Wealth Redistribution, A Ghost of Communism…?

7-7 Market Highlights (January 27 – February 2, 2019)

Tax the rich and successful, and redistribute their money to the poor…?  Well, the most successful democracies are built by the hard-working, conscientious people competing in an open and free market. In reality, the most successful people are the ones building the wealth of a democratic nation but they are few in numbers. Some call them 1%.  But this is a natural Prato phenomenon in all hierarchy in a business, organization, or in any free country. Yet the Leftists and most of the Postmodern Ideologues see this as the oppression of the mass and want the wealth redistributed to all regardless who worked to earn it. Yes, there should be a generous policy and compassionate heart to help along the poor and disengaged. However, the legislative fiat to strip the wealth from the successful to redistribute to the mass echoes the abject failure of the Soviet Communism under Lenin/Starlin. The communism and socialism failed everywhere and killed nearly 100 million people. So, what’s the solution to the wealth disparity? What say ye?

Set aside all the political difference, hateful speech, malevolence, and enjoy the Super Bowl LIII. Drink, eat, scream, and enjoy your favorite team. This iconic sporting event is an uniting force as did for Nelson Mandela in 1996 bringing together white apartheids and blacks in South Africa… Let's hope it will not be tainted by opportunists. Yes, people come together, less differences, to celebrate an all American unification event. Cheers.

Market closed early on Friday, 2/01/2019 @:  DOW: 25,063.89;   S&P 500: 2,706.53; NASDAQ: 7,263.87;  Gold: $1,322.60; Oil: $55.34; US 10-Year: 2.686% 

Here are the highlights of the 5th week of 2019:   

1.     Wealth Redistribution, a Ghost of Communism…?      A Grand Theft or Kindness…? Punishing the success for the sake of the inept and oppressed? Redistribution of income and redistribution of wealth are respectively the transfer of income and of wealth (including physical property) from some individuals to others by means of a social mechanism such as taxation, charity, welfare, land reform, monetary policies, confiscation. “Democracy is the road to socialism… Socialism leads to communism,” Karl Marx. Historically, the former Soviet redistribution experiment (Lenin, Marx, Stalin) killed 21 million to possibly 70 million. It was an abject failure, and only the absolute reprobates will support that political ideal now. Perhaps, Ocasio-Cortez, Warren, Maxine Waters, and Bernie Sanders may be oblivious to the lessons of income redistribution… Congresswoman Alexandria Oacsio-Cortex boasting taxing 70% on wealthy. And, Sen. Elizabeth Warren is setting the stage for a colossal battle at the U.S. Supreme Court over her proposed wealth tax on households worth more than $50 million.  The proposal would impose a 2% tax on net worth between $50 million and $1 billion. The 16th Amendment arguments which were, in the early 20th century, nearly an opportunity for the high court to reverse its earlier decision, which barred most wealth and income taxes... Democrats’ ideal maybe, again, struck down. What say ye? 

2.     UNCH. Patient FED on Rates.          Dow jumps more than 400+ points after Fed says, again, it will be 'patient' with rate hikes. Stocks rose on Wednesday after the Federal Reserve kept interest rates unchanged and stated it will be "patient" with raising rates moving forward. The DOW traded 445 points higher as Boeing and Apple outperformed. The S&P 500 gained 1.6%, and the Nasdaq advanced 2.2%. In a statement, the central bank said: "The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate." The Fed said it "is prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments."  But the blow out Job Report, 304,000+ addition to growing economy, smashing estimate by 100,000 may force Fed revisit tate hike...?   

3.     State of the Union Allowed by Pelosi.           Speaker Nancy Pelosi has sent a letter to President Donald Trump asking him to deliver the State of the Union address on February 5. Pelosi had previously rescinded the invitation amid the government shutdown, citing security concerns. But, the contentious budget battle on building the Wall has not seen any civil discussion. So, will it be Trump’s Emergency declaration, another government shutdown, or perhaps some miracle prevail? This does not now smell good… I pray, meanwhile, for a miracle. 

