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Aid for African countries, national wildlife refuges, Social Security beneficiaries and Secret Service Agents

Strengthening Protections for Social Security Beneficiaries Act of 2018 (H.R. 4547) – Sponsored by Rep. Sam Johnson (R-TX), this bill is designed to protect Social Security beneficiaries (approximately 8 million) whose mental or physical condition prevents them from being able to manage their benefits. These individuals are assigned a representative to manage their benefits. This new legislation prohibits people with certain types of criminal convictions from acting as representative payees; it also includes new accountability measures and greater oversight. The bill was introduced in December 2017 and signed into law by the President on April 13.

Secret Service Recruitment and Retention Act of 2018 (H.R. 3731) – Prior to this law, Secret Service agents were prohibited from being paid overtime after reaching the maximum annual salary for the pay rate of GS-15. However, because the service recently reported that more than 1,000 agents – a third of its workforce – had maxed out on their annual overtime and salary for this year, this law will expand those overtime pay limits. The law is retroactive for both 2017 and 2018. This legislation was introduced by Rep. John Katko (R-NY) in September 2017 and was signed by the President on April 3, 2018.

EGO Act (S. 188) – This new legislation prohibits federal funds from being used to pay for the cost of painting portraits of officers and employees of the federal government, including the President, the Vice President, a Member of Congress, the head of an Executive agency or the head of an office of the Legislative Branch. The bill was sponsored by Sen. Bill Cassidy (R-LA) in January 2017 and enacted on March 27, 2018.

Ashlynne Mike AMBER Alert in Indian Country Act (S. 772) – This bill amends the PROTECT Act to merge tribal AMBER Alert systems into state AMBER alert systems and make Indian tribes eligible for AMBER Alert grants, as well as other program features. The bill was introduced by Sen. John McCain (R-AZ) in March 2017 and signed into law by the President on April 13, 2018.

Keep America’s Refuges Operational Act (H.R. 3979) – This Act authorizes appropriations to provide for volunteer, community partnership and educational activities of national wildlife refuges. The bill was sponsored by Rep. Hakeem Jeffries (D-NY) in October 2017 and signed by the President on April 23, 2018.

AGOA and MCA Modernization Act (H.R. 3445) – Sponsored by Rep. Edward Royce (R-CA), this bill represents the African Growth and Opportunity Act (AGOA) and the Millennium Challenge Corporation. The legislation directs the President to establish a website to collect and disseminate information regarding AGOA and urges him to facilitate transboundary trade among eligible sub-Saharan African countries. It also establishes new assistance criteria for a low-income or a lower/middle income candidate country to enter into a Millennium Challenge Compact with the United States. The bill was signed into law by the President on April 23, 2018.            

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Business Ethics for Customer Data

Many computer users are reluctant to engage in online shopping, banking or investment transactions for fear that their account information will be stolen. According to the Identity Theft Resources Center, between January 2005 and April 2018, there were 8,870 breaches and 1,078,674,491 records exposed to bad actors. A breach is defined as an incident in which an individual name plus a Social Security number, driver’s license number, medical record or financial record (e.g., credit card, debit card) is at risk of exposure, either in electronic or paper format.

Meanwhile, recent news has shed light on the fact that the risk of having personal data related to social media websites is perhaps even more widespread. In April, Facebook announced that the data of 87 million users of the website was unlawfully used by political consulting and data brokerage firm Cambridge Analytica. Of those 87 million people, more than 70 million are in the United States.

The Facebook data was harvested via an app called This Is Your Digital Life. The app paid participants to take a personality test and consent to have their data collected. However, the app did not disclose that it also had access to and collected information about the participants’ Facebook friends.

As is often the case, the world of high technology has outpaced the ability of government agencies to monitor and regulate new innovations. We must often wait until civil liberties are impinged and damage is done before the negative impact of new technology becomes known. Unfortunately, there are presently no online privacy laws in the United States, so there is little to stop companies from using consumer information in whatever way they please.

