Markets & Macroeconomic Summary for the Week Ended December 27, 2024

December 29, 2024 — Sam H. Fawaz

The S&P 500 index closed 0.65% higher in a volatile, shortened holiday trading week. The NASDAQ index gained 0.75%, while the small caps were slightly positive, up 0.21%. The Microcap index outperformed for the week, bouncing up 1.3%. Additional signs of bearish distribution appeared this week.

Another holiday-shortened trading week is ahead, with the stock markets closed on New Year’s Day. Whether Santa can right his sleigh and deliver further gains in his traditional year-end rally remains to be seen.

Durable Goods, a volatile data series, was better than expected. It showed that new orders for key U.S.-manufactured capital goods surged in November, up 0.7%, amid strong demand for machinery. However, new orders were down 1.1% month-over-month, missing expectations.

The Conference Board’s consumer confidence reading was down from last month’s reading and notably lower than forecast. The Present Situation and Expectations Indexes fell, with the Expectations Index just slightly above the Conference Board’s 80.0 “recession threshold.” This was surprising given the renewed post-election euphoria and optimism expected to continue.

While only a single monthly data point, it is surprising that the post-election rebound in Consumer Confidence was not sustained. If consumer attitudes continue to sour and spending slows dramatically, it can significantly impact the stock market and economy in 2025.

New Home Sales from the Census Bureau were up 5.9% in November. Sales rose despite decades-high mortgage rates, mainly due to a drop in the median sales price, which saw its lowest price tag since February 2022. New home inventory was down slightly and represents a supply of 8.9 months at current prices.

Key housing-related stocks have continued to suffer due to rising interest rates. The 30-year mortgage rate from Freddie Mac rose to 6.9% this week, notably higher than its interim low of 6.1% in late September. Continued housing weakness could also indicate impending economic and stock market weakness.

Source: InvesTech Research

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Corporate Transparency Act (CTA) Enjoined and Stay Issued

December 10, 2024 — Sam H. Fawaz

Beneficial Ownership Interest (BOI) Reporting is now on hold.

In an early November article, I wrote about the CTA and how BOI reporting was required by many entities by January 1, 2025.

A court ruling last week found the CTA unconstitutional, paving the way for an appeal by the Department of Justice and FinCEN.

In a statement issued by FinCEN over the weekend, FinCEN announced that it will comply with the order issued by the District Court in the Texas Top Cop Shop case “so long as it is in effect.” Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be liable if they fail to do so “while the preliminary injunction remains in effect.”

FinCEN also disclosed that the Department of Justice filed a Notice of Appeal on December 5, 2024, and reminded the public that voluntary compliance with the CTA reporting requirements can continue.

We do not know what will happen on appeal, although we think it’s unlikely that the initial required filing date for January 1, 2025, will stand. Similarly, the filing deadlines applicable to newly formed reporting companies are also on hold while the injunction is applicable.

However, if you formed a new company and the reporting deadline was imminent when the stay was issued, it is probably prudent to ensure that you have all the information necessary to file a BOI immediately if the injunction is lifted with no change in requirements, in case additional time to file is not granted. FinCEN’s seeming emphasis on the fact that enforcement of the CTA is stayed “so long as the order is in effect” may indicate that the government does not intend to grant additional time to file.

Thus, for instance, it is possible that if a decision to lift or vacate the injunction is made on or after January 2, 2025, all reporting companies with a January 1 reporting deadline would need to file immediately. Although it does seem likely that additional time to file would be granted upon the possible lifting of the stay, it may well be that such additional time may not be lengthy, given that existing reporting companies have had almost an entire year to report before the preliminary injunction is granted.

As such, until and unless FinCEN indicates that an extension of time to file will be granted, it is prudent that all information necessary for reporting is gathered and ready to file if you do not wish to file voluntarily by your original deadline.

The decision about whether to file voluntarily may be a difficult one. On one hand, it ensures that if the injunction is vacated and there is a need to file quickly, you will already be in compliance. On the other, many may not want their information submitted to the government if there is no requirement to do so (and some may not want to pay for professional help to file their BOI report(s).)

If you are unsure what to do, please check with your entity’s attorney or CPA for the latest information about your situation if you have not yet filed a BOI report and are required to do so by the CTA.

YDream Financial Services is an investment advisory and financial planning firm serving the entire United States. If you would like to review your current investment portfolio or discuss any other financial planning matters, please don’t hesitate to contact us or visit our website at http://www.ydfs.com. We are a fee-only fiduciary financial planning firm that always puts your interests first. If you are not a client, an initial consultation is complimentary, and there is never any pressure or hidden sales pitch. We start with a specific assessment of your personal situation. There is no rush and no cookie-cutter approach. Each client and your financial plan and investment objectives are different.

Source: InterActive Legal

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