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Transparency for Elder Abuse, Internet Ads and Drug Pricing

Posted on November 1, 2017 by

Elder Abuse Prevention and Prosecution Act (S. 178) – Sponsored by Sen. Chuck Grassley (R-IA) on Jan. 20, this bill is intended to prevent elder abuse and exploitation and improve the justice system’s response to victims in such cases. Among other provisions, the Act facilitates improved data collection and Federal coordination, and enhances penalties for telemarketing and email marketing fraud directed at elders. The bill authorizes the Attorney General to designate at least one Assistant United States Attorney to serve as the Elder Justice Coordinator in each Federal Judicial District, and ensures implementation of a regular and comprehensive training program for FBI agents in the investigation and prosecution of such crimes, including specialized strategies for communicating with and assisting elder abuse victims and relevant forensic training relating to elder abuse. This bill was signed into law by the President on Oct. 18.

Women, Peace, and Security Act of 2017 (S. 1141) – Sponsored by Sen. Jeanne Shaheen (D-NH) on May 16, this Act requires the President to submit a governmentwide Women, Peace, and Security Strategy (within one year of enactment) for how the United States will promote and strengthen women’s participation in peace negotiations and conflict prevention overseas. The strategy must include guidelines for training, implementation, communication and ongoing reporting. The bill was enacted on Oct. 6.

Social Security Number Fraud Prevention Act of 2017 (H.R. 264) – Sponsored by Rep. David Valadao (R-CA) on Jan. 24, this bill restricts the use of Social Security numbers on documents sent by mail from the Federal government unless the head of a department or agency deems it necessary. The rule applies to 24 major executive agencies. The Act was passed in May by the House, in September by the Senate, and signed into law by President Trump on Sept. 15.

Honest Ads Act (S. 1989 and H.R. 4077) – Both chambers of Congress introduced versions of an Honest Ads Act on Oct. 19 amid revelations that social media sites such as Facebook and Twitter placed ads paid for by foreign entities during the 2016 election. For context, foreign spending in U.S. elections has been banned since 1966, but a loophole allows internet companies to avoid detection. Both bills hold internet ads to the same transparency requirements as television and radio advertisements, which have long been required to disclose the purchasers and content of those who place ads on their stations. Currently, internet companies are not required to do so. Both bills are presently in review by committees of the respective chambers.

To amend the Public Health Service Act to require reporting by drug manufacturers to increase transparency in drug pricing (H.R. 4116) – Introduced by Rep. Lloyd Doggett (D-TX) on Oct. 25, this bill would require drug manufacturers to submit an annual report to Congress specifying total manufacturing expenses from the previous calendar year. These reports also would include the manufacturer’s revenues, number of drugs sold and all relevant pricing information. The Act mandates that such information would be made publicly available at the Department of Health and Human Services website. The bill is in the first stage of the legislative process and will be assigned to a committee for consideration before possibly being sent to the House.

Posted in Congress at Work, Uncategorized | Leave a comment

The Importance of Quantum Computing

Posted on November 1, 2017 by

To understand what quantum computing is and why scientists find it exciting, we need to understand how traditional computing works. Today’s computers use switching and memory units – known as transistors – to store and retrieve data. These transistors handle many of the tasks calculators used to handle. Transistors have become much smaller – almost as small as an atom – but essentially, they function just like the old calculators using a sequence of bits 0-1 (you can think of these as on-off) known as a binary system. This processes the data we provide by following a pre-arranged set of instructions, known as a program.

Binary Process

We have come a very long way with this binary process. Our computers can do some complicated processing and sorting tasks by using a string of binary mathematical operations known as an algorithm. Google and other search engines use algorithms to make the sorting process very fast. The binary system of conventional computing basically does the addition, subtraction and/or multiplication almost instantly.

