Market Talk / Jan. 8 - 14

[bkrownd]

You mean all retail sales taxes are all ductable.

Ohhh...this is not on my 1040EZ. Still not sure if I finally have to move up to the "big form" this year.

 

[Birchtree]

Not anymore

The tax deduction was good only for 2004 and 2005. I can't believe that none of my democrat friends made me aware of this program until the end of 2004. So I missed the first year but managed to be diligent in 2005. I have a whole shoe box full of receipts and they were all created by my spending.

The IRS offers a graph that is to be used in comparison to income - if you can document other taxes above that mandated ceiling - you will be able to deduct any sales taxes you paid. No wonder my democrat friends kept this secret - it's going to be a goldmine of a deduction. People I know say to me won't that be boring counting all those taxes up? Not when every receipt that comes out of that box has a pleasant surprise attached to it. I'm going to probably get money back this year. I timed an automobile purchase to put me up over the ceiling and after that I knew there would be money back on anything that displayed a state sales tax which is as high as 7%.

So it may take me a whole afternoon to do the counting - but to me it is time well spent.

 

[Birchtree]

Only #1

There is only one guy I know that knows anthing about watching the Fed and it ain't DMA. You're missed. No I'm not from Brokeback Mountain but I do enjoy and benefit from information you post.

#2

 

[Birchtree]

34% and 20%

The economy may slow in 2006, but that doesn't necessarily mean bad news for stocks. Slower growth could be a boon as investors lose their fear that a sharp downturn or meddlesome inflation is on the way. Sometimes a moderate economy can actually extend the amount of time that the expansion can continue. Optimisim about the economy is what drove the fourth-quarter stock market rally that began in late October. After the last rate tightening cycle by the Fed the S&P500 rallied 34% in 1995, and 20% in 1996. In 2005 the S&P 500 companies spent more than $300 billion on buybacks, up more than 50% from 2004.

 

[oldschool]

An AP article out today on yahoo questions whether stocks will climb much higher when fed stops raising rates.

The article quotes a note by Bank of America's Thomas McManus titled "Popular view of 'what happens when the Fed stops' is based on too few cycles."

McManus apparently looked at 20 separate tightening cycles over more than 50 years, and found that the Standard & Poor's 500 performed better, on average, in the year leading up to a peak in rates than it did the year after the peak.

"This should not be a surprise," he wrote, "as earnings are generally robust during Fed tightening, and the signals for the FOMC (Federal Open Market Committee) to move to the sidelines have typically included indications of a weaker economy, which can easily undermine stock valuations, even in a more supportive interest rate environment."

So, if the rate hikes end in 2006 and if the market sticks to historical patterns and performs worse than it did in 2005, then 2006 could be nothing special.

That's not to say the end of Federal Reserve short-term rate hikes will hurt stocks. McManus found that each sector of the S&P 500 provided positive returns, on average, in the 12 months after rates peaked, but only three sectors provided double-digit returns. Those three sectors were consumer staples, health care and financial stocks, which are traditionally defensive sectors, the ones that tend to do well when the overall market is weak.


Here's link to full story. www.biz.yahoo.com/ap/060114/wall_main.html?.v=4

 

[oldschool]

The link I just posted doesn't seem to work. Here's another link for the story "Investors may be misreading Fed Intentions".

http://biz.yahoo.com/ap/060114/wall_main.html?.v=4

 

[Spaf]

Closing weekly thread

Will be starting a New Market Talk thread for next week

Enjoyed the posts!

Spaf