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Shalom to you, our partners in ministry. It is an honor to share with you the latest news from Washington, Savvy Living, Personal Planning, gift stories, finance news, and timely articles.
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This information is put together in a way to be a help in understanding what is happening in our economy so you can use it to your best advantage. I hope this information is useful to you.
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Director of Donor Relations
The American Taxpayer Relief Act of 2012 created permanent rules for federal estate planning. These principles are helpful in creating estate plans, since there now is reasonable certainty.
Estate Exemption – There is an applicable exclusion amount of $5 million plus indexed increases. For 2015, the exclusion amount is $5.43 million. This amount also applies to gifts and to generation skipping transfer taxes.
Estate Tax Rate – Those estates over the exclusion amount will be taxed at 40%. Estate tax equals $345,800 on the first $1,000,000 and 40% of the excess over that amount, reduced by the applicable exclusion amount. This amount for 2015 is calculated based on a $5.43 million estate and will be $2,117,800. The $5.43 million number will be adjusted for inflation in future years.
Marital Portability – Under "marital portability," a surviving spouse may have both exclusion amounts available. The applicable exclusion amount for a surviving spouse will be the basic exclusion amount of $5 million with cost of living increment plus the "deceased spousal unused exclusion amount." The unused exclusion will be the exclusion amount of the deceased spouse in excess of the basic exclusion amount used in the estate of that spouse. The unused exclusion amount will not be adjusted further for inflation. In order to benefit from this provision, the deceased spouse must die after 2010 and the executor must make an irrevocable election on the federal estate tax return.
If the deceased spouse transfers all assets to the surviving spouse using the unlimited marital deduction, then the surviving spouse should have available the full value of both exclusions. The amount of exclusion cannot exceed twice the basic exclusion amount and only the remaining exclusion of the last deceased spouse may be utilized.
Gift Taxes – There are two exclusions for gifts during life. Present interest gifts qualify for a $14,000 (in 2015) annual exclusion. This gift exclusion is intended to cover birthday, holiday and other gifts. There is one exclusion for each donor and each donee. For example, a couple with two children may give up to $56,000 to their children in 2015 by using four gift exclusions.
Each person also has a lifetime gift exclusion amount equal to the estate exclusion amount for that year. If the gifts exceed annual exclusion amounts, the balance will be reported on the IRS Gift Tax Return Form 709. The amount of gifts reported on Form 709 will reduce the available estate exemption. Gifts in excess of both the annual exclusions and the lifetime gift applicable exclusion amount will be subject to a 40% gift tax.
Generation Skipping Tax – If a donor transfers property to a grandchild during life or through an estate, there is potentially another transfer tax. The generation skipping tax (GST) is 40% on transfers to grandchildren or great-grandchildren that exceed the GST applicable exclusion amount. This GST exclusion is the same as the estate exclusion for the year of the transfer.
Bypass Trusts
Because there is an estate tax with an exemption of $5.43 million in 2015, it will continue to be important for individuals with large estates to create "bypass trusts." The bypass trust is a trust created in the estate of the first spouse to die. It typically will benefit the surviving spouse and the trust principal may then be transferred to children without further estate taxation.
There are two general types of bypass trusts. The conventional bypass trust pays income to the surviving spouse. When he or she passes away, the trust is distributed to children. For individuals who have large IRAs, 401Ks or other qualified pension plans, another option is a "bypass charitable remainder trust."
Bypass Trust Potential Tax Savings
For a couple with larger assets, a bypass trust is created in the estate of the first spouse to pass away. It is typically funded at the amount of the estate exemption. The bypass trust saves future estate tax because the tax in the first estate is offset by the exemption of the first spouse. Because the bypass trust is subject to tax in the first estate (but covered by the estate exemption), it is not taxable in the second estate. While the portability of the marital deduction permits the first spouse to use a simple will and transfer assets to the surviving spouse, a bypass trust permits the appreciation of trust assets during the lifetime of surviving spouse to escape taxation. The savings on this appreciation could be quite substantial in a larger estate.
Assume that there is a $5.43 million exemption per person and Joe and Jane have a $10.86 million estate. They have a simple will with all to the survivor. Joe passes away and transfers his half of the estate to Jane. She then owns all $10.86 million in assets. There is no tax because of the unlimited marital deduction. Joe's executor elects to pass to Jane the $5.43 million "deceased spouse unused exemption amount (DSUEA)."
