Nate helps you understand why new data is signaling that the job market is still strong.
Are you ready for the Corporate Transparency Act (CTA) filing requirements? Emily discusses why it should be on your radar.
Save the Date: October 24th at 12 pm ET! We are partnering with Wednesday Women to host a webinar to help you navigate your stock compensation. CLICK HERE for more information and to register!
October 2024 #Unfiltered Issue
MARKETS & INVESTING
Don’t Expect More Rate Cuts – New Data Signals Job Market is Still Strong
I’m not ready to label the Fed’s recent 0.50% rate cut a mistake, but it’s starting to look like a bit of overkill.
That’s because recent job report data seems to indicate a stronger job market than investors previously thought.
The September jobs report, released on 10/4/24, should help reinforce confidence that the labor market and U.S. economy are on solid footing.
Why? Well…
There were 254,000 jobs added in September, far exceeding expectations.
Additionally, the August report was revised up by nearly 12%, bringing that total to 159,000 jobs.
But more importantly, the July jobs number was adjusted from a weak 89,000 to a much stronger 144,000—about 61.8% higher than the original figure!
If the job market isn’t in major trouble, I wouldn't be surprised if the Fed maintained this “higher for longer” rate environment and cut rates less than currently expected.
One of the primary reasons the Fed gave for kicking off this easing cycle with a “jumbo” rate cut was to bolster what they saw as a weakening labor market. However, the U.S. labor market isn’t signaling imminent collapse, so I wouldn’t anticipate another 0.50% cut in the near future.
When the July report was first published on 8/2/24, it sparked recession fears and concerns that the labor market was declining rapidly. A weak labor market would complicate the Fed’s efforts to achieve a soft landing. But after these revisions, the longer-term picture for the labor market remains strong.
Economists generally agree that the U.S. needs to add at least 200,000 jobs per month to keep pace with growth in the working-age population. Even before these positive revisions, the 12-month average stood just below that mark at 197,000. Now, with the revisions boosting both the July and August numbers, the average has risen to 203,000, signaling that the labor market is in an even healthier place than before.
While one data point doesn’t define a trend, the upward job revisions are encouraging and the longer-term trend, which is more important, points to a healthy and balanced labor market. If the labor data continues in this direction, it’s crucial to factor in how current interest rate levels could impact your financial plans because rates could remain around here for some time.
Remember, always try to stay informed, stay calm, and consider planning for what could be a “higher for longer” rate environment.
WEALTH PLANNING TIPS
Business Owners: Are You Ready for the Corporate Transparency Act (CTA) Filing Requirements?
If you own a business or have an entity like an LLC to hold assets for privacy or for self-employment purposes, the Corporate Transparency Act (CTA) should be on your radar.
About the CTA
Starting January 1, 2025, “reporting companies” that existed before 2024 — entities created by filing paperwork with a Secretary of State (such as LLCs, corporations, and limited partnerships) — must report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is anyone who owns 25% or more of the entity or has substantial control over it.
For entities formed in 2024, you have 90 days from the formation date to file an initial report. Entities formed after January 1, 2025, have just 30 days to report beneficial owners.
Note: Certain entities, like those with 20+ employees and $5M+ in revenue, are exempt, as are entities already subject to significant government regulation.
Reports can be filed electronically on FinCen's website – there is no cost for this. If there are multiple beneficial owners, they can use a FinCEN identifier in place of disclosing personal information to the reporting company.
If you own an LLC to simply hold assets and think you don’t need to comply, think again. Penalties for non-compliance are severe, including civil fines of $500 per day (adjusted for inflation) and potential criminal penalties.
Some Considerations
Substantial Control: You don’t need to own a large stake to be a beneficial owner. If you're a senior officer or decision-maker, you may fall under this definition. Substantial control can be hard to define, so FinCEN provided some guidelines: What is Substantial Control?
Trust-Owned Business Interests: Trusts themselves aren’t required to report, but trustees, beneficiaries, or anyone exerting control over a trust may be considered beneficial owners if the trust owns a large stake in a reporting company. Legal advice is essential if you're a trustee of such a trust.
Fraud Risks: The CTA opens the door to potential fraud. While companies can file reports online, third-party services may offer to file on your behalf. Be cautious of unknown providers and start with your accounting or legal professionals if you need help. Always protect your personally identifiable information (PII) and do your due diligence when it comes to companies that solicit your business.
If you’re unsure about your reporting requirements, reach out to the Monument Team. We can’t cover every detail in a newsletter, but we can talk to you about your specific situation and point you in the right direction.
OFF THE WALL PODCAST
Conversations with Top Experts in Business, Leadership, & Wealth Management
Tune in to hear our discussion on the strong yet volatile performance of global equities, the impact of the Fed's 0.50% rate cut, and observations of China’s capital markets. The team also explores market participation, seasonality, and labor market dynamics.
Our favorite economist, Bob Stein, Deputy Chief Economist at First Trust Advisors, is back on the podcast with his straightforward opinions! Bob shares his thoughts and predictions for the 2024 electoral races for the House, Senate and White House, and their impacts on the American people.
Interested to see what it's like to work with us, but not ready to commit? Our experts can give your portfolio a health check and second opinion. Learn more here.
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