Transcripts For KQED Nightly Business Report 20160216 : vima

About it but its the last thing a jittery market needs right now. Reporter as if the stock market didnt already enough to deal with, one of the big concerns for traders and investors is how to deal with the upcoming president ial election. The man in the white house could have a lot of influence on how our nations economy functions and what opportunities could arise. Those opportunities could potentially be different depending on various election outcomes, different candidates and different policy agendas. But we certainly believe that there are opportunities in any number of these political scenarios that could unfold. The market is either going to impact the election or the election is going to end up impacting the market. The market is a discounting mechanism. Now that just means that prices today reflect anticipated future events. So as we get closer and closer to the election, stocks could fluctuate depending on who is perceived for getting closer to winning the presidency. I think from a trading perspective it does matter. For example, if you see the democrats starting to take the lead youll start to see sectors like alternative energy take off. If its a republican, areas like defense stocks will do better. But ill caution viewers those always tend to be a buy on the rumor, sell on the news type of trade. If youre not going to be able to time that efficiently, its better left staying away from those types of trades. There will be different views and interpretations of the Elections Development in the coming months and the markets will be a Battle Ground for debate which companies could benefit more or less depending whos president. On the other hand there are investors who believe these shorterterm catalysts and events shouldnt have an effect on your longerterm financial pl playbook. I dont think that topdown history affects us a great deal as far as how we allocate our shareholder coop taap call. The election will generate controversy and headlines but it doesnt necessarily mean that investors should react to every detail and development. Unless theyre prepared to watch every detail and development. For nightly Business Report im dominic chew. Lets talk about the election issues the markets might be worrying over. We turn to john harwood who joins us from washington. Good to see you as always. I think one of the things that the market is is most i guess worried and concerned about is the fact that the candidates they thought were going to do well on either side of the ticket arent doing as well as some of the quoteunquote outlying candidates. Thats brought a lot of confusion into the markets. Certainly the failure of Hillary Clinton to consolidate her position so far, the failure of jeb bush, marco rubio, those mainstream candidates who we thought were going to rise at the beginning, adds to some uncertainty in the markets. But were just at beginning of this process. Hillary clinton is still the favorite. And perhaps if Bernie Sanders makes the market nervous, Hillary Clinton will calm it down a little bit if she, as expected, takes control of the democratic race. Republican race is more uncertain. Youve got donald trump and ted cruz, two choices on the republican side that the markets hadnt planned on. Theyre still in the drivers seat in this race. So we may have to live with a little bit of that uncertainty. That may have to be factored in as we move forward during the spring. Its early to be speculating about what sort of sectors of the economy might be affected one way or another depending who wins the white house but it does occur to me based on what the rhetoric has been so far, the Health Care Sector would be one you have to look at closely. On the one hand, on the democratic side theres concern about the drug pricing issue, also on the republican side i should say. Republicans have vowed to dismantle the Affordable Care act. Well, it is going to be very difficult for them to dismantle the Affordable Care act. We have heard that for quite some time. The Republican Congress has tried to effect that for quite some time. But you do have both donald trump, the republican fro frontrunn frontru and bernie sand democratic side, Hillary Clinton, talking about making pharmaceutical companies negotiate drug prices with Government Health care programs like medicare. Thats something that you certainly have to consider. Youve also got to think about tax policy. Bernie sanders and Hillary Clinton both want to raise taxes at the top level. And theres a wide variation between what theyre proposing and what republicans have proposed which are very deep tax cuts. Donald trump proposed to take the top rate down to 25 . Some other republican is dont go that far but ted cruz has a, in essence, a valueadded tax and a flat tax on personal income. So youve got some potentially wide springs in how business income is going to be tax, how wealthy individuals are going to be taxed. We bring in ed mills to our discussi discussion, senior financial policy analyst at fbr capital markets, ed, welcome. I assume youve heard what john was just saying. It occurs to all of us that the markets, as the saying goes, they dont like uncertainty but thats what theyre going to have to deal with the next couple of months, right . Yeah, this is the expect the unexpected election. The market does love certainty, so what the market would like is a Hillary Clinton ticket on the democratic side and maybe a rubio, bush on the republican side. As was mentioned, trump and cruz are in the