Stocks Stay Flat As Jobs Report Eases Inflation Fears!

Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle? Winston Churchill

One of the great things about living in the United States is you are free to choose where you want to live. Here in Las Vegas, the State of Nevada is surrounded to the west by California, to the east by Utah, and to the south by Arizona, and to the north by Oregon and Idaho (I did pretty well in Geography in case you did not notice, thank you very much). These places offer a different life experience than Las Vegas does, but in some ways they are very similar. For example, Utah is the home of much natural beauty, but is much more simple from a lifestyle perspective than Las Vegas, due in a large part to the way that state developed historically. California is much larger and more economically diverse than Nevada, but the states are very similar. Oregon and Idaho are far more rural, and Arizona is very similar climate wise. None of the states have gambling on the same scale that Nevada does. Still, all are places one could choose to live in if one wanted to. So why do I bring this up?

The reason I do is because all have a different approach to state income taxes than does Nevada. In addition, all of these states have their own specific situation as far as pension obligations than does Nevada. In that regard, a citizen faces potentially different current and future financial obligations by not living in Nevada. California has one of the highest state income tax rates in the country. Oregon does as well. Utah and Nevada have no state income tax. Guess where many people decide to move from when they come here or to Utah? Yes, it starts with a C. In fact, across the country, this same dynamic is taking place in high individual tax rate states as both businesses and people decide to play tax rate arbitrage with their futures. Now, from an investment perspective, the tax rate of an individual state is not going to make a difference on growing the earnings power of an individual company, unless the company is totally dependent on that government for its revenues, or that state for its source of business. In any event, tax rates are a part of business and investment, and one needs to pay attention to taxes to make their investment, or business, as efficient and as effective as can be. Besides, just consider this thought, where else would one rather be than in Las Vegas than on the day of the Kentucky Derby?

In the financial markets this week, the April jobs report came in a little soft when only 164 thousand jobs were created versus the estimate of 193 thousand. On the positive side, inflation readings were tepid, which is a primary concern for investors. In combination, the market breathed a sigh of relief and decided to buy after selling equities all week long. Apple reported a better than expected number, is returning billions of dollars to shareholders over the next few years, and Warren Buffett decided to buy it hand over fist. Speaking of Mr. B, his annual meeting is today and you might look at the highlights when you get a chance. In the oil universe, the decision about pulling out of the Iran agreement is less than a week and most observers believe Mr. Trump will tell the world we are gone. Increasingly, Iran faces a big problem with its weak currency, which you can read about here. Elan Musk decided he did not want to answer any boring questions related to maybe needing upcoming financing. Perhaps Mr. Musk should remember when you owe money here on earth, you answer the question, no matter how boring they may be. In the gaming world, a flurry of acquisitions last month, led by Eldorado Resorts, keeps investors focused on the area, and an upcoming decision by the Supreme Court about the ability for states to offer sports betting is a big event as it could open up the practice across the country. Naturally, the politics of the court seem to suggest the state in question (New Jersey) will prevail. Time will tell.

 

In the political realm, aside from the Iran decision, both parties remain at war with the focus on the Mueller investigation and related issues. With summer fast approaching, one can only expect the hatred to intensify as the midterms approach. Democrats will campaign on issues with the goal of regaining the House of Representatives. Both parties have succession questions and serious disagreements among factions within their organizations. It will be interesting to see how it plays out. In the meantime, it is Cinco De Mayo, so I hope you enjoy a margarita or a quesadilla to help honor the day. Thank you for reading the blog this week, and if you have any questions about investing, please email me at This email address is being protected from spambots. You need JavaScript enabled to view it.
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Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation.  The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.