trillion to our nation’s deficit over the next decade, just inside the $1.5 trillion ceiling imposed by Congress in October.  The full Senate is expected to vote first on the final bill on Tuesday (12/19/17), followed hours later by the House vote.  Barring a last-minute roadblock that could occur, President Donald Trump would sign the legislation on Wednesday, just 5 days before Christmas (source: BTN Research).            

Janet Yellen’s 4-year term as Fed Chair has just 1 meeting remaining following last week’s conference that resulted in the 3rd rate hike of 2017 and 5th such bump since the Fed began tightening 2 years ago.  Post meeting notes forecast 3 more 0.25% rate hikes in 2018.  Since the first-rate increase took place in December 2015, the S&P 500 index has gained +34.6% on a total return basis (source: BTN Research).     

Notable Numbers for the Year:

1.     TAKES TIME - From President Ronald Reagan’s State of the Union challenge on 1/25/84 “to simplify the entire tax code so all taxpayers are treated more fairly,” it took 2 ¾ years until the Tax Reform Act of 1986 was signed into law by Reagan on 10/22/86 (source: New York Times).  2/13/17        

2.     A LOT IN A FEW - Of the 524 bank failures that have occurred in the USA during the 10 years ending 6/30/17, more than half (51%) have occurred in the 4 states of Georgia, Florida, Illinois and California.  9 US states had zero bank failures in the last 10 years (source: FDIC).  8/07/17

3.     GROWING - The US economy has been growing for the last 99 months (i.e., no recession), an expansion exceeded in length only 2 times since 1900 (source: National Bureau of Economic Research).  10/16/17 

4.     SHIFT IN TYPE - In 1975, defined contribution plans outnumbered defined benefit plans 2-to-1, i.e., 207,700 to 103,300.  40 years later in 2015, defined contribution plans outnumbered defined benefit plans 14-to-1, i.e., 648,300 to 45,600 (source: Government Accountability Office).  10/30/17 

This e-mail may include forward-looking statements that are subject to certain risks and uncertainties.  Actual results, performance, or achievements may differ materially from those expressed or implied.  The investor should note that investments in stocks of small companies involve additional risks.  Smaller companies typically have a higher risk of failure, and are not as well established as larger blue-chip companies.  Historically, smaller-company stocks have experienced a greater degree of market volatility than the overall market average. Indexes are unmanaged and investors are not able to invest directly into any index.

This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient,  you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line.  By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.

If you do not want to receive further editions of this weekly newsletter, please contact me at 614-431-4328 or e-mail me at tvorisek@vorfin.com or write me at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085.  Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC.  Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.