April Inflation – Indications of Cooling?

Year-over-year, inflation rose 3.4% in April, down 0.1% compared to march and in line with expectations.

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April Retail Sales – Consumers Take a Breather

U.S. retail sales stalled in April after downwardly revised gains in the February and March.

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March Retail Sales – Strong Print Supports Delayed Rate Cut Expectations

U.S. retail sales rose by more than forecast in March and February results were revised upward, highlighting yet-resilient consumer demand exiting the first quarter.

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March Inflation – Hot Print Likely Eliminates June Cut

Year-over-year, inflation rose 3.5% in March, up 0.3% compared to February and 0.1% ahead of expectations.

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Job Gains Strong – Stop Me if You’ve Heard this Before

Job gains were strong again in March (stop me if you’ve heard this before).  The U.S. labor market added 303k jobs in March, exceeding expectations for 214k jobs. The unemployment rate fell to 3.8%. Revisions to January and February data were marginally positive, adding 22k jobs to total employment collectively. Average hourly earnings increased 0.3%, […]

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February Retail Sales – Below Forecasts

On the heels of a robust holiday shopping season, U.S. retail sales decelerated sharply in January and missed forecasts in February, underscoring concerns over how household spending will hold up this year.

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February Inflation – Generally As Expected

Year-over-year, inflation rose 3.2% in February, up 0.1% compared to January and 0.1% ahead of expectations.  Month-over-month, prices increased +0.4%, up 0.1% compared to January and consistent with expectations.  While inflation has declined substantially from a 40-year high of 9.1% in June 2022, today’s report reinforces the Fed’s cautious approach to cutting interest rates as […]

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February Jobs – Unemployment Rises Despite Healthy Job Gains

Strong February job gains mask a gradually cooling labor market.  The unemployment rate climbed to a two-year high of 3.9% in February, but remains below 4% as hiring remained healthy.  The U.S. labor market added 275K jobs following a combined 167K downward revision to the prior two months.  The rise in the unemployment rate appeared […]

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NYCB & Flagstar Bank

You may have seen another regional bank in the headlines recently, NYCB – New York Community Bancorp.  The trouble with NYCB appears to be isolated. However, we wanted to point out that NYCB owns Flagstar bank which has several branches in Michigan. If you have a client with uninsured deposits (>$250,000) at Flagstar, you should […]

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The Corporate Transparency Act

The Corporate Transparency Act is simple in concept, but more complicated in its application. Wendy Cox supplies some definitions, deadlines and guidelines on how to navigate the new legislation.

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January Retail Sales – Womp Womp

On the heels of a robust holiday shopping season, U.S. retail sales decelerated sharply in January falling short of expectations. 

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January Jobs – Wow… just wow.

Surging job gains and higher wages great for economy and consumers, but likely extend rate cut timing.

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December Inflation – Uptick Complicates Rate Cut Timing

Year-over-year, inflation accelerated to 3.4% in December – the highest reading since September.

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November Inflation – Down YoY; Up MoM

Year-over-year, inflation decelerated modestly to 3.1% from 3.2% in October.  Month-over-month, inflation ticked up to 0.1% from 0.0% in October. 

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November Jobs – Stronger Than Expected

U.S. employers added more jobs than expected and the unemployment rate unexpectedly fell in November, underscoring the Federal Reserve’s intent to keep interest rates higher for longer.

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October Inflation – Broad Slowdown, Good Sign for Policymakers

Despite volatility in recent months, inflation has declined substantially from a 40-year high of 9.1% reached last year.

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October Jobs – Cooling but Not Freezing

Cooling, not Freezing.  After an unexpected surge in September, U.S. hiring cooled by more than expected in October and the unemployment rate inched slightly higher.  The U.S. labor market added 150K jobs, the unemployment rate increased to 3.9%, and wages grew slightly less than expected.  Of note: the UAW strike accounted for a 33K decline […]

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September Retail Sales – Stronger Than Forecast

U.S. retail sales came in better than expected in September underscoring the resiliency of consumer demand exiting the third quarter. In real terms, retail spending increased 0.3% compared to August and 0.1% year-over-year. The advance showcases an American consumer that continues to spend money in spite of a recent energy-driven increase in inflation.

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September Inflation – Another Brisk Month

Underlying inflation came in at a brisk 3.7% (year-over-year) pace for a second straight month in September underscoring how a resilient labor market continues to support consumer demand which threatens to keep inflation levels above the Fed’s 2% target.

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September Jobs – Hiring Surges, Tough Print For the Fed

U.S. hiring unexpectedly surged in September by the most since January, highlighting continuing resiliency of the labor market and bolstering the case for another Fed rate hike.

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August Jobs – Resilience and Moderation

Hiring up and wage growth down.  U.S. hiring accelerated in August and wage growth cooled – opposing signals from today’s report.  The U.S. labor market added 187K jobs, the unemployment rate rose 0.3% to 3.8%, and wage moderated.  A resilient labor market has been key to ongoing economic expansion in 2023.  While job openings and […]

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July Retail Sales – Tops Forecasts

Today’s report suggests that American consumers, supported by a strong labor market and rising wages, continue to support a growing economy despite tightening monetary policy.

