Dec 24, 2016|
"Smart investing, simplified"
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
It's blistering financial forum I'm your host can encourage you to disk and enjoy but Paul Parsons president of plaster on investment management. And this is Paul's favorite Christmas music a full time. From movie love actually Paul loses. Your favorite Christmas can be absolutely true it wouldn't be the plan's strong financial formed without that love actually music in the theme from the prime minister love this. One of my favorite movies all my friends make economy every year or roughly by the way I have not seen the movie at the sure sure you although I will see it several times every Christmas season just to drive my family knots. And you know here we are it's it's Christmas Eve we only have a week left to do in 2016. And up Paul I was asked you for sure because we've been talking about this paper that you have Kessler you talked about the fact that there are some things you need to do. Right away before the end of Tony sixteen. Are to save on taxes for 2017. Ended here because we're expecting some tax cuts under under the trump presidency. I just some tax kinda. The biggest tax cut in a generation while this isn't like the kind of tax cuts that George Bush did in 2002001. This is the biggest marginal rate tax cut that we're wolves seen since Ronald Reagan was president in between 1980 to 1986. Those two tax cuts and before that it was JFK and LBJ. In 196364. Just to give you an idea decent as are few and far between. And it's really Smart. To understand not just what's coming next year but what moves you may need to make this year to pay the least amount of taxes in both years combined that's the point the spate. So you just got a week left Paul's paper is skull moves to make it 2016 for the biggest tax cut in new generation you can get a copy emailed to you. What call Paul's office right now leave your name or email your phone number and you will be sent to you on Tuesday morning EDB 9727526. Eight KB 972 planned and well you're still making time for folks to squeeze and appointments if need be. Absolutely right we we're definitely trying to do that and even if I can't sit in on the appointment not somebody on my staff will buy if you had called before this week I would have sat in on all the meetings but at this point work for coming down to brass tacks that literally being the last week before the new year and we've had a terrific response that this paper as you can imagine I mean it's. It is very topical and very few people are talking about that I mean some people are talking about the fact that all of their changes come hang and what does it mean to me and maybe even wasn't into his music and faster but. No one ought to my knowledge I'm certainly in the Boston area has talked about. What do I need to do when 26 teen before the end of the year and believe it or not we thought we thought our BC talked all of our clients about us. And we had several clients take advantage of this. And frankly really lock in some serious savings NYC serious savings I mean tens of thousands of dollars number mind you. Some of these people are pretty wealthy or clients and their their moving around big. Blocks money but having said that there really is merit to several of these on these tactics that we would suggest you at least understand. Balls culprit number again EBB 9727526. EDB 972 plan. And ask for your free copy of the tax favored to say some of the tax favor. And will be emailed rent out to you and then again if you need to sit down with the Paul stuff. And that meet with them for the ended the year they gonna do the best to squeeze that in we just have. For business is amazing and it's crazy yeah this is that boys are running fast eighty Dade 9727526. So here we are all we knew we are facing the end of the year. It's Christmas Eve and I know that a lot of us once this time of year it's the kind of catapult her feet up. Wanna relax a little bit. But there's a lot of stuff going on in the markets right now they're short you know it's funny sort of trading volumes down a little bit and some of the markets this point can. But it sometimes that's worse some of the best opportunities actually. Results from a well as if it's thin trading but a price moves sometimes it's actually an opportunity either buy or sell list among the targets are. Having said that let's talk a little bit about what happened this week in the market so a lot US stocks were up a little bit the sweet no less than 1% and they've been bumping up against that 20000 on the Dow which is the Dow Jones Industrial Average which is an index of thirty of the largest. Well known publicly traded companies in the United States. And and you know for example yes and 500 which is an index of 500 the largest. Are publicly traded stocks and it's it's that's up almost 12%. Year to date including dividends and when you think acting was down ten or 11% in the first six weeks of 2016. You know to quote someone famous long ago who would've sunk. Yeah in congress I mean not only did you make up all of the 11%. Down but you made another 12% on top of that I mean really quite something. Well and this is a good time to take a look at what has happened over the year and European stocks it did look very good for most of the year what's happening now what cures the interest thinks thanked in dollar terms which is by the way out of the way a lot of people in fast US investors invest in Europe and you know they've essentially done nothing to almost break even year to date in dollar terms. If you invested aren't on a way that we had suggested at the beginning of the year which was buying these things on hedged currency basis if well European stocks were up 9% year to date to OK so what that tells you was in local currency. The business is actually did okay but because the Euro lost a lot of value. In. 2016. You don't think about it at the beginning of the year the Euro was where Kenny dollar tanner Sosa were there and it's now at eight you don't close to between a dollar three and a dollar for so that's a lot of devaluation. And fewer US dollar investor you know you made 