In the ten years before Jane's death, the estate grows to $14.43 million and Jane's exemption is increased by indexing from $5.43 million to $6 million. When Jane passes away ten years later, her exemption plus the DSUEA total $11.43 million. However, the estate is $14.43 million and $3 million of her estate is taxable. The estate tax at 40% is $1.2 million.
Bill and Betty also have a $10.86 million estate. However, both of them create plans with a bypass trust. Bill passes away in 2015 and his entire $5.43 million estate is transferred to a bypass trust. The trust is exempt because of the use of his $5.43 million estate exemption. Therefore, Bill's estate pays no estate tax. Betty receives income from the bypass trust for her lifetime. When she passes away, the bypass trust and her estate are each $7.17 million. Only her estate is subject to tax. With a $7.17 million estate and a $6 million exemption, the tax is $468,000. The bypass trust saved $732,000 in estate tax.
Bypass Trust Powers
The bypass trust is designed to use the exemption in the first estate and to avoid any tax in the second estate. In order to do this, the trustee must have limited powers to transfer assets to the surviving spouse. If the trustee, who may also be the surviving spouse, can simply transfer the property from the trust for his or her comfort or well-being, there is not an "ascertainable standard" and the trust will be included in his or her estate.
Therefore, the bypass trust typically has a requirement to pay income to the surviving spouse and a permission to transfer principal to the surviving spouse under a "health, education, maintenance and support" standard. In essence, there is an "ascertainable standard" that governs the circumstances in which assets may be transferred to the surviving spouse.
It is also permissible to give the trustee a power to invade the trust to the extent of the greater of $5,000 or 5% of trust assets each year. This power is used fairly infrequently because the assets transferred from the bypass trust to the surviving spouse will be subject to estate tax when he or she passes away.
Bypass Trust Pitfalls
There are many benefits of a bypass trust, but there are also some cautions. First, if the family residence is transferred into the bypass trust, it will usually receive a stepped-up basis to the value when the first spouse passes away. If the home does not appreciate, the bypass trust could sell it without paying capital gains tax. However, if the house is held for a period of years and appreciates, the bypass trust does not qualify for the $250,000 capital gain exclusion for sale of a principal residence. Therefore, there could be substantial capital gains tax payable on that residence if sold by the bypass trust.
Second, if there is a blended family that is going to receive the bypass trust remainder, the spouse may attempt to use the "health, education, maintenance and support" standard to invade the trust. For example, if the surviving spouse is the second husband or wife and the remainder of the bypass trust is going to children of the first marriage, he or she may attempt to invade the trust and then transfer it to his or her own children.
Finally, there could be conflict between the surviving spouse and a child. If the surviving spouse becomes ill and a child takes over as trustee, the child may be reluctant to provide high quality and expensive care for surviving spouse. This expensive care would deplete the trust and reduce the inheritance of the child. Therefore, this conflict of interest could cause problems.
Rights of the Surviving Spouse
In most cases, the surviving spouse will be trustee and will receive all income from the bypass trust. The surviving spouse will have the right to control the property. If there is a family residence in the trust, he or she will be able to live in the home.
Following the standards set up under the health, education, maintenance and support rule for invasion of principal, a surviving spouse may (with appropriate justification) invade principal. Finally, some trusts permit the surviving spouse the greater of $5,000 or 5% invasion power to take principal from the trust.
Bypass Formula Clause
The bypass trust normally is funded with a formula clause in the estate of the first person to pass away. Within that estate, there will be a fractional share or fixed dollar clause that is designed to allocate the maximum amount to the trust that will avoid federal estate tax. If the exemption equivalent is $5.43 million, that amount is generally allocated to the bypass trust.
The spouses and their counsel should also consider the impact of potential state inheritance or estate taxes. For most states, there will be tax that may be levied even on the first estate. Because the state inheritance and estate tax rates are lower than the federal tax, it may still be appropriate to fully fund the bypass trust. However, counsel and the two spouses should review the state tax impact on their plan.
