Preventing future terrorist attacks was apparently not on the minds of the French people as they went to the polls and voted for Emmanuel Macron as the country’s next president. Macron had run on a pro-Europe, pro-EU platform, but it was his opponent who ran on the need for stricter vetting of refugees. At 39, Macron is the youngest person to hold the position since Napoleon. The French presidential election occurs in two phases and Emmanuel Macron and Marine Le Pen were the top two finalists who survived the first round two weeks before and sought political victory in a second round that happened two weeks later. Election result projects in France gave Macron two thirds of the vote. Instead of leading another country to exit the European Union, Macron embraces the EU and campaigned on his commitment to the union. Macron’s competitor’s campaign for the presidency never had a



Reducing personal and corporate tax rates was a centerpiece of the new Trump tax proposal which came out April 26, 2017. The changes are meant to stimulate domestic corporate profits and hiring while giving the middle class a tax break. The other goal of the proposal is simplification of a process that has grown far too complex for the average person. With any changes to the current tax code and the way personal taxes are collected, there is substantial interest in how tax revenues might be affected and what taxpayers can expect for popular deductions. According to Treasury Secretary Steven Mnuchin, the structure is “a tax plan that will count partly on revenue from economic growth spurred by tax cuts and partly on revenue from limiting deductions and other tax breaks.” The White House blog states that the focus of tax reform has centered on: “job creation, economic growth, and



France has had more than its share of terrorist events and that fact has crept into the country’s politics. It has propelled one of two parties competing for the presidency into prominence for the post. Emmanuel Macron and Marine Le Pen made it through round one to fight it out in a run-off election. The first round of voting occurred on April 23, 2017 and the second round run-off will happen on May 7, 2017. Neither finalist comes from either of the country’s two leading parties. News sources characterize them both as outsiders, although Macron had worked as the Deputy Secretary General and Economy Minister for French president Hollande. The candidates from the country’s two major parties only accounted for less than 27 percent of the total vote. The voters have spoken. If this sounds like it bears a resemblance to the last U.S. presidential election, you would be right. There



Investors can be nervous people. That goes double for institutional investors; the people who manage big pension funds, mutual funds, foundations or the funds in insurance companies. When you are responsible for managing billions of dollars, in some cases, you worry about a hiccup of any geopolitical nature. It can mean volatility in the market and that can mean a loss. Unfortunately for those money managers, there is always some concerns on the world stage. Whether those concerns have to do with Iran, North Korea, Russia, terrorism, the French election or Syria, it can impact the oil markets or the stock market. Uncertainty about anything is not welcome in the equity or futures markets and it can wreck havoc with many forms of investments. In times of uncertainty, many investors seek out safe havens such as gold or government bonds, as lower risk alternatives. Yet, employing a knee-jerk reaction isn’t



Taxes are much like rust; once they are allowed to erode, they just keep on eroding. As a saver or investor, both fees and taxes can erode the potential future balance of a savings or retirement account. For this reason, strategies should always include tax considerations, especially for those in higher marginal tax brackets. During a person’s working years, if they used a defined contribution plan like a 401k, they realized a tax decrease as their contributions were not currently taxed. The effect this has was generally to reduce a workers taxes. With the exception of Roth accounts, a retiree must start tapping those retirement savings, and when they do, they will pay taxes at their current tax rate. Their marginal tax rate will be higher in most cases than if they were simply paying long-term capital gains on investments. One thing that holders of a 401k plan should avoid



The past couple of years witnessed more speculation about interest rate hikes by the Federal Reserve than what was the reality. Many of the pundits were convinced we would see four increases during 2016 and they were wrong. The thinking has shifted in 2017 as some of the precursors that the Fed considers are starting a align and justify action on their part. A growing economy and real growth in the job market, with the accompanying uptick in inflation, is just the formula the Fed needs to raise rates; really. On March 15, 2017, the Federal Open Market Committee (FOMC) raised the federal funds rate again by a quarter point; the second such move in three months. They had raised the benchmark rate this past December as well. The two increases are expected to have some effect on short term lending rates. This has been a reversal of Fed policy,



Can you imagine that you have run up the balances on your credit cards to their maximums and you call the issuer of each credit card and announce; “I have decided that you need to raise my spending limit.” You know the response; “We make that decision; not you.” The bank, or other institution, that issues those credit cards has an underwriting department that determines your risk and ability to pay before they determine a maximum spending limit on your card. A responsible household manages its debt and monthly spending against its income and other sources of assets. This balancing act keeps debt from getting out of hand and assists in maintaining good relations with creditors and keeps the consumer’s FICO score, and other measures of financial responsibility, high. This micro-economic example is replicated on a macro scale when you consider the same balancing act that the United States must



While many retirement plans do not require taxes during the accumulation phase, as the old saying goes; “nothing can be certain except death and taxes.” At some point, taxes are paid on income. There is no skirting it. The benefit of many retirement plans is that they are tax-deferred. During retirement planning, many workers don’t anticipate the effects of taxes during that phase of their lives. They forget that any consideration of living expenses must still be net of taxes. The benefit of tax deferral on many retirement plans is that taxes don’t have to be paid on the income at the time it is earned; often during the time you are at your highest tax rate. The theory is that when you retire, you will be at a lower tax rate and you can pay taxes on your deferred income at that lower rate. As long as the federal,


5-Minute Market Update | February 13, 2017

I am happy to present this week’s market commentary from FormulaFolio Investments. The goal is to give our clients and friends a simple way to see everything they need to know about the financial markets on a weekly basis, in 5 minutes or less. After all, investing should be simple, not complicated. Market Update Equities: Broad equity markets finished mostly positive for the week with large-cap US stocks experiencing the largest gains. S&P 500 sectors finished the week mostly positive as cyclical sectors generally outperformed defensive sectors. So far in 2017 technology, consumer discretionary, and materials are the strongest performers while telecommunications and energy are the only sectors with negative performance year-to-date. Commodities: Commodities were positive for the week as oil prices remained mostly flat. Speculation regarding OPEC production cuts has pushed oil prices up since late November, but an increase in US production has given investors pause so far


Trumps effect on the bond market

The stock market and bond market don’t like uncertainty. They also react to changes in the policies of a new administration of a country. It’s much like when a company changes CEO’s or a company is bought out by a competitor. The employees aren’t sure what comes next. It’s no different when a country changes administrations; there is a lot of speculation, waiting and watching and clamor about what it might mean to a whole host of variables. America just recently had a historic election. Americans spoke out loudly that politics as usual was not going to continue. America would be restored to its former glory as the world’s unquestioned superpower. Donald Trump, an outsider who had never run for political office, won the election. Not only does this kind of shake-up impact the markets but it leaves the pundits arguing about what a new batch of policy changes, related