9% local currency and you lost that all in the currency translation how does that feel I think there are heard Julia and so again that this goes down to the devil's in the details you have to not only believe in an underlying. Our economic story in a market story but the also have to make sure if you're investing internationally. That you understand whether or not that you think that there's going to be a currency appreciation or devaluation. As well. Are so in this case if you hadn't done that and you just invested on normal dollar denominated. Our international stock portfolio especially European stock portfolio. Then you would have broken even but if you Donna in local currency of the worst on hedged our portfolio currency hedge portfolio UN made 9% year to date in Europe or rescind the bonsai. Well on the bond side it does the yields have stayed pretty constant the last weeks armor tween. For the ten year treasury to wanna have to two point 6%. And yields on the ten year German bond G increased to between them and they went from point 4% down to point 3% her tenure odd German bond. And the Japanese ten year remained. Rate between zero and point 1% so they didn't move hole a couple of this week and you mentioned that the dollar is still strong and actually the dollar strengthened a lot this year and it's strengthened especially this week against the Euro again. And that currency is now trading below a dollar for its between the dollar three and a dollar for this point. And the yen remained unchanged at a 118. Per US dollar now. Let's just put also perspective it was not long ago that a dark day Euro was trade eight dollars 35 or almost a dollar forty okay in a year and a half ago and the yen. I know I was talking my daughter or your tour grow and she and that they were not yet in my daughters in the foreign exchange business in New York. You know they were talking about how the yen had honestly quite a bit and moved off of eighty and you know here we are at at are you a 118. Now that's real devaluation over apple Europe's right. Salt overall armed at the dollar has strengthened and some of the key currencies have weakened it I'm gonna talk specifically about the Euro a little later run on the shoulder because there's a real story here about what's in what's causing this and what's next for the Euro. And oil prices and a rebound a little bit they did you know that they increased west Texas increase from 52 up to 53 dollars a barrel. Brent up a little bit of 55 dollars a barrel and that's even in spite of the US inventory build actually went up a little bit us boasted being depleted. Awe and also Libya announced the reopening of pipelines after a two year blockade recently and it. Well you know I like to know wander into Barnes and no balloon breezed through some amazing I can't afford to buy cattle and how important one of them has Barron's which is expensive to get every week but I do see it did they seem to have their 2017. I'll look out already and this is one of the first ones. Usually we hear from this little bit later on in January settles right or what's a preview of the. Earns report well I I think the big highlight of this report. Was that no surprise the unexpected election of Donald Trump. Has really caused a lot of people a lot of analysts a lot of forecasters. To really change won't dare perspective I mean it's really stunning I think you've probably heard it on my voice over the last 45 weeks or a sense on November rate and by the way if you have it's not a political commentary it's an economic commentary. I'm happy. And I'm actually thrilled for my clients because I ate I see this as an opportunity. I like to see what our economy can do with less and conferences on it it doesn't mean that those in congress' work well intentioned or work for the right reason or for good reasons but what are we knew what is going to happen with our economy. As were gonna have the biggest tax break in a generation. And were have fewer regulations. Those are tool of the biggest obstacles. To when he economy firing on all cylinders OK and when you will see something like that it's not just Parsons that. Looks at that insist. While I think this is gonna be terrific news for us. Shot at from an economic perspective and from an investing perspective and it's also the perspective of the analysts are who barons are consults and they are typically. Our folks that come from the major investment banks. I as well some of the major money managers around the country and they weighed in in Barron's this past week. And what's fascinating is. These guys these same group of guys and gals are ten of them were surveyed in September. And at that time almost all of them were bearish on the outlook for the economy and the market and now merely four months later this exact same group. Is universally bullish. On the economy and the economic on the economic outlook and the market outlook so we come back we're talked a little bit about some of the things that they now see happening. With the advent of a trump presidency and I wanna caviar doubles one other thing it's unlikely that many of these people voted for trump personally okay but. Your view of the economy and the market has become much more bullish because of the truck presidency darting into Barron's preview when murdered its plans strong financial form. This is tall Parsons president of planned strong investment management. And you're listening to the plan strong financial forum on WR KR plus news talk stations. If you like what you hear on our show and what you need to take a look at your investments and retirement plan called my office at 80889727526. That's 888972. Plan. Securities and investment advisory services offered through metro metro group member to go as I can see classroom investment management is an affiliate of this financial group thinks is located in Washington street domestically. Hi this is Avi Nelson. People use different strategies to acquire enough money for retirement. Some try to do it themselves. Others buy insurance or investment products though sometimes will benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to act in your best interest. And be paid the same amount no matter watcher invested in if these things matter to you. Call Paul Parsons at planned strong investment management to learn more call 888. 