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July Inflation – Better Than Expected

On a year-over-year basis, July inflation data showed overall annualized price increases accelerated slightly to 3.3% (from 3.0% in June) largely owing to base effects of a tougher prior-year compare as peak inflation levels of 9.1% recorded in June 2022 have now annualized.

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Fed Raises 0.25% as Expected; Keeps Options Open

Fed raises interest rates by 0.25%, bringing the Fed Funds Rate range to 5.25-5.50% – the highest level in 22 years. The committee left the door open to additional increases as policymakers continue their efforts to quell inflation.

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June Retail Sales – Below Estimates

U.S. retail sales came in below expectations on a month-over-month basis, and remained soft year-over-year. In real terms, retail spending was unchanged compared to May and declined 1.5% year-over-year.

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June Inflation – Cools to 3%, Better Than Expected

June inflation data showed overall annualized price increases slowing for a twelfth straight month to 3.0% – down from a June 2022 peak of 9.1% and to the lowest level in more than two years. 

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June Jobs – Signs of Cooling, But Wage Growth Supports a July Hike

The U.S. labor market added 209K jobs, the unemployment rate fell 0.1% to 3.6%, and wage growth held steady in June. On July 26, Fed policymakers will decide whether or not to raise interest rates by another 0.25% after pausing in June.

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April Retail Sales – Soft YoY; Resilient MoM

U.S. retail sales were stronger than expected on a month-over-month basis, but remain lower on a year-over-year basis.   

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FOMC Update: No Surprise on Pause, but a Slightly Hawkish Dot Surprise

The Fed paused its rate hikes to allow for additional time to assess incoming economic data.

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May Jobs – Mixed Signals

The U.S. labor market added 339K jobs in May after an upwardly revised +294K in April and the unemployment rate jumped 0.3% to 3.7%.

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April Retail Sales – YoY Deceleration Continues

U.S. retail sales increased less than expected month-over-month and decelerated further on a year-over-year basis.

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April Jobs – Job Gains and Wage Growth Signal Resilience

The U.S. labor market added 253K jobs in April after a downwardly revised 165K in March and the unemployment rate fell back to a multi-decade low of 3.4%.

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Fed Raises 0.25%; Last One?

Fed Statement Side-by-Side Fed raises interest rates by 0.25%, bringing the Fed Funds Rate range to 5.00-5.25%. This has the potential to be the last rate hike as the Fed Funds Rate now matches the 2023 year-end dot plot from the March meeting. Key takeaways: The Fed raised interest rates 0.25%, as expected, to a […]

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JPMorgan Acquires First Republic from Regulators

Earlier this morning, JPMorgan took over embattled First Republic Bank (ticker FRC) following an auction process initiated by regulators over the weekend.

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March Retail Sales – Losing Momentum

U.S. retail sales fell for a second straight month in March, an indication that household spending is waning amid inflation and increased borrowing costs.  In real terms, retail spending declined 1.1% month over month and 2.1% year over year.  Monthly data helps to highlight current trends, however we focus more closely on year-over-year results as […]

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March Inflation – Brisk, But Better Than Expected

March inflation data showed overall annualized price increases slowing for a ninth straight month to 5.0% compared to expectations for 5.1%.

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March Jobs – Solid But Moderating

Job gains moderated, unemployment declined.  With 236K jobs added in March, payroll additions aligned closely with expectations, but marked the lowest monthly gain since December 2020 amid Fed efforts to slow labor demand and cool inflation.  Meanwhile, the unemployment rate fell slightly to 3.5%.  Average hourly earnings increased 0.3% compared to February contributing to wage […]

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Fed Raises 0.25%; Signals Hiking Cycle Close to Over

Fed raises interest rates by 0.25%, bringing the Fed Funds Rate range to 4.75-5.00%. It maintained projections for a year-end 2023 top rate of 5.25% – implying one additional 0.25% increase this year.

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Credit Suisse and Banking Sector Update

After a brief reprieve yesterday, equity markets are selling off again this morning amid fresh turmoil at Zurich-based bank Credit Suisse Group AG (CS).

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February Inflation – Overall In Line; Fed in The Hot Seat

February inflation data showed overall annualized price increases slowing for an eighth straight month – matching analysts’ expectations

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Regional Bank Failures

Last week, three banks catering to the crypto and venture capital industries failed.

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February Jobs – Payrolls Beat but Unemployment on the Rise and Wages Cooling

Job report details hint at slowing inflation. 

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January Retail Sales – Stronger Than Expected; Fed on High Alert

U.S. retail sales rose in January by the most in nearly two years, signaling robust consumer demand which, combined with yesterday’s stronger-than-expected inflation report and labor market resiliency, could mean the Fed will need to raise interest rates more than originally expected.

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January Inflation – Above Forecast, Shelter Yet to Turn

January inflation data showed price increases slowing for the seventh straight month, though not to the degree analysts had anticipated. The

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January Jobs – Huge Print

Blockbuster jobs report keeps pressure on the Fed. U.S. employers added significantly more jobs than expected in January and the unemployment rate edged down to a 53-year low.

