Category Archives: Investing and fiduciary requirements

Moody’s set to downgrade US without budget deal

By  | September 11, 2012 •

NEW YORK (AP) — The U.S. government’s debt rating could be heading for the “fiscal cliff” along with the federal budget.

Moody’s Investors Service on Tuesday said it would likely cut its “Aaa” rating on U.S. government debt, probably by one notch, if budget negotiations fail.

If Congress does not reach a budget deal, about $1.2 trillion in spending cuts and tax increases will automatically kick in starting Jan. 2, a scenario that’s been dubbed the “fiscal cliff,” because it is likely to send the economy back into recession and drive unemployment up.

A year ago, Moody’s cut its outlook on U.S. debt to “negative,” which acts as a warning that it might downgrade the rating, after partisan wrangling over raising the U.S. debt limit led the nation to the brink of default.

Rival agency Standard & Poor’s took the drastic step of stripping the government of its “AAA” rating on its bonds around the same time. Fitch Ratings issued a warning of potential downgrade.

In its report Tuesday, Moody’s said it is difficult to predict when Congress will reach a deal on the budget, and it will likely keep its current rating and “negative” outlook until the outcome of the talks is clear.

In Washington, House Speaker John Boehner said he’s not confident that Congress can reach a deal and avoid a downgrade. No serious negotiations are expected until after the November elections.

Moody’s also noted that the government will likely again reach the debt limit by the end of the year, which means another round of negotiations in Congress on raising the limit if the U.S. is to keep paying its bills. “Under these circumstances, the government’s rating would likely be placed under review after the debt limit is reached, but several weeks before the exhaustion of the Treasury’s resources,” Moody’s analyst Steven A. Hess said in his report.

Despite the rating cut last year from S&P and the warnings from Moody’s and Fitch, the U.S. has been able to continue borrowing at very low rates. That’s because investors are still buying U.S. government bonds, as economic turmoil in Europe and uncertainty in other parts of the globe have left U.S. debt and U.S. dollars looking like safe bets. In contrast, bond investors demand high rates from troubled countries like Spain and Italy.

The stock markets plunged when the downgrade happened in August 2011, but Moody’s warning on Tuesday did little to ruffle traders. The major market indexes were all modestly higher in morning trading.

H&R Block: Give Us PPACA Regs by April 30, 2013

By  | September 11, 2012 • Reprints

H&R Block Inc. is warning that individuals, employers and tax preparers will need time to read and comply with the Patient Protection and Affordable Care   Act (PPACA) tax rules that are supposed to take effect in 2014.

Kathy Pickering, a vice president at a policy affiliate of H&R Block, Kansas City, Mo., said today in Washington at a PPACA implementation hearing that her company would like to see the Internal Revenue Service (IRS) and other agencies complete the regulations and other documents that taxpayers need to figure out the 2014 PPACA rules by April 30, 2013.

Subcommittee staffers note in the hearing announcement that PPACA contains at least 47 tax provisions. Provisions that will impose taxes on some individuals who fail to own coverage and some employers that fail to provide health benefits have attracted the most attention.

Other tax provisions include a new 3.8% tax on investment income, a new Medicare payroll tax, and a new health insurance premium subsidy.

The IRS certainly has published many regulations and many batches of the informal “guidance” that taxpayers need to comply with the PPACA tax provisions, Pickering said at the hearing, which was organized by the House Ways and Means Committee’s oversight subcommittee.

But the IRS cannot wait until 2014 to release the rest of the documents that taxpayers need to get started, Pickering said, according to a written version of her testimony posted by the oversight subcommittee.

Any delays could be especially hard on the owners of small businesses, Pickering said.

Pickering told lawmakers that H&R Block itself is a franchisor and communicates with the franchisees — who are mostly small business owners — daily.

Business owners try to set up their benefits packages at least 3 months before the end of the year, and open enrollment in a state PPACA Small Business Health Options Program (SHOP) — a new, Web-based health insurance supermarket for small businesses — is supposed to start Oct. 1, 2013, Pickering said.

“This means small businesses will need, at a minimum, 4 months to plan for 2014 and to determine if they intend to participate in a SHOP,” Pickering said.

