Gun Ownership and Your Homeowners Policy

With the election of President Donald Trump, you are advised to prepare for a wild ride in the investment markets; indeed, the markets are already turning sharply negative due to the uncertainties ahead.  Will the new President really build an expensive wall across our Southern border?  Will he introduce legislation that will nullify the Affordable Care Act and throw millions of Americans with pre-existing health conditions into health insurance limbo?  Do taxpaying non-citizens who have children born in America have reason to fear deportation?  Are our allies abroad really going to have to renegotiate their trade and security arrangements with the world’s superpower?

It is helpful to remember that these market gyrations are almost always bad times to trade, and particularly to sell.  We have months before the new president takes office.  Traders and analysts have plenty of time to settle down between now and the first 100 days of the Trump presidency, and evaluate whether America’s corporations are, indeed, worth much less than they were before election night.  The safest bet you can make is that they’ll be unusually jumpy for the next four years.  But in the end, the intrinsic value of stocks don’t change with the occupant of the White House.

One of the more interesting things to watch out for is a tax reform proposal sometime in early 2017.  Along the campaign trail, candidate Trump proposed simplifying our taxes down to three ordinary income tax brackets: 12% (up to $75,000 for joint filers), 25% ($75,000 to $225,000) and 33% (above $225,000).  The wish list includes a doubling of the standard deduction, with itemized deductions capped at $100,000 for single filers; $200,000 for joint filers.  Capital gains taxes would be capped at 20%, federal estate and gift taxes would be eliminated and the step-up in basis would be eliminated for estates over $10 million.

However, one should remember that these proposals were made before anyone imagined that Americans would elect an undivided government, with the Presidency, the House and Senate all under the control of one party.  The next four years—indeed, the first 100 days of the new Presidency—represent an opportunity for the Republican party to do something much more ambitious than simply tinker with our nation’s tax rules.  Influential Republican leaders—including House Speaker Paul Ryan—have reportedly been planning for some years to rewrite our nation’s tax code.  

What, exactly, would tax reform look like?  At this point, we simply don’t know.  The goal would be tax simplification, but the bet here is that whatever form this takes will add thousands of pages to the current law.

Of course, everything is speculation at this point, which is the most important thing to keep in mind as the markets roil and the shock and awe of the unexpected election outcome begins to sink in and cooler heads prevail.  The very worst thing you could do, over the next few days and weeks, is make a temporary loss permanent by selling into the general panic.

Whither Brexit?

More than three months after British voters elected to extricate their economy from the European Union, Brexit still hasn’t actually happened.  What’s going on?

Apparently nothing more than a careful process designed to minimize damage on both sides of the English Channel.  British Prime Minister Theresa May recently announced a target of late first quarter 2017 as the time she and Parliament will finally pull the trigger and invoke Article 50 of the EU’s Lisbon Treaty.

When that happens, it will, by contract, start two years of negotiations on exactly what the economic relationship between Britain and mainland Europe will become.  At the same time, however, May says she plans to introduce “Great Repeal” legislation next year that will convert all existing EU laws into U.K. legislation.  Parliament will also have to repeal the European Communities Act of 1972.

But will there actually BE a Brexit?  A group of over 1,000 British barristers have signed a letter pointing out that the Brexit referendum was nonbinding, and that the prime minister cannot make such a significant decision without consulting Parliament.  It’s possible that until Parliament affirms the extrication from the European Union, it won’t legally take place.  London’s High Court is expected to issue a ruling on Parliament’s role in Brexit on October 13, but an appeal is expected no matter what the ruling—sending the case to the U.K. Supreme Court to be heard in mid-December.

It may be helpful to remember that May herself advocated remaining in the European Union prior to assuming her current leadership position.  There is speculation that her uncompromising timeline on Brexit is simply a way to reassure voters that she has heard their message.  Then she can work for a so-called “soft Brexit,” where the country will control its borders via liberal work quotas, and there will be little changed in terms of trade and finance.

Meanwhile, despite the dire predictions, there has been no British recession as a result of the unexpected vote, and little has changed in regard to London’s status as Europe’s leading financial center.

Sources:

http://www.bloomberg.com/news/articles/2016-10-02/may-to-pull-brexit-trigger-by-march-as-u-k-to-enshrine-eu-laws

https://www.ft.com/content/a859227e-88bf-11e6-8cb7-e7ada1d123b1?ftcamp=published_links%2Frss%2Fcomment%2Ffeed%2F%2Fproduct

http://www.reuters.com/article/us-britain-eu-may-speech-idUSKCN1220LM

Taxes Up (but not so much as you might think…)

If you think taxes are higher than their historical rates, well, it depends on how far back in history you’re comparing them to.  Take a look at the accompanying chart, which shows tax revenue as a percent of total national income for four countries—France, Sweden, the United Kingdom and the U.S.—since 1868.  The chart ends in 2008, and is taken from research by tax policy analyst Thomas Piketty.

People who think taxes are too high will note that today’s total tax haul is much higher today than it had been during the period from 1868 through 1940, and the spike due to World War II’s considerable expenses was never compensated for by a fall back to previous levels.