So why do we need a different way of computing? Miniaturization has given us the ability to pack hundreds of millions of transistors on a chip of silicon about the size of a fingernail. However, as computer technology continues to advance, the more information we need to store, the more bits and transistors we need. Currently, our transistors are as small as we can make them. Most computer tasks we do are unlikely to max out computer power because they need more transistors than our computers can house. However, as computers continue to handle complex computing problems on behalf of companies (and private and public organizations), they will hit a ceiling and exceed the capacity and capability currently available. Scientists refer to these no-go situations as intractable problems – problems traditional computing cannot solve. Quantum computing – using atomic particles – is seen as a possible answer to the capacity and time limitations inherent in binary systems.

Quantum Computing

Quantum theory deals with atoms and the subatomic particles they contain. Atoms do not obey the basic rules of traditional physics. In quantum computing, qubits take the place of bits. Unlike a bit that is restricted to a binary system (think 0-1 or on-off), an atomic qubit can store an infinite range of values between 0 and 1 in multiple states. Don’t worry too much about understanding exactly how it works, just remember this means quantum computing could do multiple things at the same time – unlike conventional computing, which does a series of things one at a time – and that it could work up to millions of times faster than our current binary systems.

Will quantum computing render traditional computing obsolete? No, that is unlikely. Most of us will not need such powerful computing technology. And the commercial launch of quantum computing is by no means a certainty. It’s been about 30 years since researchers began to discuss quantum computing theory, and we have seen some significant progress in the past seven or eight years, with Google and MIT both producing prototypes. Researchers estimate we won’t see mainstream quantum computing for some years. Interestingly, if/when quantum computing comes of age, it would have huge impact on our current encryption technology (encryption is really the deliberate manufacture of an intractable problem). Now, that might be something for us all to think about.

Posted in Uncategorized, What's New in Technology | Leave a comment

Weighing the Impact of the Equifax Breach

Posted on November 1, 2017 by

Call it ironic that on the very day Equifax went public with news of its massive data breach, Congress was holding hearings on reducing the regulations imposed on U.S. credit bureaus. Long before the recent breach that exposed confidential data affecting about 143 million Americans, Equifax had been lobbying aggressively on issues involving data security and breach notification, as well as proposals to limit exposure to lawsuits. These lobbying efforts have cost the credit reporting agency a reported half million dollars, as Equifax tried to drum up support from lawmakers in Congress. Democrats have been vocal in their opposition to legislation that limits credit agencies’ exposure to class-action lawsuits. Sen. Elizabeth Warren (D-MA), who introduced legislation aimed at cracking down on credit bureaus, and New York Gov. Andrew Cuomo, who wants to expand the state’s strict cybersecurity standards for the financial sector to include credit reporting bureaus, are two Democrats who have taken up the fight on behalf of consumers.

Irony aside, the Equifax situation is a good example of what happens when theory and practical application in the real world collide. From the get-go, the Trump administration has highlighted excessive government regulations as an unnecessary drag on business profitability and economic growth, and has made loosening regulations on banks and other financial institutions a major priority. Few people want more red tape in their daily business dealings; but on the other hand, most people want more accuracy in reporting and more accountability from the credit agencies that play such a major role in our country’s financial sector.

Credit agencies are integral to the financial infrastructure of the United States. When problems arise, the implications are serious. Apart from a major data breach like the recent one at Equifax, credit-reporting agencies’ errors can cause significant difficulties for consumers who cannot buy homes and autos or get bank credit without good credit ratings. A Federal Trade Commission report published in 2013 showed that 5 percent of all consumers had errors on one or more of their credit reports that could cause them to pay more for transactions like auto loans and insurance. Consumer complaints, which have increased 1,700 percent over the past 20 years according to the U.S. Chamber of Commerce, have grown exponentially as the agencies’ reliance on technology has soared. Industry critics believe the credit agencies should be held as accountable, and face as much scrutiny, as regional banks.