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Fed Raises 0.25%, as Expected; Commentary Well Received

Fed Statement Side-by-Side: https://file.ac/QIEfaKSk2vI/ Fed raises interest rates by 0.25%, bringing the Fed Funds Rate range to 4.50-4.75%.  The market is now lower than the fed, pricing for a terminal rate of 4.75-5.00% before 75-100 bps of cuts in late 2023 & early 2024. Key takeaways: The Fed raised interest rates 0.25%, as expected, to […]

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Fourth Quarter GDP: Expanded Faster Than Expected

This morning, the Bureau of Economic Analysis delivered an advance estimate of fourth quarter GDP growth.  The report showed that real GDP expanded at an annual rate of 2.9%, compared to expectations of +2.6%, following growth of 3.2% in the third quarter. 

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December Retail Sales – Below Forecast

U.S. retail sales fell by more than forecast in December (-1.1% MoM vs. -0.9% expected) with a real year-over-year decline of 0.5%. While real year-over-year retail sales declines can be a leading indicator of a recession, softness is also an indication that Fed efforts to reduce consumer demand, and in turn inflation, is having an impact.

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December Jobs – Solid Hiring; Wages Cool

Solid hiring and decelerating wage growth may offer Fed some breathing room. U.S. employers again added more jobs than expected in December and the unemployment rate edged lower while wage growth decelerated more than expected and participation increased slightly. Today’s report highlights resiliency of the labor market, but may also be an early indication that the persistent imbalance between the supply and demand for labor is beginning to unwind. A sustained deceleration in wage growth could lead Fed officials to pursue less aggressive policy moves in the coming months.

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November Retail Sales – Demand Softens

U.S. retail sales posted the largest month over month decline in nearly a year reflecting softness in a range of categories that suggest some easing in American’s demand for goods. The report suggests some loss in momentum in consumer demand for goods amid high inflation and a shift in preferences favoring services. While rising wages and excess savings built up during the pandemic have helped support spending, consumers are feeling more pressure. While real year-over-year retail sales declines can be a leading indicator of a recession, softness is also an indication that Fed efforts to reduce consumer demand, and in turn inflation, is having an impact.

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Fed Raises 0.5%; Signals More Hikes in 2023

• The Fed raised interest rates 0.50%, as expected, to a range of 4.25-4.50%.
• Projections for the rate next year were revised upward by 0.50%, from 4.50-4.75% to 5.00-5.25%. This was a hawkish surprise and is impacting risk assets.
• The bond market is unconvinced, and continues to price in a high-point of a 4.75-5.00% rate and then cuts of 1.00% by early 2024.
• Chair Powell noted that the economy appears to be slowing, but continued to characterize the labor market as out-of-balance, and risks to inflation as skewed to the upside.

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November Inflation – Lower Than Expected

November inflation data surprised positively this morning for the second month in a row offering hope that decades high price increases are easing and perhaps giving Fed policymakers additional breathing room in the months ahead.

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November Jobs – Stronger Than Expected Despite Fed Efforts

Good news is bad news. Continued job gains highlight strong demand, but offer little relief for the Fed. U.S. employers again added more jobs than expected in November and wages increased more than expected underscoring continued labor market strength despite rising interest rates and concerns of an impending recession.

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October Retail Sales – Stronger than Expected

U.S. retail sales posted the largest month over month increase since February and real growth of 0.6% year-over-year indicating that demand for goods is broadly holding up despite decades high inflation and a deteriorating economic outlook.   While real year-over-year growth in retail sales tends to be an indication of economic health, consumer resilience may complicate […]

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October Inflation – Cooled More Than Forecast

October inflation data surprised positively this morning offering hope that decades high price increases are easing  and perhaps giving Fed policymakers some breathing room in the months ahead.  The Consumer Price Index rose 7.7% from the same period a year ago compared to expectations of +7.9%.   In addition to beating expectations, October CPI was the […]

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September Retail Sales – Inflation/Rates Weighing on Consumers

U.S. retail sales slowed in September with inflation adjusted spending unchanged from a year ago and down month over month.  Weaker retail spending is an indication that rampant inflation is catching up with consumers.  The Fed is expected to implement a fourth 0.75% rate increase next month as part of an ongoing effort to soften […]

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September Inflation – Hotter than Expected; Core on the Rise

On the heels of last week’s solid jobs report, September inflation data came in hotter than expected this morning likely cementing another 0.75% Fed rate increase next month.  While policymakers have responded to elevated inflation with the fastest hiking cycle in over 30 years, the labor market and consumer demand have remained resilient.   The Consumer […]

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September Jobs – Payrolls In Line, Unemployment Lower

Continued job gains underpin consumer health, offering no relief for the Fed.  U.S. employers added jobs at a healthy, though more moderate pace in September and the unemployment rate fell, suggesting the labor market remains resilient against aggressive rate increases from the Federal Reserve.  While there have been some signs of moderating labor demand including […]

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Back into a Bear Market and to a New Year-to-Date Low