9727526. Hiring the right advisor could be your best investment. Or visit planned strong dot com. Securities and investment advisory services offered through next financial group linked member tumor SIPC plans to investment management is not an affiliate of next mention grouping and is located at 980 Washington street. Disciplined strong financial forum under your skin color re being introduced along with apple Parsons president's. Plan strong investment management. Just the bastion bursts pitchers get a loan listening to this yes Paula reuse our stuff. So did you watch Saturday Night Live last weekend's visited did you see when they did the love actually and gals parity as a matter -- sorry Clinton with a car it's always that I want a lot of viewers have while this is combining two of Paul's favorite subjects especially for a while. You know yet I have to take Kate MacKinnon is very good at at her Hillary Clinton or an arson Tuesday. And the whole kind of waving hi it's me thing out and friends is that they're all gone. Anyway but cute cute skid and and great movie obviously and Merry Christmas everybody is listening to us today this is interest to see if it's great to be doing your program McChrystal is a Christmas Eve when it's only three in the afternoon I don't know Massey for Christmas Eve afternoon yet Chris right exactly I mean it's almost do you agree gets darker half an hour so I now it's it's pretty much what it's a great time here you know out of sleaze just replace a special means that is true and I know you enjoy that well you know it's I enjoy success this shows our seventh year in a row we've done now seven yeah this is Netscape I'm via the San. This is really the anyway we were talking about the I'll lock yet the outlook from Barron's and and that. These both the prognosticators. For parents these. That they had economists for some of the big investment banks and money managers around other country. We're serve latest to kind of what BC coming. In the upcoming year 2017 because you you have to lay the table here you have to say. Tom you know what why expect the economic growth to be light corduroy expect of terror from a market perspective as well and ultimately are there certain sectors and so forth that may be in favor as a result of kind of what we see happening now on the marketplace and and as I said that the first thing that really became very clear in the Barron's article was. How this seat change this was in marked change from where these same people were three or four by months ago right and it was specifically because of the election of Donald Trump. And and the reason they are so optimistic now as opposed to being more bearish. Aunt was because of improved profits from lower corporate taxes. They see some infrastructure spending which should stimulate some economic growth and they see reduced regulations and all those things are our positive aspects to this. And to what degree they are concerned about the possibility and their hope is that it's more rhetoric and then then likelihood of around certain kind of restricted trade things that that trump may try to put in place it can get a big picture what do they see happening to the S&P gas cylinders so the S&P 500 which again is yet that index of 500 largest publicly traded stocks in the last our base he would Doug going from its current level to about 2380. By year ran that's about 5%. Increase. From where we are today it's actually. And that's not as robust a 5% increase mission as robust as what you may have seen in prior years as a relates to what they thought they'd CDS and arm but don't forget. Some of the growth for 2017 may have already been front load and in two essentially the year and returns and 2016 because don't forget. As I said at the beginning of the show the S&P 500 is up 11%. Year to date including dividends. And you could argue that the last four or 5% since the trump election. Well I could also have occurred. In 2017. And add that to the 5% growth that they're talking about. Now you're looking at 10% overall overall feels about right and you know somewhere in the 5% growth rate seems about our rightful given how much we've already experienced in 26 team. And by the way just give you an idea what the the ranges of of these professionals. Some think the S&P will only not increase by about 2%. Well the most robust estimate was about 13%. Or would a up a median forecast. As I said of about a 5% increase our earnings appalled of these seem there. Well earnings are expected to grow about 7%. Next year and by the way back doesn't even include the majority of Trump's proposed reforms. Most noticeable to those are most notable of those of course would be. For our taxes and tax reduction. On now that's 7%. Really reflects a rebound in energy or access the real driver behind it. Plus some incremental improvements in other sectors but it's really energy driven and by the way if you also included. That the savings associated we did reduce taxes and other initiatives the trumpets talked about. Now you're looking at earnings growing by as much as 12%. Over this year. And when you think about that 12% earnings growth could really fuel some nice bomb stock price appreciation. Very few expect multiple expansion over the floor price earnings multiple set another way on your not gonna. And they did the opinion of these people is that the price earnings multiple right now forward is about seventeen times earnings it's earnings go up. 12% while you and the multiples stay the same you could expect prices to what 12%. Are there is a thinking that there may be a little bit of contraction in the price earnings multiple and that's where why you say well overall maybe it's ten or 11% total growth including the trump attacks are cuts and so forth. You mentioned in your G and and that's sector what about other sectors are what do we see happening well the big favorites. Without a doubt. Assume start with financials can. And it makes a lot of sense you know