WASHINGTON – It’s the day after Christmas, and all through the house, not a creature is stirring. Because the denizens of this house are now trying to figure out how to lose all the weight we’ve put on since the Thanksgiving holiday long-weekend. Not to mention Christmas Day. Meanwhile, back on Wall Street, open for business as usual on Thursday, December 26, this fall’s apparently endless Santa Claus Rally 2019 continues to set more new records along the way. Go figure. On the other hand, Congress has just helped some current and potential retirees while screwing others on the 401(k) and IRA fronts. More on this a bit further down.
NASDAQ hits record territory. Again
At 3 p.m. ET, an hour before the market closes, we find the NASDAQ soaring again into record territory. That tech-heavy measure continues to float slowly into the stratosphere today, exceeding 9008.41 at the moment, up over 55 YUGE points for a roughly 0.62 percent gain. The S&P 500 and the Dow Jones Industrials find themselves up to a less impressive degree, but they’re still up just the same. Holiday volume continues modest, however, putting a mental asterisk on some of these numbers. But the Santa Claus Rally 2019 phenomenon continues nonetheless.
Tech stands behind the biggest gains today, starring Amazon and Apple. Although the oils decided to play nice today as well, influenced among other things by a drawdown in the nation’s still plenteous, frack-driven oil supplies. Happy Holidays!
Movers and shakers behind today’s tech gains
CNBC comments on the two big heroes behind today’s tech gains.
“Amazon — Shares of Amazon [trading symbol: AMZN] jumped over 3%, leading the gains in the S&P 500, after the e-commerce giant said it has just had its best holiday shopping season ever. Amazon said in a statement that “billions” of items were ordered worldwide and “tens of millions” Amazon devices were purchased.
“Apple – Shares of the tech giant [AAPL] gained more than 1% as the Nasdaq topped 9,000 for the first time. The S&P also hit a new all-time high, fueled by optimism over a U.S.-China trade deal. Stocks are continuing their end-of-year strength in what is often called a “Santa Claus rally.” Facebook, Amazon and Alphabet were among the other FAANG stocks moving higher on Thursday.”
Our portfolios have been out of volatile Apple shares for some time now, so we missed the big Santa Claus Rally 2019 there, alas. On the other hand, we did acquire a few of Amazon’s very costly shares, which apparently decided to ride the thermals today, soaring a whopping $78.79 PER SHARE as we write this article. That’s a relief for sure, since these shares have more or less sucked (an inside Wall Street term) since earlier in Q3 for a variety of reasons. Apparently those reasons vanished with today’s Christmas sales news.
More on Amazon and Apple action
BTW, an odd point: Insofar as S&P is concerned, Amazon still lives within its Retail Sector, not in its tech (Information Technology) sector. So, Sector-wise, Amazon is actually helping out the retail sub-averages and ETFs more than tech today. On the other hand, the shares continue to make NASDAQ and S&P 500 fans happy after their long Q3-Q4 2019 drought.
Apple remains in IT, of course, and its increasing share price is almost certainly due not only for surprisingly robust sales of its current devices. Anticipation continues to build that sales numbers for Apple’s next-gen 2020 iPhone models – the first to deliver 5G functionality – will end up somewhere in the next galaxy by this time next year.
China rumors are back again
The rumor mill also has it that China continues to make nice noises about the Waiting for Godot-like US-China Phase I trade deal. However, like the Apostle Thomas, I’ll believe this potential good news when I see the Chi-coms sign a document that isn’t another clever anti-US con job in disguise. Even The Donald could underestimate these professional thieves. On the other hand, these nice-nice rumor continue to fuel Santa Claus Rally 2019 down the home stretch.
Generalities are about all I can deal in for the remainder of this calendar year. I don’t plan any major moves at all for the portfolios. But we should all be aware that some profit-taking may yet occur before 2019 is out. If not, we may get profit-taking big-time starting on January 2, 2020, when we enter a new taxable year.
Congress finally starts messing with IRAs. Have they hit you yet?
In worse news, at least for some, Congress, in its wisdom, has just screwed me and millions of other leading-edge Boomer guys and gals in an unexpected way. They’ve just passed legislation that, among other things, pushes the magic age when mandatory IRA redemptions must begin to 72 instead of the current 70 ½. (OK, Boomer!) They’ve also allowed oldsters still working ( a lot of them) to keep sticking a percentage of earned income into their current 401(k)s and / or IRAs until they’re 72 as well.
But too bad for the likes of this increasingly ancient columnist. The closing bell for this revised deal occurs next week on December 31. Anyone who hits the age of 70 ½ after that is eligible for this nice, tax-favorable little deal. But for folks who hit 70 ½ in 2019, oh, sorry, too bad, old rules apply. So now those in this unlucky category have to start pulling out money from their IRAs right now. And pay the taxes, of course. How else do we think the Feds can pay for their constant generosity to us peons? Right?
Those sneaky Congresspeople – when they’re not figuring out what else to impeach Trump for even though they’re not actually impeaching him, until, well, whenever – also smacked younger taxpayers upside the head as well in this legislation. Younger people gifted with Inherited IRAs next year and after, MUST pull all that money out within a 10-year period after they inherit the IRA from their now-deceased dads, moms, and whomever. Well, at least this bad news hasn’t been absorbed yet, so it hasn’t affected Santa Claus Rally 2019 yet either. (I think.)
Financial planning is a good idea. When Congress doesn’t screw with your plan…
I’ve been telling people for years that every time anyone in Congress took a look at all the money Americans have stashed away in 401(k)s and IRAs since they were invented… every time they looked they would just lick their chops figuring out ways to steal that tax-sheltered money back quicker, the better to provide even more funds for giving free “stuff” away to buy votes.
Well, we’ve just seen the sneaky Phase I of this effort. While the age 72 stuff will indeed help out older taxpayers on the cusp of retirement – except me – we’re watching the start of crunch-time on younger generations. Who, sooner or later, will see the official Social Security retirement age rise again at some point for them, just as it rose for the Boomers a couple of decades ago.
The Social Security age-boost I can see. People are living longer. So payouts become more extensive and continue over a longer period of time.
But the 401(k) / IRA stuff is sneaky for all generations. And look for more sneaky little Congressional repossession efforts in the years to come. Takes a little bit of fun out of the otherwise robust Santa Claus Rally 2019 we’re experiencing yet today.
Back on vacation. For now…
I’m outta here for now. And columns will remain chancy until January 2. After a year like 2019, I need at least some semblance of a vacation!
– Headline image: Santa appears at the annual festival of lights held at Virginia’s New River Trail State Park first weekend of each December. No word as to whether he guaranteed this month’s Santa Claus Rally at this event. Image via Wikimedia Commons, CC license 2.0.