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December Economic Update

Market Summary

For most of November, the stock market was plagued by the same skepticisms that have been present for months now: rising interest rates, the trade war with China, and flattening corporate profits. While the S&P 500 Index rose 1.79% for the month, it wasn’t a straight upward trajectory. We have found ourselves locked in (yet) another trading range in the stock market; bouncing off of the top and bottoms of the channel. This is understandable, as there are cases to be made for both the up and down sides. (1)

Oil was the hardest hit sector in November, dropping a staggering 21.8%. While this is good news at the gas station, it was a drag on helping the market to lift higher after the October pullback. On the plus side, the real estate market experienced an unexpected pop. The National Association of Realtors cited a 1.4% gain for existing home sales in October, their last reporting period. (2,3)

Year-End Financial Planning

As the new year approaches, there are a few things that you may want to consider checking off of your list:

  • IRA Contributions – For 2018, your total contributions to all of your IRA accounts (Traditional, Roth, SEP, etc.) cannot be more than $5,500 or $6,500 if you are age 50 or older. If you have low earned income, check with your tax professional before making a contribution. You must make contributions before April 15, 2019 or before you file your 2018 taxes, whichever comes first. (4)

  • Charitable Gifting – You can claim the deduction on your 2018 return, provided you itemize your deductions with Schedule A and you keep a good paper trail. If you give cash, you need to document it. Incidentally, the I.R.S. does not equate a pledge with a donation. Contributions to individuals are never tax deductible. (5)

  • Consider Tax Implications of Upcoming Transactions – Whether you are planning on buying or selling real estate next year, exercising stock options, or selling investments which held outside of a tax-deferred account, it might pay dividends to do some planning now. Any of these actions might significantly impact your 2018 and/or 2019 taxes. Check with your tax professional to see how to minimize your tax burden.

Market Outlook

The current stock environment is largely news-driven at the moment. President Trump announces postponing China tariffs, market goes up – The President refers to himself as a “Tariff Man” on Twitter, market goes down.