Investors are analyzing President Obama’s new budget proposal to see what it may mean for the economy and the markets. While it is not a piece of legislation which will be voted up or down, it does reflect the administration’s efforts to reach a “grand bargain” with Congress on deficit reduction. Our first article this week examines how it may affect both the debate and investors. We then turn to the fall in the price of gold, which recently posted its biggest one-day decline on record. Interest rates remain at a historic low, and Federal Reserve Vice Chair Janet Yellen expects them to stay there for the forseeable future. Bloomberg reports on why the Fed plans to keep the benchmark rate at this record low. Our final article discusses how the American Taxpayer Relief Act affects estate trusts and whether changes to them may be necessary.
The Obama Budget Proposal: 5 Takeaways For Investors– President Obama’s budget proposal, unveiled last week, comes on the heels of vastly different budgets approved in March by the Democratic-controlled Senate and the Republican-controlled House. Notable items for investors include proposals to instate the so-called “Buffett Rule,” cap the value of itemized deductions, make changes to the estate tax, cap retirement savings, and require all cost-basis calculations to use the average cost basis method. This article by Michael Townsend at Charles Schwab & Co. summarizes these proposals. http://investing.schwab.com/public/schwab/resource_center/expert_insight/schwab_investing_brief/washington_watch/the_obama_budget_proposal.html
Gold Price Takes Biggest One-Day Fall Ever Recorded– The price of gold bullion posted its biggest one-day decline on record, falling more than $125 an ounce on Monday. Many professional investors were caught off guard by the price collapse. The flight from gold took place in every corner of the global economy, including speculators, exchange-traded funds and owners of physical bullion in China and India. http://uk.reuters.com/article/2013/04/15/uk-markets-precious-idUKBRE93E0FK20130415
Fed’s Yellen Wants To Keep Benchmark Rate At Record Low– Federal Reserve Vice Chairwoman Janet Yellen says she sees nothing in credit markets that justifies raising interest rates and that she supports keeping the central bank’s key rate at a historic low. “I don’t see pervasive evidence of rapid credit growth, a marked buildup in leverage or
significant asset bubbles that would threaten financial stability,” she said. “But there are signs that some parties are reaching for yield, and the Federal Reserve continues to carefully monitor this situation.” http://www.bloomberg.com/news/2013-04-16/yellen-backs-lower-for-longer-rate-policy-while-seeing-risks.html
Estate Planning Trusts No Longer As Relevant, Useful After ATRA– Irrevocable life insurance trusts, qualified personal residence trusts and family limited partnerships may no longer be relevant for some taxpayers with the passage of the American Taxpayer Relief Act of 2012. Some of these strategies have lost their applicability due to a permanent increase in the federal estate tax exemption and portability.Changing them might not be easy, however, and in some cases they may still provide valuable asset protection.
We hope you enjoy reading these articles along with us and that you find them informative. Please forward this to your friends and family.
John R. Day, Bill Ennis and Stephanie Davidson