For their part, anti-regulation Republicans argue that abuses in the court system can adversely affect not only a business, but also its employees, customers and vendors. A bill to cap penalties resulting from class-action lawsuits and to eliminate punitive damages leveled against credit agencies, introduced by U.S. Rep. Barry Loudermilk (R-GA), was derailed by the Equifax data breach and by the agency’s subsequent delay in making the news public. Given the extent of the data breach and vocal criticism of the company’s handling of the situation, public opinion and sentiments on Capitol Hill most likely will be tipped in favor of the pro-regulation faction for the time being. 

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High Concept Strategies: Evidence-Based Investing

Posted on November 1, 2017 by

This is the second in a series of articles discussing various types of high-concept investment styles. This month we explain evidenced-based investing.

Investors and their advisors frequently are influenced by a variety of factors, ranging from news, rumors, biases, gut instinct, emotions (from exuberance to fear), marketing tactics, compensation models and business models. While any of these influences can lead to investment outperformance, they are just as likely to lead to flat or underperformance as well. Without real fundamental analysis, investing is just a combination of luck and conjecture.

However, the concept of Evidence-Based Investing is a more disciplined approach to asset management and securities selection. The practice involves analyzing past performance data with present economic circumstances. In other words, instead of using ,relationships or emotions to guide investment selection, EBI money managers utilize facts, logic and reason.

EBI involves extensive research to discover new factors and then test (and often reject) them against data from various investment time periods. Not only is the past used as prologue, but evidence-based investing practitioners also must pay careful attention to the current state of financial economics.

The primary goal behind evidence-based investing is to eliminate subjective factors that might influence decision making, such as some tidbit on the news or passage of new government legislation. An EBI portfolio starts with a carefully constructed asset allocation designed to meet a specific goal, with secondary considerations of lowering costs and tax liability. The evidence-based portfolio is regularly rebalanced to maintain its strategic asset allocation. Any new security introduced to the allocation must undergo disciplined analysis based on the current evidence for its fundamentals.

Generally, an EBI-constructed portfolio undergoes the following process:

  • Asset Allocation – Determine how much to allocate to each asset class based on client goals and market-specific evidence.
  • Security Selection – Each security is selected based on market- and manager-specific evidence for each asset class.
  • Trading & Rebalancing – Portfolio changes are subject to specific guidelines regarding when and how to trade or rebalance given market-, tax- and transaction-specific evidence.
  • Tactical Adjustments – Portfolio investment mix is strategically altered when a security or asset allocation class is weighted outside the established percentage ranges; it is feasible that some tactical changes are made in order to capture excess returns (higher gains or fewer losses) due to short-term fluctuations – as long as those decisions are based on fundamental and technical evidenced-based analysis.

While the evidence-based approach tends to be more technical than goal-oriented, it still relies on specific objectives. The strategy uses the most current evidence available to stratify securities by particular factors, such as size (small, medium or large cap stocks), style (growth, value or balanced) or timing (business life cycle or economic cycle).

The evidenced-based approach to investing is designed to replace guesswork with a disciplined, research- and analysis-based strategy that pairs past performance with the most current information available. It takes emotion and irrational behavior out of the investment equation by relying on a systematic analysis that combines strategic asset allocation, tactical security selection, global diversification, tax sensitivity and regular, disciplined portfolio rebalancing techniques.

Posted in Financial Planning, Uncategorized | Leave a comment

Solid Economic Growth and Stellar Tech Earnings

Posted on November 1, 2017 by

Standoffs with North Korea, three devastating hurricanes at home, escalating political tensions and political crises in Spain and Germany did not make a dent in Wall Street’s bull run in the third quarter of 2017. October did not buck this trend. As the month drew to a close, the U.S. markets hit record highs and good economic reports gave investors more to celebrate.  Here are the highlights of financial news over the past month.