Retirement Funds to Bypass Trust
If the first spouse to pass away has a majority of his or her estate in taxable retirement funds, it may be necessary to use those assets to fund the bypass trust. It is quite easy to do so through a beneficiary designation for the IRA, 401K or other qualified plan. For a 401K or in a community property state, it is necessary to have a spousal consent to fund the trust. In most cases, counsel will require a spousal consent if a trust is to be funded with an IRA, 401K or other qualified retirement plan.
The potential disadvantage of funding the bypass trust with a taxable retirement plan is that it is a wasting asset. That is, as the qualified plan is paid out to the bypass trust, it is subject to income tax. The federal and state income tax may exceed 40% on the plan payouts.
For example, with a $2 million IRA paid to the bypass trust over a 12 year expectancy of a surviving spouse, there could be $800,000 in federal and state income tax. The $2 million IRA could be reduced to $1.2 million after tax.
Bypass Charitable Remainder Unitrust
If the estate is fairly substantial, it may be preferable to transfer the IRA, 401K or other qualified plan into a bypass charitable reminder unitrust (CRT).
The bypass CRT is usually a 5% payout unitrust. It may exist for the life of spouse and lives of children, or it may exist for the life of surviving spouse plus a term of up to 20 years for children.
Because the bypass CRT qualifies for the use of the estate exemption and there is a charitable estate deduction for the value of the remainder interest, it may be larger than the typical bypass trust. For example, with a $5.43 million exemption and a $750,000 present value of the remainder interest, it may be possible to fund the bypass CRT with $6 million and still have zero estate tax.
The CRT has the benefit of tax-exempt status. It may receive the full distribution from an IRA, 401K or other qualified plan tax-free. The full value of the plan may then be invested for the benefit of the surviving spouse and children. The value of the total income distributed over a long period of time may actually be similar to the value of income plus principal in a regular bypass trust. With a regular bypass trust, the IRA or 401K will be depleted by payment of a very high income tax rate.
$3 Million IRA to Bypass Trust or to Bypass CRT?
Mary has a $3 million IRA and $3 million in other assets. She passes away and transfers those assets into her $6 million bypass trust for the benefit of husband Joe. The IRA is paid out over the 12 year expectancy of her surviving spouse, Joe. There is $1.2 million in income tax paid on the $3 million IRA, leaving $4.8 million in the bypass trust. Husband Joe and the children receive income from $4.8 million for their lifetimes.
Martha also has a $3 million IRA and $3 million in other assets. She transfers both assets into a bypass charitable remainder trust. The $6 million trust receives a $3 million IRA distribution, but it is tax-exempt. All $6 million is invested to earn income for family for the duration of the lives of surviving spouse Mitchell and their children. This trust will eventually be transferred to charity, but the increased life income to family makes up for the future gift to charity.
SAVVY LIVING
What are the symptoms of a stroke? My 66-year-old aunt had a stroke a few months ago and neither she nor my uncle had a clue it was happening.
Unfortunately, most Americans don't know the signs of a stroke, but they need to. Strokes are the fifth leading cause of death in the United States and the No. 1 cause of disability. Being able to recognize a stroke and getting to the hospital quickly can make a huge difference in reducing its potentially devastating effects. Here are some tips that can help you recognize a stroke and what you should do if it happens to you or your loved one.
Types of Stroke
According to the Centers for Disease Control and Prevention, every year more than 795,000 people in the United States have a stroke - three-quarters of which are over the age of 65. A stroke occurs when a blood vessel that carries blood to the brain is suddenly blocked by a clot (ischemic stroke), or bursts (hemorrhagic stroke), causing parts of the brain to become damaged or die. About 87% of all strokes are ischemic.
Depending on the severity of the brain damage, strokes can cause mild to severe disabilities, including paralysis, loss of speech, vision and memory, along with other health and emotional issues and death.
Stroke Signs
Since a stroke injures the brain, the person having a stroke may not realize it. Stroke victims have the best chance if someone around them recognizes the symptoms and acts quickly. The five most common symptoms include:
Sudden numbness or weakness of the face, arm, or leg, especially on one side of the body.
Sudden confusion, trouble speaking or understanding.
Sudden trouble seeing in one or both eyes.
Sudden trouble walking, dizziness, loss of balance or coordination.
Sudden, severe headache with no known cause.
