Daily Commentary
Get a weekly roundup of our market insights.
Sign up for our weekly e-mail newsletter.
By Jonathan Cable, Reuters, 4/23/2024
MarketMinder’s View: “HCOB’s preliminary composite euro zone Purchasing Managers’ Index (PMI), compiled by S&P Global, bounced to 51.4 this month from March's 50.3, well ahead of expectations in a Reuters poll for 50.7 and marking its second month above the 50 level separating growth from contraction.” Underpinning the climb was an uptick in the services industry, while manufacturing remains in contractionary territory. That isn’t terribly new news, given it extends long-running trends. But the quick reference here to Germany returning to growth in April’s PMI is somewhat interesting and something we think would surprise many, given its reputation as a heavy-industry hub. At any rate, this is mostly confirmation that growth seems to be underway in Europe. And that is about it.
US Business Activity Expands at Slowest Pace in Four Months
By Vince Golle, Bloomberg, 4/23/2024
MarketMinder’s View: S&P Global’s US Composite purchasing managers’ index ticked down to 50.9 in April’s preliminary reading, falling from March’s 52.1. Now, readings above 50 indicate expansion, so that on the surface isn’t worth sweating much, particularly because these gauges don’t tell you anything about the rate of growth—only its breadth—the titular claim here notwithstanding. However, falling new orders, especially in America’s dominant services sector, are worth noting. This is just one data point, which we would never counsel making much of, but we will be watching for developments here and in the similar Institute for Supply Management gauge.
Hereβs What to Know Before Withdrawing Funds From Inherited Individual Retirement Accounts
By Kate Dore, CFP, CNBC, 4/23/2024
MarketMinder’s View: This is a handy reminder of the rule changes since 2019’s Secure Act passed that require many non-spousal beneficiaries to deplete inherited traditional IRAs within a decade versus no time requirement previously. Since such withdrawals are taxed at the beneficiary’s ordinary income bracket, this can create uncomfortable tax bills. Furthermore: “In 2022, the IRS proposed mandatory yearly withdrawals for heirs if the original account owner had already started their required minimum distributions, or RMDs. But the agency has since waived penalties for heirs’ missed RMDs amid confusion. These waived RMDs could create a tax problem for certain heirs who still must empty inherited accounts within 10 years, experts say. The shorter window could mean larger distributions and higher-than-expected income for those years.” There is no way to know whether the IRS will suspend annual withdrawals again in 2024. But keep in mind that it may only compound problems later, especially if, as this notes, tax rates revert to pre-2017 marks after 2025.
By Kate Dore, CFP, CNBC, 4/23/2024
MarketMinder’s View: This is a handy reminder of the rule changes since 2019’s Secure Act passed that require many non-spousal beneficiaries to deplete inherited traditional IRAs within a decade versus no time requirement previously. Since such withdrawals are taxed at the beneficiary’s ordinary income bracket, this can create uncomfortable tax bills. Furthermore: “In 2022, the IRS proposed mandatory yearly withdrawals for heirs if the original account owner had already started their required minimum distributions, or RMDs. But the agency has since waived penalties for heirs’ missed RMDs amid confusion. These waived RMDs could create a tax problem for certain heirs who still must empty inherited accounts within 10 years, experts say. The shorter window could mean larger distributions and higher-than-expected income for those years.” There is no way to know whether the IRS will suspend annual withdrawals again in 2024. But keep in mind that it may only compound problems later, especially if, as this notes, tax rates revert to pre-2017 marks after 2025.
Ill-Discipline in the EU Ranks Could Tear the Euro Apart
By Jeremy Warner, The Telegraph, 4/23/2024
MarketMinder’s View: While we don’t disagree that policy differences among the eurozone nations could in theory threaten the euro, this coverage seems like much ado about very little to us. It cites a proposal to change the EU’s growth and stability pact, which used to mandate deficits stay below 3% of GDP and debt at 60%. Now they aim to add more flexibility and ditch such arbitrary targets. But here is the thing: As this article admits early on, nations routinely ignored those rules. Italy and France violate both “ceilings” now. So adding more flexibility to a rule that was never enforced seems like a pretty meaningless change to us. So in no way do we think such policy shifts threaten the euro. And, we will note in the end that the EU and eurozone are not synonymous. So whatever Sweden or Hungary’s debt and deficit levels are, it isn’t relevant whatsoever to the euro’s viability, considering neither of them use it. There is a lot of conflation of the EU and eurozone in this piece.
Euro Zone Business in Services-Led Bounce in April, PMI Survey Shows
By Jonathan Cable, Reuters, 4/23/2024
MarketMinder’s View: “HCOB’s preliminary composite euro zone Purchasing Managers’ Index (PMI), compiled by S&P Global, bounced to 51.4 this month from March's 50.3, well ahead of expectations in a Reuters poll for 50.7 and marking its second month above the 50 level separating growth from contraction.” Underpinning the climb was an uptick in the services industry, while manufacturing remains in contractionary territory. That isn’t terribly new news, given it extends long-running trends. But the quick reference here to Germany returning to growth in April’s PMI is somewhat interesting and something we think would surprise many, given its reputation as a heavy-industry hub. At any rate, this is mostly confirmation that growth seems to be underway in Europe. And that is about it.