(Washington)

Advisors need to pay very close attention to what states are doing on taxes. As might have been expected, states with high taxes are working hard to come up with solutions that protect their residents from the higher payouts trying to be imposed by the federal government. The new tax package limits state and local deductions (“SALT”) to just $10,000, which means much higher tax bills for residents of higher tax states. While New York is preparing to sue the federal government over the changes, California has already come up with what looks like a good solution. Residents of the state can simply donate to the “California Excellence Fund” instead pf paying taxes, as such a charitable gift is deductible in the new federal package.

FINSUM: New York may also use the same plan as California is using. All the states seem likely to do this. What a big waste of time and energy because of a silly rule.

(New York)

Barron’s has been getting increasingly bearish of late (with the Dow at 25,000 now, we can understand why!), and they have published a bearish article laying out the case for why a correction is looming. The argument has a lot to do with price action, and what the market is showing is that despite reaching a new high, it is coasting rather than gaining momentum. The last trading day of the year—a 118-point loss—was a worrying sign of slowing momentum, and many technical indicators now point to falling prices soon.

FINSUM: One key takeaway from this piece is that despite January being considered a good month for stocks, that is not the case in midterm election years.

(New York)

The stock market just finished a sensational year, capping what seems a one-in-a-lifetime nine-year run. However, there is something very surprising about this rally that is different than those in the past—more and more Americans are sitting it out because of fear. Since the start of 2012, nearly a trillion Dollars has been pulled from retail equity mutual funds (some went back in as ETFs). The market rose 116% over the same period. In the last three years, US stock funds (ETFs included) have seen net outflows each year.

FINSUM: The Financial Crisis left deep scars for investors all across the country, and the traumatic effects of it can be seen in the data.

(New York)

It is that time of the year again, and investors need to watch out. January is historically the top month for retail bankruptcies, and it seems likely there is going to be another cull this year. Last year saw a furious pace of retail bankruptcies, with more companies going bust than during the Great Recession. January is traditionally when most companies file, according to data going back to 1981.

FINSUM: Christmas sales were a little better than feared this year, so a couple of zombies might linger on longer than January, but this is certainly going to be another year of retail bankruptcies.

(Washington)

The last couple of years have seen a huge surge in the legal pot industry. More and more major states have made marijuana legal, which in turn has sparked a flurry of business to create a legal pot industry. However, doom and gloom may be about to settle into the young area as Jeff Sessions, Trump’s Attorney General, has now rescinded the Obama era policy that limited legal enforcement of federal marijuana laws in states where it was legal. The news hit the sector hard, with one of the main pot stock indexes down as much as 24% yesterday.

FINSUM: It is going to be hard for the federal government to enforce any national law when there is primarily only local law enforcement, but this could still cause some major disruptions to the young industry.