Back into a Bear Market and Near the Year’s Low The markets are experiencing another volatile quarter. We are writing today to provide an update on what’s changed since the official start of the bear market back in June. We will also provide some historical context on bear markets and share our thoughts of what […]

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Fed Hikes Another 0.75%; Year End Target to 4.25%-4.50%

Side by Side Statement Comparison: Attachment: https://file.ac/3J4OO5c0VOs/ Fed raises interest rates by another 0.75% as inflation remains too high. The policy range is now 3.00%-3.25%. The Fed projects 5 more 2022 hikes and a year-end target rate of 4.25%-4.50%. The Fed projects 1 hike in 2023 before easing in 2024. At its meeting today the […]

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August Retail Sales – Better Than Expected

U.S. consumers showed resilience in August as real retail sales grew 0.8% year-over-year and 0.2% month-over-month.  In nominal terms, retail spending increased 9.1% for the year and 0.3% compared to July.  Economists were anticipating a month-over-month decline of 0.1%.  The value of sales at gas stations dropped again on lower fuel prices, likely freeing up […]

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August Inflation – Higher Than Hoped Despite Declines at the Pump

U.S. inflation was more resilient than anticipated in August despite falling energy prices, keeping pressure on the Fed to implement a third 75 bps rate increase later this month.  The Consumer Price Index rose 8.3% from a year earlier, down from 8.5% in July and a peak of 9.1% in June, but higher than expected.  […]

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August Jobs – Unemployment Rises on Higher Participation Despite Healthy Job Gains

Solid job gains and higher participation underpin consumer health, illuminates Fed challenges.  U.S. employers added jobs at a healthy, yet more moderate pace in August, offering little definitive evidence of an economic slowdown despite an increase in the unemployment rate.  Labor force participation increased and wage growth decelerated slightly.  Overall, the report highlights a continued […]

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July Retail Sales – Holding Up

July retail sales were flat compared to a month earlier as sharp declines in gasoline prices and auto purchases masked better results in other categories.  Excluding gasoline and autos, retail sales rose a better-than-expected 0.7%.  The significant drop in gas prices likely aided consumer sentiment while freeing up cash to spend elsewhere.  The Fed continues […]

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July Inflation – Rolling Over?

U.S. inflation decelerated more than expected in July on lower energy prices, which may reduce pressure on the Fed to continue on its aggressive rate hiking path.  The Consumer Price Index rose 8.5% from a year earlier, cooling from the 9.1% (40 year high) in June as a decline in gasoline prices offset increases in […]

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Fed Hikes 0.75% – As Expected

Fed raises interest rates by 0.75%, bringing the Fed Funds Rate range to 2.25-2.50%. The FOMC is projecting 4 additional hikes this year, taking the year-end range to 3.25-3.50%. The market is aligned with the Fed, pricing in a year-end range of 3.25%-3.50%. At its meeting today the FOMC voted unanimously to raise the Federal […]

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GDP Contracts Again; Looking Under the Hood

This morning, the Bureau of Economic Analysis delivered an advance estimate of second quarter GDP growth.  The report showed that real GDP decreased at an annual rate of 0.9% in the second quarter following a decrease of 1.6% in the first quarter.  In yesterday’s Fed update, we cautioned that a negative GDP print could trigger […]

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June Inflation – Acceleration Pressures Fed

U.S. inflation came in higher than expected in June, which will keep the Fed on an aggressive tightening path intended to tamp down demand.  Policymakers have already signaled a second 75 bp rate hike to come later this month, which should be considered the base case following today’s report.  Some economists have suggested that June […]

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June Jobs – Payroll Gains Top Estimates; Labor Market Strength Continues

Job gains top estimates, unemployment rate holds at 3.6%.  S. employers added more jobs than expected in June and the unemployment rate held near a fifty-year low, suggesting that for the time being, hiring needs are defying concerns about the economic outlook.  Wage growth (while still elevated) moderated slightly for a second month in a […]

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May Retail Sales – More at the Pump, Less at the Dealership

Job gains top estimates, unemployment rate holds at 3.6%.  S. employers added more jobs than expected in May and wage growth (while still elevated) moderated slightly.  A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years.  The central bank […]

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We’re in a Bear Market… Now What?

Today, the S&P 500 officially entered a bear market closing down more than 20% from the peak on January 3.  Year-to-date, 2022 has been difficult for investors, offering limited opportunities for positive returns.  In this update, we offer historical perspective on the bear market experience, highlight issues likely to shape the path forward (for better […]

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May Inflation – Unexpected Acceleration; New 40-Yr High

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May Jobs – Payroll Adds Top Estimates; Unemployment Steady at 3.6%

U.S. inflation unexpectedly accelerated to hit a new 40-year high in May.  Record gasoline prices and geopolitical factors threaten to keep inflation high in the coming months suggesting the Fed – which has already committed to half-point rate increases at each of its next two meetings (starting next week) – will need to apply more […]

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April Retail Sales – Solid Spending

April retail sales up 8.2% year-over-year; basically flat after inflation.  In spite of elevated inflation, consumers continued to spend at a robust pace in April.  Increased spending on gasoline (+37% YoY) accounted for a large portion of the nominal increase, but strength was also evident in food services and drinking places (+19.8%), brick and mortar […]