Fred Goldberg Jr., a lawyer who was the IRS commissioner from 1989 to 1991, said he believes the government can reduce the odds that PPACA will create an administrative quagmire for individuals by giving the IRS adequate funding and having the IRS determine whether individual taxpayers qualify for the new PPACA health insurance purchase tax subsidies that are supposed to go to moderate-income taxpayers.

Wellness Credits, What are they – Really?

09.06.2012 | Los Angeles|Danone Simpson, founder and CEO, Montage Insurance Solutions

The Department of Health and Human Services (HHS) awarded $372 million to 44 various communities to help with the efforts of reducing obesity, smoking, increase physical activity and improve nutrition (, 3/19/10). It is uncertain if this American Recovery and Reinvestment Act of 2009 has impacted the communities; and when the government grants were researched these amounts were earmarked for senior citizens. Today another award was released for 2012.

Employer groups are hearing from various sources the importance of wellness, says Danone Simpson, founder and CEO of Montage Insurance Solutions. Carriers are offering to assist with wellness efforts and many add as much as $44 in cost per year to the premiums. For larger employers Kaiser will send a bus to park outside workplaces testing employees for high cholesterol or strokes for a fee. “High cholesterol is one of the major risk factors leading to heart disease, heart attack and stroke. 2,200 Americans die of cardiovascular disease each day” (American Heart Association,

Lifestyle changes are needed and yet Americans are sitting in front of computers all day urged to be more physically active. The balance is falling on the employers’ shoulders who know if they have more than 50 employees they are now required to pay for medical insurance or be fined $2,000 per employee per year. So the Human Resources Departments are asked to create wellness programs to keep premium costs down. Pooled groups will have to have a community effort in order to accomplish this goal unless they are planning to grow into a larger employer who has control over their premium costs.

Yet, the buzz on the street is wellness. Today, August 29, 2012, the Obama administration announced, “The Public Health Training Centers (PHTC) is to improve the Nation’s public health system by strengthening the technical, scientific, managerial, and leadership competence of the current future public health workforce” ( Approximately 36 U.S. Government Universities have been given a grant worth an average of $650,106 in financial assistance to promote public health training for the third year in a row.

So what does this mean for employers? We are not sure yet. “Employer wellness incentive programs take a variety of forms, ranging from employer-provided direct incentives, such as pedometers or discounted health club memberships (participation only programs) to group health plan incentives that link healthcare discounts to meeting certain health targets, such as cholesterol or blood pressure standards (standard-based programs). The codified support for employer wellness programs in the PPACA demonstrates Congress’s intent to encourage these programs and, thus, enhance and encourage public wellness. However, whether offered as part of a health plan program subject to HIPAA or the PPACA extension, or as a separate employer program or policy not subject to HIPAA or the PPACA, wellness programs are still generally bound by federal, state and local nondiscrimination and privacy laws, such as the Americans with Disabilities Act (“ADA”); Genetic Information Nondiscrimination Act of 2008 (“GINA”); Title VII of the Civil Rights Act of 1964, as amended (“Title VII”); and the Age Discrimination in Employment Act. Employers contemplating penalty or reward wellness programs should consider that few, if any, cases have addressed the application of these nondiscrimination laws to the wellness program penalty and reward provisions” (Hall, 2012,

The only reimbursements are from employers to employees who participate in the employer sponsored programs. Today the employer is allowed to reimburse the employee a portion of their premium dollars by up to 20% of the cost of employee-only coverage and in 2014 that amount goes up to 30%; however this costs the employer more, while many are struggling to pay their portion of the premiums.

So what can an employer do? Employers need to make sure their broker is providing some of these services to their employees in a compliant way on a volunteer basis. And make sure their program is compliant or it can be deemed discriminatory in a court of law, “Despite PPACA’s clear legislative support for wellness efforts, employers fashioning penalty and reward wellness programs must consider nondiscrimination and privacy implications of such provisions” (Hall, 2012,

Unraveling the Patient Protection and Affordable Care Act (“PPACA”) is a full time job and the penalties and compliance landmines are plenty. Overtaxed HR departments need brokers who are working 24/7 to guard the employees and employer from tax burdens and who offer employee wellness incentives, since the government is not.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at (818) 676-0044 or

Employer Health Care Costs Expected to Increase

September 10, 2012 ( – Despite health care reform legislation, health care costs will continue to increase for plan sponsors and employees, according to preliminary results of the United Benefit Advisors (UBA) 2012 Health Plan Survey.