Many retail companies use marketing, promotions and other business tools to effectively collect large amounts of data in order to reach customers more effectively. However, some also sell that data as a revenue channel. Then there are other companies (data brokers) that use data-gathering tactics for the sole purpose of collecting personal information and then selling it to other companies for their marketing use. All of these practices bring up a myriad of ethical questions regarding privacy and data ownership.

While some states limit the ability to tap information, nearly everyone has publicly accessible data via real property and tax assessor records, court filings, recorded liens and mortgages, driver’s license records, motor vehicle records, voter registrations, telephone directories, real estate listings, birth, marriage, divorce and death records, professional license filings, recreational (hunting and fishing) licenses, and Census demographic information.

Social media sites then supplement this data with consumers’ names, age, gender, location, schools attended, companies worked for and any other personal information, photos and videos they willingly share. (If this causes concern, learn how to delete your Facebook account here).

Some social media websites are designed to provide a platform where people can share stories about their families and/or health. The underlying purpose of this business model is to compile and sell information freely offered by participants. For example:

  • GoodParentingToday.com
  • T5HealthyLiving.com

These are just two of 17 websites owned and operated by data brokers.

It’s important to be aware of the common tactics used to accumulate personal information either without your consent or without realizing you’ve given it through participation. Any time that you enter your name, email and other contact information in exchange for a promo discount, news feed or other “free” offer, be aware that your data is being collected specifically for a consumer database that might be sold and used by companies you do not wish to hear from.

Also recognize that companies collect your web browsing history. In other words, they can compile data based on what websites you visit, news articles you read and products you buy or even just browse. They can tell where you bank or invest by how often you visit those websites and how much time you spend there.

You might hear that one way to avoid having your browsing history tracked is to open an “incognito window” (or the like) offered by some browsers. However, all this does is eliminate cookies and tracking data from being stored on your personal computer. Where you visit and what information you provide to those websites are still visible to the companies tracking participating users.

 

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

Six Good Reasons Your Company Needs a Blog

So what’s all the fuss about blogs? Do they really help your business? Here are a few of the many reasons that they do.

  1. Helps with Organic Search
    Every time you write a new piece of content, you create a new URL, which means that there’s a new opportunity for you to be found when customers search for information – when they’re looking for answers to their questions. You want to be there for them. You want them to come to you.
  2. Creates a Library of Unique Content
    The more you write about your expertise – and from different perspectives each time – the more long-tail search terms you will create. This is increasingly becoming a good source for the majority of queries. And this way, you’ll have a better chance of bringing in some highly targeted search traffic.
  3. Contributes to Lead Generation/Inbound Marketing
    So you’ve got all this great content, but you don’t want to give it away for free, right? Blogs are a great way to increase customer interest and engagement, as well as harvest data. Here’s how – offer free snippets or highlight segments of your killer content, but keep the rest gated behind a landing page or sign-up form. In other words, dangle the carrot. After customers have shared their info, they’ll get to revel in the riches of your powerful content and you get their info. It’s a win-win for both of you.
  4. Establishes You as a Thought Leader
    You know your stuff better than your competition. It bears your thumbprint and sets you apart from the rest. Simply put, blogging shows that you’re a front runner in your industry. But that’s not all. Blogs also are a place where your customers can return to again and again for solutions. You become a trusted source, which increases traffic.
  5. Leads to Conversions
    When the content on your blog offers real value, it helps establish trust with your customers – creating an emotional connection. When this happens, you have a greater chance of converting a lead to a sale. And this is something everyone wants.
  6. Integrates Well with Social Media
    Once you’ve established your voice in the marketplace, push it out on social media. The effects of sharing your business tools and know-how from your blog on the web are exponential. Do the math. You know 500 people who know 800 people who know 1,000 people. The potential for engagements, which could end up as sales, are endless. 
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Impact of International Trade Tariffs

In March of this year, the Trump Administration made good on campaign promises by announcing a new global trade policy that it believes will better serve Americans. Specifically, it features:

  • 25 percent tariff on imported steel
  • 10 percent tariff on imported aluminum
  • 25 percent tariff on approximately 1,300 Chinese exports worth about $50 billion a year

Over the past few decades, more goods and services worldwide have been allowed compete with domestic products and services sans taxes. This increased competition resulted in lower prices for consumers, enhanced productivity and efficiency, and increased revenues for manufacturers. However, it also led to a substantial loss of jobs as some U.S. companies moved manufacturing operations to other countries to take advantage of reduced labor and overhead costs.

