Author: Roger Staiger

5 October 2018

 

Question: According to MSN:Money, what are 6 things other governments provide that Americans still have to pay for?

 

Sovereign bond sell-off fans out across world as belief in US economy builds – Pg. 1

–          A US economy turbo-charged by fiscal stimulus has strengthened the conviction of some investors that 2018 will mark the end of a 30-year bond bull run

–          …economists forecast will show the economy added 185,000 jobs last month and delivered workers wage growth of close to 3%

–          …the yield on the 10-year Treasury touched as high as 3.23%, ….

–          …US economy, which expanded 4.1% in the second quarter, has been one of the defining features of markets this year and helped suck money from emerging markets

 

Republican women back Kavanaugh as gender politics shape midterms – Pg. 3

–          While several women said they believed something had happened 36 years ago to Christine Blasey Ford, Mr Kavanaugh’s accuser, they were not sure just what – only that it did not rise to the level of rape.  At the same time, they seemed convinced that a man with an impeccable record had been wronged, and that the men in their own lives might also be at risk

–          (Prof Note: The world is changing.  Statements (note: I am not saying “True/False” statements, only “Statements”), are extremely difficult to prove/disprove without FACT.  In my family’s estate case, the forger and witnesses LIED!  This was proven by a jury, i.e. the finder of fact in the U.S. judicial system.  How was I able to prove this?  First, it took hundreds of thousands of dollars for experts.  Second, I had the dream team for estate litigation from the local attorneys to K&L Gates driving ALL legal strategy and research (up to five law firms at once).  Third, I had the seven figures required to finance this injustice and the resolve to see this to the end.  It is important to note that when asked if I would have pursued had I had a family to support I worry the answer would have been “no” as it was such a huge financial undertaking and I probably would not have placed family finances at such risk.  Fourth, I was able to identify and hire the BEST experts in forensic documentation analysis, meteorology, and computer forensics (thank you K&L Gates!).  YES, the forger and witnesses were proven to have lied.  For example, in deposition testimony they noted a beautiful day of happiness and family BBQ when, in fact, it had been a hurricane.  Hello Doppler Radar!!!  I mention this as I worry individuals are convicted in today’s society on statements rather than a jury (or court) verdict.  I worry today that most individuals lack the resources to prove truths and facts.  (This is NO statement on Ford and/or her statements being truthful or not, only that the statements have not been proven in a court of law by a jury and/or judge.)  In my case, I was labeled the ungrateful and angry son that could not accept his father’s decisions until the jury verdict.  I do not know what happened 36 years ago with Ford, I only feel that Kavanaugh has been convicted without the benefit of a trial.)

–          While Republican women worry about sexual assault, for example, many worry about the danger of it being unfairly “weaponized” by their political opponents.  (Prof Note: That is my fear, i.e. that Statements are now weapons.  What happened to “Innocent until proven guilty.”?)

 

Listed companies are less short-termist than was thought – Pg. 11

–          ….listings are often unpopular: “short-termism”

–          …IRS data, which covered 2.7m “firm-years”, suggest that listed groups actually invested 48.1% more – not less – than private ones, after adjusting for sector and size

–          …when the Fed team analyzed what happened when privately held companies went public, their R&D-to-physical-asset ratios increased by 34.5%, and their “R&D-to-total investment shares by 17.1%”

–          When publicly listed companies went private, however, there was “a reduction in R&D investments”

–          The research notes that listed companies from “industries that are more sensitive to earnings announcements pull back their investments in long-term physical assets and innovation” when share prices swing too wildly, investing in short-term projects instead

 

Answer: (1) College; (2) Healthcare; (3) Vacation; (4) Parental Leave; (5) Baby items; (6) Daycare

4 October 2018

 

Question: According to MSN:Lifestyle, what are 12 little things you’re doing when traveling that could be putting you in danger?

 

US services and jobs growth points to strong final quarter – Pg. 2

–          A record level of expansion in the services sector and a spurt in private sector job creation drove a sell-off in bonds and set the US economy on course for a strong final quarter of the year

–          …services sector, which makes up about 80% of US GDP, ….

