Market Commentary, 12/07/17

Last week both the S&P 500 and the Dow recorded weekly gains, with the Dow rising nearly 3.0%, topping the 24,000-point threshold for the first time. However, it was a rough week for information technology stocks, and the NASDAQ Composite was slightly negative.

All three indexes are relatively flat on the week.

Tax Bill Saga

A preliminary version of long-awaited tax bill has now passed the House and another has passed the Senate. Now congressional leaders have appointed conferees, a group of people charged with hashing out the differences in the House and Senate tax bills. Some of the larger differences in the current plans include:

  • The House offers permanent personal tax rates, while the Senate’s version expires in 2025. The corporate rate, meanwhile, would be permanent in both bills.
  • The House bill will start the 20% corporate rate in 2018, the Senate begins in 2019.
  • The Senate bill repeals Obamacare’s individual mandate.
  • Both bills double the exemption to $11 million, but only the House bill entirely repeals the estate tax in 2024.
  • The Senate bill maintains the current mortgage interest deduction of $1 million. The House bill cut it to $500,000.
  • The House bill repealed the alternative minimum tax. The Senate bill maintained it.
  • The Senate bill has seven tax brackets with a lowered top rate, while the House has four brackets with the current top rate.
Senate Income Tax Rate Income Levels for Those Filing As:
Single Married-Joint
10% $0-$9,525 $0-$19,050
12% $9,525-$38,700 $19,050-$77,400
22.5% $38,700-$60,000 $77,400-$120,000
25% $60,000-$170,000 $120,000-$390,000
32.5% $170,000-$200,000 $390,000-$450,000
35% $200,000-$500,000 $450,000-$1M
38.5% $500,000+ $1M+
     
House Income Tax Rate Income Levels for Those Filing As:
Single Married-Joint
12% $0-$45,000 $0-$90,000
25% $45,001-$200,000 $90,001-$260,000
35% $200,001-$500,000 $260,001-$1,000,000
39.6% $500,000+ $1,000,000+

 

Once the committee approves a joint bill, it will go before both the House and Senate for approval. It is unclear how quickly the conference bill will be available for a vote, but House Speaker Paul Ryan said Wednesday that the GOP is aiming to have a bill on President Trump’s desk by Christmas.

Travel Ban

In other US news, the Supreme Court is allowing President Trump’s long-disputed travel ban to go into effect on travelers from the following six nations: Chad, Iran, Libya, Somalia, Syria and Yemen. The ban also restricts travelers from North Korea and certain government officials from Venezuela, but this portion of the ban was already approved by lower courts.

This is not a final ruling on the travel ban as challenges to the policy are winding through the federal courts, even though the appeals are likely to fall to the Supreme Court ultimately.

Summary

The market has continued to show strength, with the Dow closing at an all-time high on Monday (24,290). In our last communique we projected the Dow to reach 24,000 by Christmas, but now it would not be out of the realm of possibility to break through 25,000 by Christmas, especially if the joint tax bill is delivered to the President by then.

Regards,

Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
jeremiah@copelinfinancial.com

Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.

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