The reason President Trump is in favor of new international tariffs is because he believes it will reduce the number of imports into the United States and encourage companies to produce more goods domestically – thus restoring lost jobs.

However, the outcome is not likely to be this simplistic. While the tariffs might provide a boost to American companies that produce aluminum and steel, the reality is that the United States does not currently produce enough of these raw materials to meet demands across a multitude of industries. This means many companies will have to import aluminum and steel and pass on the cost of those tariffs to consumers via higher prices. Once those raw materials are integrated into the production of U.S.-made products, such as automobiles, higher consumer prices could make them less competitive than foreign automobile manufacturers.

Economists have surmised that the steel and aluminum tariffs alone could disrupt economic growth in key industries such as automotive manufacturing, chemicals, and oil and gas production.

However, the trade news doesn’t stop there. The announcement has already triggered retaliatory tariffs from China, while other countries such as Canada and those in the European Union have indicated they might levy retaliatory tariffs on American-made products. This will further hurt American companies by disrupting our export market. Farmers, in particular, have indicated they will be heavily impacted. In 2016, China – the largest buyer of U.S. agricultural exports – paid more than $21 billion for our farm products.

When the trade tariffs were first announced, investment markets experienced a drop before returning to normal levels. Stocks have since wavered back and forth on a day-to-day basis, but pundits attribute this more to market fundamentals than a reaction to potential trade wars.

Longer term, tariffs are likely to impact certain industries more than others, affecting both  revenues and stock prices. However, higher consumer prices can also affect bond investments. If trade tariffs trigger higher inflation, the Federal Reserve might accelerate its planned increase for interest rates. In turn, new bond issues will have higher coupon rates, which would devalue existing bonds with lower yields.

It is worth noting that the Trump Administration has indicated it is open to negotiate new trade deals on a country-by-country basis to amend the international tariffs and strike a better bargain for U.S. companies. Initially, the United States granted a number of temporary exemptions, including to the European Union. However, if no agreements are reached the taxes are scheduled to begin on May 1.

Posted in Financial Planning | Leave a comment

Why Earnings Are No Longer Enough to Drive Growth

Rising interest rates make a different animal of the stock market. Unlike when interest rates are steady or declining, positive earnings (overall for the market, not necessarily individual stocks) just aren’t enough to take the markets perpetually higher.

Many companies are reporting excellent earnings, but the market appears to be somewhat stalled. Taking a look at the recent market performance in Table 1, we can see that 2018 returns have been less than stellar.

 

Table 1

Domestic Stock Indexes As of Date 1-Week 4-Week 13-Week YTD
DJ Industrial Average TR 4/24/2018 (3.0%) 2.2% (8.0%) (2.2%)
NASDAQ Composite PR 4/24/2018 (3.8%) 0.2% (5.5%) 1.5%
NYSE Composite PR 4/24/2018 (1.5%) 2.8% (7.4%) (2.3%)
Russell 2000 TR 4/24/2018 (1.7%) 3.0% (2.6%) 1.5%
S&P 500 TR 4/24/2018 (2.6%) 1.9% (6.7%) (0.9%)
S&P MidCap 400 4/24/2018 (1.6%) 2.7% (4.7%) (0.3%)
 

Source: MorningStar Index Performance

Higher interest rates create an obstacle for stocks because they raise the cost of what is called the carry trade. A carry trade is a strategy where an investor borrows money at a low interest rate and then turns around and invests the borrowed money in an asset with a higher return. Carry trades can come in many forms, such as a Yen carry trade where investors borrow Japanese Yen at low interest rates and then exchange it for U.S. dollars or another currency that pays a higher interest rate on its bonds. Carry trades also are effective when rates are low and stocks are rising; it makes sense for many investors to borrow money at low rates and buy stocks earning substantial returns.