 

Greek banks riled by bad debt worries – Pg. 15

–          Some of Greece’s biggest banks suffered steep share price falls yesterday as investors worried they may not have enough capital to meet fresh targets on reducing their large portfolios of bad debts

–          Investors have also been spooked by plans the Greek banks have submitted in the past week to the ECB for reducing their non-performing exposures, which currently make up almost 40% of their loan books

–          If the banks sell bad debts below their book value it could trigger losses that eat into their equity buffers and require fresh capital raisings

 

Eurozone investors reduce US debt holdings for first time since late 2013 – Pg. 21

–          ….move which suggests the ECB’s winding down of its quantitative easing programme has begun to ripple through to other markets

–          Investors in the Eurozone have been steady buyers of US debt securities since the ECB embarked on QE, which analysts said was in part due to capital being displaced from European markets as the central bank has hoovered up assets

–          Net purchases of US equities also dipped slightly

–          The ECB has bought 2.5tn (euro) of Eurozone debt securities under a QE programme that is set to stop at the end of this year.

–          The US credit market has boomed in recent years with corporate debt levels reaching a record

–          …the quality of the US investment grade debt market has deteriorated sharply, fueling fears that any weakening in the economic outlook could trigger a swath of downgrades, leaving investors holding junk-rated paper

 

Answer: (1) You post your vacation photos before getting home; (2) You don’t have someone pick up your mail; (3) You get very drunk; (4) You leave your drink unattended; (5) You don’t dress like the locals; (6) You carry your passport with you everywhere; (7) You’re not aware of your surroundings; (8) You ask directions from strangers; (9) You have oversized luggage or too many bags; (10) You don’t check the weather report; (11) You try to bribe officials (Prof Note: I have no idea what the 12^th is…only 11 were listed)

3 October 2018

 

ENRON!  Correction, every 50 minutes during the four-hour examination I was walked around the building for 10 minutes, i.e. I was given 50 minutes to model, interrupted for 10 minutes, then another 50 minutes to model, etc.  Also, the salary offered was $80,000/yr with a $10,000 signing bonus payable in 30 days of start of employment.  Also, I was asked by several to comment on Enron’s hubris.  I am not about to say I did not have “confidence/ego” at that point in my life.  However, I have learned, and continue to learn, that being humble is best for many reasons.

 

Question: According to MSN:Money, the elimination of what 15 expenses will save you $9,955.94/year?

 

Trump considered blanket ban on all China student visas over spying fears – Pg. 1

–          …proposal was shelved over concern for its economic and diplomatic impact (Prof Note: Consider the U.S. Universities that would have literally imploded over night!  I love the Panda!!!)

–          US officials in Beijing made a broader economic argument that most US states enjoyed service-sector trade surpluses with China because of spending by Chinese students

 

Fed chief defends caution on rate rises despite wage growth – Pg. 2

–          Jay Powell cited the experience of the 1990s as he argued an acceleration of wage growth need not trigger too much inflation.  The link between tight labour markets and inflation has been “greatly reduced”, although not eliminated, in recent decades…

–          Fed officials have been picking up increasing anecdotal evidence of shortages of available workers as US unemployment hovers at 3.9%, with further declines predicted in the coming months.

–          Wage growth has accelerated to its quickest pace in nine years while the economy expanded at an annualized pace of more than 4% in the second quarter

–          …assess whether there was a danger of the “revenge of the Phillips curve”, but he suggested those risks were limited

 

Customers’ tips leave workers waiting for fairer pay – Pg. 9

–          This week, the UK government said it would ban restaurants from keeping any of the tips that customers pay by card

–          Customers may also be swayed by racial and gender biases (or simply their mood).  Employers can be biased too, but at least when that is the case, the employee has some legal redress

–          Moreover, plenty of customers do not want to have this management function thrust upon them at the end of a meal.  There is nothing enjoyable about the quick mental arithmetic, the fumble for spare cash and the worry you have not been generous enough (Prof Note: I am a proud member the Army/Navy Club in DC.  Of the many things I enjoy, one of the top is that when my guests and I are finished we simply leave.  We are not held hostage waiting for a bill (have signed when seated) nor worried about the staff remembering the gratuity level I, or anyone, leaves.  We are all equal.)