if you see interest rates going up and by the way it was unanimous they all saw somewhere around three interest rate increases from happening a point 25%. Three different times in 2017. So that you know essentially what you're thinking is interest rates are gonna go whopping there or go up a bit. In 2017. All that happens. The sector that benefits the most from not without a doubt is financials OK because. They charge more immediately. Based on what current interest rates are but they don't hate you more immediately there a lot stickier with what they pay you one deposits. Then how quickly they change their fees and the best example I can give view of of this that many people can relate to us sick about what happens if there's a significant increase suddenly to the price of oil and does it seem like big gas station ups their price that night each absolute right when they are lower water the ice for instantaneous. Okay. And and yet when you do here there's a big. Did they take their time get through tomorrow it takes a why doesn't this all well we bought the inventory at a higher levels and take us awhile to burn thriller then we'll pass the savings along to its dissenting in the financial sector when interest rates go up they increase what they charge you instantaneously. But as far as what they pay you they take their sweet time getting to that and what does that do that increases what's called net interest margin rednecks which is another way of saying profit to the bottom line based on. What they how much money they lend out and what are able to charge people for lending out that money so financial I think where the clear winner an of the ten. Economists think eight of the ten. Output that is one of their top sectors that they'd won one vast and the other major sector debt that the majority of them liked was healthcare. On and again and that makes sense from you you think about free election that the probability was that Hillary was gonna become president. There was a lot of rhetoric around our price controls. Health care was really beat not because of that and frankly the prospect of obamacare also negotiating down prices. A lot of that's going away now although trump has said that he is gonna take some action on some. Drug pricing. As a result the majority also see health care. SE up a positive garrido and vast in 2017. Now on the on the bad side places to potentially avoid that they are under waiting or avoiding overall. They think consumer staples. On is dis by the way disliked by nine of the ten mark OK how hot and that's because. These stocks are expensive. And could suffer further if rates rise why for exactly what we've talked about for months and months and months which is. People bought the stock based on their dividend yield not based on their earnings okay and now if you have interest rates going up and you can buy up on two with a similar type field. But has no risk to it compared to a stock which has some risk to it. Well people would favor the bond and as a result the price of the stock goes to the folks who Barents don't seem to be concerned about the Fed raising the rate. Now and in fact I think is seen as almost being relatively healthy one. The reason for the right reason and then that actually the economy is firing on more cylinders and as a result they wanna make sure that inflation doesn't get out of control. And you know the second reason is it's already built into the market forecasts they were they you know. Before was to increase is now what's three it's not that significant a change. And so overall a lot of this is built and what about consumer confidence it's it's been incredibly good apart some of the highest measurements so we've seen and oh gosh eight years or more 89 years as a result. And what that means is any market drops frankly may be an opportunity to buy and are rather than saying oh geez I'm worried is known does this thing still have Lex. Node does their forecast for. Eighty. GDP forecast for 2017. From the EC -- these economists was about to our 2.4 percent now what you're seeing from -- staff and from specifically from odd that the future our Treasury Secretary was they're shooting for more 33 and a half percent its gonna be interesting to see if this number comes up part of what I seen is that that 2.4 percent GDP growth rate that they had four -- that this forecast did not include some of the incentives that were built into the trump plan and so that alone could cause that GDP rate to go up by say in 06 tenths always made even a one whole percent up. Welcome back all talk about what the tax cuts mean mean going forward according to these economists it's a plan strong financial for this is. All Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Boston's talk station. If you like what you hear on our show and what immediate take a look at your investments and retirement plan called my office of 80889727526. That's 888972. Plant. Securities and investment advisory services offered through metro metro group member to go as IPC classroom investment management is an affiliate business financial group thinks is located in Washington street domestically and six. Hi this is on he Nelson. If you're fifty or older here's a suggestion. Commit to getting your financial house in order over the years you worked hard took chances made sacrifices. And built up as much wealth as possible so you'd never run out of money in retirement. Well. Now it's time to get organized and to make sure you have a financial plan. Who protect your retirement. Rich your financial life together. Call Paul Parsons a plan strong investment management a schedule financial checkup call 888. 