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April Inflation – Moderating, but Hotter Than Expected

U.S. Consumer prices rose more than forecast in April, indicating that elevated levels of inflation could persist longer than expected and keeping the Federal Reserve on an aggressive path of monetary tightening.  The report did show a slight moderation in price increases, but a 0.6% month-over-month increase in core consumer prices (excluding food and energy) […]

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April Jobs Report Highlights Labor Market Strength

Labor market momentum continues; highlights underlying economic strength.  S. employment continued to increase at a robust pace in April and wage growth (while still elevated) moderated slightly.  A sustained softening in wage growth would be welcome by the Fed as it endeavors to tamp down the highest inflation levels observed in 40 years.  The central […]

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Fed Hikes 0.50%; Unveils Quantitative Tightening Plan

Fed Statement Side-by-Side: https://file.ac/QLp-SuA66f8/ Fed raises interest rates by 0.50%, bringing the Fed Funds Rate range to 0.75-1.00%. The market is pricing in a year-end range of 2.75%-3.00%. At its meeting today the FOMC voted unanimously to raise the Federal Funds rate to 0.75-1.00%. We also received clarity on the pace of quantitative tightening. Beginning […]

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1Q GDP – Soft Print; Trade Deficit & Inventories Mask Consumer Strength

1.4% GDP contraction. U.S. GDP contracted at an annualized pace of 1.4% in the first quarter compared to analyst expectations for 1.0% growth and decelerating from +6.9% in the fourth quarter. On its face, the headline number is decidedly soft, but underlying details show still-solid household demand and business investment, which aligns with the commentary […]

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March Retail Sales – Increased Gas Spending Masks Moderation Elsewhere

March retail sales up 6.9% (nominal) and down 1.6% (real) year-over-year.  Increased spending on gasoline (+37% YoY) accounted for more than a third of the nominal increase as several more discretionary-oriented categories slowed or declined.  It is important to note that we are entering a period of extremely difficult prior-year comparisons.  Retail sales grew by […]

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March Inflation – Hot Reading Incorporates Russia/Ukraine

Consumer prices rose 8.5% in March marking a fresh 40-year high and bolstering expectations that the Fed will raise interest rates by 0.50% in May.  Many observers believe today’s CPI reading could mark the peak, capturing rising energy and food costs following Russia’s invasion of Ukraine.  Additionally, we have now annualized the last of easier […]

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March Jobs – Strong Report, but a Slight Miss Compared to Elevated Expectations

Payroll additions are strong, but miss elevated expectations.  U.S. job growth momentum continued in March and previous reports were revised higher. Yields moved higher after the release, indicating that bond market investors believe this report provides ample justification for the Fed to continue hiking rates. At its March meeting, the median FOMC projection was for […]

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Fed Hikes 0.25%; Signals Six More in 2022

FOMC Statement Side by Side Fed raises interest rates for first time since 2018 and signals intentions for 6 more hikes in 2022. At its meeting today the FOMC voted to raise the Federal Funds rate to 0.25%-0.50%. Bullard dissented, preferring a rate of 0.50-0.75%. The statement noted that the Fed will begin reducing its […]

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February Retail Sales – Healthy (For Now) Despite Record Gas Prices

February retail sales up 17.6% (nominal) and 9.7% (real) year-over-year.  Primary drivers of the year-over-year increase include spending on gasoline (+36.4%), restaurant dining (+33.0%) and apparel (+30.6%).  Despite sustained strength in real retail sales growth, heightened inflationary pressures exacerbated by the Russia/Ukraine conflict are posing a threat to consumer demand and therefore economic growth.  In […]

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February Inflation – Not Out of The Woods Yet

Consumer prices are 7.9% higher than they were a year ago – in line with forecasts and marking a fresh 40-year high.  This data suggests inflation woes were intensifying even before Russia’s Ukraine invasion sparked a dramatic increase in commodity prices.  Most economists were expecting February to mark the peak of YoY price increases, with […]

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February Jobs – Payroll Additions Accelerate, Wages Take a Breather

Payroll additions surprise positively again. U.S. job growth boomed in February while wage growth slowed, highlighting a steadily improving, though extremely tight labor market that should keep the Fed on track for a rate increase later this month. Whereas some observers had seen potential for more than one 0.25% increase in March, economic uncertainties posed […]

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Perspective on Ukraine Invasion

Background on the Situation: Following a period of failed diplomatic reconciliation, Russian president Vladimir Putin officially declared war with Ukraine last night. Shortly thereafter, a series of military advances were made by the Russian army into Ukraine, extending all the way to Ukraine’s capital city, Kyiv. Leading up to today’s events, the United States and […]

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January Retail Sales – Cars and Furniture and Clothes, Oh My!