On Oct. 26, several major technology leaders in the United States announced better-than-expected results for the third quarter of 2017. As a result, the technology-heavy Nasdaq Composite and Nasdaq 100 indices rose 2.1 percent and 2.8 percent, respectively, to reach record highs that day before biotech shares tanked, dragging the healthcare sector lower and the Nasdaq in its wake. Amazon posted a dazzling 34 percent increase in revenues in the past quarter – its recent acquisition of Whole Foods helped to push earnings higher than earlier forecasts. Its net earnings of $256 million, or 52 cents per share, handily surpassed previous share earnings estimates. The good news from some of Nasdaq’s best-known companies –Microsoft, Alphabet (Google’s parent company) and Intel – also was credited with sparking a rally in the Asian equity markets.

The Dow Jones Industrial Average also was boosted by good third-quarter earnings. Nike commanded the spotlight as the blue-chip index’s biggest gainer with share prices increasing 3.4 percent after the company raised its revenue growth targets for the coming years.  

GDP Results

All in all, analysts were happy with the third quarter Gross Domestic Product results, which showed a 3 percent annualized growth rate, up from the estimate of 2.5 percent. Forecasters noted that natural disasters like Hurricane Harvey and Hurricane Irma did not have such a negative impact on the national economy as they had feared. Businesses boosted their inventory holdings. This suggests they are expecting solid demand in the coming months. Business investment – spurred by spending on new equipment – rose during the third quarter of 2017 at a rate of 3.9 percent. On the trade front, exports rose by 2.3 percent and imports declined by 0.8 percent – a further contribution to positive growth.

Change Ahead

Speculation abounds regarding the Federal Reserve – most especially as to how the nation’s central bank will respond to the recent solid economic data and to the equity markets’ continued upswing. Many traders expect a rate increase before the year’s end. The Fed’s easing policy over recent years has helped keep the nation’s recovery moving forward. Now that we are out of the woods, fund managers and investment strategists are hoping the Fed proves as adept at steering a successful course whilst tightening monetary policy.

Change always brings a certain amount of trepidation, and there’s a lot of change on the horizon for the Fed. With Vice Chairman Stanley Fischer’s recent resignation, the Fed will lose its most prominent policy hawk, as well as a strong advocate for tough oversight of banks. Janet Yellen’s term as Fed Chairwoman concludes in February 2018. This means that the top two positions at the Fed will both become vacant within five months of each other. Among the four or five contenders for the top slot, Fed Gov. Jerome Powell is rumored to be a frontrunner, though many believe the president has not yet made up his mind. This appointment is a very important one with major ramifications for both the markets and the nation’s economy.

The above is intended as general commentary and is not intended to be a substitute for counsel from professional tax and investment advisors.

Posted in Stock Market News, Uncategorized | Leave a comment

Internship Considerations for Businesses

Posted on November 1, 2017 by

When it comes to businesses and organizations looking for talent, working with colleges and universities for future interns is a viable option. While projections for 2016 showed a 4.8 percent drop for internship opportunities, as the National Association of Colleges and Employers reported, the insurance, finance and real estate industries expected to increase their internship and co-op hiring by 8.4 percent in 2016 over 2015. Despite the variability, using internships can provide a great resource for finding and developing talent for the future.

There are many ways that businesses can help establish and maintain relationships with high schools and colleges for future interns. By volunteering to work with career development offices, businesses can go beyond submitting an advertisement looking for interns. A company representative might assist a university by looking over interns’ resumes, helping students build interviewing skills through mock interviews or assisting with university-led workshops.

In fact, an experienced employee who is also an alumnus may be more effective connecting with potential interns than a C-level executive. Someone who has been in college more recently can give interns a timely outlook on their own experience transition from post-secondary education to the work world. While an organization’s employee who is a recent college graduate may not be part of the human resources team, he or she could add a fresh perspective by answering student questions about the company’s mission, culture and expectations of interns.

When it comes to giving an intern responsibilities, the type of tasks will vary depending on the internship’s length of time in the industry. One responsibility an intern may be involved with is contributing to existing social media management or helping create new social media. Recent graduates are typically more familiar with the latest social media platforms and what content works with the public, and therefore can add a fresh perspective on how to procure younger clients and grow demographics. Regardless of the task assigned to an intern, supervision is recommended. Interns may be the ones who create social media, but it should be reviewed by a manager who can catch social media gaffes.