9727526. That's 888972. Plan commit to getting your financial house in order. Call 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group linked member camera SIPC plans for investment management does not an affiliate of next mention grouping and is located at 980 Washington street Dedham mass. It's quite a strong financial forum. Featuring our special Christmas music false favorite Christmas music. I'm Don Garber the anchor desk along with Paul Parsons present a plan strong investment management in let me just remind you that. You still have time to call for Paul's paper that this favors being offered free of charge sure listeners. And it's talking about moves to make you 2016 which means in the next week is going to make or right now for business very exactly before the biggest tax cut in new generation. She can call now for your copy of the paper. And then you can still get an employment if you call very quickly and try to scheduled appointment with a member of Paul's team in the next four business days. Because a lot of their moves here in this paper that you outline ball that can really save people a lot of money what is quickly go over couple of the a couple of those moves. What might you find in this paper that may affect me or someone out lightning. Wolf first and you're actually right in fact we've had we've gone through this with all of our client base and when we did that we have literally gone through at and and identified opportunities for some of our clients have are going to save them. Thousands and thousands of dollars in taxes now maybe their portfolios bigger than yours neutered income is different than yours but it just gives you an idea how much opportunities they are. And the other thing is. I think this is the one of the most under reported stories out there are so many people focus on Welch when he seventeen it looks like trump. You know may get this tax thing through listen. He's gonna get a tax plans are the -- the Republicans understand that if there's no change in the tax structure the Republicans won't be in power in two years or sooner jell OK I'm telling you those two years go class and the party's over I'm talented date they will have their hats handed to them by the electric the same electorate that are rejected Hillary Clinton and pick and said okay we're gonna go on a test drive with this guy Donald Trump credit that's the same electorate that can very quickly turn. And 2018 if what they hope will happen doesn't happen organic. And so let's talk about what some of those changes are you know probably the most important one is that they're gonna reduce tax rates marginal tax rates. And the second thing they're gonna do is they're gonna simplify them going from seven brackets down to three Brackins. I am not one of those people who believes a lot of the stuff he era in the mainstream media about what's gonna happen here I don't think it's going to be watered down I think that trump will find a way to make this relatively revenue neutral and I think he will get most of this tour. On and again you have to handicap that yourself. I'm telling you my perspective is that's what's gonna happen and frankly that's what I'm planning on what does it mean. It doesn't mean by the way that the rich get richer and what it means is I do believe this is going to be tax cut for middle income middle America I actually believe that one weighs gonna do that is you can increase the standard deductions the standard deduction for individuals can grow from 5000 dollars to 121000 dollars the standard deduction for Koppel is gonna go from 121000 dollars. All whipped a 30000. Dollars so there's actually a benefit to be married and similar penalty now actually there is your old marriage had a panel I don't longer either so there are a number of things shared the rates are gonna come down. They are gonna be consolidated. The second thing that's gonna happen is you have higher deductions which shall mean that you'll have few you'll have less taxable income she may not even be in the same tax bracket anyway to start with. Of course the press likes to point out the one or two little spots where our taxes may go off on of a subset of people my guess is they'll leave infect slow Chanel because I think trump is really committed to this idea that he wants the middle class to get a break here. And and I think he's gonna design this in such a way that that occurs even mention moves it we have to make. This year can you need example one absolutely on so one change I didn't mention was that as trump brings down. On the the marginal tax rates the brackets themselves any increases deductions. One thing he's talked about doing is happening. The amount of deductions that you can take so if you're middle income person you don't worry about stuff your high income person with a whole bunch of deductions. Now you're you're seeing that you you could potentially have your deductions limited and that I'll give you a tip for that so higher earners who itemize deductions. May wanna consider accelerating. Charitable donations. So that their Meade in 2016. In fact we've had a couple clients this past week set up what are called donor advised fund it's why you couldn't you can actually make the donation now and say you you have you make a lot of money or you if you are fortunate enough to have significant assets that you'd like to odd to donate to charity. Well. If those deductions are are actually limited to cap a 100000 dollars for us an individual 200000 dollars for a couple and by the way don't forget you've got stayed income taxes that go win us what are your deductions you that your mortgage interest as a deduction and now we are charmer charitable contributions while if those are limited in the future than you actually may want to do your gift it now before twenty sixteens over why because there will be no cap on you'll be able to get the full benefit from. Another reason you wanna do what is because it's worth more tee when the taxes that you've seen aids this year journal higher marginal tax bracket now then you will be in the future and then back deductions worth a lot more do you now Dan it is a year or two from OK so that's just one example of that of a move to make this year and as I said we have its us several clients. Who have elected to make that move and it's gonna save them some serious money if you're in the top marginal tax bracket. You're gonna go from you know 43%. Or over 40%. Measure marginal tax rate. Downed 33%. Doesn't sound like a lot but 7%. You know on a 100000 dollar donation is 7000 box car that's 7000 dollars of less tax you will pay between now when the future because you did it at a higher marginal tax rate. You should call now for balls Bieber. 