Author: Roger Staiger

15 August 2019

 

Question: According to MSN: Money, what is the current level of US American mortgages?

 

Bonds sound recession alarm as China and Germany show strain – Pg. 1

• Fears over a global economic downturn were intensified by disappointing data from Chian and Germany yesterday, sending bond yields tumbling to fresh lows and weighing on already-jittery stock markets
• …yields of US and UK 10-year government bonds dipped below those of shorter-maturity debt for the first time since the financial crisis – an inversion of their normal relationship that has historically been a harbinger of recession
• …German economy shrank in three months to June
• The US “yield curve inversion” – when long-term bond yields are lower than short-term – was particularly unnerving to investors, given the global importance of the biggest economy
• Typically, longer-term debt trades with higher yields to compensate investors for the risk of holding debt for several years, during which time it is more difficult to predict economic conditions. When the yield curve flips, it is generally seen as a strong signal that investors are expecting an economic downturn

 

WeWork goes public with mission to ‘elevate consciousness’ in $4bn IPO – Pg. 1

• WeWork has unveiled its prospectus for a $3bn-$4bn IPO that would see the office-space provider become the latest private unicorn to go public I the face of stormier markets and a gloomier global economy
• The heavily lossmaking property group, which stated its mission as “to elevate the world’s consciousness”, would follow Uber, Lyft and Pinterest in a rush to IPO this year after an extended period when hyped young companies have relied on private investors to supply billions of dollars of growth capital
• The stampede is seen by some money managers as a sign that stock markets are near their peak
• WeWork stands out for its rapid growth, ballooning losses and heavy debt load
• The IPO filing received an immediate negative reaction from Fitch, the rating agency, which downgraded WeWork deeper into junk territory, noting high spending on properties and the hiring of thousands of staff

 

Macy’s tumbles on profit warning – Pg. 11

• Macy’s issued another profit warning yesterday, intensifying concerns on Wall Street over bricks-and-mortar retailers and dragging share prices down across the sector
• Macy’s also cited a drop in tourism. Sales from overseas travelers declined about 9% in the quarter,…

 

Answer: $9.4tn

14 August 2019

 

Question: According to MSN: Money, what is the current U.S. government’s debt level?

 

US delay on China consumer goods tariffs sparks relief rally in equities – Pg. 1

• The US said it would delay imposing a 10% tariff on a set of consumer goods imported from China – including laptops and mobile phones – until December, in an effort to ease fears over the trade war’s impact on markets and the economy
• Fresh US-China tension flared this month as Mr Trump threatened to impose 10% tariffs on $300bn of new goods on September 1, on top of the 25% levy in force on $250bn of Chinese imports. The US also labelled China a currency manipulator, inflaming the situation

 

Consumer price rise fuels Fed debate on interest rates – Pg. 2

• US consumer prices including airline tickets and fruit and vegetable rose last month, adding further fuel to the debate over how vigorously the Federal Reserve loosens monetary policy
• The CPI, a measure of growth in prices for common goods such as foods, housing and fuel, rose 0.3% in July, in line with estimates, and higher than June’s month-on-month growth of 0.1%
• Core CPI, which removes the more volatile costs of food and energy, rose 2.2% over the past year, the strongest increase since December 2018

 

Sweden’s negative rate prophets struggle for honour in own land – Pg. 17

• The krona has now depreciated about 15% against the euro since negative rates were introduced in 2015, extending its decline from its post-crisis peak to 24%
• At a time when the ECB is expected tot send rates deeper into negative territory, the experience of Sweden – the first big economy to experiment with sub-zero rates – might be instructive
• Negative rates were dreamt up in 1890 by Silvio Gesell, a colourful German businessman who enjoyed a one-week stint as the people’s representative for finance in a commune that styled itself the Soviet Republic of Bavaria
• His ideas were later championed as a possible solution to the Great Depression with John Maynard Keynes calling Gesell a “strange, unduly neglected prophet”
• The Swedish central bank has always enjoyed a reputation for innovation – it was a pioneer in inflation targeting, for example – and in July 2009 the Riksbank introduced the first negative rate on deposits held on behalf of commercial banks
• …research by Gauti Eggertsson, professor of economics at Brown University, and Larry Summers, the former US Treasury secretary now at Harvard, contends that such a policy offers “diminishing returns”
• While bank profitability remained solid, the limp krona had failed to stimulate exports and the country’s savings ratio is actually rising despite negative rates
• Because of negative rates, many Swedish companies – especially exporters – have kept more money overseas, particularly in the US
• Property prices have stabilized after a 2017 dip but have still tripled in real terms since the mid-1990s, lifting the price-to-income ratio to almost 30% above its two-decade average,…

 

Answer: $22.3tn

13 August 2019

 

Question: In the US, how many acres are dedicated to growing hemp?

 

KPMG forced out senior partner after probe into conduct on messaging app – Pg. 11

• KPMG has forced out the head of one of its core businesses after an investigation into his conduct involving messages sent on WhatsApp

 

NZ legalizes salaries paid in digital currencies – Pg. 17

• New Zealand has become the first country to legally back companies that are paying employees in cryptocurrencies, in a move that brings the often maligned asset class in line with mainstream forms of payments
• Cryptocurrencies are largely unregulated digital currencies that enable users to send money online without being tracked
• The ruling by New Zealand’s tax authority allows salaries and wages to be paid in cryptocurrencies such as bitcoin from September 1, as long as the payments are in regular, fixed amounts
• The digital currency of choice must also be pegged to at least one regular currency and must be able to be converted directly into a standard form of payment

 

Corporate America frets over rising toll on profit from trade war with China – Pg. 17

• Corporate executives in the US are growing increasingly nervous that the trade spat with China will dent their companies’ profits
• About 70% of the companies that mentioned tariffs specifically were negative, up from 50% last quarter
• The fading sentiment came as the world’s two largest economies prolonged their stand-off over trade, denting investor confidence that US-listed companies exposed to China will be spared
• The worsening outlook came as US corporate profit growth has slowed

 

Answer: 128,320

12 August 2019

 

Question: According to MSN: Money, what are five (5) signs it is time to sell your business?

 

Global banks cut 30,000 jobs as investment climate darkens – Pg. 1

• Almost 30,000 lay-offs have been announced since April at banks including HSBC, Barclays, Societe Generale, Citigroup and Deutsche Bank. Most of the cuts have come in Europe, with Deutsche accounting for more than half the total, while trading desks have been hit hardest
• Bank executives are under pressure from investors to cut costs and protect profits
• Banks are also bracing themselves for the so-called Basel IV rules, which will increase their capital requirements and make trading less profitable

 

Too much loyalty does neither firm nor employee much good – Pg. 12

• Loyalty is one of many ways in which our instincts to identify with a peer group and conform to authority, shapes and also warps our ethics. Team bonding can lift people to extraordinary performance.  Yet, studies also find that being in a group makes us less likely to go to a victim’s aid
• Our sensitivity to social cues can even persuade us to deny the evidence of our eyes….
• Toxic leaders are often accomplished crowd psychologists
• Postmortems on scandals – US bank Wells Fargo is an example – typically reveal an evidence trail of workers who voiced concerns that managers ignored or tackled with half measures
• Given that studies find that a strong sense of fairness predicts principled dissent, promoting employees who put fairness before loyalty might help to combat blinkered thinking

 

Answer: (1) The ‘right’ offer has come along; (2) You have taken your business as far as you can; (3) You have nothing left to invest; (4) The market is shifting; (5) Lack of motivation (Prof Note: One of the greatest aspects of P(Gain) has been the support of others and the unending market of opportunities.)