WHAT'S NEXT IN THE DEBT CEILING DEBATE?

Implications for the short term & the long term.

In January, will the federal government be shuttered again? At first thought, it seems inconceivable that Congress would want to go through another protracted fight like the one that shut things down for 16 days in October. That could occur, however, if a new budget panel doesn't meet its deadline.

Once more, the clock is ticking. By December 13, a group of 30 senators and representatives have to hammer out a bipartisan budget agreement. It must a) reconcile the markedly different House and Senate FY 2014 budget plans passed earlier in 2013, and b) map out a longer-term plan to shrink the federal deficit. If a) doesn't happen, then the country will be threatened with another federal shutdown on January 15. If b) doesn't happen, then another round of sequester cuts from the 2011 Budget Control Act will be initiated as of that same date.1,2,3,4

Does this seem like déjà vu? It does among many political and economic analysts, who fear a repeat of the supercommittee debacle of 2011, when a bicameral, bipartisan group of 12 Capitol Hill legislators just gave up trying to find a way to shave $2 trillion from the deficits projected for the next decade.4

This new committee is bigger, and like the supercommittee, its leaders are far apart politically. Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) are the budget chairs of their respective chambers of Congress. The key difference lies in the modesty of its ambition. On October 18, Murray told Bloomberg that the committee would aim for "a budget path for this Congress in the next year or two, or further if we can" rather than a "grand bargain" across the next 10 years.1,3

Will they manage that? Some observers aren't sure. Murray co-chaired the failed supercommittee of 2011, and while Ryan was quiet during the fall budget fight, he recently authored an op-ed piece for the Wall Street Journal reiterating his controversial ideas to slash the deficit by reforming entitlement programs. Still, Sen. Lindsey Graham (R-SC) told Bloomberg that "there's a real desire to take another effort, not at a grand bargain, but at a sequestration replacement," and Sen. Jeff Sessions (R-AL) commented that "we don't want to raise expectations above reality, but I think there's some things we could do."1,3,5

Leaders from of both parties maintain there will be no shutdown in January. Senate Minority Leader Mitch McConnell (R-KY) stated that a shutdown is "off the table" this winter. On CNN's State of the Union, Sen. John McCain (R-AZ) warned that the public would not tolerate "another repetition of this disaster"; on ABC's This Week, House Minority Leader Nancy Pelosi (D-CA) said she sympathized with the public's "disgust at what happened." These comments do not necessarily imply expedient negotiations ahead.3,6

The short-term fix didn't fix everything. As a FY 2014 budget hasn't yet been agreed upon, the Treasury is still relying on stopgap funding to keep the federal government running through January 15 and "extraordinary measures" to raise the federal debt limit through February 7.2

The long-term outlook for America's credit rating didn't really change. Fitch put its outlook for the U.S. on "negative" and warned of a potential downgrade; Dagong, the major Chinese credit ratings agency, actually downgraded the U.S. from A to A-. Even so, S&P and Moody's didn't take action as a result of October's shutdown; while S&P thinks the shutdown will cut 0.6% off of Q4 GDP, it still gives the U.S. an AA+ rating (downgraded from AAA in 2011).7,8

America lacks top-notch credit ratings, but few nations have them. In fact, only 11 countries possess the coveted AAA rating from S&P and Fitch plus the leading AAA rating from Moody's. If you look at S&P's ratings for the globe's ten largest economies, Germany is the only one with an AAA. China gets an AA- with a "stable" outlook and Japan has an AA- with a "negative" outlook. While Russia has the world's eighth biggest economy, Moody's, Fitch and S&P all rate it one grade above junk bond status.7

Is Wall Street all that worried about another shutdown? At the moment, no - because there are several reasons why the next debt debate could be less painful. As the goal appears to be a near-term bargain instead of a grand one, it may be more easily realized. If the newly appointed budget panel fails, the economy can probably weather $20 billion of 2014 sequester cuts. Also, many mid-term elections are scheduled for 2014; do congressional incumbents really want to damage their reputations further with another shameful stalemate?8

While confidence on Wall Street and Main Street would erode with a repeat shutdown, the Treasury might face a slightly easier challenge in January than it did in October. Sequester cuts would trim the already-shrinking federal deficit further in early 2014, conserving some federal money. As a Goldman Sachs research note just cited, Fannie Mae and Freddie Mac could also make their dividend payments to the Treasury early in Q1, which would also help.8