8889727526. That he DB 97 to plan and just ask for the tax paper. And email it right out to you leave your name. Phone number and email address of course and you'll get that paper right away and then you need to schedule an appointment with Paul and his team. He did get a get that call in because we only have four business days left. And even if ball can't say would you which he always does but of course. Right now we're just a few days left but somebody from ball staff will sit with you and cool would you may need to do between now and the end of the year. 8889727526. Well and speaking of tax cuts this is one thing that was brought up in the Barron's story as well. Absolutely and there's aren't real driver yeah it's a real driver why the the whole perspective. Of of what is gonna happen in the upcoming year. I has turned from frankly being quite bearish opinion quite bullish by the exact same ten people for months apart yeah okay and not just personal but of course corporate tax in world that's a huge part of a reduced corporate tax rate is gonna help those companies that are currently at the highest rate now the most great. And don't forget he's also talked about. Our our reduction in the tax re for a repatriated. Cash cash that is profits earned overseas that they'd like to bring back the United States. But until now have chosen not to because they said hey. You know about 35% isn't competitive market repatriate cash market or pay any tax on while you know if they bring that back at ten or 15%. Tenor and by the way there's 2.4. Trillion dollars of profits overseas by major companies and United States. If you bring back a good hunk of that and you get ten or 15% tax on that. That's that's at 200 aren't 300 billion dollar windfall recently told him treasury some real money era and a and that's the kind of thing I think trump was looking at to try to make this thing. Revenue neutral so let's all the positive self blood waters some of the concerns some concerns are that. This post election run up. In especially like the infrastructure sacked or the engineering sector in the materials stocks. They may be over done at least that's what these sob these guys were talking about. Armed and another thing is due to. Do you really think that a Republican congress is gonna do everything or most of the things. But trump has proposed doing especially if it adds to federal debt might take on an assist by the way. I think they will do many things that trump is proposing and he's gonna do wood and a much more revenue neutral way. That until now people had understood that it was going to happen. On another thing that they're concerned about is obviously DE FT free trade rhetoric I ran for me this was one of the biggest ones but again. You don't try opposite colorful man and he speaks colorfully and you really have to. On the when the rubber meets the road what does he actually gonna do and my sense on this one. Is he's not gonna put up as many trade barriers. As he might have a lead us to believe at the beginning and are part of that again barons had an article on this last week as Welch. They talk about what it would do it would be crippling if you you know because don't forget the United States doesn't just a make stops were big consumers grew up we'd buy a lot of stuff from other other places so you know it would hurt us as much as it would probably help us and I think as a result he's gonna focus a lot we're trying to retain jobs in the United States. But maybe not do this many things would up punitive tariffs as as certainly the red or might have indicated during the election campaign. Are these economists feeling strongly that trump will be able to pass on these tax cuts for instance the corporate tax cut once and you know that's it that's on mark on the line though is that it was raised as a concern but I think the fact that they're already starting to build it in their forecast. Says that they think it's more likely than not likely all tell you I think it's incredibly likely because I think it's a suicide pill for the Republicans if they don't pass meaningful legislation. In the first three to six months in his presidency look along the first two years I don't see. Dare being a lot of much of meddling and and non kind of watering down of a lot of stuff. As a result I think. Market friendly policies slight risks. Are likely gonna occur more so than I think even the media is willing to give credit to at this point and that's the basis from my optimism and I think a lot of the optimism expressed by these individuals. In the on the Barents a team. Paul when we come back we'll wrap up this Barron's outlook for 2017 and then we'll look at some news stories that are happening right now on some investing ideas is well disciplined strong financial form this just. All Parsons president of planned strong investment management. And you're listening to them plans strong financial forum on WRKO. Boston's talk station. If you like what you hear on our show and what media take a look at your investments and retirement plan called my office. 80889727526. That's 888972. Plant. Securities and investment advisory services offered through an extra two group member to go as I can sequester investment management is an affiliate of this financial grouping that is located in Washington street and Massachusetts. Hi this is Bobby Nelson people use different strategies to acquire enough money for retirement. Some try to do it themselves. Others buy insurance for investment products though sometimes will benefit the seller more than the buyer what makes sense is to hire an advisor with first rate credentials and why do investment management experience. Should have a fiduciary obligation to act in your best interest. And be paid the same amount no matter watcher invested in if these things matter to you. Call Paul Parsons at planned strong investment management to learn more call 888. 