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December 20, 2010 at 05:35 AM
The drama in Congress over extension of the Bush-era tax cuts ended with President Obama signing the compromise bill he had worked out with the Republican congressional leadership last Friday afternoon. The most contentious issue for advisors and their clients—whether the estate tax would be reinstated, and at what levels—was finalized as well, though estate planners would do well to explore the ramifications for the heirs of clients who died in 2010. (See two comprehensive looks at estate planning in light of the tax bill, one focusing on its overall provisions, particularly the 2010 issues; the other with input from noted advisors Harold Evensky and Diahann Lassus.)
The defeat of the omnibus spending bill in the Senate last week leaves the entire Federal government’s finances in limbo, most notably (for advisors) the state of the SEC’s budget. The Senate bill would have given the Commission $1.3 billion in the current Federal fiscal year, which ends Sept. 30. That funding is what Chairman Mary Schapiro has made clear the SEC would need to conduct its many studies and rulemakings under Dodd Frank. (See David Tittsworth’s insights into the tax bill and budget process and what it means for Dodd Frank implementation.)
This week Congress is still in session, though former Congressman Bill Frenzel (R-Minn.), now of the Brookings Institution, told AdvisorOne’s John Sullivan that he thinks the Federal budget bill will be punted to the 112th Congress that will convene in January.
In a holiday-shortened week where the markets are closed on Dec. 24 in observance of the Christmas holiday, there are several economic reports that may well move the markets, and happenings in the eurozone will continue to draw interest—the European Central Bank, for instance, has expressed concern over Irish legislation meant to restore two big Irish banks to financial health, and Greece considers its 2011 budget this week.
At AdvisorOne, we will begin our own holiday tradition, providing a series of articles from some of the best financial minds—and journalists—on what to expect from the markets in 2011, and how advisors can have a successful year for themselves and their clients. The AdvisorOne 2011 Outlook series will look at the economy and the markets in broad terms, at specific asset classes, at practice management, at tax and estate planning and on what you can expect from the Feds in terms of practice-affecting legislation and compliance.
On Monday, Dec. 20, the AdvisorOne 2011 outlook kicks off with an overview of the economy and markets from LPL Financial, reported by AdvisorOne’s Joyce Hanson. The Chicago Fed releases its national activity index. Both houses of Congress will convene, but prospects for an omnibus spending bill are uncertain; on Saturday, Obama signed a new continuing resolution (CR) that runs through Tuesday; the previous CR was due to expire Sunday night. Sen. Mitch McConnell (R-Ky.), the Senate Minority Leader, told CNN on Sunday that he and Democratic leaders had reached agreement on a CR to keep the government running through March; Senate Democratic Leader Harry Reid (D-Nev.) later said that the two sides were near agreement on such a measure.
