WHAT THE MARKET IS TELLING US ABOUT THE ELECTION

Burt White Chief Investment Officer, LPL Financial Jeffrey Buchbinder, CFA Market Strategist, LPL Financial Election years have historically been good for stocks, and this year has been no different, although with less volatility than we would expect during the summer of an election year. That relative calm may partly reflect that the market is increasingly pricing in greater certainty that would come with a Hillary Clinton victory, as her support has climbed in the polls. This week we look at what the stock market and some politically sensitive industry groups may be telling us about the potential outcome of the presidential election in November. WHERE’S THE ELECTION YEAR VOLATILITY? Election years have historically been good for stocks, though with some volatility, as we wrote in our election themed Weekly Market Commentary back in May (“What Might Trump the Election Year Pattern?”). That volatility during election years has historically come during the middle and late summer months — in other words, about now. Although each cycle is different (especially 2008), in recent decades we have observed that the volatility tends to subside, and a late-year rally ensues, when markets have more clarity on the candidates’ platforms and start to price in a winner. So where has the volatility been this summer? As shown in...
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The Many Benefits of a Roth IRA

Why do so many people choose it rather than a traditional IRA? The Roth IRA changed the whole retirement savings perspective. Since its introduction, it has become a fixture in many retirement planning strategies. The key argument for going Roth can be summed up in a sentence: Paying taxes on retirement contributions today is better than paying taxes on retirement savings tomorrow. Here is a closer look at the trade-off you make when you open and contribute to a Roth IRA – a trade-off many savers are happy to make. You contribute after-tax dollars. You have already paid federal income tax on the dollars going into the account. But, in exchange for paying taxes on your retirement savings contributions today, you could potentially realize great benefits tomorrow.1 You position the money for tax-deferred growth. Roth IRA earnings aren’t taxed as they grow and compound. If, say, your account grows 6% a year, that growth will be even greater when you factor in compounding. The earlier in life that you open a Roth IRA, the greater compounding potential you have.2 You can arrange tax-free retirement income. Roth IRA earnings can be withdrawn tax-free as long as you are age 59½ or...
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The TPP Controversy

Will the Trans-Pacific Partnership ever be ratified? Should it be? The Trans-Pacific Partnership is back in the news. A new wave of controversy surrounds this huge trade deal, which has been agreed to, in principle, by 12 nations, but not yet ratified. Its adherents say that it would boost U.S. economic growth. Its detractors say that it would destroy more U.S. manufacturing jobs and doesn’t go far enough to halt environmental abuse.1 Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam have all committed to joining the TPP. These 12 countries generate about 40% of the world’s economic growth and about a third of global commerce. At least six of these nations must ratify the TPP in order for it to operate, and two of those six nations must be Japan and the United States. Therein lies the obstacle. Lawmakers in both Japan and the U.S. will certainly debate the merits of the agreement on the way to a 2017 vote, and there is a real possibility the deal could be struck down.1 What does the TPP aim to achieve? It would lower taxes on imports and exports – and get rid of...
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