As we close out 2017 the final week of the year the markets have not been as cooperative as investors would have liked. The markets have pulled back from historic highs and the Dow was not able to hit the elusive 20,000 mark. Looking forward to 2017 here are several issues that may impact clients and markets.
New President: President elect Trump takes the oath of office on Friday January 20th in Washington, D.C. The US markets have reacted mostly positive to the Trump election based on promises of lower taxes, faster growth and more US based jobs. Here is a link if you would like more information on the inauguration.
Tensions with Russia?: Obama announced sanctions against Russia yesterday afternoon and expelled 35 Russian official in response to the allegations of Russian cyber-attacks during the election. Russia has not yet retaliated but Russian Foreign Minister Sergei Lavrov “We of course cannot leave these stunts unanswered. Reciprocity is the law in diplomacy and international relations.”
Tax cap increase: Workers and employers each pay in 6.2% of wages into the Social Security system until the salary cap of $118,500. In 2017 the tax rate will stay the same but the cap is being raised to $127,200 to adjust for higher wages in the US.
Payments increase: The cost of living adjustment for 2017 will be a modest 0.3% or about $5 per month. This increase is in line with 2016 which did not see any raise. Increases to Social security are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
Earning Limits: The earnings limit for people 65 and younger will increase from $15,720 in 2016 to $16,920 in 2017. While those who turn 66 in 2017 the limit increases by $3,000 to $44,880.
For a full list of changes, here is the 2017 Social Security Changes Fact Sheet.
China: China is trying to reduce the impact of the Dollar on the Yuan as the Yuan trades at an eight year low. They are introducing 11 more countries into its currency basket.
Euro: The Financial Times polled 28 economists and over 60% believe that the Euro and dollar will hit parity next year for the first time in 14 years. Rising interest rates in the US and continued QE in Europe are thought to be two of the main factors in the shift.
Dorsey, Wright & Associates, LLC, a Nasdaq Company, is a registered investment advisory firm
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