drivers seat and Bernie Sanders is having a much tougher than expected much stronger than expected challenge to Hillary Clinton. If it looks like were going to have a donald trump and sanders nominee on either side, the market not like that. Thats when i think the market would get very nervous and looks to possibly the entrance into a third party candidate. For the first time in a long time were hearing the words brokered convention bandied about. What do you think the Market Reaction would be if for the first time we got a brokered convention . I think broker convention is much more likely on the republican side. What we do see is that trump and cruz are doing well, then theres this fight for that kind of quoteunquote establishment lane. Most of these delegates are giving out on a proportional basis. Up like past years, most of these candidates have a lot of money, not only in their intenderal Campaign Funds but also through super pacs to stay in longer. No one thinks its their time to get out. If we get that that convention that is a lot of up certainty the market would not like. I do think its going toward a more mainstream candidate if you get to that point, launching likelihood of a trump thirdparty run at that point. What i was going to ask you, its a reaction what would it mean if there were a brokered convention on the gop side and what if there is a thirdparty candidate, whether it could possibly be mr. Trump or Michael Bloomberg whos making noises . A couple points, tyler. First of all, i think we have to note the primary calendar turns toward winner take all in midmarch. If somebody can really separate from the pack, if donald trump can hold his lead, he could start racking up delegates in a hurry. I think a brokered convention is not a likely scenario. If you do get a third party, it could be trump. If somebody else beats him for the republican nom nice. That would likely deliver the election to the democratic candidate because donald trump would siphon off a lot of those workingbass voters hes been attracting in republican contests. If its bloomberg, on the other hand, that would likely guarantee a republican victory. Michael bloomberg would draw some of those upscale, suburban, collegeeducated voters who are more inclined to vote with the democrats and it might look to bloomberg as a reasonable admit ground. A lot of variation in those scenarios. We do have to remember that its very difficult for a thirdparty candidate to get elected. They can be a spoiler. Would you like to react to that, ed . Specifically the bloomberg reference . I think one of the things that you have to remember about the thirdparty reference is that kind of the winner of the president ial election is the perpendicular who gets 270 electoral votes. We have a very complex system in terms of how you get the nomination and then how you get the presidency. One of my concerns is if there is a thirdparty candidate, does someone fail to get that majority . Does this get thrown to the house . So in in sense you could have a donald trump as a thirdparty candidate and the republican still wins in that scenario. Its not the assured Democratic Victory in that case. Something we began with, john talking about that is the repeal which the gop have been talking about of the american the Affordable Care act. If a republican has the white house, republicans probably wont lose either house of congress, they wouldnt have main the ability to drive everything through. But is it more is it possible that the aca could get repeal the . I think its more possible that the aca would see some changes. I think you always have to look at the fact that anything that gets through the senate needs 60 votes. Theres some changes that you could do on a 51 vote majority. Part of the reason republicans fought so hard against obamacare after it was passed is that once you give someone a benefit, youre not going to just see a wholesale removal of that benefit for millions of americans. So the aca and most of those benefits are set regardless of who wins here. John harwood, thanks very much. Ed mills with fbr capital markets, appreciate your time. It is that time of year lean. Its tax season. Well get you ready with everything you need to know coming up next. Today is february 15th. Normally we would be exactly two months from the day our taxes are due. But if you didnt figure it out from our last segment this is not a normal year. Since 2016 is a leap year, everyone gets one extra day. February 29th. But wait, theres more. This year, friday, april 15th, is a legal holiday in our nations capital. The 154 the anniversary of when president lincoln signed the compensated emancipation act which freed 3,000 slaves in the district of columbia. That pushes the tax dead line for most of us to the next business day, or monday the 18th. But if you live in maine or massachusetts, the 18th is patriots day. So residents of those states get until the 19th. Got all that . Were going to have a quiz later in the show. Im going to move to massachusetts. Since its tax soap the Inspector General for the irs is warning taxpayers of a new and costly scam. Irs is calling me . Is this for real . Reporter fraud is real. A new series of Public Service announcements warning americans of an ageold tax scam thats taking more and more new victims to the cleaners. Criminals call american taxpayers pretending to be irs agents and demand phoney back taxes. Often the carcinogen naturals threaten to call the police if the taxpayer hangs up the phone. It makes me angry. Because i feel personally bad for the victims. Then i feel angry that these criminals are using the irs as a means to scare people into paying them money. Reporter the Inspector General for the irs says as many as 5,000 victims have paid as much as 26. 