January retail sales up 3.8% month-over-month (+3.2% adjusted for inflation); topping forecasts.  Retail spending increased 3.8% in January – marking the highest increase since March following a 2.5% decline in December.  Demand for goods remains robust despite elevated inflation levels, while the omicron variant and related surge in Covid-19 cases likely dampened services spending in […]

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January Inflation – Onward and Upward

Consumer prices are 7.5% higher than they were a year ago – slightly higher than forecast and the highest level reported in nearly 40 years.  The writing was already on the wall, but when you couple these persistent elevated levels of inflation with the labor market strength we discussed last week, it leaves absolutely no […]

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January Jobs – Upside Surprise

Payroll additions surprise positively – Highlighting labor market strength and emboldening Fed plans.  S. job growth exceeded all forecasts and defied Omicron headwinds in January.  Following its meeting last week, the FED noted the impact of the Omicron variant on COVID-sensitive sectors like travel, but predicted a short wave of infection and, as a result, […]

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FOMC Reaction – January Update

Fed statement side-by-side comparison Fed sets the stage for hiking to begin at their next meeting, March 16 At its meeting today the FOMC voted unanimously to maintain the Federal Funds rate at 0-0.25% and to finish tapering in early March. Some market participants speculated that the FED might raise interest rates by 0.50% in […]

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December Retail Sales – Inflation Takes a Bite

December retail sales declined 1.9% month-over-month (-2.4% adjusted for inflation); missing forecasts. Retail spending declined 1.9% in December, following a 0.2% gain in November, suggesting that elevated inflation levels are beginning to weigh on consumers. December data showed softer spending at furniture, electronics, and sporting goods stores and a more meaningful dip in online spending […]

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December Inflation – Feeling Hot Hot Hot

Consumer prices rose at the fastest annual pace in nearly 40 years last month, setting the stage for the start of Federal Reserve interest rate increases as soon as March – a dramatic shift from the policy timelines projected as recently as a few months ago.    Looking forward, we believe normalizing demand, tighter policy, and […]

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December Jobs – Deja Vu All Over Again

Payroll additions disappoint again; Lower unemployment provides underpinning for tighter Fed policy. U.S. job growth slowed to its lowest level in 2021, while participation was unchanged and unemployment marked a fresh post-pandemic best. Today’s report is an indication that in spite of robust demand for workers, the issues that have limited hiring (retirements, childcare issues, […]

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FOMC Reaction – December Update

Fed moves to less accommodation, consistent with investors’ expectations.At its meeting today the FOMC voted unanimously to maintain the Federal Funds rate at 0-0.25% and to increase the pace of tapering. In its summary of economic projections, the Fed updated their projections to show slightly slower GDP growth, a lower unemployment rate, and slightly faster […]

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November Retail Sales – Tempered By Inflation or Christmas Came Early?

November retail sales rose 0.3% month-over-month (-0.5% adjusted for inflation); missing forecasts. Retail spending increased 0.3% in November, following an upwardly revised 1.8% increase in October. In recent communications, we highlighted expectations for month-over-month figures to continue to be a bit noisy (+/-1%) despite spending levels that remain decidedly robust in absolute terms. November data […]

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November Inflation – Take a “Peak?”

Consumer prices rose at the fastest annual pace in nearly 40 years last month, increasing pressure on the Federal reserve to tighten monetary policy sooner rather than later.  We believe there is a high likelihood that November readings mark peak inflation levels for this cycle.  Increasingly tough comps and tighter policy should cause the rate […]

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November Jobs – Mixed Message

Payroll additions miss by a margin; Unemployment drops significantly?  U.S. job growth slowed to its lowest level in 2021, while participation ticked higher and unemployment marked a fresh post-pandemic best.  We can only assume that seasonal adjustments* played a role in the mixed message we find in today’s jobs report.  Looking ahead to the December […]

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October Retail Sales – Shop Til We Drop

October retail sales rose 1.7% month-over-month (+0.8% adjusted for inflation); topping forecasts.  Retail spending increased 1.7% in October, the most since March, following an upwardly revised 0.8% increase in September.  Broad-based increases are an indication that consumer demand remains robust despite higher prices.   It appears that elevated savings and rising wages are supporting continued merchandise […]

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October Inflation – Comin’ in Hot!

Consumer prices (CPI) increased 6.2% year-over-year, higher than forecast, and marking the highest level since 1990.  In October, the consumer price index (CPI) increased 6.2% compared to the same period a year ago.  Expectations ranged from 5.4% to 6.0% with a median of 5.9%.  Core CPI (excludes food and energy) increased at 4.6% year-over-year.  The […]

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October Jobs – Now We’re Cooking With Gas

Payroll additions and unemployment rate both better than expected in October.  The U.S. labor market showed promise in October with higher-than-forecast and broad-based payroll gains indicating stronger progress filling millions of open positions.  Last month, we highlighted our view that school re-openings and expiry of expanded unemployment benefits should support more hiring into year-end especially […]

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September Retail Sales Better Than Expected – Again

September retail sales rose 0.7% month-over-month building on a better-than-expected August.  Retail spending increased 0.7% in September on broad-based improvement after unexpectedly increasing 0.9% in August, and indication that consumer demand remains robust.  Economists expected a month-over-month decline of 0.2%, with estimates ranging from -0.8% to +1.0%.  In Tuesday’s research meeting, and in subsequent communications, […]

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September Inflation – Above Forecast