However, notice that the total for America has largely leveled off in the past 30 years, and most especially notice that the U.S. share of total income, at 27.5%, is considerably lower than the other countries.  Both France and Sweden are flirting with 50% levels, while the U.K. is just above 35%.  In the case of the U.S. and Britain, total tax levels are largely unchanged since around 1960—which is not something you hear in Presidential or Congressional debates about our tax rates.

You also aren’t hearing much about the growing national debt these days, in part because the rate of growth has slowed dramatically and is now at or below historic averages.  The accompanying chart shows an encouraging trend of federal deficit as a percentage of U.S. GDP; the black line represents a zero budget deficit, which was breached briefly during the Bill Clinton presidency.  The dip starting in 2008 represents the historic government bailout which was designed to address the Great Recession and global banking crisis that began in 2008.

A Slow Decline in Readers

Do you read printed books occasionally?  If you do, you’re still in the majority, but a declining one.  As you can see from the accompanying chart below, 73% of American adults have read at least one book in the last 12 months, down from 79% in 2011.  65% of us have read a print book in the past year, while a growing number—currently 28% of us—have read an e-book, and 14% have listened to an audio book.  The electronic formats appear to be growing in market share, but very slowly compared to the printed versions.

According to the Pew Research Center, the median number of books an American will read in a 12-month period is four, but a relatively small group of voracious readers pushes the average number of books read per American up to 12.  Women (77%) are more likely than men (68%) to have read a book in the past year, while 26% of the population does not read books at all.

Apparently reading declines with age.  80% of Americans age 18-29 have read a book in the past year, but that declines to 73% for people age 30-49, and further declines to 70% of people age 50-64.  Only 67% of people over the age of 65 read a book in the past year.

Source:

http://www.pewinternet.org/2016/09/01/book-reading-2016/

Will Your Morning Cup of Coffee Make You Healthier?

If you drink coffee habitually, you’ll like this.  A new study monitored the coffee intake of 208,500 men and women over the course of 30 years, and found that people who drink coffee in moderation (fewer than five cups a day) received a number of significant health benefits.  Among them: lower risk of dying from heart diseases, diabetes, certain brain conditions—and, oddly enough, suicide.

Of course, you’ve already read that coffee compounds are rich in antioxidants and inflammation-fighting agents.  Researchers haven’t found the precise link between the diminished health risks and coffee consumption, but speculate that these beneficial compounds could be involved—and outweigh the detriments associated with caffeine consumption.

Source:

http://diply.com/sciencep/article/coffee-helps-live-longer

Good News About HIV

You don’t hear much about the HIV epidemic any more, despite the fact that an estimated 1.2 million Americans are living with the disease, and an estimated 44,000 new cases are reported in this country every year.  The Center for Disease Control says that 36.7 million people around the world have the disease, and 1.1 million died from AIDS-related causes last year.

Until recently, there was no cure for HIV.  But that may have changed, thanks to the work of researchers at the universities of Oxford, Cambridge, Imperial College London, University College London and King’s College London.  The researchers are testing a new therapy which targets the disease in its dormant state, and to everyone’s surprise, one of the 50 people in the trial appears to be completely cured.  The virus is completely undetectable in his bloodstream.

Current treatments have reduced the death rate of HIV victims by targeting the disease whenever it starts reproducing from the DNA of immune cells in the body.  But these anti-retroviral therapies (ARTs) can’t spot infected cells where the virus is dormant.  The new therapy uses a vaccine to help the body recognize which cells are HIV-infected, and then a drug called Verinostat activates those dormant cells so they can be spotted by the immune system and eliminated.

The trial is ongoing, but it provides hope for millions of people who are living under one of the most intractable diseases on the planet.

Sources:

http://www.cdc.gov/hiv/basics/statistics.html

http://www.telegraph.co.uk/news/2016/10/02/hiv-cure-close-after-disease-vanishes-from-blood-of-british-man/

Bees an endangered species?

You probably know that the bee population in the U.S. has been collapsing for the past several years, due to factors that are only now being partially understood.  Scientists call the phenomenon “colony collapse disorder,” but the term “beemageddon” has become popular among laypersons.

Suspects for the population decline have included pesticides, disease-bearing parasites and poor nutrition.  The most recent study by the University of Maryland and the U.S. Department of Agriculture has pinned the decline on a witch’s brew of common pesticides and fungicides used by farmers, which contaminate the pollen that bees collect to feed their hives.  The scientists identified 21 different agricultural chemicals in one sample alone.  The chemicals, acting together, reduce bees’ ability to resist infection by a parasite that had been previously identified in colony collapse disorder.”

Perhaps the most alarming news is that one plentiful member of the bee family has become the first in bee history to be put on the endangered species list.

The protection has been extended to yellow-faced bees in Hawai’i, which were once the most common insect on the islands.  They are now rarely seen, in part due to the destruction of its traditional habitats, in part due to competition from an invasive bee from India competing for the same flower nectar, and from invasive ant species that lunch on their larvae.

The endangered species listing will help protect the yellow-faced bees’ critical habitats, while mainland researchers still try to figure out what to do in the rest of the country to halt the alarming population decline.

Source:

http://gizmodo.com/bees-placed-on-endangered-species-list-for-the-first-ti-1787313026?utm_campaign=socialflow_gizmodo_twitter&utm_source=gizmodo_twitter&utm_medium=socialflow

http://qz.com/107970/scientists-discover-whats-killing-the-bees-and-its-worse-than-you-thought/