MARKET CLOSED

Due to the Juneteenth holiday, the stock market will be closed today.

SCRUTINY EASED

This week, the Ether token experienced a significant rise, climbing up to 3.6% before settling just above the $3,500 mark. This uptrend comes following the growing speculation that the U.S. Securities and Exchange Commission (SEC) might be easing its regulatory scrutiny on Ethereum. An investigation had been underway to determine if Ether should be classified as an unregistered security, and this move could hurt its demand. However, Ethereum developer ConsenSys recently revealed that the SEC has decided to close its investigation into Ethereum 2.0. This announcement followed a letter sent to the SEC, prompting them to clarify their stance on Ether, especially after approving several ETFs based on the premise that Ether is a commodity, and although the SEC has not yet responded to these claims, this closure has sent a positive signal to the market. Nevertheless, it is important to remark that there still a degree of uncertainty as the SEC, particularly under Chair Gary Gensler, has not given a definitive stance on whether Ether is a security, leaving some concerns about future regulations on Ethereum projects.

HOMEBUYERS SQUEEZED

America’s homebuyers are feeling the squeeze as rising prices and inflation make it harder to afford homes. Homebuilder Lennar (LEN) reported that buyers are under pressure, leading to more credit issues. Despite a drop in Lennar’s average home sale price to $426,000 this quarter from $449,000 last year, consumers still need discounts and incentives due to a housing shortage and high living costs. The Federal Reserve’s efforts to control inflation and the potential for interest rate cuts could boost demand, but for now, high mortgage rates are keeping buyers wary. Lennar has tried to attract buyers with incentives like mortgage rate buydowns, but these efforts are hurting profit margins, causing concerns among analysts and a 5% drop in Lennar’s stock.

LOOMING TAX CLIFF

The expiration of significant tax breaks after 2025 has financial advisors working proactively with clients to navigate the impending “tax cliff.” Enacted in 2017 under former President Trump, the Tax Cuts and Jobs Act (TCJA) introduced lower federal income tax rates, increased standard deductions, and higher exemptions for gift and estate taxes. If Congress does not act, these benefits will lapse, potentially impacting more than 60% of taxpayers. Advisors suggest it is crucial to start tax planning now, despite the uncertain future of these tax provisions. Strategies being discussed include “accelerating income” to take advantage of the current lower tax rates, such as increasing pre-tax retirement withdrawals or converting traditional IRAs to Roth IRAs for future tax-free growth. For high-net-worth individuals, making “lifetime gifts” before the gift and estate tax exemptions are reduced could be beneficial. These maneuvers can help alleviate the impact of higher taxes post-2025, making early preparation essential.

INTERNATIONAL NEWS

The UK hit a notable milestone as headline inflation aligned with the Bank of England’s (BOE) 2% target, a feat not seen in nearly three years. Nonetheless, it is worth remarking that while this achievement offered some cause for celebration, it did little to convince traders that an interest rate cut is imminent. By late morning in London, market odds for a rate cut during the BOE’s Thursday meeting dropped to just 5%. In addition, the achievement of the 2% inflation mark, although significant, was largely expected due to considerable drops in energy prices over the year. Policymakers are closely monitoring services inflation, which came in higher than anticipated at 5.7%, reflecting domestic economic pressures. In addition, core inflation, which excludes volatile components, remains high at 3.5%. Moreover, despite recent inflation rates being encouraging, the central bank remains cautious, particularly with a general election approaching. Furthermore, it is worth noting that BOE’s decision on future rate cuts is complicated by persistent high wage growth, recorded at 6% in June. Nonetheless, analysts suggest that a rate cut in August is still possible, but will depend on future economic data.