Consumer prices (CPI) increased 0.4% month-over-month, higher than forecast (0.3%), but moderating from 0.6% rolling six month average.  In September, the consumer price index (CPI) increased 0.4% compared to August.  Expectations ranged from 0.1% to 0.4% with a median of 0.3%.  Of note, the rise in prices reflected higher food and shelter costs, while used […]

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U.S. Election – Counting Continues

Vote counting continues in several key swing states to determine who will serve as President of the United States for the next four years.  In this note, we will recap what is known about the election results so far, outline likely next steps in the process, and discuss the immediate reaction in capital markets. Race […]

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A message from William D. Johnston

Dear Clients and Friends of Greenleaf Trust, Each month we send our newsletter titled “Perspectives” to our clients and friends of Greenleaf Trust. Almost always, the content is about the economy, financial markets, wealth management retirement and financial planning. Today it is important that we talk honestly about a national crisis that has plagued our […]

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Operation Thank You

Please join us in taking a moment to find or create a card, write a few words of appreciation to the doctors, nurses and other healthcare providers, and send the card to us. We’ll quickly distribute them to area hospitals and clinics, making sure that your kind and supportive words are heard. Cards should be […]

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Coronavirus Update – Getting Worse Before it Gets Better

The coronavirus induced sell-off is reaching new depths today as investors continue to grapple with the rapid spread of the virus and uncertainty around a fiscal response to curb slower economic growth from the outbreak.  The S&P 500 officially entered bear market territory this morning with losses extending more than 25% from the late February […]

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Oil Price War – Another Facet of Uncertainty

Happy Monday? Oil prices, already beleaguered by softening demand owing to the coronavirus, opened another 30% lower to $35/barrel after disintegration of the OPEC+ alliance triggered a full blown price war among the world’s biggest oil producers.  The oil price shock adds another facet of uncertainty during a period of instability for the global economy […]

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Perspective on Coronavirus Outbreak and Market Response

We have written previously on 01/27/20, 02/14/20 and 02/24/20 offering our perspective on the evolving coronavirus narrative. While the situation in China continues to improve, spread of the virus outside of China has ignited fears and the financial market response has been both swift and severe.  These circumstances are unnerving, but also decidedly transitory – […]

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Update on Coronavirus Outbreak

On January 27, we published a note sharing our perspective on the coronavirus outbreak.  While our views are largely unchanged, we felt it was important to provide an update as the issue continues to evolve. Status of the Outbreak: The coronavirus (COVID-19) manifests as a pneumonia-like illness resistant to standard treatments, and is believed to […]

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Coronavirus Outbreak: What Are We Worried About?

We have written twice previously on 01/27/20 and 02/14/20 offering our perspective on the evolving coronavirus narrative.  In light of a recent spike in anxiety and global flight to safety, we attempt to look beyond the headlines and reduce the narrative to its most basic components.  Below, we have done our best to objectively evaluate […]

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Perspective on Wuhan Coronavirus Outbreak

Concerns over the human and economic impact of the coronavirus outbreak in China have driven a financial market flight to safety in recent days.  The outbreak invites anxiety on the heels of a sustained rally in U.S. stocks that occurred despite looming issues including a presidential impeachment, ongoing global trade negotiations, and a flare up […]

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Perspective on U.S./Iran Escalation

What happened? The tone in global financial markets turned cautious this morning after a U.S. airstrike in Iraq ordered by President Trump killed one of Iran’s most powerful generals, fueling concern over escalating tensions.  According to the Defense Department, the U.S. military took “decisive defensive action” by killing General Qaseem Soleimani who was “actively developing […]

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Update on US Monetary & Trade Policy

We have been focused on two primary drivers for US markets in 2019: trade negotiations and the Federal Reserve’s monetary policy decisions. On Wednesday, July 31st, the Federal Reserve cut interest rates by 0.25%. In his press conference, Fed Chair Jerome Powell noted trade policy’s impact on their decision to ease: “After simmering early in […]

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US/China – Perspective on Recent Developments

Less than two weeks ago, investors were operating under the assumption that a U.S./China trade deal was all but certain.  Much has changed in a short period. Uncertainty has been reintroduced around when, or if, an agreement will materialize.  We continue to believe an eventual compromise is the most likely outcome, but for now, visibility […]

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The Yield Curve Inverted…What Now?

On Friday last week, the U.S. treasury yield curve inverted. Weak economic data out of Europe spurred heavy demand for bonds, pressuring the 10-year yield to 2.44%, its lowest level in over a year and about a basis point lower than the 3-month T-bill yield. This is significant because a curve inversion is considered one […]

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Basis Planning: Qualified Small Business Stock Exclusion

Considerable time these days is spent identifying ways to include the value of trust assets in the settlor’s gross estate in order to obtain an income tax basis adjustment to those assets. But the settlor or beneficiary’s death is a condition to this planning strategy. What if capital gain exclusion could be obtained while the […]

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Disclaiming to Reach a Higher Basis

Disclaiming an interest in property has always been a way to add flexibility to an estate plan. By exercising of a timely qualified disclaimer, the disclaimant effectively moves assets to another individual, or to a trust, without incurring any gift tax. Consequently, disclaimer planning takes center-stage in many estate plans these days by spouses to […]

