April 25, 2016

The Markets

Isn’t it remarkable that China’s growth is so consistent?

A columnist from The Washington Post once opined that China “produces an astonishing number of astonishing numbers.” Last week’s GDP announcement, which helped push markets higher, may fall into that category.

China’s official statistics agency reported the country’s gross domestic product (GDP) grew by 6.7 percent during the first quarter of 2016. That didn’t come as a big surprise because it’s smack-dab-in-the-middle of the official Chinese government target of 6.5 to 7.0 percent GDP growth. The target was set last year when the government adopted its most recent five-year plan.

This past month I have done a lot of re-modeling in the practice now that the severe markets of last May to this January have relaxed somewhat. The equity is being built up somewhat and cash and bond holdings have been reduced. I’ll keep you abreast if there are major changes in the process later.

What Do Economists Think?

As they’ve traveled across the country, U.S. Presidential candidates have made a variety of economic proposals and promises. National Public Radio’s Planet Money asked 22 economists from across the political spectrum for their two cents on the matter. Survey participants were given three options: good, debatable, or bad. Here are their opinions (for the record, not mine!):

1. End the “carried interest” tax break, which benefits hedge fund managers and private equity executives.

  • Good: 20
  • Debatable: 2
  • Bad: 0

2. Lower the corporate tax rate to 25 percent.

  • Good: 10
  • Debatable: 10
  • Bad: 2

3. Create a “National Infrastructure Bank” seeded with public money to help finance infrastructure projects.

  • Good: 10
  • Debatable: 8
  • Bad: 4

4. Make tuition free at public colleges and universities.

  • Good: 1
  • Debatable: 1
  • Bad: 20

5. Make tuition free at community colleges for students who contribute earnings from working 10 hours a week.

  • Good: 5
  • Debatable: 9
  • Bad: 8

6. Impose a “spectator tax.” Stock trades will be taxed at 0.5 percent and bonds at 0.1 percent.

  • Good: 4
  • Debatable: 6
  • Bad: 12

7. Raise the federal minimum wage to $15 an hour.

  • Good: 2
  • Debatable: 4
  • Bad: 16

8. Remove single taxpayers who earn less than $25,000, and married taxpayers (and those filing jointly) who earn less than $50,000 – approximately over 50 percent – from the tax rolls.

  • Good: 2
  • Debatable: 9
  • Bad: 11

9. Everyone pays the same 10 percent tax rate. It retains some version of the earned income tax credit and deductions for lower-income families.

  • Good: 1
  • Debatable: 0
  • Bad: 21

10. Expel immigrants who are in the United States illegally.

  • Good: 0
  • Debatable: 0
  • Bad: 22

We’ll find out what the American people think later this year!

Weekly Focus

“And along the way I discovered that a lot of great originals in history were procrastinators. Take Leonardo da Vinci. He toiled on and off for 16 years on the Mona Lisa. He felt like a failure. He wrote as much in his journal. But some of the diversions he took in optics transformed the way that he modeled light and made him into a much better painter.”

-Adam Grant, Organizational psychologist

 

Image used in accordance with Creative Commons 2.0 Generic License. 

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