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Federal Reserve tapering and proposed corporate tax increases have dominated headlines recently. In our latest market update, titled “Don’t Fight the Fed,” we summarize the Fed’s current position, review proposed tax changes, and consider the effect of both on the market. Here are the key takeaways:
- The unwinding of the massive accommodation by the Federal Reserve is underway.
- While tapering reduced bond yields in the past, current conditions may be different.
- Tapering caused initial volatility in equities, but that was short lived.
- Proposed increase to corporate taxes and the initiation of a buyback tax should not be a major headwind for equity markets.
- Rates and earnings do play into valuation and need to be watched closely.
- The weight of the evidence still leans bullish and BWM remains overweight stocks vs bonds.
As always, we are closely watching our indicators and are prepared to make portfolio changes in response to any changes in our outlook. Please contact BWM Financial if you would like to discuss your specific situation in more detail.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.