Global investors can't really back away from America. The dollar is still the world's reserve currency, and China owns about $1.3 trillion of our Treasuries. Those two facts alone should compel our legislators to work things out this winter, hopefully before the last minute.7

Citations.
1 - cnn.com/2013/10/17/politics/budget-talks-whats-next [10/17/13]
2 - csmonitor.com/USA/DC-Decoder/2013/1017/A-new-shutdown-clock-is-ticking.-Can-Washington-avoid-a-rerun-video [10/17/13]
3 - bloomberg.com/news/2013-10-18/obama-s-goal-of-grand-budget-deal-elusive-as-talks-begin.html [10/18/13]
4 - tinyurl.com/lchxblz [10/18/13]
5 - cnn.com/2013/10/09/politics/shutdown-ryan/ [10/9/13]
6 - tinyurl.com/lbp8cxn [10/20/13]
7  - globalpost.com/dispatch/news/regions/americas/united-states/131018/credit-rating-debt-explained [10/20/13]
8 - cbsnews.com/8301-505123_162-57608220/5-reasons-wall-street-thinks-the-next-fiscal-feud-will-fizzle/ [10/19/13]

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO PETER MONTOYA.

A SHORT-TERM DEAL ENDS THE SHUTDOWN

The fix is merely short-term, but it is certainly welcome.

At the eleventh hour, a default is averted. After weeks of contention, a bill to reopen the bulk of the federal government and raise the debt ceiling made its way to the White House late Wednesday. President Obama signed the bill into law shortly after midnight, and by the middle of Thursday's trading day, both the S&P 500 and the Russell 2000 had reached all-time highs.1,2

In a sense, Congress merely kicked the can down the road. Capitol Hill lawmakers passed a stopgap deal to fund the federal government through January 15 and extend America's borrowing authority through February 7. A bipartisan negotiating committee will face a December 13 deadline to create a federal spending and tax blueprint for the next ten years.1

Asked Wednesday night if another shutdown would occur in the coming months, President Obama emphatically told a reporter: "No." On October 17, Senate Minority Leader Mitch McConnell (R-KY) told the conservative National Review that "a government shutdown is off the table" this winter.1,3

The deal resulted in just one alteration to health care reforms. The Affordable Care Act emerged from this battle relatively unscathed. People who receive federal subsidies for their health insurance under the ACA will face a new income verification test, but the subsidies will remain in place. House Republicans had demanded a 2-year delay for the 2.3% tax on medical devices stemming from the ACA, but that effort was set aside Tuesday. Congressional Democrats had argued for a 1-year delay in the $63 per-person "reinsurance" fee slated to hit group health plans in 2014; they didn't get it.4,5,6

Retroactive pay is coming for furloughed federal workers. All federal employees sent home as a result of the shutdown are slated to receive delayed salary payments "as soon as practicable."7

The budget cuts passed into law in 2011 remain in place. The $1.2 trillion in automatic federal spending cuts scheduled through 2021 will still be carried out, as mandated by the Budget Control Act of 2011 that brought an end to that summer's debt ceiling fight. The 2013 sequester cuts represented the first step in this reduction of federal spending.4,8

A short-term fix is better than none at all. You could argue that this deal simply postpones a solution in favor of a short-term truce on Capitol Hill. Even so, it beats the potentially catastrophic alternative of a U.S. default. Wall Street will now wait to see if Congress can provide a gift for the holidays - a larger-scale solution to trim future deficits.

Citations.
1 - chicagotribune.com/news/chi-government-shutdown-20131017,0,1184326.story [10/17/13]
2 - tinyurl.com/ljh5xhl [10/17/13]
3 - blogs.marketwatch.com/capitolreport/2013/10/17/mitch-mcconnell-says-another-shutdown-is-off-the-table/ [10/17/13]
4 - tinyurl.com/m94pmd5 [10/16/13]
5 - tinyurl.com/lsp6gkg [10/16/13]
6 - washingtonpost.com/blogs/wonkblog/wp/2013/10/15/delaying-obamacares-reinsurance-fee-would-be-a-win-for-insurers/ [10/15/13]
7 - foxnews.com/politics/2013/10/16/senate-budget-deal-provides-back-pay-for-furloughed-federal-workers/ [10/16/13]
8 - washingtonpost.com/blogs/wonkblog/wp/2012/09/14/the-sequester-explained/ [9/14/13]

Sincerely,

William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO PETER MONTOYA.

