Reinhart Week in Review by Madison Investments 1.19.2024

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RETAIL SALES

Retail sales rose 0.6% in December. The retail sales control group, which is used in GDP calculations, rose 0.8%.

Our Take: Retail sales were surprisingly robust in December, easily outpacing expectations. Fourth quarter GDP estimates are likely to rise given the solid sales report, and a continued strong economy is a reason for the Fed to delay the start of rate cuts.

MUNICIPALS

The California Assembly and Taxation Committee held a hearing to discuss Assembly Bill 259, which would create a new wealth tax on wealthy individuals. AB 259 called for a 1.5% tax on the assets of Californians with a net worth of $1 billion and a 1% tax on Californians with a net worth of $50 million. After the hearing, the bill, which was introduced in 2023, stalled.

Our Take: Governor Newsom and California lawmakers are looking for ways to solve the state’s budget deficit. The wealth tax in AB 259 was not the answer. California residents already face a high tax environment and imposing significant wealth taxes on high-net-worth individuals would potentially drive them to move out of the state.

About Reinhart Fixed Income
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

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Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

This website is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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In addition to the ongoing market risk applicable to portfolio securities, bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally, the longer a bond’s maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which allows the issuer to retain the right to redeem the debt, fully or partially, before the scheduled maturity date. Proceeds from sales prior to maturity may be more or less than originally invested due to changes in market conditions or changes in the credit quality of the issuer.