–          In many states, employers are legally allowed to pay measly hourly sums to “tipped staff” like waiters and barmen

 

Fed’s Quarles outlines plan to cut lenders’ rules burden – Pg. 14

–          The Federal Reserve plans to lighten the regulatory burden on large US banks, …but big foreign banks operating in the US that had also hoped for relief will not see changes anytime soon

–          Congress has already ordered the Fed to lift some of the strictest provisions of the Dodd-Frank regulations for banks with between $100bn and $250bn in assets, under legislation earlier this year known as the Crapo Act…

–          …G-SIBS [globally systematically important banks]

–          G-SIBS face the highest capital and liquidity requirements because of their critical role in the world financial system.  US banks that have more than $250bn in assets but which are not on the Financial Stability Board’s list of G-SIBS include US Bankcorp, TD Bank, PNC and SunTrust

 

Answer: (1) Streaming Services (Prof Note: If you got rid of cable this may be your baseline…like it is mine…love NetFlix!); (2) Phone games; (3) Newspaper subscription; (4) Satellite Radio; (5) Designer Coffee; (6) Life Insurance; (7) Brokerage Commissions; (8) Investment Costs; (9) Cable TV; (10) Premium Gas; (11) Warehouse Club Memberships; (12) Bank Fees; (13) Bottled Water, (14) Gym memberships; (15) Cigarettes

2 October 2018

 

ENRON!  (Bet that got your attention! :))  In August 1999 I interviewed, and was offered, a position with Enron.  The position was Manager of Model Development, i.e. pro forma development, for Asia, Africa, and Australia.  I turned down the position due to salary.  However, I just found, see attached, the modeling examination I was provided in Houston as part of the interview process.  The modeling test was four hours and every 10 minutes, I am NOT joking, you were interrupted and walked around the building.  Enron’s thought was that one never gets an uninterrupted 4 hours to model.  My response when told this was, “Who will interrupt me between 2am and 6am.”  They did not comment.  Within the four hours the entire model was completed WITH US GAAP compliant financial statements, i.e. Income, Statement of Cash Flow, Balance Sheet (which incorporated the Statement of Retained Earnings), Depreciation and Tax pages.  I provide this as, I just found it while cleaning my office, an example of where, I believe, new graduates should be regarding their modelling skills.  Enjoy!

 

Question: According to MSN: Money, what are five suggestions that can earn more money so one can get on the path to true wealth?

 

IMF picks its first female chief economist – Pg. 2

–          A US and Indian citizen, Ms Gopinath grew up in India, received her Ph.D. from Princeton University and worked at the University of Chicago before moving to Harvard

–          She is best known for her work on exchange rates, writing recently that the gains to flexible exchange rates “are less that you think” – a view that will be challenging to the IMF, which traditionally supports the policy

–          …her research has shown that currency depreciations are ineffective in stimulating exports in most countries because goods are overwhelmingly invoiced in dollars.  With a “dominant currency”, export prices do not fall when the exchange rate changes and so export flows are quite unresponsive to exchange rates.  Imports often fall due to a lack of purchasing power in dollars

 

The US must hold firm on bank capital rules – Pg. 9

–          Few things are more complex than rules designed to constrain excessive borrowing by large “systemic” financial institutions.  There are “leverage ratios” – relatively simple metrics that require a bank to hold a minimum amount of equity relative to total assets – and “risk-weighted ratios” that specify equity minimums based on the perceived riskiness of a bank’s holdings

–          Tough capital rules are a competitive advantage, not weakness

–          Thick capital buffers keep the banking system functioning through economic cycles.  Every dollar reduction in bank capital weakens the public’s protection against big failures

–          The fed should be free from political influence in the exercise of both monetary and regulatory policy.  The Federal Reserve Bard has autonomous funding and lengthy terms so that its members can withstand the destructive animal spirits of politicians up for re-election

 

Answer: (1) Negotiate your salary; (2) Take on a side hustle; (3) Improve your skills (Prof Note: Personally, raise your skills to the level that your employer worries you will leave rather than you worrying they will eliminate your position!); (4) Invest in income-producing assets (Prof Note: Can you say, “Real Estate”?)