The problem with carry trades is that the more investors pile into the arbitraged asset, the more the underlying asset price rises, making the carry trade even more attractive. This can create a self-perpetuating cycle and set the stage for periods of irrational valuations based on market euphoria. Such cycles might be followed by sharp market declines or even crashes when the carry trade reverses or unwinds.

Over the past month, short-term interest rates have reached 1.75 percent, and the yield on the 10-year Treasury Bond is approaching 3 percent. This is similar to what happened in other periods of rising interest rates (see Table 2 below).

Table 2

Market Date Range 10 year T-Bond Yield Change S&P 500 Decline
December, 1986 – October, 1987 From 7.19% to 10.23% 200 points
November, 1998 – March, 2000 From 4.70% to 6.20% 1053 points
August, 2005 – June, 2007 From 4.24% to 5.17% 940 points
July, 2016 – Now From 1.46% to 2.94% ???
 

Some will argue that there are other reasons behind these market declines – and of course there are – however, rising interest rates are clearly a common factor. In order for the market to continue to advance, earnings need to increase at a rate that also compensates for the rise in interest rates.

The Federal Reserve believes it can manage interest rate rises in an orderly manner to keep inflation targets in check without curtailing growth and therefore earnings. As a result, there is certainly no guarantee of a market decline or crash; however, it does mean that strong earnings might not be enough to keep pushing the market higher.

Posted in Stock Market News | Leave a comment

Tips on Running an Effective Email Marketing Campaign

According to Statista, of the globe’s 3.7 billion email users, 233 million live in America. The same report also projected that by the end of 2020, the number of email users in the United States will increase to almost 255 million. With a large global audience of email users, and experts forecasting an increase in the United States, how can organizations maximize this medium?

Collecting Customers’ Emails

Building an email list is the primary step in an effective email marketing campaign. While there are many ways to do it offline, such as asking for a caller’s email or having them write it down if they volunteer their information in person, the most efficient way to do so is online.

WordPress calls them “Welcome Gates” – a pop-up box that’s presented to the visitor immediately upon opening a website – and this is one way to get visitors to sign up for future emails. Offering a free eBook or a free gift, or perhaps a percentage off a future order can also encourage visitors to sign up for upcoming newsletters.

Along with having a static box contained within a Contact Us page that is always available for sign-ups, visitors can similarly be prompted to register for an email newsletter when they are visiting other pages or immediately before leaving. These are also known as “Lightbox pop-ups” and “Exit-intent pop-ups,” respectively.

Include a Direct Subject Line

Once a subscriber list is established, creating an attractive email for recipients to receive and open is the next step. Since people often quickly scan their inbox, one important element is to create an eye-catching subject line.

When it comes to creating a subject line, making one that’s succinct yet descriptive is essential to increase the effectiveness of an email marketing campaign. Much like an article’s headline is meant to attract the reader’s attention, examples of eye-catching subject lines might be “10 Things to Do Before Seeing Your Tax Preparer” or “Get 25% Off Orders Today Only.” These subject lines both educate readers and quickly demonstrate how they’ll benefit from opening and reading the email. Creating a sense of urgency or piquing the curiosity of how a recipient can improve his life will increase the email’s effectiveness.

Keep it Short

Paying attention to an email’s design is another important element. While there’s no hard and fast rule on the mix of images and text for email marketing messages, Dan Scalco, an INC Magazine contributor, offers a few recommendations to increase email marketing effectiveness. One is to limit the size of the message. Using high resolution images in a compressed format will enable emails to load quickly, keeping the attention of users who are going through their emails.

