Market-Moving News[i]

April slump

The retreat from the record high that the S&P 500 achieved in late March accelerated, as the index finished the week down 3.0% to post its third negative result in a row. The NASDAQ’s weekly decline was steeper at about 5.5%; in contrast, the Dow posted a tiny gain. 

Growth stocks lag

Worries about technology companies and the interest-rate outlook weighed on growth stocks, and a U.S. large-cap growth benchmark trailed its value counterpart by a wide margin. The growth stock index closed down nearly 5% for the week versus a less than 1% decline for the value index. 

Yields rise again

Yields of U.S. government bonds rose for the third week in a row as investors continued to rein in their expectations for near-term interest-rate cuts. The yield of the 10-year U.S. Treasury bond briefly rose as high as 4.69% on Tuesday—the highest since last November—before retreating somewhat to close at 4.61% on Friday.

Dialing back expectations

U.S. Federal Reserve Chair Jerome Powell conceded that it’s “likely to take longer than expected” to gain sufficient confidence that inflation is on a sustainable downward track. In a speech on Tuesday, Powell reinforced recent messaging about a delayed timeline for interest-rate cuts, saying “it’s appropriate to allow restrictive policy further time to work.”

Anxiety rises

An index that tracks investors’ expectations of short-term U.S. stock market volatility rose for the third week in a row to the highest level in nearly six months. On Friday afternoon, the Cboe Volatility Index was up 46% from a recent low on March 27.

Oil volatility

The price of U.S. crude oil briefly spiked around 4% to more than $85 per barrel late Thursday in the wake of the latest hostilities between Israel and Iran. However, prices quickly reversed course as tensions eased somewhat, and Friday afternoon’s price of around $83 marked a roughly 3% decline for the week.

China’s comeback

China’s government reported that the nation’s GDP grew at an annual rate of 5.3% in this year’s first quarter, exceeding most economists’ expectations. The result follows implementation of stimulus measures that are designed to bring the world’s second-largest economy closer to prepandemic growth rates.

U.S. GDP ahead

Thursday’s scheduled release of the U.S. government’s initial estimate of first-quarter GDP is expected to show that the economy remained on a solid growth track but slowed relative to last year’s fourth quarter, when GDP grew at a 3.4% annual rate. An estimate released on Tuesday by U.S. Federal Reserve economists projected a first-quarter growth rate of 2.9%. 

The Week Ahead:  April 22-26

• Monday
  • No major reports scheduled

• Tuesday
  • New home sales, U.S. Census Bureau

• Wednesday
  • Durable goods orders, U.S. Census Bureau

• Thursday
  • First-quarter GDP, advance estimate, U.S. Bureau of Economic Analysis
  • Pending home sales, National Association of Realtors
  • Weekly unemployment claims, U.S. Department of Labor

• Friday
  • Personal Consumption Expenditures Price Index, U.S Bureau of Economic Analysis
  • University of Michigan Index of Consumer Sentiment

Philosophy Quote of the Week  

The Marks of a Rational Person

“These are the characteristics of the rational soul:  self-awareness, self-examination, and self-determination.  It reaps its own harvest…It succeeds in its own purpose…”

Marcus Aurelius, Meditations, 11.1-2

Tax Tips[ii]

Basis, Capital Gains, and Losses

Did you buy property for your business last year?  Did you sell stocks or mutual funds?  Did you receive an inheritance?  Did someone gift you a car, house, stock or any asset other than cash?  In all these events, your total costs, investment or inheritance in assets, is known as basis that can affect your tax return.  The IRS has come great points on how to address capital gain or loss.  When you sell a ‘capital asset,’ the sale usually results in a capital gain or loss.  A ‘capital asset’ includes most property you own and use for personal or investment purposes.

Here are 10 facts from the IRS on capital gains and losses:

1. Capital assets include property such as your home or car. They also include investment property such as stocks and bonds.
2. A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.
3. You must include all capital gains in your income. Since 2013, you may be subject to the Net Investment Income Tax (NIIT).  The NIIT applies at a 3.8% rate to certain net investment income of individuals, estates, and trusts that have income above statutory threshold amounts.
4. You can deduct capital losses on the sale of investment property. You can’t deduct losses on the sale of personal-use property, like your house, car, furniture, etc.
5. Capital gains and losses are either long-term or short-term, depending on how long you held the property. If you held the property for more than one year, your gain or loss is long-term.  If you held it for one year or less, the gain or loss is short-term.
6. If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a ‘net capital gain.’
7. The tax rates that apply to net capital gains will usually depend on your income. For lower-income individuals, the rate may be 0% on some or all of their net capital gains.  In 2013, the maximum net capital gain tax rate increased from 15% to 20%, depending on your income.  A 25% or 28% tax rate can also apply to special types of net capital gains.
8. If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This type of loss is known as a Net Capital Loss.  The Net Capital Loss is limited to $3,000 per year, or $1,500 if you are married filing separately.
9. If your total net capital loss is more than the limit you can deduct, you can carry over the excess losses you are not able to deduct to next year’s tax return. You will treat those losses as if they happened that year.
10. You must file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses, with your return.