5 million to the scam artists who can be located inside the United States or around the world. The scam began by targeting new immigrants to the United States and threatening deportation and other penalties. But the Inspector General says it has since mutated and now its targeting every demographic group. Early if the scam, the callers had some sort of information about you. They may have four digits of our your Social Security now. Now theyre randomly making blanket kas. Theyve shifted to calling cell phones. Reporter thats why the agency released five new videos in english and spanish telling people the irs will not call you out of the blue and threaten to arrest you. The government has one piece of advice for anyone getting such a call hang up on fraud. You cant be tricked into giving personal information if you hang up the phone. You cant be tricked into paying them money, harassed or intimidated into paying them, if you hang up the phone. Reporter what if the caller really was from the u. S. Government . Well, the Inspector General says not to worry. The irs wont be offended if you hang up on them. For nightly Business Report, im amon jabbers in washington. More. What you need to know this tax season from avoiding scams and surprises to whats new as you prepare to file your taxes. She is president of la sue swirly Wealth Management firm. Welcome back. Great to be back. You would agree with the just hang up the phone, certainly. But what else can people do to protect themselves from scams . Bottom line is, file your tax return as early as you can file it. And avoid all those people trying to file for you. Thats one. Also, not only hanging up the phone if the irs says theyre calling, but also emails. Dont click on those links when the irs sends you an email and says, click on this link, we need extra information to process your return. Make sure you dont click on those links. Theyre just trying to steal your information. Lets talk about whats new this year. Anything different in the Filing Season this time around . Not super different. But there are extensions that are really important and now permanent. One is the ira distribution to a charity. Thats a wonderful opportunity. If you have to take required minimum distributions at 70 1 2 and you want to give it to your charity, you can do that now taxfree. And it applies to your required minimum distribution. The other is to the state and local Fraud Protection . Thank you, exactly. There are states that dont have state income taxes. And it makes perfect sense to keep track of those sales taxes in states like florida and texas that dont have a state income tax. It can be a really good tax benefit. Thats now a permanent. And also, you were saying that basically six digits issued by the irs and pins they are going to be either allocating or asking you to use when you file. The irs has started doing that as a trial in several states. And now theyre trying to use them for people whose identity has been stolen. So that they can try to add an extra layer of protection. Some states are trying to do things like that also and include a request for your drivers license to file for efiling in your tax return. So a lot of the Government Entities are trying to provide extra layers of protection for us. All right. On that good note, thank you so much diane la sues. Its tax time for businesses as well. While most traditional businesses do have establish plans for paying their taxes the fledgling Marijuana Industry is feeling its way around the process. As jane wells tells us, it could be a taxing issue for some entrepreneurs. Reporter its tax time in the cannabis industry. For many new in the business, their irs bill could leave them dazed and confused. Companies in our business are paying 40 to 70 depending on demographic. Reporter even though marijuana is illegal at the federal level, the irs still insists these Companies Pay income taxes. At the same time, the agency bars them from making most normal business deductions. You know, you could end up with a tax bill far more than any potential profit you could ever make. Reporter jeremy carr of the dispensary in West Hollywood said that could start to happen as legalization is bringing down prices and margins. Ive seen Profit Margins drop 40 in the last five years. Reporter the irs does allow deductions for the costs of growing marijuana. But does not allow deductions for the retail cost of selling it. Things like rent, advertising, payroll. Fortunately the margins are there, at least in Northern California where we operate. Reporter Derek Peterson left wall street to start terra tech, a publicly traded hold cog which owns a variety of Cannabis Companies including the bloom dispensary in oakland. Terra tech owns other companies which dont involve pot, like one which provides growing equipment, or a firm which sells regular produce to retailers. He makes sure businesses are segregated in their tax reporting and puts as many costs as legally possible into areas where deductions are allowed. A lot of the business is one leg in the black market. Were not able to do that because were publicly traded and everything also audited annually. Theres a lot of providers that because of this headwind are operating with one foot in the black market, one foot in the regulated market. Reporter those trying to be legit accuse the irs of hypocrisy. Ken holland owns the koko in denver. He says the lack of normal deductions will cost him 1. 