ENTERING THE YELLEN YEARS

A look at the economist newly nominated to lead the Federal Reserve.

Janet Yellen - currently the vice chair of the Board of Governors of the Federal Reserve - has been nominated to succeed Ben Bernanke at the helm of the world's most important central bank. A former UC Berkeley and London School of Economics professor and San Francisco Fed president, Yellen is a globally admired economist with many fans on Wall Street. The way it looks now, in January she will become the most powerful woman in the world.1,2,4

The average investor doesn't know that much about Yellen and may be wondering what kind of course Fed policy may take under her watch. So here is a closer look at her.

Is Yellen just a clone of Ben Bernanke? It is true, Yellen has often voted in line with Bernanke regarding Fed policy; that was partly why Wall Street cheered her nomination. It also liked the fact that the controversial Larry Summers had withdrawn his name from consideration. Yet there are discernible differences between Yellen and Bernanke.1

The Fed has a mandate to focus on two goals: the goal of full employment, and the goal of price stability. Some Fed chairs lean more toward the first objective, and some lean more toward the second. While Bernanke built a reputation among his fellow economists as a responsive monetarist, Yellen is known as more of a Keynesian, someone who believes in the power of a sustained government stimulus to promote employment and heal the economy. In fact, earlier this year, she commented that "it is entirely appropriate for progress in attaining maximum employment to take center stage." 1,2

So is Yellen an inflation dove? In the eyes of many, yes. She may end up sustaining QE3 longer than Bernanke might have, and putting off significant tapering of QE3 for longer than her predecessor. Interest rates may stay at rock-bottom levels under her tenure for longer than presumed. Since QE3 began, both Yellen and Bernanke have maintained that easing to the tune of $85 billion in bond purchases per month is needed to fight ongoing high joblessness and subpar growth, even with the threat of asset bubbles or the possibility of losses for the central bank when those bonds are sold.1,2,3

Yellen got it right at a couple of key moments during the 2000s. In 2006, she warned of a housing bubble that could bring down the whole economy, not a particularly dovish moment for her. (Of course, Yellen and her Fed colleagues could have chosen to tighten and try to prevent one from forming 2-3 years earlier.) As the FOMC voted to cut interest rates by 25 basis points in December 2007, Yellen wanted a half-percent cut, stating that "any more bad news could put us over the edge, and the possibility of getting bad news - in particular, a significant credit crunch - seems far from remote." The Great Recession was a fact of life within a year.2,4

While Yellen is widely seen as extending the policies put in place during Ben Bernanke's term with little alteration, the big question is how quickly and how ably the Fed will be able to tighten if inflation becomes hazardous after all this easing. If Bernanke's legacy is that of a great scholar of the Great Depression who reactively managed the economy out of dire straits, Yellen's legacy may be built on how well the Fed can control the side effects and the gradual withdrawal of its current accommodative monetary stance.

Citations.
1 - cnn.com/2013/10/10/opinion/ghitis-janet-yellen/?hpt=hp_t4 / [10/10/13]
2 - tinyurl.com/kawhouj [3/21/12]
3 - bloomberg.com/news/2013-10-09/janet-yellen-s-to-do-list.html [10/9/13]
4 - tinyurl.com/mlqgjyf [10/13/13]

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO PETER MONTOYA.

A DARK ANNIVERSARY

September 15th marks the 5th anniversary of one of the scariest events in investment history: the collapse and bankruptcy of Lehman Brothers, at the time one of the largest investment banking firms on Wall Street. Many date the market collapse and the start of the Great Recession to Lehman's fall on September 15, 2008.


As we look back at the string of debacles in the last quarter of that fateful year, it's fair to ask whether the conditions which caused the shock to the global economic system have been fixed or changed. The underlying question is: could something like that happen again?

Let's look at the problems one at a time.

