Liz Ann Sonders of Schwab offers her take on the Federal Reserve’s interest rate decision.  Many investors may wonder how a rate hike will impact commercial property values.  A report from the accounting firm Ernst & Young analyzes.  Finally, CCH summarizes key provisions of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) recently signed by the President.

Said the Fed to the Market:  Take a Hike.  In a unanimous decision, the FOMC, led by Chairwoman Janet Yellen, moved off the unprecedented zero bound by raising rates by 0.25% for the first time in nearly a decade; while also soothing markets by reinforcing a “gradual” pace of additional rate hikes to come.  The initial benign reaction by the stock market, and the lack of change in the bond market, suggest this was a very well-communicated rate change.  The initiation of rate hikes removes the uncertainty around the start date obviously; but does not remove the uncertainty around the path of rate hikes from here. Liz Ann Sonders of Schwab believes this will remain a focus by investors in 2016; and is likely to contribute to some of the volatility she believes will persist across the equity and fixed income markets.  Click here to read the full article

 

Commercial Property Outlook in a Rising Rate Environment.  How will commercial property values be affected by a rising rate environment?  Interest rate policy adjustments likely will have only a marginal impact on commercial real estate valuations and investment momentum, according to a report by Ernst & Young.  The lessons learned from the Great Recession, coupled with greater regulatory oversight will temper investment boom and bust cycles.  This will provide a positive investment environment for US commercial real estate.  Click here to read the full article

 

Congress Renews Tax Extenders, Makes Many Permanent.  Just before recessing for the holidays, the House and Senate passed the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).  President Obama signed the legislation.  The Act does considerably more than the typical tax extenders legislation seen in prior years.  The Acts permanently extends the provision for individuals age 70 ½ and older to be allowed to make tax-free distributions from individual retirement accounts (IRAs) to a qualified charitable organization, to a maximum of $100,000 per taxpayer each year.  The Act also makes permanent the election to claim an itemized deduction for state and local general sales tax, in lieu of deducting state and local income taxes.  Several other provisions were extended.  Click here to read the full article

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J. Mark Nickell & Co.

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