9727526. Hiring the right advisor could be your best investment. That's 888972. Plan or vision plan strong dot com. Securities and investment advisory services offered through next financial group pink member former SIPC plans to investment management is not an affiliate of next financial grouping and is located at ninety to Washington street Dedham mass. Disciplined strong financial performance get incorporated being condensed loan would fall Parsons he's president of planned strong investment management. And he smiling from you do view because it's Christmas Eve and he's listening to his favorite Christmas music love this I can tell you how I do lose a big smiley I just wish I could play the percussion you know on the kettle drums yeah all he really a great. Yeah I'll go ahead. Mouse. I play in the children's. Yeah I mean. Probably couldn't but you think you could exactly it looks doable as opposed to the violent yes it looks completely also all things yes if yes well that promotes who judges do and that's music from love actually Paul's favorite movie and is also is it Christmas music 070 yeah we've done this on Christmas sure why not why not it's it's you liked its feel good yeah absolutely. And in the music is at least you know it's it's Christmas C without being something that be here along the right me right now if you listen to the radio blogs. Both the radio sort of you know some other stations are Christmas carols all the times I'm just all these India and you like to I can't take it all day denial you know I found myself doing in the snide yeah Durham guys know this is the timing could listen for an hour to know when I did I I don't wanna do little Christmas shopping trying to get in the -- and you know you do not in the mood to deal that does the money spending cruel but ouch the yeah out. Bowed to argue about that Barron's report that I I was kind of peaking at a bookstore and you've been giving us into a biased and did you host a hostile. Five but I talk to a record Mary I'll bet you they're gonna cover god you're the favorite kind of conned by a guy like I did buy comes god did they escort you out. After awhile yeah I got to serve courses are regarded close and kinda guy yeah you've read most of our magazine it's a bit but didn't give government and nicely but you know I thought you were also good start a little bit about the Goldman Sachs forecast yeah how these compare so Barron's has there isn't how they compare contrast was would Goldman Sachs you know. Well they're both positive on day its interest saying that bill whole thing about parents is. They look at. A bunch of these market friendly fiscal policies and fewer regulations. And they're saying you know why this is really fueling positive sentiment there's this expression our business called the weakening of the animal spirits and I'm in a sounds like it should be a movie or something or maybe a dime novel by what are really means is people really get excited it. They really Bob become invested if you will and the idea that the market will do well that the economy will do well. And and by that nature becomes self fulfilling prophesy I'm okay. There's a sentiment of that out there now that that was certainly reflected. Are in the Barron's arm description of what they went through over the last four months durst and what happened in September when they serve eighty steeple and most recently after election. The difference was really quite striking and it wasn't a weakening of the animal spirits to a degree because of some of the policies. That look like they will be implemented sometime in the next year. Now Barron's. Outlook was one but Goldman are also came out with the your forecast for 2017. And dale actually had a similar kind of an outlook there there I think in the markets up probably 5% by the end of the year but. Here's the difference date look at it as almost being a two part here they thought hey listen the first part of the year is gonna be dominated by if you will hold off for a ha I trump presidency. And maybe it probably around a 10% rally. India and the S&P 500 which we've talked about before and now again what would it be fueled by. Lower taxes repatriation. Of overseas corporate cash. Pull back and government regulation. Government spending stimulus all those things sound and feel good to the Goldman people as well. I'm but here's what they're also saying they think of the second half of the year. Could be one more of fear so the first half this whole. The second half as more fear thanks to may be inflation jumping up a bit may be labor cost starting to accelerate. And the Fed implementing for. 25 basis point increase knocks 34 of them so they look at this and say disc could be. Our cost for a pullback of about 5% from the peak in the midyear to the end of the year. So overall by the end of the year you're net up 5% to run okay. So both of them are calling for the yes and Pete to be up about 5% just a Goldman thinks they're gonna overshoot a little bit for the first part of your. And then have a certain kind of an adjustment after that. Up all of us get to some of the the news stories of the week and there was a big story that I has been somewhat buried them everything else has been going on and this has to do with that. Interest income and Muni bond. We how's about that you know it's funny when you when you look through this trumped tax plan. On route it dark so one thing that doesn't jump I'll back you. Is Howell interest income is gonna be treated and before your eyes glaze over this is really important OK and the reason that's important because if you invest in Muni bonds. One of the key benefits. Is that in most cases their interest payments are not taxable for federal income tax purposes right. Now the ritual trump tax plan didn't have favorable treatment for all investment income but here's the key. The house GOP plan that Paul Ryan has put out there would simply allow all individuals to exclude 50%. Of the or investment income which includes. Capital gains qualified dividends and wait for the big finish. Interest income. Okay. So the fact that 50% of the income is excluded. This essentially means that all these types of investment income are gonna be taxed at half. The ordinary income tax rate which means 6%. Twelve and a half percent and sixteen and A half percent brackets. So and by the way in all both plans whether it's trump or the Paul Ryan plan not the three point 8% Medicare surtax is repealed that goes away TO. So I'll think about it this way interest income on taxable bonds will be cut down. From 43%. Tax rate to sixteen and a half percent tax were at the highest income levels and in doing so well. It may actually greatly undermined demand for municipal bond debt why because Munis most attractive feature is their tax free income status. So if other bonds have much lower tax rates. Then Munis will be comparatively much less attractive than they are now that could lead to outflows so let me give you an example OK okay probably the best just to look that way. Think about this a high quality tenure Muni bond today is currently yielding about 21 half percent. Since it avoids. 