Broker Check

Monday Money Report

| May 01, 2023

Earnings reports from big tech companies drove an upswing in the market last week, with Thursday recording the biggest daily increase in both the Dow Jones Industrial Average and the S&P 500 since January 6th.[1] Also released on Friday was the Federal Reserve’s preferred inflation metric, the Personal Consumption Expenditure Price Index, or PCE, was down to 4.2%, its lowest level since May 2021.[2] Remember that the Fed has a target inflation rate of 2%, so we’re still double that, and we’re expecting another quarter-point rate hike in May.

If you’re still hurting from paying the tax bill, or if you want to reduce your tailpipe emissions, you might consider purchasing an electric vehicle this year.  The misnamed Inflation Reduction Act updated previous tax credits for electric vehicles. The renamed Clean Vehicle Credit adds a requirement that final assembly of the vehicle must take place in North America for the purchase to be eligible for the tax credit.[3]  There’s a long list of additional requirements to be eligible for the full $7,500 credit, and you can see those on the IRS website, as well as a list of qualified vehicles. Fewer than a dozen EVs qualify for the full credit.

One loophole for the final assembly and battery component requirements is that those rules only apply to purchases of vehicles, and not leases.[4] Leasing also allows you to have the credit applied to your monthly payment, rather than collecting it when you file taxes next April.

If you’re not familiar with leasing a vehicle, some things to look at are both the price paid, and the residual value, or what the auto manufacturer thinks the vehicle will be worth at the end of the lease.  In theory, the lease payments should equal the difference between the two numbers.  A vehicle that holds its value, like an electric vehicle that can receive software updates, should have a high residual value, making the monthly lease payment lower.  It also relieves you of having to deal with the battery when it dies and needs replacement. 

Your action item this week is to clear your saved credit card numbers from online shopping sites.  The pause to get up and find your card, then type in the number, can give your brain a chance to catch up, and think about the necessity of the purchase.

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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.

[1] Market Watch, Dow advances over 200 points by Isabel Wong and Joseph Adinolfi 04/28/23

[2] Market Watch, Dow advances over 200 points by Isabel Wong and Joseph Adinolfi 04/28/23


[4] Bloomberg Businessweek, A Tax Loophole makes EV Leasing a No-Brainer in the US by Keith Naughton 04/27/23