Author: Roger Staiger

24 August 2018

 

Question: According to MSN:Money, what are 10 things you’ll spend more on in retirement?

 

Banks to lend Riyadh $11bn as Aramco listing stalls – Pg. 1

–          Saudi Arabia’s sovereign wealth fund is primed to choose international banks to lend it $11bn, filing the hole left by the delayed listing of state energy group Saudi Aramco and providing financing for crown prince….

–          The loans are particularly important for the fun after plans to list Saudi Aramco, from which it was due to receive proceeds, were postponed indefinitely

–          Syndicated loans to sovereign wealth funds are unusual, with large Middle Eastern funds, such as the Qatar Investment Authority, typically borrowing against specific investments instead.  As many as 15 banks are expected to participate in the loan

–          The sale, which moves money from one state coffer to another, will have implications for league table rankings that banks use to measure their performance against rivals

 

Pope faces call to open Vatican archives on clerical child abuse – Pg. 2

–          (Prof Note: I am intentionally not wading into this abyss.  However, and perhaps this is wading, can anyone provide a reasonable explanation as to why the Pope is not in Pennsylvania right now?)

 

Trump fate hangs on definition of hush money – Pg. 4

–          Michael Cohen, Donald Trump’s longtime personal lawyer, dropped a bombshell this week as he confessed to paying hush money to two women to influence the 2016 election and said Mr Trump told him to do it

–          …Mr Cohen’s admission to two criminal violations of campaign finance law does not leave the president defenseless

–          The bar for criminal prosecutions of campaign finance law is a high one, and it requires prosecutors to show that a person willfully and knowingly violated the law

–          …need to provide evidence that indicated that Mr Trump knew the payments were illegal, but ordered them anyway

–          A civil case brought by the Federal Election Commission would not need to show a violation was willful or knowing,…

–          The highest bar to any criminal prosecution, however, is Mr Trump’s status as president.  Although the constitutions does not explicitly rule out an indictment of a sitting president, some scholars have argue that impeachment is the proper course for holding a president to account.  The Department of Justice endorsed this view in 1973 and again in 2000, when the Office of Legal Counsel issued an opinion arguing that “the indictment or criminal prosecution of a sitting president would impermissibly undermine the capacity of the executive branch to perform its constitutionally assigned functions”

 

Land reform will sow the seeds of a fairer South Africa – Pg. 9

–          It is nearly 25 years since South Africa became a democracy….

–          One of the areas where this disparity is most devastating is in the ownership of and access to land

–          …the current distribution of land is the second-biggest constraint on poverty reduction and shared prosperity

–          The “land question” goes back more than a century to the 1913 Natives Land Act, which gave legislative form to a process of dispossession that had been under way since colonial times.  It limited the country’s African population to slightly more than 10% of the land, reserving the rest for the white minority

–          Even now, the dispossession of land continues to determine the prospects of millions of South Africans.  And it holds back economic development.  By restricting the ownership of land to a small minority, the apartheid regime ensured that one of the country’s most valuable economic resources would be severely underused

–          …individuals, companies and trusts own 90% of land in South Africa, and the sate 10%.  Of this 90%, individuals own 39%, trusts 31%, companies 25%, and community-based organizations 4%, with co-ownership at 1%

–          The audit also found that 97% of total agricultural holdings are owned by 7% of landowners.

–          The proposal on expropriation without compensation is one element of a broader programme of land reform that seeks to ensure that all citizens can have their land rights recognized

 

US student debt: Sallie cum laude – Pg. 10

–          …now the gross US student debt balance is tottering $1.5tn or more

–          Only $100bn of that figure was originated by the private sector.  The main lender here, Sallie Mae…

–          Sallie’s annualized default rate is under 3%.  Its return on equity was a whopping 19% in the most recent quarter

 

Stronger economy gives Powell room for manoeuvre at Jackson Hole – Pg. 17

–          The Atlanta Fed estimates real GDP growth is running at 4.3% for the third quarter, wage pressures are rising, inflation is on target and unemployment is below 4%

–          …the 10-year Treasury yield remains well below 3%, an influence on the cost of US home loans and longer term company borrowing

 

Answer: (1) Travel; (2) health Care; (3) Utilities; (4) Moving and relocating; (5) Fitness; (6) Day-to-day expenses; (7) Debt; (8) Charitable giving; (9) Reading; (10) Financial Planning

22 August 2018

 

Question: According to MSN:Money Opinion: What are the 10 commandments of retirement?

 

All-time high puts US stocks on brink of history’s longest bull run – Pg. 1

–          US stocks hit an all-time high yesterday as the market moved a day away from setting the record for the longest-ever bull run, with investors cheered by strong company earnings and Donald Trump’s corporate tax cuts

–          …set the stage for making the post-financial crisis rally the longest stretch of rising prices without a 20% drop, the level typically associated with a bear market

–          It has been aided by unprecedented central bank stimulation of the economy and a burgeoning debt pile globally, raising fears that the equity boom is a bubble fueled by years of cheap money

–          The duration of the rally – which by the end of trading today will clock up 3,453 days to top the 1990-2000 bull run fueled by first tech boom – reflects the low base from which it started.  Markets plunged after the global financial system nearly collapsed in 2008, weighted down by bad bets on toxic mortgage debt and excess leverage

–          On an annualized basis, the gain would be about 16.5%, compared with a historical average of 22% for bull markets

–          The biggest-gaining rally on an annualized basis came in the wake of its most storied collapse: a 35.5% rise from 1932-1937, the years after the October 1929 drop that preceded the Great Depression

–          The Fed has raised US interest rates seven times since 2015, and another two increases are penciled in this years, with some hawks urging more increases, given the rise in economic growth and asset prices in recent months

 

Fed chief knows risks are acute as he heads for Jackson Hole – Pg. 3

–          The US consumer is resurgent, economic growth is running at an annualized pace of more than 4%, joblessness is hovering near 50-year lows, and fiscal policy is set to deliver a further boost in the second half of the year

–          Among the main questions are: where is the so-called neutral level of interest rates that neither suppresses nor propels growth; do rates need to be lifted into restrictive territory; how should the Fed factor in the threat of financial excesses; and when should the central bank stop shrinking its multi-trillion-dollar balance sheet

–          The flattening of the yield curve, which is regarded by some as a possible harbinger of slowing growth, could be providing warning signs…

–          The economy is on track to grow at 4.3% annual rate in the third quarter, …

–          The personal savings rate in the first quarter was revised upwards to 7.2% form a previously reported 3.3%, indicating households are less financially stretched than economist has thought.  With unemployment at just 3.9% and the Fed’s favoured measure of core inflation hovering at 1.9%, analysts have started to discuss how far inflation may overshoot the Fed’s 2% target

 

Answer: (1) If your preretirement lifestyle is set with a view to what you can sustain after you quit the workforce, you’re likely on track; (2) Remember that social security is designed to replace no more than 40% of preretirement income; (3) Have a financial and estate plan that provides for your spouse and any others who depend on you financially…; (4) Never forget the nonfinancial aspects of your retirement are important, too.; (5) Pay attention to communications from your employer, Social Security, Medicare, personal advisers and others; (6) Put retirement savings ahead of other goals, like college or a vacation home; (7) Save as much as possible as soon as possible; (8) Recognize that your taxes may not be lower in retirement; (9) Place health care high on your list of fixed expenses; (10) Invest in ways that will provide steady income stream in retirement