Scalco also recommends distinguishing an email marketing campaign from other emails within users’ inboxes by going beyond text. While using emojis might be only thought of for users who text, research suggests it might be an effective marketing tool. Citing an Experian report, Scalco explained that businesses have seen a 56 percent increase in email “open rates” when they used emojis. According to his estimate of the average person receiving 100 emails daily, emojis provide a way for brands to set themselves apart from other daily incoming emails. 

When designed and sent out at the right time of the day and week, email marketing can be an effective resource in a marketer’s toolbox.

Sources

5 Simple Tricks to Vastly Increase Your Email Open & Conversion Rates

https://www.statista.com/topics/1446/e-mail-marketing/

https://wordpress.org/plugins/tags/welcome-gate/

https://wordpress.org/search/lightbox+popup

https://wordpress.org/search/lightbox+popup

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What the New Tax Law Means for the Home Equity Loan Interest Deduction

Prior to the recent tax law changes, taxpayers were allowed to deduct qualifying mortgage interest on loans up to $1 million, plus the interest on an additional $100,000 in home equity debt. The new tax law clearly limits the mortgage interest deduction to $750,000 worth of debt; however, treatment of home equity loan debt was more ambiguous. Many read the new law as eliminating the interest deduction altogether on home equity loans and lines of credit. Other tax professionals argue that the use of the loan proceeds is what matters.

Confusion Sets In

The confusion stems from language in the new tax law that erased the deduction for home equity debt interest between tax years 2018 and 2026, unless they use the debt to buy, build or improve the home. The debt also must be collateralized by the underlying home. In response to the ambiguity, the Internal Revenue Service recently issued guidance on how to handle deducting interest paid on home equity debt under the new tax law. The IRS clarifies that taxpayers can still deduct interest on home equity loans, lines of credit or second mortgages, regardless of the technical loan label or name, and that it is the use of the loan proceeds that matters.

Going into more detail on the new law, the IRS notes that you can deduct interest from refinanced debt if it meets all three of the following criteria:

  • The debt is secured by a qualified residence
  • The total of the refinanced debt is not greater than the cost of the residence
  • The proceeds are used to improve or expand the residence

All of this is subject to the new $750,000 (married filing jointly) debt limit on the total amount of all loans.

Examples, Please!

To help further clarify, let’s take a look at a few examples of the IRS guidance in action.

Example 1: On Feb. 3, 2019, Zach and Linda get a mortgage for $600,000 to purchase their primary residence with a value of $850,000. In March of the same year, the taxpayers obtain a home equity loan for $150,000 to add on to the house.

The primary residence secures both loans and the combined total of the loans is $750,000, so it neither exceeds the $750,000 mortgage loan limit nor does the cost of the home exceed the debt, so all interest paid on both loans is deductible.

Example 2: On March 14, 2020, John and Marcy take out a mortgage of $400,000 to buy a primary residence (loan secured by the property). In June of the same year, they buy a cabin in the woods as a vacation home and take out a loan for $200,000 to acquire it (loan is secured by the cabin).

Since the total of the two mortgages is $500,000 (below $750,000) and secured by the individual properties, all related interest is deductible. Note that if the $200,000 used to buy the cabin was taken as a home equity loan or line of credit against their main residence, then the interest paid on the $200,000 would NOT be deductible since it was not used to improve or add-on to the same property.

Example 3: On July 7, 2018, Bob and Stacy get a mortgage for $550,000 to acquire a house as their primary residence (loan is secured by the home). Later in October, they take out another $400,000 loan to buy a lake house as a vacation property (loan is secured by the lake house).

Despite the loans being secured by the individual properties, not all of the interest is deductible because the total of the two mortgages at $950,000, exceeding the $750,000 limit. Instead, only a percentage of the total interested paid is deductible.

Conclusion

As you can see, generally interest on home equity loans, lines of credit and refinances are still deductible as long as you reinvest in or add on to a qualified residence (within the debt limits). If you use one of these types of loans for something unrelated, such as paying credit card debt, taking a vacation or putting your kids through college, it’s not deductible – no matter what you call the loan.

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