The easiest way to identify a stroke is to use the F.A.S.T. test to identify the symptoms.
F (Face): Ask the person to smile. Does one side of the face droop?
A (Arm): Ask the person to raise both arms. Does one arm drift downward?
S (Speech): Ask the person to say a simple sentence. Is their speech slurred?
T (Time): If you observe any of these signs of stroke, call 911.
To help you remember the signs, the American Stroke Association has a free "Spot a Stroke FAST" app (seestrokeassociation.org) that you can download on your smartphone or mobile device. You can also visit the National Stroke Association at stroke.org and print their "Act FAST" wallet card to keep as a reminder.
Act Quickly
Remember that a stroke is a medical emergency and every minute counts. Even if you're not sure a stroke is happening, call 911 anyway. The longer blood flow is cut off to the brain, the greater the damage. Immediate treatment can save a person's life and improve their chances for a successful recovery.
Ischemic strokes are treated with a drug called t-PA that dissolves the blood clots that block the blood flow to the brain. The window of opportunity to start treating a stroke is three hours. But to be evaluated and receive treatment, patients need to get to the hospital within 60 minutes.
If you have a choice, wait for the paramedics rather than driving the patient yourself. Patients who are transported by EMS are evaluated and treated much quicker than people who are driven in. Of course, don't drive if you are the one having a stroke.
It's also very important that you call 911 even if the symptoms go away. When symptoms of stroke disappear on their own after a few minutes, a "mini-stroke" or transient ischemic attack (TIA) may have occurred, which is a warning that a major stroke may be coming. That's why even mini-strokes need to be treated like emergences.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
YOUR PLAN
A Bequest to Further Good Work
Dave: The work of our favorite charity was important to us and we provided support with current gifts, but wanted to do more. We received their newsletter and noted that we could make a gift from our estate and join the legacy society. We saw a picture of smiling people just like us and we wanted to be part of that group.
Nancy: We met with our lawyer to revise our wills and we each included a provision for a bequest. Our lawyer put language in the will that allows a percentage of our estate to go to our favorite charity. This was easy to arrange and permits us to still use our assets during our lives if we need them.
We told their gift planner about our decision and were excited when we were invited to a special event honoring us. We will continue to make gifts during our lives, but it feels good to know that our support will help in the future.
You also may want to make it easy and convenient to have a bequest included in your will. The language link below shows how a bequest can very easily be included in your will.
You might find it helpful to print this page and the bequest language. Please feel free to give this information to your attorney. If he or she has any questions, please contact us.
Click Here to review sample bequest language.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your benefits may be different, you may want to click here to view a color example of your benefits.
WASHINGTON NEWS
Highway Trust Fund Bill Slowly Rolling Forward
On May 31 the current bill to provide funding for the Highway Trust Fund will expire. If Congress does not act, hundreds of summer highway construction projects will be placed on hold.
At a May 11 conference in Washington, Transportation Secretary Anthony Foxx predicted another short term extension for highway project funding. Rep. Rosa DeLauro (D-CT) was on a panel with Foxx. She agreed that the solution would be short term and noted, “There is not going to be a long-term fix – the five or six years that we have been able to pass, pull together on a bipartisan basis. This will be the 33rd short-term extension over the last six years.”
At the same conference, Rep. John Delaney (D-MD) also predicted a short-term funding solution. Delaney praised the Grow America Act which would fund the Highway Trust Fund for six years. It uses an 8.75% tax on the $2 trillion of overseas profits of U.S. corporations to create an American Infrastructure Fund.
Senate Finance Committee Chair Orrin Hatch (R-UT) is attempting to find $11 billion in tax revenue to fund the projects from June 1 to December 31, 2015. He is regularly meeting with House Ways and Means Chair Paul Ryan (R-WI) to discuss acceptable offsets. Both chairmen have indicated they anticipate creating a solution by the end of May.
Editor’s Note: The shortfall in highway funding is in part due to Washington action in mandating more fuel-efficient cars. The federal gas tax receipts assumed a larger number of gallons used each year. With the more fuel-efficient cars, Americans are not using the anticipated amount of gas and the result is less tax revenue for the Highway Trust Fund. Because increases in the gas tax are very unpopular, Washington has simply moved forward with 33 short-term patches.