5 million more in taxes. If were licensed and legal in colorado that should be good enough for the irs. They certainly cash our checks every month. Why february is the start of spring. At least when it comes to houses. Well explain. U. S. Markets were closed today but heres what to watch this week. Wednesday we get minutes from last months Federal Reserve meeting. Investors will focus on what the committee had to say about the economy and the future of interest rates. With oil such a focus of investors, thursdays inventory numbers could trigger a big reaction in the market. And we get a look at the inflation picture friday when the Elections Development<\/a> in the coming months and the markets will be a Battle Ground<\/a> for debate which companies could benefit more or less depending whos president. On the other hand there are investors who believe these shorterterm catalysts and events shouldnt have an effect on your longerterm financial pl playbook. I dont think that topdown history affects us a great deal as far as how we allocate our shareholder coop taap call. The election will generate controversy and headlines but it doesnt necessarily mean that investors should react to every detail and development. Unless theyre prepared to watch every detail and development. For nightly Business Report<\/a> im dominic chew. Lets talk about the election issues the markets might be worrying over. We turn to john harwood who joins us from washington. Good to see you as always. I think one of the things that the market is is most i guess worried and concerned about is the fact that the candidates they thought were going to do well on either side of the ticket arent doing as well as some of the quoteunquote outlying candidates. Thats brought a lot of confusion into the markets. Certainly the failure of Hillary Clinton<\/a> to consolidate her position so far, the failure of jeb bush, marco rubio, those mainstream candidates who we thought were going to rise at the beginning, adds to some uncertainty in the markets. But were just at beginning of this process. Hillary clinton is still the favorite. And perhaps if Bernie Sanders<\/a> makes the market nervous, Hillary Clinton<\/a> will calm it down a little bit if she, as expected, takes control of the democratic race. Republican race is more uncertain. Youve got donald trump and ted cruz, two choices on the republican side that the markets hadnt planned on. Theyre still in the drivers seat in this race. So we may have to live with a little bit of that uncertainty. That may have to be factored in as we move forward during the spring. Its early to be speculating about what sort of sectors of the economy might be affected one way or another depending who wins the white house but it does occur to me based on what the rhetoric has been so far, the Health Care Sector<\/a> would be one you have to look at closely. On the one hand, on the democratic side theres concern about the drug pricing issue, also on the republican side i should say. Republicans have vowed to dismantle the Affordable Care<\/a> act. Well, it is going to be very difficult for them to dismantle the Affordable Care<\/a> act. We have heard that for quite some time. The Republican Congress<\/a> has tried to effect that for quite some time. But you do have both donald trump, the republican fro frontrunn frontru and bernie sand democratic side, Hillary Clinton<\/a>, talking about making pharmaceutical companies negotiate drug prices with Government Health<\/a> care programs like medicare. Thats something that you certainly have to consider. Youve also got to think about tax policy. Bernie sanders and Hillary Clinton<\/a> both want to raise taxes at the top level. And theres a wide variation between what theyre proposing and what republicans have proposed which are very deep tax cuts. Donald trump proposed to take the top rate down to 25 . Some other republican is dont go that far but ted cruz has a, in essence, a valueadded tax and a flat tax on personal income. So youve got some potentially wide springs in how business income is going to be tax, how wealthy individuals are going to be taxed. We bring in ed mills to our discussi discussion, senior financial policy analyst at fbr capital markets, ed, welcome. I assume youve heard what john was just saying. It occurs to all of us that the markets, as the saying goes, they dont like uncertainty but thats what theyre going to have to deal with the next couple of months, right . Yeah, this is the expect the unexpected election. The market does love certainty, so what the market would like is a Hillary Clinton<\/a> ticket on the democratic side and maybe a rubio, bush on the republican side. As was mentioned, trump and cruz are in the drivers seat and Bernie Sanders<\/a> is having a much tougher than expected much stronger than expected challenge to Hillary Clinton<\/a>. If it looks like were going to have a donald trump and sanders nominee on either side, the market not like that. Thats when i think the market would get very nervous and looks to possibly the entrance into a third party candidate. For the first time in a long time were hearing the words brokered convention bandied about. What do you think the Market Reaction<\/a> would be if for the first time we got a brokered convention . I think broker convention is much more likely on the republican side. What we do see is that trump and cruz are doing well, then theres this fight for that kind of quoteunquote