Author: Roger Staiger

15 October 2018

 

Question: According to MSN: Money, what are five (5) reasons you won’t retire on time?

 

US growth near turning point as tighter policy kicks in, warns Bridgewater chief – Pg. 1

–        The US economy faces a looming deceleration as tighter monetary policy starts to weigh on activity and ratchets up pressure on financial markets, …

–        Treasury yields started climbing sharply this month, as a string of healthy US economic data and hawkish comments by Federal Reserve officials forced investors to reassess their sanguine view of how far and how fast the central bank would raise interest rates

–        Tax cuts have invigorated the US economy, pushing the jobless rate to its lowest since 1969.  The Fed predicts growth to surpass 3% in 2018, leading it to pencil in a fourth rate rise of the year in December, and another three in 2019

 

Trump shifts blame to Fed as stocks tumble – Pg. 3

–        …Trump described the policies pursued by chairman Jay Powell as “crazy” and “loco”, suggesting misguided rate rises are puncturing equity values

–        While just over half of Americans have direct or indirect stock market holdings, more than 90% of those in the top 10% of earners are exposed, …

–        The central bank and its chairmen have been caught in political crossfire before.  Officials in the George H W Bush administration put intense pressure on Alan Greenspan to loosen policy in the early 1990s, and the president subsequently argued the Fed was responsible for his defeat to Bill Clinton in 1992.  Ben Bernanke came under criticism from both sides in the financial crisis

 

The new flexible: why employers are rethinking part-time hours – Pg. 10

–        In an article this year for Harvard Business Review, the researchers set out the findings of the experiment, which gave employees notice of their timetable two weeks in advance with start and finishing times that stayed the same throughout the fortnight.  An app allowed workers to swap shifts without waiting for a supervisor’s approval.  Sales increased by 7%, and labour productivity by 5% (Prof Note: Even Universities do not have set schedules.  It is difficult for professionals and families to schedule around the unknown.)

 

Answer: (1) Underestimating how much money you’ll need (Prof Note: I always stress that identifying one’s desired lifestyle is critical.  The determining if it is realistic.  The reassessment (if necessary)); (2) High living expenses (Prof Note: Determine what is important to one’s family); (3) Overspending on housing (Prof Note: Housing is a huge area where one can generally save.  Downsizing); (4) Investing too aggressively or not at all (Prof Note: You have to get in the game and get in early!!!); (5) Not having a plan (Prof Note: One of my many criticisms of higher education is they focus on corporate plans and focus very little, if at all, on personal plans)

13 October 2018

 

Question: According to MSN: Money, what should you do immediately if your wallet is stolen?

 

Torrid week puts markets in reverse – Pg. 1

–        Shares in the biggest US bank were down more than 1.6% in afternoon trading after rising 2.5% at the opening of the bell.  European stocks were equally unable to cling on to early gains

–        ….two-day rout on Wednesday and Thursday that sliced more than $1tn off the S&P 500, the benchmark index struggled to hold onto gains yesterday ….

–        The global sell-off, which gathered speed this week but began at the start of the month, has been blamed on a recent jump in yields on benchmark US Treasuries, which investors fear will lead to a rise in borrowing costs for a wide range of heavily indebted companies

 

New York tower blocks undergo millennial makeover – Pg. 6

–        For decades, corporate real estate decisions were dictated by the wants and needs of chief executives, with proximity to their homes a particular consideration.  That is changing now as companies fight to attract young talent with different ideas about how and where they work

–        For companies, that means catering to workers who favour public transport and bike sheds over black cars; who require built-in shopping, cafes and fitness centres, as their work and leisure time tend to blend; who revere natural light, delivered by floor-to-ceiling windows, and informal spaces, with must-have features like rooftop terraces …..

 

Junk bonds dumped as US rates jump sparks largest outflow since February – Pg. 13

–        US stocks and other risk assets have sold off after yields on benchmark government bonds rose to a seven-year high, prompting a reassessment of valuations

 

Bad news for housebuilding recovery as America loses its free lunch from world – Pg. 14

–        …September 27 and 28.  That Thursday and Friday, just before the end of the third quarter, the interbank market’s cross-currency “basis swap” for euros to US dollars rose to 30bps and the cost of yen-dollar basis swaps went up by 46bp

–        That was the end of foreigners paying for the US economic expansion.  It also probably marked the end of the housing recovery

–        The effect of those changes in the basis swap rates was to make it uneconomic for European or Japanese investors to buy US Treasury bonds and hedge away the currency risk

–        Someone other than currency-hedged foreigners will have to buy those bonds, along with the trillions more to be generated by the growing US deficit

–        It seems likely those new buyers, probably US commercial banks, will need higher rates to be tempted to bid at a time the Fed is unwinding its own positions

–        …US homebuilders…they needed years more of low interest rates to meet the demand from millennials

–        NAHB…”Affordability is at a 10-year low”

–        Housing starts in August reached an annual rate of only 1.282m, far below the pre-crash peak of 2.273m in 2006

 

Answer: (1) Secure emergency funds; (2) Call the police; (3) Call your bank; (4) Put a freeze on your bank account if needed; (5) Call your creditors; (6) Report your missing government-issued ID cards; (7) Place a fraud alert on your credit file; (8) Report the incident to the Federal Trade Commission; (9) Contact the IRS; (10) Monitor your credit report; (11) Monitor your bank, Credit Card and Health Insurance Statements; (12) Update recurring payments; (13) Make a copy of everything in your wallet (Prof Note: Memorize all important numbers to lock yourself down financially)

12 October 2018 FT — Articles to Read

 

Question: What are 51 hobbies that cost less than $10?

