Too often we find ourselves reading articles that predict financial doomsday or that have headlines designed to scare the reader into action or submission. In a world filled with non-stop news reporting and endless platforms to promote ideas, sell products, and gain attention, it can be very difficult to determine what is important and true.
Although it has not been a straight path higher, the S&P 500 index has logged 29 new record closing highs year-to-date. Retail investors have perhaps been emboldened, as the financial channels continue to spotlight the parabolic moves of latest “meme” stock(s) targeted by the WallStreetBets and other Reddit crowd traders.
Buckingham Advisors is once again sponsoring Operation Cherrybend, an annual event that provides combat-wounded veterans with fellowship and activities including adventure, music and community. The mission of Operation Cherrybend is to thank veterans for their courage, selflessness and sacrifice to our country.
Inflation concerns are rising. So, for this newsletter, we will focus on consumer inflation and the CPI, or Consumer Price Index. There are many variations of CPI, including month-over-month, year-over-year, seasonally adjusted, and with or without food and energy prices.
Your small business may be eligible for the Employee Retention Credit (ERC) in 2021 – and it is not too late to claim it. While the ERC was initially implemented by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, it was the Consolidated Appropriations Act that extended the credit through June 30, 2021 and later the American Rescue Plan Act of 2021 that further extended the credit through December 31, 2021.
Year-to-date, the equity markets continue to show positive momentum, reflecting growing signs of the economic recovery and rising expectations for corporate earnings. The S&P 500 is up 11.5% year-to-date as of yesterday’s close.
Many of our small business clients ask if they can reimburse their employees for health insurance. Although you cannot give your employees money directly for their healthcare expenses, there is a tax advantaged health benefit that allows employers to reimburse their employees for their healthcare expenses. This benefit is called a Health Reimbursement Arrangement or an HRA.
The American Rescue Plan, 2021 (ARPA, 2021) was signed by President Biden on March 11, 2021 to address the continuing economic impact on small businesses, employers, and employees due to the coronavirus (COVID-19) pandemic. The legislation extends and expands provisions found in the Families First Coronavirus Relief Act (FFCRA), Coronavirus Aid, Relief and Economic Security (CARES) Act, and the Consolidated Appropriations Act, 2021 (CAA, 2021).
Looking at 1-year returns, we are at an extreme moment in time. While the closing low for stocks in 2020 came on March 23rd, the 1-year returns from March 16th are still impressive: large cap, mid cap, small cap, and international stock indices have generally gained 60% or more. Treasury bonds, viewed as the safe haven, have not fared well due to rising interest rates. While the price of gold has increased over the past year, relative to the S&P 500, the performance is near the 10-year low seen in 2018.
President Biden signed a $1.9 trillion dollar bill into law on March 11, 2021. The American Rescue Plan Act of 2021 provides a third round of stimulus checks (with some new provisions and tighter income limits), increases the child tax credits available for 2021, makes some unemployment benefits non-taxable, extends some of the current federal unemployment benefits until September 6, 2021, provides a break on COBRA and Affordable Care Act (ACA) premiums for some individuals, and includes a variety of other provisions for individuals and businesses in 2021.