establishment lane. Most of these delegates are giving out on a proportional basis. Up like past years, most of these candidates have a lot of money, not only in their intenderal Campaign Funds<\/a> but also through super pacs to stay in longer. No one thinks its their time to get out. If we get that that convention that is a lot of up certainty the market would not like. I do think its going toward a more mainstream candidate if you get to that point, launching likelihood of a trump thirdparty run at that point. What i was going to ask you, its a reaction what would it mean if there were a brokered convention on the gop side and what if there is a thirdparty candidate, whether it could possibly be mr. Trump or Michael Bloomberg<\/a> whos making noises . A couple points, tyler. First of all, i think we have to note the primary calendar turns toward winner take all in midmarch. If somebody can really separate from the pack, if donald trump can hold his lead, he could start racking up delegates in a hurry. I think a brokered convention is not a likely scenario. If you do get a third party, it could be trump. If somebody else beats him for the republican nom nice. That would likely deliver the election to the democratic candidate because donald trump would siphon off a lot of those workingbass voters hes been attracting in republican contests. If its bloomberg, on the other hand, that would likely guarantee a republican victory. Michael bloomberg would draw some of those upscale, suburban, collegeeducated voters who are more inclined to vote with the democrats and it might look to bloomberg as a reasonable admit ground. A lot of variation in those scenarios. We do have to remember that its very difficult for a thirdparty candidate to get elected. They can be a spoiler. Would you like to react to that, ed . Specifically the bloomberg reference . I think one of the things that you have to remember about the thirdparty reference is that kind of the winner of the president ial election is the perpendicular who gets 270 electoral votes. We have a very complex system in terms of how you get the nomination and then how you get the presidency. One of my concerns is if there is a thirdparty candidate, does someone fail to get that majority . Does this get thrown to the house . So in in sense you could have a donald trump as a thirdparty candidate and the republican still wins in that scenario. Its not the assured Democratic Victory<\/a> in that case. Something we began with, john talking about that is the repeal which the gop have been talking about of the american the Affordable Care<\/a> act. If a republican has the white house, republicans probably wont lose either house of congress, they wouldnt have main the ability to drive everything through. But is it more is it possible that the aca could get repeal the . I think its more possible that the aca would see some changes. I think you always have to look at the fact that anything that gets through the senate needs 60 votes. Theres some changes that you could do on a 51 vote majority. Part of the reason republicans fought so hard against obamacare after it was passed is that once you give someone a benefit, youre not going to just see a wholesale removal of that benefit for millions of americans. So the aca and most of those benefits are set regardless of who wins here. John harwood, thanks very much. Ed mills with fbr capital markets, appreciate your time. It is that time of year lean. Its tax season. Well get you ready with everything you need to know coming up next. Today is february 15th. Normally we would be exactly two months from the day our taxes are due. But if you didnt figure it out from our last segment this is not a normal year. Since 2016 is a leap year, everyone gets one extra day. February 29th. But wait, theres more. This year, friday, april 15th, is a legal holiday in our nations capital. The 154 the anniversary of when president lincoln signed the compensated emancipation act which freed 3,000 slaves in the district of columbia. That pushes the tax dead line for most of us to the next business day, or monday the 18th. But if you live in maine or massachusetts, the 18th is patriots day. So residents of those states get until the 19th. Got all that . Were going to have a quiz later in the show. Im going to move to massachusetts. Since its tax soap the Inspector General<\/a> for the irs is warning taxpayers of a new and costly scam. Irs is calling me . Is this for real . Reporter fraud is real. A new series of Public Service<\/a> announcements warning americans of an ageold tax scam thats taking more and more new victims to the cleaners. Criminals call american taxpayers pretending to be irs agents and demand phoney back taxes. Often the carcinogen naturals threaten to call the police if the taxpayer hangs up the phone. It makes me angry. Because i feel personally bad for the victims. Then i feel angry that these criminals are using the irs as a means to scare people into paying them money. Reporter the Inspector General<\/a> for the irs says as many as 5,000 victims have paid as much as 26. 