1) One of the biggest problems in 2008 was that banks had found ways to borrow up to 50 times what they were worth in net capital, which meant that even small losses caused them to tumble into insolvency and a government bailout. If you and I tried to borrow 50 times what we're worth in order to play the stock market, we would be stopped at the door of the bank.

Have we imposed similar limits on Wall Street since 2008?

Alas, the answer is no. Since the crisis, according to an article in Time magazine, some of the largest U.S. banks have raised the amount of capital they hold on their books. But after furious lobbying efforts, Wall Street managed to stymie any efforts by Congress to put limits on their leverage. In the future, theoretically, they could borrow even more than they did in the last crisis.

2) This might not be so terrible, except that the investment banks used the money they borrowed to gamble in the stock market, and in the highly-risky derivatives market, and in the packaged mortgage pools that they were creating and selling to their customers. Former Federal Reserve Board Chairman Paul Volker has argued that investment banks should not be allowed to speculate or day-trade with borrowed money; they should earn their money by making loans and taking companies public. Others have argued that Wall Street firms should be forced to at least use their own money when they buy and sell investments for their own account--not other people's money.

Has Congress or the regulators restricted this risky behavior?

Alas, no. The so-called Volker Rule was removed from the Dodd-Frank legislation after a successful Wall Street lobbying effort. Today, investment banking firms and their traders buy and sell at a furious rate. The most recent notorious example came when a JP Morgan Chase trader, who was nicknamed The London Whale by his peers, managed to lose $7 billion of the company's (and shareholders') capital in 2012 before newspapers broke the story and alerted the company's sleeping risk management department.

3) A lot of the worst damage to the global financial system was done by complex derivatives investments that were created outside of the regulatory system, and distributed around the globe with zero oversight. When it was discovered that companies like AIG had made guarantees via these products that were many orders of magnitude higher than the net capital of the company itself, regulators were appalled--and at a loss to even calculate the extent of the exposure, much less unravel and repair the damage to bank and pension balance sheets across the globe.

Do we have a way to monitor and regulate these derivatives investments today?

Yes and no. Roughly half of the interest-rate-swaps market must now pass through central clearinghouses in the U.S., allowing the Commodities Futures Trading Commission to track who owes what to whom. But once again, relentless lobbying by Wall Street managed to carve out significant loopholes in this oversight, so that today banks and hedge funds do a brisk (and unregulated) trade in foreign exchange derivatives in international markets. There is nothing to stop another Whale, operating in the U.S., Japan or elsewhere, from playing havoc with Wall Street's balance sheets, and Wall Street can continue to sell guarantees across the globe, invisibly to the regulators.

4) Many of the toxic packaged mortgage products that Wall Street sold to its unfortunate customers had been rubber-stamped by the credit rating agencies as high-grade, safe bond investments. Later, it was pointed out that the ratings agencies who gave AA ratings to packages of junk securities were, as a normal part of their business model, paid by the companies whose products they were rating.

Have we fixed this problem?

No. The ratings agencies like Standard & Poors and Moody's are still paid for their services by the very Wall Street firms and bond underwriters that create the products they are rating.

5) Behind everything else, perhaps the biggest cause of the financial crisis was Wall Street incentive systems--the way that Wall Street brokers, traders and executives are compensated. To see why this is a problem, consider what actually happened in the years leading up to 2008: traders and Wall Street financial wizards knew that they could sell a lot of the products that they were creating, and the result would be a windfall for their companies and a big bonus of more than $1 million in their pockets. They sold a lot, then they sold more, and their bonuses went up accordingly. These products had the potential to blow up and ruin the company, or they might pay off big.

If they paid off big, the bonuses would be astronomical. If they blew up, well, the traders, executives and wizards might be laid off. But they could console themselves for their bad luck by counting the bonus dollars in their retirement accounts, which would be far more money than the average American investor is ever likely to see. Heads they win big, tails they win not quite so big. Where is the incentive for them to actually worry about whether the products they created and sold would blow up and wreck the company, the balance sheets of banks and pension funds, and the global economy?

Have we changed the incentive structure for Wall Street?

Alas, no. There were proposals to create so-called "clawback" provisions, where, if the derivatives or packaged investments were to blow up in the future, traders, brokers, wizards and other responsible executives would have to give back some or all of the bonuses they received. But the proposals went nowhere.