4.     Super Bowl Economy.  Yes, you can spend $5.2 million for 2-second ads in the Super Bowl LIII. Ridiculous…? Well, ROI can be 4% to 20%... And, American adults say they will spend an average $81.30 for a total of $14.8 billion as they watch the New England Patriots and the Los Angeles Rams meet up in the Super Bowl this year. The biggest spenders are those ages 35-44 at an average $123.26. Furthermore, America is facing historical challenges on the economy, the political climate and the biggest national issues. Perhaps the diversion from vengeful activities and uniting all the fans, celebrities, and businesses, the spiritual ROI may be much more worthwhile. Remember Nelson Mandela, Nobel Peace Prize Medal winner, and former President of South Africa in 1996 used the unlikely tool, Rugby, to bring together white apartheids and blacks… So, get your favorite drinks and snacks ready, and get your remote controlling fingers warmed up for the Super Bowl. May your favorite team win! 

5.     Tax Red Flags.          Be cautious and keep all your hard-earned money in your pocket. Pay fair tax. But there are red flags on your 2018 tax return could spark interest from the IRS. This year, there are more factors at play that could spur attention from the IRS, due to the Tax Cuts and Jobs Act — which taxpayers are now dealing with for the first time as they prepare their 2018 returns. Even though the IRS may be just getting back on its feet after the partial government shutdown, with another one potentially in mid-February but don't assume you can pull a fast one on your tax return this year. Most people will never face an audit. Of the nearly 148 million individual tax returns filed in 2016, just under 1 million (about 0.7%) were audited, according to the latest available IRS data. Here are some things that could cause the IRS to look more closely at your 2018 tax return: Large charitable donations, Rental activity, Unreported income (“the No. 1 cause to get a letter from the IRS"), and Overseas accounts. 

6.     Polar Vortex Kill.      More than 30 record lows were broken across the Midwest. Cotton, Minnesota, was the coldest place in the US on Thursday with a low of -48C (-56F).  Chicago passed the record low for 31 January, while Mount Carroll has probably beaten the Illinois record with a morning temperature of -39C (-38F).  Polar vortex death toll rises to 21 as US cold snap continues, and the toll will rise… Ninety million people, a third of the US have seen temperatures of -17C (0F) or below. Hospitals have been treating frostbite as parts of the country ground to a halt. Homeless people have been particularly at risk. Polar Vortex tragedies…: woman, 60, was found dead in an abandoned house in Lorain, Ohio. Some people were found dead a short walk from their homes: A Michigan man froze to death in his neighborhood, "inadequately dressed for the weather." In a wind chill of -46C (-51F) an 18-year-old student was found unresponsive a short walk from his dorm on Wednesday and later died in hospital. On Tuesday, a man froze to death in a garage in Milwaukee, Wisconsin, having "apparently collapsed after shoveling snow." Dangerous roads kill too: A man was fatally struck by a snow plow near Chicago on Monday and in northern Indiana, a 22-year-old police officer and his wife died after a collision on icy roads. Please be safe. Dress warm and stay inside. 

7.     Venezuela Oil Sanctioned.    Treasury sanctions Venezuela state-owned oil firm in bid to transfer control to Maduro opposition. The sanctions aim to transfer control of Venezuela's oil wealth to the forces that oppose socialist dictator Nicolas Maduro. U.S. companies can continue to import oil from Venezuela, but the funds must be held in accounts that are not accessible to the Maduro regime. Last week, the opposition leader of Venezuela's National Assembly, Juan Guaido, named himself interim president amid street protests. President Trump soon recognized Guaido as the nation's leader and his administration has been marshaling international support for the opposition figure since then. Under the sanctions, U.S. companies can continue to purchase Venezuelan oil, but the payments must be held in an account that cannot be accessed by the Maduro regime. "If the people in Venezuela want to continue to sell us oil, as long as the money that money goes into blocked accounts, we'll continue to take it," Mnuchin said. "Otherwise we will not be buying it." Still, Venezuela remains one of the largest suppliers to U.S. refineries. Venezuela shipped an average 580,000 bpd of crude oil and petroleum products to the country in the year through October 2018, the last month data were available.

 *******************************************

These are my researches and analysis on the highlights of the week. Perhaps you should take a closer look at them, do additional research and analysis if these are interesting to you. This “7–7 Market Highlights” is presented for general knowledge, the resource for management, and perhaps as a tool for career development, and building wealth. As always, “Think for Yourself”, you decide on your own final analysis and position. 

Mahalo. I welcome your thoughtful comments, “like” notes, and “share” of this publication. 

 ~ S. Vincent Shin

   www.dhirubhai.net/in/vshin

References and Image credits to Bloomberg News, Getty image, AP Photo, Reuters, CNBC..., and special thanks to Image & Visual Consultant @U.Y.