What a Month — Hang in There
Historically, September is the market’s worst month. This September, however, has been rather calm. The market trended down through the first few weeks of the month, then responded positively to the Federal Reserve’s decision to reduce interest rates by 50 basis points rather than the 25 basis points many expected. How will the markets react to our upcoming presidential election in about five weeks? Let us look at other election years.
Since the 1992 presidential election, the market has declined an average of 3.4% for the September-October months leading into the election. Sectors reacting negatively during those months generally include technology, energy and real estate, while consumer staples and utilities tend to move higher. Investors fearful of the uncertainty need to avoid panicking with the urge to take a short-term view of a long-range portfolio.
To prove a point, in the November-December months following the election, regardless of who was elected, with uncertainty removed, the market has seen an equally broad upturn, with the market increasing 3% since 1992. Hang in there. (Source: Standard and Poor’s’ “The Outlook”)
50 Basis Point Rate Cut…Now What?
At this month’s meeting, the Federal Reserve cut the Fed Fund’s Rate for the first time in four and a half years, lowering it by 50 basis points. While the market was expecting a cut of 25 basis points, there was a loud cry for 50, and the Fed delivered. There was a lot of speculation around the Fed cutting 50 with people asking what the Fed knows that we do not. The simple answer is not much. The key was the cut, in our opinion.
What does the rate cut mean for American consumers and businesses? Consumers will find it less costly to carry credit card debt because of lower interest rates, although do not look for the reduction in the short term as credit card issuers are reluctant to do so. Eventually, they will be forced to do it.
It is another story when it comes to borrowing money for a car/truck where we expect rate reductions much faster. However, it will be a reduction in mortgage rates that will likely have the largest impact, should mortgage rates go below the psychological 6% rate. The only thing that might slow it down is the expectation of even lower rates in the not-too-distant future.
However, all is not rosy. After years of super low interest rates dogging savers, those same folks have enjoyed money market rates exceeding 5%, CDs in the 3-5% range depending on maturities, and a 10-year Treasury Note at over 5% earlier this year. As for the equity markets, the large cap stocks have already gone up mightily this year with much of it the result of anticipating the rate cuts. Expect them to react in a quasi-increasing kind of way, but with small caps and private equity starting to recover. We only hope that the Fed, which has seemed behind the curve did not start too late. We will know in about six months.
Tauck Event
Attention fellow travelers. ProVise has teamed up with Tauck Tours for a presentation of “travel beyond the ordinary experiences.” If you are interested in discovering the world and pursuing your travel dreams, the event details are as follows:
- When: Wednesday, October 23rd
- Where: Centre Club Tampa, 123 S. West Shore Blvd., 8th Floor, Tampa 33609
- Time: 5 – 7 pm
Because we have limited seating, please let us know if you are interested in attending by contacting Donna Eppes at eppes@provise.com or 727-441-9022 ext. 230.
Social Security Increase Lower…Again!!!!
In one month, we will get the final Social Security cost of living adjustment for 2025. In fact, it will probably be the lowest increase since 2021. The index used by Social Security went from 2.9% in July to 2.4% in August, which, when averaged over the past 11 months, creates an estimated 2.5% increase. With inflation running hot for the past three years, it does not feel like much of an increase.
It is Cold Out There
Most of us have gotten letters over the past five years notifying us our personal information may have been compromised when a hacker was able to access a company’s computer system. Unfortunately, some of us have received more than one. Besides notifying those affected, the company must also provide at least one year free of credit checking with at least one of the major firms (Experian, Transunion and Equifax).
To keep fraudsters from obtaining credit in your name, you may consider putting a “freeze” on your credit accounts. How do you do it? The good news is it is not difficult, and it is free. You must set up an account with each of the three credit firms mentioned above. When you go to the site, be prepared to provide some form of government identification. What is the downside? If you apply for a loan or credit card, you will need to unfreeze one of the accounts and remember to “re-freeze” it after being approved.
Hidden Assets and Divorce
During a divorce, both parties are required to gather comprehensive financial information in a Financial Affidavit. This affidavit outlines all sources of income, deductions, living expenses, assets, and liabilities. Once completed, the Financial Affidavit becomes part of the official court records.
Suppose, however, you notice discrepancies in your spouse’s affidavit like an account balance that seems unusually low. In that case, you may be facing a situation where your spouse is concealing assets. Hidden assets can take various forms, including undisclosed bank accounts, stocks, real estate, business interests, or other financial holdings not properly reported in the affidavit.
Concealment methods may involve secret accounts, transferring assets to third parties, undervaluing assets, selling property before the divorce is finalized, or engaging in dissipation (wasteful spending, such as gambling or damaging marital property). These tactics are often used to avoid a fair division of assets in the property settlement agreement.
If you suspect your spouse is hiding assets, you should take action. Review at least two years of tax returns for any unfamiliar income streams from investments, properties, or businesses. Scrutinize bank and credit card statements for unusual transactions, such as transfers to unknown accounts or significant purchases that are not reflected in the affidavit. Additionally, if your spouse’s lifestyle does not align with their reported income, this may further suggest hidden assets.
Consider hiring a forensic accountant or a Certified Divorce Financial Analyst® who can meticulously analyze financial records to uncover hidden assets. These professionals help ensure that your attorney can secure a fair settlement for your life after divorce.
Should you empty your bank account before a divorce? (marble.co)
What Are the Penalties of Hiding Assets during Divorce? | LegalMatch
Fridman, Pam. Financially Fit Divorce. Pam Friedman CFP®, CDFA®, 2022.
Beneficial Ownership Interest (BOI) Form Deadline Approaching
Have you heard of the Beneficial Ownership Interest (BOI) report? As of January 1, 2024, new entities (corporation, LLC, etc.) had to complete a BOI report within 90 days of formation and entities existing prior to that date must do so by December 31, 2024, because of the Corporate Transparency Act.
You file the BOI with the Financial Crimes Enforcement Network (FinCEN), a part of the United States Treasury. You incur a $500 per day penalty if you do not file the form. The form contains the legal name and any trade name (DBA), the address of the principal place of business, what jurisdiction it was formed in, and a tax ID number – either a Social Security number or Employer Identification Number (EIN).
Who needs to be included? Any individual who owns 25% or more of the entity and individuals with substantial control. The following positions fit the definition of having substantial control: president, CFO, general counsel, CEO, COO, any comparable position, or those individuals with the power to appoint or dismiss specific officers or member of the board of directors or is a pivotal decision maker. For each person, the business must provide their full legal name, date of birth, home address, and a copy of their driver’s license. You can complete the form at BOI E-FILING (fincen.gov) online or download and submit it later. Remember to update the information as needed.
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