Indeed, it appears that the moral code on Wall Street has actually gotten worse, not better. As evidence, consider a recent poll of 250 Wall Street traders, portfolio managers, investment bankers and brokers (who call themselves investment advisors), where 23% said that "they had observed or had firsthand knowledge of wrongdoing in the workplace." 24% of the respondents said that they would "engage in insider trading to make $10 million if they could get away with it." 26% said they "believed the compensation plans or bonus structures in place at their companies incentivize employees to compromise ethical standards or violate the law." And 17% said they expected "their leaders were likely to look the other way if they suspected a top performer engaged in insider trading."

And these are the people who are integral to the safe and healthy functioning of our financial system.

6) The financial crisis problem that got the most public attention was the "Too big to fail" problem, where the government felt it had no choice but to reach into the taxpayers' pockets and bail out the companies that caused the problem in the first place. People talked about the moral hazard when a company knows that its failure is too painful to contemplate. The company can make huge risky bets, and if it wins those bets, it puts enormous sums of money into its own pockets. If it loses them, the government will bail it out. Once again, heads they win, tails they don't lose--which is not how the economy is supposed to operate.


Have we fixed the "too big to fail" problem?

No. In fact, it has gotten worse, as the healthy companies were given government incentives to buy the less healthy ones on Wall Street.

7) In the aftermath of the global financial crisis, some observers pointed out that banks should ideally function as utilities in the U.S. economy. Their function is to provide capital for companies and individuals who build or create businesses (and jobs). When Wall Street is using that capital instead for its own purposes, to day-trade for their own accounts and create complex investment products that are highly-profitable but serve no economic purpose, they are diverting valuable capital into their own pockets.

Can anything be done about this?

Not currently. Wall Street lobbyists have successfully beaten back all efforts to change their corporate behavior. Meanwhile, an article written by the former chief economist of the International Monetary Fund notes that the financial sector--chiefly the largest Wall Street firms--now earns more than 41% of all domestic corporate profits. That means that Wall Street has used the valuable capital that should be made available to the corporate sector to generate profits for itself that roughly equal the profits of all the aerospace and defense firms, pharmaceutical and oil companies, electric utilities, housing and construction, TV, radio, the movie industry, computer and software companies and the entire health care industry--combined.

Of course, none of this means that another global financial meltdown is going to happen; what happened in 2008 was a perfect storm of unfortunate events. But it is hard to be encouraged by how Congress and regulators have gone about fixing the problems that were exposed by the financial crisis. The anniversary of the Lehman collapse suggests that our elected officials and regulators still haven't learned the lessons of 2008.

Sources:
Time cover story, Sept. 23, 2013
http://dealbook.nytimes.com/2013/07/15/on-wall-st-a-culture-of-greed-wont-let-go/?_r=0
http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/?single_page=true)

Sincerely,
William T. Morrissey and Tammy Prouty
Sound Financial Planning Inc.
wtmorrissey@soundfinancialplanning.net
Primary Office
425 Commercial Street, Suite 203
Mount Vernon, WA 98273
Phone: (360) 336-6527
Secondary Office
650 Mullis St., Suite 101
Friday Harbor, WA 98250
(360) 378-3022

PLEASE READ THIS WARNING: All e-mail sent to or from this address will be received or otherwise recorded by the Sound Financial Planning, Inc. corporate e-mail system and is subject to archival, monitoring and/or review, by and/or disclosure to, someone other than the recipient. This message is intended only for the use of the person(s) ("intended recipient") to whom it is addressed. It may contain information that is privileged and confidential. If you are not the intended recipient, please contact the sender as soon as possible and delete the message without reading it or making a copy. Any dissemination, distribution, copying, or other use of this message or any of its content by any person other than the intended recipient is strictly prohibited. Sound Financial Planning, Inc. has taken precautions to screen this message for viruses, but we cannot guarantee that it is virus free nor are we responsible for any damage that may be caused by this message. Sound Financial Planning, Inc. only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements. Follow-up and individualized responses that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, will not be made absent compliance with state investment adviser and investment adviser representative registration requirements, or an applicable exemption or exclusion. This information should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. WE WOULD LIKE TO CREDIT THIS ARTICLE'S CONTENT TO BOB VERES.