Here are a few key points to remember:

1. Basis is defined in numerous ways. It is either what you paid for assets or what others paid for it, if gifted to you.  But basis is stepped up to Fair Market Value (FMV) if inherited.
2. Basis is important to determine gain or loss when you sell or dispose of something.
3. The higher your basis, the lower your capital gain (thus the lower your taxes).
4. Mutual fund basis increases as capital gains and dividends are reported if they are reinvested (add each year to your mutual fund cost). Brokerage houses keep this information for you, even if you transfer or move your investments to another brokerage firm.
5. Reduce your capital gains by keeping track of your basis. Keep an annual log of what you pay for something plus what you reinvest.  If you are gifted or inherit assets, then get a basis value from either the estate or the one who gifted it to you.

Health Tip of the Week[iii]

Caregiver stress:  Tips for taking care of yourself

Caring for a loved one strains even the most resilient people. If you're a caregiver, take steps to preserve your own health and well-being.

By Mayo Clinic Staff

As the population ages, more people are doing caregiving. About 1 in 3 adults in the United States is an informal or family caregiver.

A caregiver is anyone who helps another person in need. A person in need might be an ill spouse or partner, a child with a disability, or an aging friend or relative.

Caregivers report higher levels of stress than do people who are not caregivers. It's important for caregivers to know that they, too, need help and support.

Caregiving is rewarding but stressful

Caregiving can have many rewards. For most caregivers, caring for a loved one feels good. And it can make your relationship stronger.

But the demands of caregiving also cause emotional and physical stress. It's common to feel angry, frustrated, worn out or sad. And it's common to feel alone.

Caregiver stress can put caregivers at risk of changes in their own health. Factors that can increase caregiver stress include:

• Caring for a spouse.
• Living with the person who needs care.
• Caring for someone who needs constant care.
• Feeling alone.
• Feeling helpless or depressed.
• Having money problems.
• Spending many hours caregiving.
• Having too little guidance from health care professionals.
• Having no choice about being a caregiver.
• Not having good coping or problem-solving skills.
• Feeling the need to give care at all times.

Signs of caregiver stress

As a caregiver, you may be so focused on your loved one that you don't see how caregiving affects your own health and well-being. The signs of caregiver stress include:

• Feeling burdened or worrying all the time.
• Feeling tired often.
• Sleeping too much or not enough.
• Gaining or losing weight.
• Becoming easily irked or angry.
• Losing interest in activities you used to enjoy.
• Feeling sad.
• Having frequent headaches or other pains or health problems.
• Misusing alcohol or drugs, including prescription medicines.
• Missing your own medical appointments.

Too much stress over time can harm your health. As a caregiver, you might feel depressed or anxious. You might not get enough sleep or physical activity. Or you might not eat a balanced diet. All of these increase your risk of health conditions, such as heart disease and diabetes.

Tips to manage caregiver stress

The emotional and physical demands of caregiving can strain even the strongest person. Many resources and tools can help you care for your loved one and yourself. Make use of them. If you don't take care of yourself, you won't be able to care for anyone else.

To help manage caregiver stress:

• Ask for and accept help.Make a list of ways in which others can help you. Then let them choose how to help. Ideas include taking regular walks with the person you care for, cooking a meal for you and helping with medical appointments.
• Focus on what you can do.At times, you might feel like you're not doing enough. But no one is a perfect caregiver. Believe that you're doing the best you can.
• Set goals you can reach.Break large tasks into smaller steps that you can do one at a time. Make lists of what's most important. Follow a daily routine. Say no to requests that are draining, such as hosting meals for holidays or other occasions.
• Get connected.Learn about caregiving resources in your area. There might be classes you can take. You might find caregiving services such as rides, meal delivery or house cleaning.
• Join a support group.People in support groups know what you're dealing with. They can cheer you on and help you solve problems. A support group also can be a place to make new friends.
• Seek social support.Stay connected to family and friends who support you. Make time each week to visit with someone, even if it's just a walk or a quick cup of coffee.
• Take care of your health.Find ways to sleep better. Move more on most days. Eat a healthy diet. Drink plenty of water.

Many caregivers have trouble sleeping. Good sleep is important for health. If you have trouble getting a good night's sleep, talk to your health care professional.

• See your health care professional.Get the vaccines you need and regular health screenings. Tell your health care professional that you're a caregiver. Talk about worries or symptoms you have.

Respite care

It may be hard to leave your loved one in someone else's care. But taking a break can be one of the best things you do for yourself and the person you're caring for. Types of respite care include:

• In-home respite.Health care aides come to your home to spend time with your loved one or give nursing services or both.
• Adult care centers and programs.There are centers that give day care for older adults. Some also care for young children. The two groups might spend time together.
• Short-term nursing homes.Some assisted living homes, memory care homes and nursing homes accept people who need care for short stays while caregivers are away.

Working outside the home

Caregivers who work outside the home can feel burdened. If this describes you, think about taking a leave from your job for a time if you can afford to do so.

Employees covered under the federal Family and Medical Leave Act may be able to take up to 12 weeks of unpaid leave a year to care for relatives. Ask your human resources office about choices for unpaid leave.

You aren't alone

Ask for the help you need. Besides asking family and friends, use local resources for caregivers.

To start, check out the national Eldercare Locator or contact your local Area Agency on Aging to learn about services in your area. Or try your state's Aging and Disability Resource Center. You can find these resources online or in a telephone directory.

There also are mobile apps and web-based services that give support to caregivers. These services can help build coping skills and teach about caregiving.

[i]https://www.jhinvestments.com/weekly-market-recap#investment-returns, accessed 04.21.2024.

[ii] Hockensmith, Robert F.  52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money.  Kindle edition, pages 74-77, accessed 04.21.2024.

[iii]https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/caregiver-stress/art-20044784.  Accessed 04.21.2024.