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Greenleaf Trust Research: Dems take the House, GOP holds the Senate

In last month’s Perspectives newsletter, we detailed expectations, as well as probable and possible outcomes heading into midterm elections. The article: “Democrats or Republicans…Who Will Ace the Midterms” is available here for your reference. Midterm Outcomes Aligned with Expectations Yesterday, Americans cast ballots to elect members for all 435 seats in the House of Representatives […]

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Remainder Purchase Marital Trust Strategy

A couple of months ago I wrote about the possible use of spousal lifetime access trusts (SLATs) as a way for a married couple to exploit the recent $5 million increase in their respective federal gift tax exemption amount, while still retaining access to the cash flow generated by those transferred assets. Yet another technique […]

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‘Enhanced’ Defined Dollar Value Formula Transfers

The 2017 Tax Cut and Jobs Act provides more incentives for individuals to gift assets either to their family members or to dynasty-type irrevocable trusts. The temporary increase in the applicable transfer tax exemption amount by $5.6 million per individual encourages the wealthy to consider making large gifts when no federal gift tax will be […]

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On Tariffs and Trade Policies

The first quarter of 2018 was exciting if nothing else. Stock market strength in January was followed by a correction in February sparked by inflation concerns and monetary policy uncertainties. Stocks rebounded into March until tariff announcements from the White House and speculation over a possible trade war pushed markets lower again. Evolving U.S. trade policy begets uncertainty […]

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Charitable Remainder Trusts: An Old Tool to Fix A New Problem

The Tax Cut and Jobs Act (the 2017 Tax Act) provided several surprises, although I am not sure that it actually delivered that much simplification to a complex tax code as was promised. One big surprise was to make alimony or spousal support no longer tax deductible by the payer or taxable to the recipient. […]

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Community Property Agreements and Trusts: Old and New Planning Tools

Structuring an estate to obtain an income tax basis ‘step-up’ upon the death of a client continues to be a significant goal of many estate plans. New planning strategies try to exploit old estate tax rules to intentionally cause an asset to be included in a decedent’s taxable estate. This approach attempts to create rights […]

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Trust Modifications: The Material Purpose Limitation

Modern trust statutes provide several ways in which to modify an irrevocable trust. For example, in Michigan an irrevocable trust can be decanted to move its assets to a new trust that is created by the trustee. MCL 700.7820a. Additionally, Michigan’s version of the Uniform Trust Code also offers several other procedures that can be […]

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Alter Ego: An Asset Protection Trust’s Achilles Heel?

Much has been written lately about Michigan’s recent venture into the asset protection trust waters with its adoption of the Qualified Dispositions in Trust Act (the Act) effective in March of this year. The Act clearly indicates that a transfer of assets into the Qualified Dispositions Trust can only be set aside following by the […]

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Decanting a Trust: Are There Public Policy Limits?

Decanting a trust is one way to eliminate or change provisions in an existing trust that are viewed as undesirable, or which are no longer workable due to changes in the law or the beneficiary’s circumstances. While there are some statutory limitations imposed on the trustee’s decanting power (e.g. the inability to decant-away the beneficiary’s […]

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An Overview of Michigan’s Qualified Dispositions In Trust Act

Why it is relevant: The draft persons of the proposed bill, which ultimately became the Michigan Qualified Dispositions in Trust Act [MCL 700.1041 et. seq.] thought that the Act could possibly result in a business boom for estate planning attorneys and trust companies in northern and western Michigan. Their reasoning was based on the notion […]

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Allard: What Exactly is Michigan’s Public Policy?

No one really seems to know these days what Michigan’s public policy is when it comes to prenuptial agreements or for that matter, postnuptial agreements. We are told that if a married couple enters into a postnuptial agreement while living together and with divorce not imminent, their agreement is against Michigan’s public policy and thus […]

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Wait and See Planning: Fine Tune a QTIP Trust

With the uncertainty that surrounds the possibility of tax law changes by Congress this year, what advice can an advisor provide to their clients when it comes to estate planning? We are left wondering if there will be a federal estate tax, a federal generation skipping transfer tax, a federal gift tax, a ‘step-up’ (or […]

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Unsigned Wills: Really!

Just when you think you know what the law requires, along comes a court decision that throws water on that conventional thinking. Such was the situation last fall when the Michigan Court of Appeals in In re Estate of Sabry Mohamed Attia (October 10, 2016) surprised many estate planners with a decision that permits an […]

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Divorce Settlements: Using Trusts to Deal with Distrust

I had the dubious opportunity to serve both as a divorce attorney and an estate planning attorney for over 42 years. One lesson that I learned is that many divorce attorneys are not always cognizant of the income tax implications that arise in a divorce settlement. Many divorce attorneys even go so far as to […]

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Unique Assets: Purpose Trusts

While most trusts are established to make distributions to either individuals who are the named trust beneficiaries or to a charity, a purpose trust normally exists to hold or to dispose of specific assets, meaning the trust exists to carry out a specific purpose rather than to provide a benefit to particular individuals. Purpose trusts […]

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