4 January 2019 FT — Articles to Read

4 January 2019


Question: According to MSN: Money, what are six (6) tax surprises new retirees face?


Apple’s China warning sends tremors through stock markets – Pg. 1

–          Apple’s abrupt warning over weak Chinese sales has stoked fears for the health of the global economy, rattling financial markets and leading traders to ramp up bets that the Federal Reserve is more likely to cut interest rates than raise them in 2019

–          The iPhone maker’s first cut to its revenue forecast in 16 years put its shares on track for a 9% decline yesterday – its biggest one-day drop in five years….

–          The tech-heavy Nasdaq index was down 2.3% by afternoon trading in NY…while the S&P 500 fell 1.9%

–          The sharp drop in Apple shares means the company’s market capitalization has fallen below Alphabet, at $680bn.  The iPhone maker’s valuation had already been overtaken by tech rivals Amazon and Microsoft at the end of last year.  Apple’s value peaked at $1.12tn in early October

–          ..US 30-year Treasury yield to a one-year low of 2.9%, …

–          The Fed Funds futures market, where traders speculate on the direction of interest rates, indicated that there was no chance the Fed would lift rates in 2019, and a 30% chance the US central bank would ease policy this year

–          The US yield curve, a popular gauge of impending economic downturns, has also signaled danger ahead


Median price for a Manhattan apartment falls below $1m – Pg. 2

–          The median price of a Manhattan apartment has fallen below $1m for the first time in three years, …

–          The median price paid for co-operatives and condominiums in the prime borough of New York City – some of the most expensive properties in the US – fell 5.8% to $999,000….

–          There was a 25.5% fall in the median sales price of new developers compared to the same period a year earlier, reflecting fewer sales of the highest priced apartments.  The median sales price for resale co-ops and condos rose 2.8%

–          (Prof Note: Simple Math…over the past year jumbo mortgages have increased 100bps.  So, assuming a $1,000,000 purchase price, 40% downpayment, i.e. $600,000 mortgage, and current 4.60% rate, how much more does the 100bps increase cost the purchaser?  Answer: $125,000 over the 30 years.  Now, couple this with the tax law change of limited deductibility of property taxes and the market is finally pricing reality.)


US car sales defy downturn prediction – Pg. 12

–          General Motors estimated that US auto sales rose slightly last year to 17.3m, defying predictions that 2018 would be a down year for the US industry – …

–          Ford also announced a 3.5% drop in 2018 …

–          GM predicted a cyclical slowdown in November when it announced it was cutting 11,000 jobs and idling four US factories to prepare for it

–          Profits held up well in 2018 too, despite the impact of US tariffs on commodity prices


Answer: (1) You stop paying Social Security payroll tax on your income; (2) You may start paying taxes on your Social Security Benefits; (3) You stop paying Medicare payroll taxes on your income; (4) Your standard deduction increases once you reach 65; (5) You may qualify for a homestead exemption on your property taxes; (6) You may see your taxes and other costs increase as a result of RMDs