 

Trump blames ‘out of control’ Fed as investors dump equities – Pg. 1

–        Global stock markets are heading for their worst week in six months as investors spooked by rising interest rates sold equities worldwide, …

–        Yesterday’s sell-off was most pronounced in Asia, where rising borrowing costs combined with mounting trade tensions between the US and China to hit technology stocks particularly hard

–        …yesterday’s drop was one of the broadest and most international of the recent turbulence

–        Bond market turbulence – which pushed the benchmark US Treasury yield to a seven-year high of 3.26% this week – has unnerved investors and bled into equities….

–        Higher interest rate increase the cost of corporate borrowing, raising fears that years of cheap money are ending

–        US inflation data for September narrowly missed forecasts, temporarily assuaging fears that the Fed might have to raise rates more quickly

 

Lagarde defends Fed against Trump – Pg. 2

–        …the IMF managing director called for global leaders not to break the system of international co-operation that she said had served the world well since the second world war, and rejected US complaints that China was engaged in competitive devaluations of the renimbi

 

IMF braced for emerging market danger signals – Pg. 2

–        Inevitably, emerging market stocks yesterday mirrored the US equity declines…

–        This year, the IMF has already agreed to its biggest bailout, a $57bn loan package for Argentina, and is considering a request from Pakistan for a loan estimated at $7bn

–        Optimists point to the fact that since the 1990s, many emerging market countries are in a stronger position, having allowed their currencies to float and having bolstered their foreign exchange reserves

 

Chinese Finance – Pg. 7

–        The country’s top financial regulators last year launched a campaign to stop corporations from moving vast quantities of capital offshore – at its peak in 2016, $220bn was channeled out in foreign direct investment

–        The rise and partial fall of the centrally controlled asset management companies illustrates the ways that China’s financial sector and its economy have been transformed over the past two decades.  The four groups, born out of a Chinese banking crisis, were created by the finance ministry in 1999 to absorb a pile of non-performing loans at the country’s four largest commercial banks

–        The recapitalization of the financial sector was bankrolled by China’s central bank with 10-year bonds maturing in 2009, at which time the AMCs were expected to default and be liquidated, having accomplished their sole task of offloading the bad debt from the banking system

–        Emboldened, the “bad banks” rapidly expanded to entrench themselves in China’s financial system, picking up licenses for securities broking, insurance, trusts, property development, private equity investments and financial leasing.  They also bought commercial banks in China and Hong Kong and employ thousands of people in dozens of separate business units dedicated to high-yielding lending

–        Offshore corporate lending by AMCs were often structured to appear like investments rather than loans

–        Global markets have felt the ripple of the AMCs pulling back from the high-yield bond market

 

Answer: (1) Origami (Prof Note: I mentioned giving a girl a dozen origami roses at a talk I gave at UMD rather than spending the $100+.  There were several women in the audience whose faces literally imploded.); (2) Learning to code; (3) Disc Golf (Prof Note: I have considered installing these at Cat Ghaut.  We would be the only Disc Golf on both islands); (4) Dancing (Prof Note: Bust a move!); (5) Running (Prof Note: Shoes are $100+ and you need to protect your knees with good shoes); (6) Whittling (Prof Note: Be careful for your fingers); (7) Learning languages; (8) Geocaching; (9) Meditation; (10) Card tricks (Prof Note: Ok…this is cool!); (11) Hiking (Prof Note: I consider this a death march.  It is great going out but ever step forward requires a tired step back); (12) Kitting (Prof Note: Awesome though I would love to quilt…did I just actually publish this statement?! J); (13) Rock collecting; (14) Reading books (Prof Note: love reading!!!  Expand one’s mind); (15) Stargazing (Prof Note: Love it!); (16) Exercising; (17) Coupon; (18) Cross-stitching; (19) Yoga; (20) Blogging; (21) Adult Colouring; (22) Acting; (23) Snorkeling; (24) Juggling (Prof Note: Cool!); (25) Journaling (Prof Note: Be careful about discovery, i.e. keep the journal private); (26) Writing poetry (Prof Note: Awesome!); (27) Fostering animals; (28) Mixing music; (29) Quilling; (30) Chess; (31) Phone Photography; (32) Pencil Drawing; (33) Cooking; (34) Volunteering; (35) Mentoring; (36) Gaming; (37) Solving puzzles; (38) Self-Improvement; (39) Foraging; (40) Insect Collecting; (41) Arrowhead Hunting; (42) Seashell Collecting; (43) Magic Tricks; (44) Movie Watching; (45) Dog Training; (46) Preserving Flowers; (47) Writing Letters to a Pen Pal; (48) Yo-Yoing; (49) Macrame; (50) Beading