5 million to the scam artists who can be located inside the United States<\/a> or around the world. The scam began by targeting new immigrants to the United States<\/a> and threatening deportation and other penalties. But the Inspector General<\/a> says it has since mutated and now its targeting every demographic group. Early if the scam, the callers had some sort of information about you. They may have four digits of our your Social Security<\/a> now. Now theyre randomly making blanket kas. Theyve shifted to calling cell phones. Reporter thats why the agency released five new videos in english and spanish telling people the irs will not call you out of the blue and threaten to arrest you. The government has one piece of advice for anyone getting such a call hang up on fraud. You cant be tricked into giving personal information if you hang up the phone. You cant be tricked into paying them money, harassed or intimidated into paying them, if you hang up the phone. Reporter what if the caller really was from the u. S. Government . Well, the Inspector General<\/a> says not to worry. The irs wont be offended if you hang up on them. For nightly Business Report<\/a>, im amon jabbers in washington. More. What you need to know this tax season from avoiding scams and surprises to whats new as you prepare to file your taxes. She is president of la sue swirly Wealth Management<\/a> firm. Welcome back. Great to be back. You would agree with the just hang up the phone, certainly. But what else can people do to protect themselves from scams . Bottom line is, file your tax return as early as you can file it. And avoid all those people trying to file for you. Thats one. Also, not only hanging up the phone if the irs says theyre calling, but also emails. Dont click on those links when the irs sends you an email and says, click on this link, we need extra information to process your return. Make sure you dont click on those links. Theyre just trying to steal your information. Lets talk about whats new this year. Anything different in the Filing Season<\/a> this time around . Not super different. But there are extensions that are really important and now permanent. One is the ira distribution to a charity. Thats a wonderful opportunity. If you have to take required minimum distributions at 70 1 2 and you want to give it to your charity, you can do that now taxfree. And it applies to your required minimum distribution. The other is to the state and local Fraud Protection<\/a> . Thank you, exactly. There are states that dont have state income taxes. And it makes perfect sense to keep track of those sales taxes in states like florida and texas that dont have a state income tax. It can be a really good tax benefit. Thats now a permanent. And also, you were saying that basically six digits issued by the irs and pins they are going to be either allocating or asking you to use when you file. The irs has started doing that as a trial in several states. And now theyre trying to use them for people whose identity has been stolen. So that they can try to add an extra layer of protection. Some states are trying to do things like that also and include a request for your drivers license to file for efiling in your tax return. So a lot of the Government Entities<\/a> are trying to provide extra layers of protection for us. All right. On that good note, thank you so much diane la sues. Its tax time for businesses as well. While most traditional businesses do have establish plans for paying their taxes the fledgling Marijuana Industry<\/a> is feeling its way around the process. As jane wells tells us, it could be a taxing issue for some entrepreneurs. Reporter its tax time in the cannabis industry. For many new in the business, their irs bill could leave them dazed and confused. Companies in our business are paying 40 to 70 depending on demographic. Reporter even though marijuana is illegal at the federal level, the irs still insists these Companies Pay<\/a> income taxes. At the same time, the agency bars them from making most normal business deductions. You know, you could end up with a tax bill far more than any potential profit you could ever make. Reporter jeremy carr of the dispensary in West Hollywood<\/a> said that could start to happen as legalization is bringing down prices and margins. Ive seen Profit Margins<\/a> drop 40 in the last five years. Reporter the irs does allow deductions for the costs of growing marijuana. But does not allow deductions for the retail cost of selling it. Things like rent, advertising, payroll. Fortunately the margins are there, at least in Northern California<\/a> where we operate. Reporter Derek Peterson<\/a> left wall street to start terra tech, a publicly traded hold cog which owns a variety of Cannabis Companies<\/a> including the bloom dispensary in oakland. Terra tech owns other companies which dont involve pot, like one which provides growing equipment, or a firm which sells regular produce to retailers. He makes sure businesses are segregated in their tax reporting and puts as many costs as legally possible into areas where deductions are allowed. A lot of the business is one leg in the black market. Were not able to do that because were publicly traded and everything also audited annually. Theres a lot of providers that because of this headwind are operating with one foot in the black market, one foot in the regulated market. Reporter those trying to be legit accuse the irs of hypocrisy. Ken holland owns the koko in denver. He says the lack of normal deductions will cost him 1. 