FINANCES
Stocks - Macy's Earnings Disappoint
Macy's, Inc. (M) reported its latest quarterly earnings on Wednesday, May 13. The company reported disappointing earnings, but also a new initiative to improve declining sales.
Macy's announced quarterly sales of $6.23 billion. This represents a slight decrease from the same period last year when the company reported sales of $6.28 billion.
"We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors," said Terry J. Lundgren, Macy's, Inc. Chairman and CEO. "Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy's and Bloomingdale's stores, including New York City, Chicago, Las Vegas and San Francisco."
The company reported net income of $193 million for the quarter. This represents a decrease from the comparable period last year when Macy's reported net income of $224 million. Earnings per share came in at $0.56 per share.
Macy's, like other retail stores, has been struggling of late. The market is deeply fragmented. Shoppers are either purchasing items from discount stores or high-end stores. This leaves department stores like Macy's struggling to find their target audience. In addition, millennials, whose purchasing power is increasing dramatically, tend to gravitate towards retail stores that offer an experience. Macy's stores fail to draw this key demographic. As a result, management's latest initiative is aimed at high-end shoppers. Macy's plans to redesign and add high-end merchandise, more staff and new technology to its best 150 stores.
Macy's, Inc. (M) shares ended the week at $66.53, up 1.05% for the week.
J.C. Penney's is Improving
J.C. Penney Company, Inc. (JCP) reported its latest quarterly earnings on Wednesday, May 13. The company is attempting a comeback and reported improved earnings compared to the same quarter one year ago.
J.C. Penney reported quarterly sales of $2.86 billion. This represents a slight increase from the same period last year when the company reported sales of $2.80 billion.
"We are pleased with the Company's solid performance this quarter across all key metrics including sales, gross margin and EBITDA," said Myron E. Ullman, III, CEO of J.C. Penney. "This year we are switching gears, going on the offensive to gain back share and grow our business profitability while executing our vision to become the preferred shopping choice for Middle America. I would like to thank our team of 114,000 associates for their hard work and warrior spirit that helped us deliver these results. It is their passion to win and to serve the customer that sets J.C. Penney apart from the competition."
The company reported a net loss of $167 million for the quarter. This represents an improvement over the comparable quarter last year when J.C. Penney reported a net loss of $352 million.
Investors were initially disappointed with J.C. Penney's earnings report. Many were hoping for a more marked improvement in sales. As a result, J.C. Penney's stock price fell to a low of $8.02 per share immediately after the release. However, investment bank BMO Capital Markets upgraded J.C. Penney's rating from "underperform" to "market" before the market opened on Friday. The investment bank stated that the ratings upgrade is largely due to renewed confidence that J.C. Penney will be able to reach its goal of $1.2 billion in EBITDA by 2017. After the ratings upgrade, J.C. Penney's stock price began to rise, hitting a high of $8.44 in early Friday trading.
J.C. Penney Company, Inc. (JCP) shares ended the week at $8.56, relatively unchanged for the week.
Nordstrom Reports Mixed Earnings
Nordstrom, Inc. (JWN) reported its latest quarterly earnings on Thursday, May 14. The company reported impressive sales, but a decline in net income as the company spends heavily on capital improvements.
Nordstrom reported net sales of $3.12 billion for the quarter. This represents an increase in sales over the same period last year when the company reported net sales of $2.84 billion.
"Our customer strategy is squarely focused on serving customers on their terms and delivering the high level of service they expect from us," said Blake Nordstrom on a conference call with investors. Blake Nordstrom is one of three siblings who are presidents at Nordstrom, Inc.
The company reported quarterly net income of $128 million. This represents a slight decrease from the comparable period last year when the company reported net income of $140 million. Earnings per share came in at $0.66 per share.
As other department stores have been struggling, Nordstrom has been shifting its strategy to fit customer needs. This shift has already shown dividends as revenue rose almost 10% this quarter compared to one year ago. However, this shift has not been cheap. The company has been spending heavily on technology and warehouses to speed up the delivery of online orders. In addition, Nordstrom is expanding into Canada and doubling the size of its discount outlet Nordstrom Rack. The company plans to spend an additional $4.3 billion between now and 2019.
Nordstrom, Inc. (JWN) shares ended the week at $74.80, down 3.1% for the week.
