TheLiveBigWay Digest – Weekend Edition
Herein a few updates to yesterday’s Digest.
After dominating the headlines in recent weeks and months, the sequester is here. President Obama signed the order last night to impose $85 billion in cuts to domestic and military programs after a last minute meeting with Congressional leaders that produced no alternatives. While there is universal agreement that the cuts will be a drag on the economy in the near to intermediate term, investors appeared unfazed, with the Dow Jones Industrial Average reaching its third-highest level of all time. As we see it, these cuts are ill-timed but not catastrophic. The current consensus among economists is that the sequester isn’t big enough to cause another recession but will likely pare economic growth by about half a percent and increase unemployment by 500,000 to 700,000. Not great but not the end of the world either. If we’re lucky, this may mark the end of partisan budget battles for a while, freeing us from the brinksmanship that can so unsettle markets. As the New York Times reported this morning:
But both the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011.
The showdown in December over the so-called fiscal cliff yielded $620 billion in tax increases over 10 years. The across-the-board spending cuts now going into force will cut deficits an additional $1.2 trillion.
Both sides indicated that for now, that may be enough — a fiscal peace through political exhaustion.
Keep your fingers crossed.
Reminder – Change to Tax Reporting on Client Private Page®
We will no longer be posting a year-end realized gain/loss report to your Client Private Page® as we have done previously (all other reports will still be available). We’ve made this change because your cost basis is now reported on your Schwab 1099. If you have any trouble locating your 1099, please let us know and we’ll get you a copy.
Have a great weekend!
The Yeske Buie Team