43%. Federal income tax today it pays the same as a taxable bond that has a coupon of four point 35%. Okay now if the tax rate on interest falls to sixteen hour and a half percent. The Muni bond is now gonna need to yield. Three point 6%. Direct present the same taxable Lamotte so it's gonna have to go from two and a half percent. To three point 6%. In how that does set a price drops aren't okay. So it means I'm that the price would have to drop. About 10%. For that amount of change in the interest rate on a ten year bond and so the reason I bring this up it's so important. Muni bondholders should be aware of this potential change he actually may see a significant adjustment. In the price of Munis if this kind of tax change occurs now mind GO. There's a discrepancy between the trump plan and the Paul Ryan house point it will have to see how this plays out but Muni bond holder should be very aware of this. Well we're talking about Munis Paul there was a story in the journal let you do with Connecticut. So speaking of of places to avoid Tom cat it. It as you know Connecticut is really Don not a great place to invest in municipal bonds at this point simply because that the status is really. They've run out of options there the highest the second highest tax state. In the country at this point and they're still running really. Big deficits is okay so their racking up all kinds of debt. And at the head of the pack you've got Hartford the city capital and the city capital is actually at this point they have the they have incredibly high tax rates within the city. And they're trying to tap now into the wealthy suburbs. On to try to get some financing navy for example a regional sales tax have ever heard such a new school for a while they're really trying because and here's why. They can't go to the state this state already has a billion dollar budget shortfall so they've got funny work on their hands they and by the way the states already raise taxes. Are to the highest level as I said of any state in the union. Hartford bonds are already read junk OK so that's not going so well and as I said deficits continue to increase. And the city has the highest property tax rate. In this state at nearly twice the rate of surrounding towns and it gets better. More than half of the city's tax base is exempt from tapped taxation. She can't even go to them and ask him for tax dollars and finally the city and state ranked near the top of states in rankings of pension. And bonded debt totals so they have. All kinds of debt problems and just to give you an idea Hartford's pension costs increased over 200%. In the last decade. While property tax revenues grew 25%. Okay that's not awaiting well so the question is can the city avoid bankruptcy. I'm not I don't know the answer to that it's certainly is a reason why it's really important to know which sponsoring your Muni bond portfolio and what kind of risks those bonds carry. Paulus has built a show really of that folks should write down a number four because they need to call right away we just remind everybody the paper. The showed them truck full of information and yet it seemed like the most important thing you can remember is. Karma for balls paper if you haven't done so yet 8889727526. EDD 97 to plan and just say semi balls paper. It will be emailed read out to you by Tuesday. And you'd if you need to schedule appointment do it right away because Paul's team will do their best to squeeze you in the nearly four. Business days after and even one of them I think it's market shortened so it's really tight at this point. But if you have a significant problem after your take a look at the paper have a email to you if you see that you've got a serious problem. Call us right away and say look I've got a big problem I need help right away once again. Indeed 89727526. Paul. A very Merry Christmas to you and your family as soon when your fans thank you and to all our listeners Merry Christmas. Will be back next week on New Year's Eve for another pass for another fund financial party it's the glass strong financial form. This is tall Parsons president of planned strong investment management. And you're listening to the plan's strong financial forum on WRKO. Boston's talk station. If you like what you hear on our show and what media take a look at your investments and retirement plan called my office. 80889727526. That's 888972. Plan. Securities and investment advisory services offered through an extra to prevent -- finger as I -- -- investment management and filling them a special briefing this look at this any Russian diplomats and say let's strung investment management is located 980 Washington street Dedham mass 0226. And can be reached at eighty to 89727526. Political views may not reflect the views or opinions of next financial group the securities and investment advisory services offered through next financial -- number fender SIPC classroom investment management has not affiliate Dutch financial group think this radio show is for informational purposes only and is not a solicitation recommendation that any particular investor should purchase or sell any particular security information contained herein is obtained from sources believed to be reliable but its accuracy and completeness or not guaranteed neater next financial groupings nor represented -- of provides talked to.