The Dow started the week of 5/11 at 18,188 and closed at 18,273 on 5/15. The S&P 500 started the week at 2,116 and closed at 2,123. The NASDAQ started the week at 5,003 and closed at 5,048.
Bonds - The Treasury Rollercoaster
Macy's announced quarterly sales of $6.23 billion. This represents a slight decrease from the same period last year when the company reported sales of $6.28 billion.
"We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors," said Terry J. Lundgren, Macy's, Inc. Chairman and CEO. "Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy's and Bloomingdale's stores, including New York City, Chicago, Las Vegas and San Francisco."
The company reported net income of $193 million for the quarter. This represents a decrease from the comparable period last year when Macy's reported net income of $224 million. Earnings per share came in at $0.56 per share.
Macy's, like other retail stores, has been struggling of late. The market is deeply fragmented. Shoppers are either purchasing items from discount stores or high-end stores. This leaves department stores like Macy's struggling to find their target audience. In addition, millennials, whose purchasing power is increasing dramatically, tend to gravitate towards retail stores that offer an experience. Macy's stores fail to draw this key demographic. As a result, management's latest initiative is aimed at high-end shoppers. Macy's plans to redesign and add high-end merchandise, more staff and new technology to its best 150 stores.
Macy's, Inc. (M) shares ended the week at $66.53, up 1.05% for the week.
J.C. Penney's is Improving
J.C. Penney Company, Inc. (JCP) reported its latest quarterly earnings on Wednesday, May 13. The company is attempting a comeback and reported improved earnings compared to the same quarter one year ago.
J.C. Penney reported quarterly sales of $2.86 billion. This represents a slight increase from the same period last year when the company reported sales of $2.80 billion.
"We are pleased with the Company's solid performance this quarter across all key metrics including sales, gross margin and EBITDA," said Myron E. Ullman, III, CEO of J.C. Penney. "This year we are switching gears, going on the offensive to gain back share and grow our business profitability while executing our vision to become the preferred shopping choice for Middle America. I would like to thank our team of 114,000 associates for their hard work and warrior spirit that helped us deliver these results. It is their passion to win and to serve the customer that sets J.C. Penney apart from the competition."
The company reported a net loss of $167 million for the quarter. This represents an improvement over the comparable quarter last year when J.C. Penney reported a net loss of $352 million.
Investors were initially disappointed with J.C. Penney's earnings report. Many were hoping for a more marked improvement in sales. As a result, J.C. Penney's stock price fell to a low of $8.02 per share immediately after the release. However, investment bank BMO Capital Markets upgraded J.C. Penney's rating from "underperform" to "market" before the market opened on Friday. The investment bank stated that the ratings upgrade is largely due to renewed confidence that J.C. Penney will be able to reach its goal of $1.2 billion in EBITDA by 2017. After the ratings upgrade, J.C. Penney's stock price began to rise, hitting a high of $8.44 in early Friday trading.
J.C. Penney Company, Inc. (JCP) shares ended the week at $8.56, relatively unchanged for the week.
Nordstrom Reports Mixed Earnings
Nordstrom, Inc. (JWN) reported its latest quarterly earnings on Thursday, May 14. The company reported impressive sales, but a decline in net income as the company spends heavily on capital improvements.
Nordstrom reported net sales of $3.12 billion for the quarter. This represents an increase in sales over the same period last year when the company reported net sales of $2.84 billion.
"Our customer strategy is squarely focused on serving customers on their terms and delivering the high level of service they expect from us," said Blake Nordstrom on a conference call with investors. Blake Nordstrom is one of three siblings who are presidents at Nordstrom, Inc.
The company reported quarterly net income of $128 million. This represents a slight decrease from the comparable period last year when the company reported net income of $140 million. Earnings per share came in at $0.66 per share.
As other department stores have been struggling, Nordstrom has been shifting its strategy to fit customer needs. This shift has already shown dividends as revenue rose almost 10% this quarter compared to one year ago. However, this shift has not been cheap. The company has been spending heavily on technology and warehouses to speed up the delivery of online orders. In addition, Nordstrom is expanding into Canada and doubling the size of its discount outlet Nordstrom Rack. The company plans to spend an additional $4.3 billion between now and 2019.