The question of compensation is often subjective. The U.S. Department of Labor maintains that if the following six criteria are met for an internship by businesses, the organization might not be subject to the pay requirements in the Fair Labor Standards Act.

According to the DOL website, the first criteria is, “the internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment”. Second, the intern must receive value from his time with the employer. The intern should not take the role of an existing employee, but be appropriately monitored by the business’ regular employees. The business may not obtain a direct benefit from the intern, and may have the organization’s normal workflow periodically slowed by the intern’s experience. There also is no expectation of the intern being hired once the internship is completed. Finally, there is a clear expectation and agreement by the intern and employer that no wages will be paid.

While these are general guidelines, internships and the organizations that use them will vary. The overall benefit is that having interns at a business can provide a fresh perspective for both the intern and the employer.

Statistics/Reference:

https://www.naceweb.org/job-market/internships/hiring-projections-for-interns-and-co-ops-down-in-2016/

https://www.dol.gov/whd/regs/compliance/whdfs71.pdf

 

Posted in General Business News, Uncategorized | Leave a comment

The Trump Tax Reform Plan – What Is and What May Be

Posted on November 1, 2017 by

Major tax reform enactment is a rare event, with the last occurring back in 1986 under President Ronald Reagan. As a result, current discussions could pan out to be much ado about nothing; however, with the solid majorities that Trump and the Republicans hold in both houses of Congress, there is real potential for tax reform to pass.

Timing and Certainty

The Trump administration’s goal is to get the tax changes passed and signed into law by the end of 2017. So, what should you expect from a tax bill that will likely be more than 1,000 pages long by the time it’s all over? Let’s take a look at some of the most notable changes widely impacting taxpayers and see. Note that these provisions are currently under debate and are subject to change between the writing of this article and the time the bill passes.

Prospective Provisions

  • Simplify the tax bracket structure by replacing the current seven individual tax brackets (10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent) with three brackets featuring rates at 12 percent, 25 percent and 35 percent
  • Lower the corporate tax rate by about half from the current 39.1 percent to 20 percent
  • Create a 25 percent business tax rate for certain pass-through entities’ (S Corporations, LLCs, etc.) business income in lieu of this income being taxed as ordinary income at the individual tax payer level
  • Create a territorial tax system for companies conducting business internationally, along with enacting a one-time mandatory repatriation tax
  • Estate tax repeal
  • Eliminate most itemized deductions and personal exemptions
  • Repeal the alternative minimum tax (commonly referred to as the AMT)

401(k) Tax Deductibility Changes

In addition to these proposals, there is one particularly contentious change on the docket that impacts the tax deduction related to 401(k) plans, being referred to as Rothification. Rothification essentially turns your current 401(k) into a Roth 401(k) by limiting pre-tax contributions to $2,400 versus the current limits of $18,000 ($24,000 if you are 50 and older). Plan participants are still allowed to save on an after tax basis up to the old limits.

Looking at the numbers, say you currently contribute $10,000 per year into your 401(k) plan and are in the 25 percent federal and 5 percent state tax brackets. Assuming your entire contribution amount falls within these marginal tax rates, you save $3,000 per year in taxes. Under the new proposals, you would only save $720, or a difference of $2,280 (assuming your marginal tax rates are not impacted).

Trump recently tweeted that there will not be any changes to 401(k) deductions; however, it was originally in the plan and could come back into play. Employers are concerned that this will discourage savings and Wall Street is terrified because managing 401(k) assets is big business.

Conclusion

The sheer magnitude of the proposed tax overhaul along with the contentious political environment means that exactly what, if anything, comes out of the administration’s plan is uncertain. Major changes could happen, so you’ll want to work with your tax advisor to navigate any new rules.

Posted in Tax and Financial News, Uncategorized | Leave a comment