21 March 2019 FT — Articles to Read

21 March 2019


Question: According to MSN: Money, what are eight (8) things that you probably did not realize are taxable?


Fed expected to hold rates amid slowing momentum – Pg. 2

–          The Federal Reserve is likely to refrain from raising interest rates for the rest of the year…cementing the US central bank’s sharp shift towards a “patient” approach to monetary tightening in the face of waning economic momentum in the US and abroad

–          …unanimously to keep the target range for the Federal Funds rate between 2.25% and 2.5%, where it has been since December, as widely expected by economists

–          …UC central bankers downgraded their expectations for US economic growth this year to 2.1% from 2.3% in December

–          …the US central bank announced plans to end the reduction of its balance sheet that had been under way since 2017 to shed some of the assets it built up during multiple rounds of quantitative easing during the financial crisis

–          Most economic data in recent weeks have supported the Fed’s move towards a more dovish approach to interest rate increases.  Inflation data have been relatively soft, while the latest reading on job creation and industrial production have been weak

–          Some of the biggest external risks to the US economy and financial sector, such as the fate of Brexit and the US-China trade talks, are still present and laden with uncertainty


Trump-Conway psychodrama keeps Washington transfixed – Pg. 2

–          (Prof Note: I am becoming embarrassed to be an American!  This is simply embarrassing!)


Australia to reduce immigration and tie visas to regions – Pg. 4

–          Australia plans to cut its annual immigration intake by 15% and make some arrivals live in regional areas in an effort to ease pressure on roads, housing and other infrastructure

–          A high immigration rate – one person arrives to live in Australia every minute – has helped the economy rack up a record 27 years without recession and established the country as one of the most multicultural in the developed world

–          ….raising public concerns about pressure on housing and other public infrastructure, as well as claims that Australia is veering towards a “European separatist multicultural model”

–          Under the regional visas policy, migrants will be encouraged to settle away from big cities and qualify for permanent residence after spending three years living in a regional location


US chiefs’ economic confidence falls – Pg. 13

–          Business confidence is receding in the US from the heights it reached after Donald Trump’s election, as friction with trading partners and a slowing global economy weigh on chief executives’ expectations for hiring, investment and growth

–          CEOs also lowered their estimate of US GDP growth for the year, from 2.7% three months ago to 2.5%


Landmark for Saudi stocks as index providers become kingmakers – Pg. 19

–          …the world’s three largest index providers will funnel billions and billions of dollars into Saudi Arabian stocks after admitting them to benchmarks whose influence has mushroomed alongside the growth of passive investing over the past decade

–          The process, which began this week when FTSE Russell and S&P Down Jones added the stocks to their indices, raises questions over what investors will be buying given Aramco, the country’s largest and highest profile company, remains state-owned

–          It also underlines the outsized role that index creators now have in directing capital into countries with authoritarian regimes such as Saudi Arabia, which just five months ago was accused of orchestrating the killing of journalist Jama Khashoggi

–          Exchange traded funds created to follow these indices will be forced to mirror the weighting of Saudi stocks

–          The biggest sector within the stock market is financials, essentially a play on the health of the Saudi economy, followed by materials – largely petrochemicals and fertilisers


Costs cut as ‘feemageddon’ bites hard in equity funds – Pg. 19

–          Fees on US equity funds fell to a new record low last year as relentless pressure from cheaper index-tracking rivals forced asset managers to slash costs in a bid to staunch heavy outflows

–          The average “expense ratio” of an US equity mutual fund dipped to 0.55% in 2018, down from 0.59% the year before and almost half the cost charged by asset managers at the turn of the millennium, …

–          Expense ratios track the percentage of assets deducted each year for costs associated with management, record-keeping and other administration

–          In addition to pruning fees on active strategies, many asset managers have launched competing passive funds at rock-bottom prices to gain market share.  The ferocious priced war has intensified this year with investment groups such as BlackRock and JPMorgan Asset Management cutting fees to stay competitive


Answer: (1) Social Security retirement benefits; (2) Alaska Permanent Fund dividends; (3) Bribes; (4) Illegal activity; (5) Alimony; (6) Cancelled debts (Prof Note: This is a HUGE shock when debts are “restructured” and those feeling they had a ‘windfall’ receive a taxbill for said “windfall”.  Nothing is free!); (7)  Gambling winnings; (8) Bartering