5 million more in taxes. If were licensed and legal in colorado that should be good enough for the irs. They certainly cash our checks every month. Why february is the start of spring. At least when it comes to houses. Well explain. U. S. Markets were closed today but heres what to watch this week. Wednesday we get minutes from last months Federal Reserve<\/a> meeting. Investors will focus on what the committee had to say about the economy and the future of interest rates. With oil such a focus of investors, thursdays inventory numbers could trigger a big reaction in the market. And we get a look at the inflation picture friday when the Consumer Price<\/a> index comes out. And that is some of what to watch this week. Believe it or not, president s day weekend marks the start of the spring housing market. Or at least according to most real estate agents. Buyers and sellers alike are facing kind of a mixed bag. High prices, low supply, and a growing conundrum over the best strategy. Do you buy or do you rent . Diana olick explains. Reporter on a snowy tuesday in a suburb north of d. C. , jesse and mike tried to get a jump on the spring housing market. A oneweek jump at least. I feel theres not a lot of inventory right now. So that does make us a little bit nervous. Because we think theres going to be a lot more offered maybe in two or three weeks. Id say for sure we feel that stress. Reporter theyre relocating from hong kong. So in two days they toured 19 homes are this one wasnt even listed yet but the agent convinced the sellers to show it anyway. I think inventorys going to remain tight. I think the closer you are to urban centers, the tighter the inventory. Because the demand is strong. A lot of that stuff gets scooped up before it hits the market. Reporter prices are still going up here and across the nation. Not because incomes are rising but because demand is strong and supply is just so tight. It begs the question, why not rent . We do want to have that as an option. If we cant find something that we love, we dont want to be locked into a house and three or four months down the rhoda side we made a bad decision. Reporter rents are rising as well. Does it make better Financial Sense<\/a> to buy or rent . As with Everything Else<\/a> in real estate, that depends on location. Nationally home buyers can break even, that is, spend as much to own as to rent, in less than two years, according to zillo. That factors in Mortgage Rates<\/a>, down payments and taxes. In pricey d. C. It will take longer, four and a half years. In dallas, just over one year. Of course, some still have that oldfashioned notion that a home can make them money. I like to buy, hold, not only view it as my home but a potential Investment Opportunity<\/a> going forward. Im more a buyer than a renter. Reporter with Mortgage Rates<\/a> falling to nearrecord lows the math on buying is making more sense. The craftsmanship is spectacular. Reporter that is if what little is out there fits the bill. Diana olick in washington for nightly Business Report<\/a>. More about the spring selling season, the chief economist at red fin, nella, good to see you. Why is there so little inventory in so many markets . Its a combination of three real big factors. One, theres been a lack of new construction that would keep up with population increases. New construction of Single Family<\/a> and apartments are down 50 from where they were in their peak. Second, as was highlighted, theres a lot of demand. Mortgage rates are really, really low. A lot of people want to buy now. Third, theres this idea that not only can i own, i can rent my home. So what a lot of homeowners have done when theyve traded up or moved up is theyve rented their previous home while buying the now one. That takes supply off the market. Finally, were also in addition to those three seeing people stay in their home longer. Rep elevating instead of relocating. You say there is good news in this scenario for the biruyers. Theres been a shift in selling pricing strategy. Red pen did a survey of sellers and found that morselers are pricing in the middle of the comparables in their neighborhood. Thats a shift from what we saw in the fall when morse sellers were pricing at the top of those comparables. Sellers are getting the message buyers are not going to pay top dollar for much longer than anything and they have to price realistically, even though theres a shortage in the market. If im going to sell this spring what Little Things<\/a> can i do to get my house ready for sale so that i can put my best door forward . For what the most important thing you can do is price right. We know that you get more views in the first two weeks of a listing than any time after. Homes that are overpriced, they miss that initial opportunity to make a great first impression. But beyond that its really simple things. Clear out the clutter. Make sure you can home wan pass inspections. Make sure youre working with someone who knows their local market. Every market is different. With winter still here, even though this, mays the start of the spring selling season, i think a lot of people who want to sell their home, they wait until the wieather turns, april or may. That is too long . Its too long. In fact, there is demand in the market now. We know that, measure by how many people go on tours, how many people attend open houses. If you want to get the jump on competition as a seller, you need to Start Marketing<\/a> your home now while theres very little competition. Especially if youre going to then turn around and buy a new home. Make sure your sale is in the works and that way that frees you up to look for that nextlevel home. If you need equity in that home to purchase your new home. Nella richardson, chief economist at read fin. That is nightly Business Report<\/a> for tonight. Im tyler mathisen, thanks for watching. Im sue herera. Have a great evening. See you back here tomorrow. Announcer imagemakers is made possible by the members of kqed. 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