Your Weekly Blip 3/19/21

Your Weekly Blip 3/19/21

More sector rotation as the markets continued their game of growth versus value ping pong. Today, tech and the NASDAQ took its turn moving up, while the Dow was down another 234 points to close the week at 32,627. The ambivalence in the market is spurred from the concerns of eventual rising bond yields and inflation, balanced against the fact that the Fed has no inclination to raise interest rates any time soon, the Fed is also injecting a massive amount of liquidity into the markets, and company balance sheets are starting to improve as more and more people are vaccinated and businesses are able to open up more.
There was recent good news and bad news for Boeing. The good news was the deep space NASA rocket, where Boeing is the primary contractor, passed a key test that will allow the project to move forward, and allow the rocket to be moved to the Kennedy Space Center. While they are on good terms with the gubment there, they are still not in the good graces of the FAA, as they ruled that they will not let Boeing do their own predelivery safety check for some Dreamliners, and that the safety checks will be done the FAA inspectors.
Chubb, looking to do a COVID responsible activity, went buck hunting. They made an offer on The Hartford (the buck), and I guess they intend to take that thing home and put on some more weight. Chubb made an offer at $65 a share, which is a 13% premium, and investors said “not so fast” as they sent shares right over that $65 mark. This reminds me of a couple months back when Brookfield Asset Management offered $16.50 for their publicly traded real estate arm, which at the time was trading at around $14.50, and investors came in to say they weren’t having it, and it now sits at $17.87. It will be interesting in both cases to see if investors end up with a better bid, or if the offer gets pulled off the table.
We wanted to pass along a little info to help you, and others, get a general understanding of the Washington Long Term Care (LTC) Trust Act, and let you know that there is a way to opt out of the tax if you want to. In 2019, the Washington State Legislature passed a new bill aimed at providing LTC benefits to people in Washington. Benefits will not start until 2025, but beginning in 2022, there will be an additional 0.58% tax assessed to all wages of every Washington employee’s paycheck through payroll taxes. The taxes go to pay for the LTC benefits, which are currently worth $100 a day for 365 days – a total max lifetime benefit of $36,500. In order to qualify for this benefit, you must contribute for 10 years, or have paid the tax for 3 of the last 6 years, and be a Washington resident. For example, if you are 60 years old, then retire at 65, but wouldn’t require benefits until you are 70, you will have paid the taxes, but won’t qualify for benefits because you didn’t contribute for 10 years or for 3 of the last 6 years. If you’re someone that is younger, and you pay the taxes for the next 20 years, then you decide to retire in Idaho, or Arizona, or wherever, you will have paid the taxes but won’t qualify for benefits because you don’t live in Washington anymore. You can opt out of the tax, if you currently have a personal LTC policy, by contacting the Washington Employment Security Department, after October 1, 2021 and before December 31, 2022, and applying for an exemption. If your policy qualifies you for an exemption, you will need to provide this proof to your employer to be opted out of the tax. If you don’t have a personal LTC policy, and want to opt out of the tax, you still have time to get a policy. Currently you have until the end of 2022, but the legislature is working on an amended bill that will most likely require a policy to be active by mid July 2021. There are many factors that go into deciding what could be best for your situation, and if you would like more information about the LTC Trust Act, or would like a better understanding of how it might apply to your personal situation, please feel free to give us a call at 206-352-9205.