Nordstrom, Inc. (JWN) shares ended the week at $74.80, down 3.1% for the week.
The Dow started the week of 5/11 at 18,188 and closed at 18,273 on 5/15. The S&P 500 started the week at 2,116 and closed at 2,123. The NASDAQ started the week at 5,003 and closed at 5,048.
Bonds - The Treasury Rollercoaster
Bond yields rose and prices dropped sharply early in the week as investors sold U.S. Treasury bonds. Later in the week, foreign investors purchased U.S. bonds at record levels pushing yields back down.
The 10-year Treasury bond yield rose to 2.35% on Tuesday, May 12. This is the highest level in six months. On Thursday, the government auctioned $16 billion in 10-year and $24 billion in 30-year Treasury bonds. Foreign investors purchased these bonds in record numbers. As a result, Treasury yields dropped in Thursday and Friday trading. In early Friday trading the 10-year Treasury yield was 2.14%.
Analysts are looking at the bond selloff early this week as a market correction rather than a market shift. "It is a correction, albeit a deep one," said Ray Uy, Senior Portfolio Manager at Invesco Ltd. Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management, Inc. stated, "Currently the market consensus is this selloff is more of a technical selloff than a sea change."
The "sea change" is unlikely to occur until the Federal Reserve raises interest rates. According to a survey conducted in May by the Wall Street Journal, 73% of economists surveyed believe that the Federal Reserve will begin raising rates at its September meeting.
The 10-year Treasury note yield finished the week of 5/11 at 2.14% while the 30-year Treasury note yield finished the week at 2.92%.
CDs and Mortgages - Interest Rates Rise Again
The 10-year Treasury bond yield rose to 2.35% on Tuesday, May 12. This is the highest level in six months. On Thursday, the government auctioned $16 billion in 10-year and $24 billion in 30-year Treasury bonds. Foreign investors purchased these bonds in record numbers. As a result, Treasury yields dropped in Thursday and Friday trading. In early Friday trading the 10-year Treasury yield was 2.14%.
Analysts are looking at the bond selloff early this week as a market correction rather than a market shift. "It is a correction, albeit a deep one," said Ray Uy, Senior Portfolio Manager at Invesco Ltd. Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management, Inc. stated, "Currently the market consensus is this selloff is more of a technical selloff than a sea change."
The "sea change" is unlikely to occur until the Federal Reserve raises interest rates. According to a survey conducted in May by the Wall Street Journal, 73% of economists surveyed believe that the Federal Reserve will begin raising rates at its September meeting.
The 10-year Treasury note yield finished the week of 5/11 at 2.14% while the 30-year Treasury note yield finished the week at 2.92%.
CDs and Mortgages - Interest Rates Rise Again
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, May 14. The results show mortgage rates continuing to rise for a third consecutive week.
The 30-year fixed rate mortgage averaged 3.85% this week. This was up from last week when it averaged 3.8%.
This week, the 15-year fixed rate mortgage averaged 3.07%. This number was up from last week when it averaged 3.02%.
"Mortgage rates rose for the third consecutive week as 10-year Treasury yields continued to climb," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "The labor market continues to improve with the U.S. economy adding 223,000 jobs in April, a solid rebound from merely 85,000 job gains in March. Also, the unemployment rate dipped to 5.4% in April as the participation rate ticked up to 62.8% and jobless claims were far less than expected."
The money market fund finished the week of 5/11 at 0.4%. The 1-year CD finished at 0.6%.
Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
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Jews for Jesus
The 30-year fixed rate mortgage averaged 3.85% this week. This was up from last week when it averaged 3.8%.
This week, the 15-year fixed rate mortgage averaged 3.07%. This number was up from last week when it averaged 3.02%.
"Mortgage rates rose for the third consecutive week as 10-year Treasury yields continued to climb," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "The labor market continues to improve with the U.S. economy adding 223,000 jobs in April, a solid rebound from merely 85,000 job gains in March. Also, the unemployment rate dipped to 5.4% in April as the participation rate ticked up to 62.8% and jobless claims were far less than expected."
The money market fund finished the week of 5/11 at 0.4%. The 1-year CD finished at 0.6%.
Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
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Jews for Jesus
60 Haight Street
San Francisco, Clifornia 94102 United States
Phone 415-864-2600
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