The survey revealed that employer-sponsored health plans experienced an increase of 5%, compared with 8.2% last year. Additionally, more PPO, Consumer Directed Health Plans (CDHP) and HMO plans required and/or increased employee deductibles in 2012, continuing a trend toward shifting costs to employees.

Other key national findings from the survey include:

  • PPO plans have nearly two-thirds (61.7%) of all enrolled employees nationally; 
  • The average monthly employee input for plans of all plan types (HMO, PPO and CDHP) with contributions is $136 for single coverage and $494 for non-single or family coverage;
  • As a direct result of Patient Protection and Affordable Care Act (PPACA) changes, 91.7% of all plans now offer an unlimited lifetime maximum benefit, compared with 81.3% in 2011 and just 16.1% in 2010; and
  • Less than half (48%) of all covered employees also elected to cover their dependents (a decline of 1.9%).

“The intent of the survey is to provide employers of all sizes with the data they need to manage their health care benefit programs effectively,” said Tom McCormick, senior partner at EBS Capstone.

The 2012 UBA Health Plan Survey included responses from 17,905 health plans sponsored by 11,711 employers nationwide. The survey will become available to the public November 1.

More information is available at

Weekly Economic Update for September 3, 2012





“Variety is the soul of pleasure.”


– Aphra Behn




Understand that Newton’s fourth law of motion may carry over to your financial life: your returns may decrease as your trading activity increases.




You hold 3 U.S. coins in your hand. None of them are dimes, pennies or quarters. They total 60¢. What 3 coins do you have in hand?



Last week’s riddle:

A major league pitcher faces just 27 hitters in a baseball game. He retires all of them, allowing no runs and no hits. Still, his team loses the game 4-0. How is this possible?


Last week’s answer:

He was a relief pitcher who did not start the game.


September 3, 2012



Speaking Friday at the Federal Reserve’s annual Jackson Hole, WY symposium, Fed Chairman Ben Bernanke gave Wall Street a bit of a lift. Commenting that the recovery is “far from satisfactory”, he expressed that the central bank “should not rule out” further stimulus. The Dow rose 90 points on the day, certainly helped by Bernanke leaving a door open for QE3.1,5


Personal spending rose 0.4% in July, and the Commerce Department also noted a second consecutive 0.3% monthly rise in household income. This was welcome news following last week’s revised yet still modest 1.7% Q2 GDP reading.2


After a 2.4% July advance, the National Association of Realtors reported its pending home sales index at 101.7 – the healthiest reading since April 2010 and a 12.4% improvement from 12 months ago. Additionally, the S&P/Case-Shiller Home Price index posted an annual gain for the first time in 20 months in June (+0.5%).3


According to the Conference Board, pessimism has increased: its August consumer confidence gauge hit a 10-month low (60.6). Alternately, the University of Michigan’s final August consumer sentiment survey rose to a 3-month high of 74.3, a 2.0% gain that beat the forecast of economists polled by MarketWatch.4,5


On the week, the DJIA lost 0.51% to slip to 13,090.84, the S&P 500 fell 0.32% to 1,406.57 and the NASDAQ edged down 0.09% to 3,066.96. Yet even with stocks on a 2-week losing streak, the Dow (+0.63%), S&P (+1.98%) and NASDAQ (+4.34%) put up August gains for the first time since 2009. Looking at the NYMEX, COMEX and AAA’s Daily Fuel Gauge Report, oil ended the month at $96.47, gold at $1,687.60 and unleaded gasoline at $3.83.5,6,7

THIS WEEK: Monday is Labor Day – U.S. markets are closed. The August ISM manufacturing index comes out Tuesday along with data on July construction spending and August auto sales; Q2 earnings arrive from Smithfield Foods and Campbell’s Soup. Wednesday, Dollar General and H&R Block issue earnings reports. Thursday brings new weekly jobless claims figures, the August ADP employment report, ISM’s latest service sector index and Q2 results from Hovnanian. Friday, August unemployment figures arrive plus earnings from Kroger and Lululemon.

DJIA +7.15 +12.72 -0.40 +5.11
NASDAQ +17.73 +18.90 +3.63 +13.33
S&P 500 +11.85 +15.40 -0.91 +5.35
10 YR TIPS -0.68% 0.18% 2.34% 3.10%

Sources:,,, – 8/31/125,8,9,10

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.


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This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.


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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck