Author: Roger Staiger

7 July 2018

Question: According to BestLife, what are 15 signs you’re old fashioned?

China takes on ‘trade bully’ Trump – Pg. 1

–          Beijing accused Donald Trump of “trade bullying” as it imposed retaliatory tariffs against new US duties on $34bn of Chinese imports yesterday in the biggest escalation so far of a trade war between the two largest economies

–          The consequences of a dispute that could threaten global supply chains have alarmed governments and multinational corporations

–          …China is targeting US farm and energy exports, including soyabeans, …

–          The US added 213,000 jobs in June, including 36,000 jobs in the manufacturing sector at the heart of Mr Trump’s trade efforts.  It also saw 600,000 people rejoin the labour force

US labour market draws 600,000 new jobseekers – Pg. 4

–          Participation in the US labour market surged as workers who had been sidelined from employment stated looking for a job again

–          …the percentage of the US population in work or looking for work rising 0.2% to 62.9%.  The rise in the supply of workers helped to push the unemployment rate back up to 4%, marking the first increase in the number in almost a year following May’s 18-year low of 3.8%.  It also weighed on wage growth…which rose 2.7% from a year ago, below expectations

Lawsuits alone will not stop the US opioid epidemic – Pg. 9

–          States, counties and cities have filed lawsuits accusing the industry of masking the risks of opioid painkillers while using aggressive tactics to boost their sales

–          …OxyContin…known as “heroin of pill” …

–          The sad fact about smokers who develop lung cancer is that many die quickly, so their impact on public finances falls to zero

–          …42,200 died from overdoes in 2016 – but many of the 2.6m Americans with opioid abuse disorders will cycle in and out of addiction for decades, which will put long-term strain on public services

–          A recent report estimate that the crisis is costing Ohio up to $8.8bn a year – more than its annual budget for primary and secondary education combined

–          ….many people suffering from opioid addiction have since progressed from prescription painkillers to heroin

–          When President Donald Trump declared a public health emergency last year instead of a national emergency, the subtle difference meant there was no release of federal funds

Calls for Fed to rethink monetary policy framework as it unwinds balance sheet – Pg. 13

–          The Federal Reserve needs to reassess the technical implementation of monetary policy “before too long”, …

–          The interest on excess reserves (IOER) acts as a ceiling for the fed funds rate and policymakers deemed it necessary to lower the ceiling in response to the effective fed funds rate rising close to the top of the target range

–          The US Treasury has been selling more short-term debt into the market as the Fed has withdrawn as a buyer

Answer: (1) You dress to the nines when you go out (Prof Note: No issue here); (2) Your house is covered in doilies (Prof Note: Nope); (3) You address everyone as either “sir” or “ma’am” (Prof Note: Nope); (4) Every piece of art in your house is a portrait of a dead relative (Prof Note: Only on Nevis and that is a single piece of art dedicating the house to my grandfather who built it); (5) Walks are your primary form of entertainment (Prof Note: I do enjoy my afternoon constitutional on Nevis); (6) You ask people out for dates in person (Prof Note: What?  No swipe?! J); (7) You use words like “jalopy” and “keen” (Prof Note: Guilty); (8) Your grooming routine involves a lot of oils and wax (Prof Note: What grooming routine?!); (9) Your sleepwear covers most of your body (Prof Note: No comment); (10) Your preferred cooking methods don’t require fancy technology (Prof Note: Open a can, pour, heat, done); (11) You regularly handwrite letters (Prof Note: I am working hard on doing this more often); (12) Every sickness is treated with extreme heat; (13) A deck of cards can keep you busy all night; (14) You wear a different hat for every occasion (Prof Note: I do wear hats all winter…but my head gets cold otherwise); (15) Modern movies aren’t to your liking (Prof Note: Agree!) (Prof Note: It appears I am “hip”!)

6 July 2018

Question: According to MSN:Money and Moving Guide, what are the 10 Best Ways to save money on a move?

BoE’s Carney warns of hit to global growth from all-out trade war – Pg. 2

–          An all-out trade war could drag down global growth by far more than the direct economic impact of higher tariffs….

–          …a 10% increase in duties by the US and its trading partners could, in a worst-case scenario, slow US output by as much as 5% over three years

–          The BoE calculates that the tariffs already announced by the US, EU, China, Canada, and Mexico would, if implemented, double average bilateral tariffs and raise average US tariffs to their highest level for more than 50 years, to about 4.5% for imports from China and 6.2% for imports from the EU

–          …BOE’s models suggest that a larger increase in tariffs of 10% between the US and all its trading partners could take 2.5% off US output and 1% off global output through trade channels alone

–          …the UK economy had grown up to 2% less than the BoE would otherwise have expected, given the strong global backdrop and fiscal policy…

–          Over the longer term, these losses would be aggravated because a loss of trade openness would be likely to drag on productivity growth…

Credit Suisse fined in US over jobs for princelings – Pg. 12

–          Credit Suisse has been fined $77m by US authorities for hiring the friends and family of Chinese government officials as part of a “corrupt scheme” to win banking business

–          …settle charges that between 2007 and 2013 its Hong Kong investment bank tried to win contracts with Chinese state-owned entities by hiring people with close links to government officials

–          The fines are the latest fallout from the scandal surrounding the hiring of so-called princelings in China by US and European banks

–          The justice department said Credit Suisse maintained spreadsheets for so-called “relationship hires”, which identified in at least three instances the specific deals that the recruitment allowed the bank to win

–          In one email quoted by the DoJ, a Credit Suisse employee explained that “relationship hires have to translate to $” or “the relationship is worthless to our organization”

Fed needs to wake up and admit the US is overheat – Pg. 20

–          The unemployment rate declined to 3.75%, a 48-year low and three-quarters of a percentage point below the Fed’s median estimate of its long-run sustainable rate.  Consumer prices rose 2.3% in May from a year earlier.  Excluding volatile food and energy categories, core personal consumption expenditures inflation moved up to 2%, matching the Fed’s target for the first time in more than six years

–          With the latest increase in the federal funds rate to a range of 1.75 to 2.00%, the Fed has finally brought real interest rates to about zero (Prof Note: “Real” indicates inflation adjusted)

–          Given the gradual pace outlined by the Fed, monetary policy would eventually become modestly restrictive some time in 2019 or later

–          …theory teaches that interest rates need to be restrictive before the economy overheats

–          International financial markets are responding to the prospect of tighter US monetary policy by bidding up the value of the dollar against other currencies.  In the past, this has been a key catalyst for international financial crises

–          With the Fed raising rates and the People’s Bank of China cutting reserve requirements in June, the renminbi slid more than 3% against the dollar, its largest ever monthly drop.  Continued depreciation risks a replay of the destabilizing capital outflows seen in 2015 when US and Chinese monetary policies also diverged.  Then, a mild financial panic that played out into early 2016 stoked fears of global recession

–          …Indonesia surprised market by hiking rates 50bps last month.  Mexico is raising rates to defend its currency and some observers think the next move in Brazil will have to be a hike too

–          …history teaches that the Fed has never successfully managed a soft landing with the current sets of macroeconomic conditions.  In every case when the Fed tightened policy by enough to raise the unemployment rate by more than four-tenths of a percentage point, it caused a recession

Answer: (1) Tax deductions; (2) Find free boxes (Prof Note: I keep all old boxes so no issue); (3) Use old newspaper for packing; (4) Don’t rent blankets (Prof Note: Rent…somehow I have assembled about half a dozen, at least, moving blankets); (5) Compare prices with portable storage units (Prof Note: While not feasible for many, I have four sea containers…legos for adults!); (6) Ship books and other items (Prof Note: Keep your copy of Foundations of Real Estate Financial Modelling close to you at all times!); (7) Use original packaging for electronics (Prof Note: I always keep the boxes for electronics for this reason and for when my IT manager upgrades my home system and we sell the old stuff); (8) Find cleaning supplies at a Dollar Store; (9) Plan out utility shut off dates; (10) Declutter (Prof Note: This is a great time clean out that clutter!)  (Prof Note: I just moved last month.  Also, remember that there comes an age when your friends should not be assisting, or at least assisting in a less labour intensive manor.  I hired movers but still need the Great Anton S to assist.  Halfway through I was done and Anton had hurt his back.  Even the great Anton S is mortal!)

5 July 2018

Question: According to MSN:Money, what are 8 common mistakes parents make with their kids?

Israeli entrepreneurs fight to lure foreign talent – Pg. 3

–          …skills shortage squeezes Israeli high-tech groups and pushes up salaries…

–          The tech sector has been one of Israel’s fastest-growing industries and an object of national pride as it has become an incubator for brands such as Waze, the GPS app sold to Google for about $1bn in 2013

–          Indian and Chinese engineers, who make up the bulk of tech-industry immigration to the US and UK, rarely consider Israel as an option, turned off by the difficult visa process, safety perceptions or salaries that lag behind western standards, …

–          Average annual wages across the sector have gone up from $61,000 in 2012 to $72,000…

–          The shortage is most acute when it comes to senior engineers…

Eurozone wages climb steadily as workers feel financial benefits of regional recovery – Pg. 4

–          While the eurozone’s recovery has been under way for several years and unemployment fell into single digits in the summery of 2016, workers across the 19 member states have been slow to benefit

–          But hourly wage costs rose by 2% between the first quarter of last year and the first quarter of 2018, the biggest increase since the start of 2013,…

It is a mystery why bankers earn so much – Pg. 9

–          Goldman Sachs will be paid $58m by 21^st Century Fox for its advice on Fox’s planned $71bn asset sale to Walt Disney (and the bank stands to gain another $47m for financing the remainder of Fox)

–          ..today’s dealmaking boom is the most rewarding time in history to be a global M&A banker.  It is especially lucrative for those in the top league of advisers who run many auctions

–          The secret to a bulging “success fee” is less to obtain the best possible deal than to make the chief executive and the board believe they got it

–          The M&A adviser’s job has three qualities that put its practitioners in a powerful bargaining position over their own pay.  First, the stakes are very high.  Second, advisers are paid with other people’s money.  Third, M&A advice is a black box.  The last is the most valuable

–          Deals can be brilliantly executed at the time without adding to a company’s long-term value and many are unwound – …

Answer: (1) They don’t plan for unpaid maternity leave (Prof Note: While the amount of time necessary to be off is a variable, the amount of time paid-off should be a known.  Am I missing something?); (2) They spend money on unnecessary things (Prof Note: My friend’s mother, growing up, always would tell us, “Oh, we have that in the basement.  Go and look when we get home.”  There was NEVER anything in the basement!); (3) They set a bad example (Prof Note: As the article acknowledges, my own father use to say, “Do as I say, not as a do.”  Not the best example.  When he passed (Naval Captain and Wharton MBA) I discovered a train wreck called his financials.  In order to set a positive example one must understand.  I truly wonder, if my father (using him as an example of all others) truly understood personal finance and estate planning); (4) They spend what they don’t have (Prof Note: I was just in South Beach looking at condos this past weekend.  Talk about excessive spending!); (5) They avoid talking about money (Prof Note: So few families, for which I am familiar, discuss finances.  I get that revenue can be a personal number, but how are children to learn?  I often say if blessed with a child(ren) I would pay them monthly to be my child(ren).  From the monthly stipend I would deduct rent, utilities, Insurance, etc.  Also, they would NOT be paid for household chores though I would encourage a side hustle at the appropriate age(s)); (6) They don’t change their pre-baby habits (Prof Note: The article discusses reducing expenses now that there is a child); (7) They pay for chores that should be expected (Prof Note: Bravo!  Are children not free labour?!); (8) They let their kids know how much they worry (Prof Note: Childhood is a special time.  It seems to me that, ideally, childhood should be free of financial worry.  Just like the goal of retirement.)

3 July 2018

Question: According to MoneyTalksNews, what are 20 purchases that buyers nearly always regret?

Japan labour shortages to drive big automation outlays – Pg. 3

–          Japanese companies are signaling a sharp rise in capital spending this year as industry eyes robots, IT and factory automation to offset worker shortages and the tightest labour market in four decades

Ecommerce and overcapacity stall mall projects in China – Pg.

–          Chinese retail real estate construction – for years the world’s largest – has peaked and is expected to decline during the next few years as developers struggle with overcapacity and the rise of ecommerce

–          Retail supply in 17 large cities …grew last year with the completion of almost 10m sq m of new space – equivalent to 14,000 football pitches.  That will fall 16% to 7.9m sq m this year

–          Mall developers…have faced vacancy rates above 20% in some cities, may welcome the news as they are able to push up rents

–          Rental costs at malls have been stagnant for years but will increase modestly this year as tenancy rises, ….

–          Chinese retail sales growth is among the world’s fastest, at about 10% year-on-year, but an increasing proportion of that spending is going to ecommerce.  Online shopping accounted for 20% of total retail spending last year, up from 4% in 2010

–          The number of malls with gross floor area of more than 10,000 sq m in the 30 largest cities is expected to increase from about 1,000 to more than 1,400 by 2019, …

Answer: (1) Boat (Prof Note: I have looked into purchasing seadoos so many times and the numbers and hassle never work for me.  I cannot even imagine a boat!); (2) Timeshare (Prof Note: I did more research at the Four Seasons Nevis and there villas, many of them, have fractional ownership.  No one could explain how it worked.  Roughly, as best I could figure, for $500,000 one purchased 1/10 ownership of a Villa which entitled them to four weeks.  However, it was unclear if it was the same 4 weeks AND you could not leave your stuff so it was really like prepaying for a 4 week holiday); (3) Extended Warranties (Prof Note: One cannot put a price on piece of mind…); (4) Desktop Computers (Prof Note: Most of my computers are desktop..love them!); (5) DVDs (Prof Note: $5.00 bin at Walmart!); (6) Giant tent or other expensive camping equipment (Prof Note: I thought Millennials were into “Glamping”?!  I’ll be at the Marriott…thank you very much!); (7) Camcorder (Prof Note: Can you say, “iPhone”?); (8) Home printer (Prof Note: I just purchased one for Nevis with NO regrets!); (9) Pedometer (Prof Note: What the heck is this anyway?); (10) Home exercise equipment (Prof Note: A lawfirm was moving and I purchased their entire gym for under $500.  Yes, I am buff!); (11) One-use kitchen gadgets; (12) Pools and hot tubs (Prof Note: Guilty!!!  I built one and purchased the other.  Guilty pleasure!); (13) Piano (Prof Note: If I could play, I would proudly display a piano.  Until that point, a keyboard it is!); (14) Fine China (Prof Note: I hope when I am invited I am not expected to eat from paper plates! J); (15) Extravagant wedding (Prof Note: One of my favourite wedding stories was when I was talking with a very successful developer whose son was getting married.  He was paying for part of the wedding.  So, nosy me, asks how that occurred.  He said, “The bride’s father asked if I could contribute.”  I said, “Please, please tell me how this occurred.  Where did he ask this of you?”  The groom’s father said, “well, we were at his weekend house…”  I said, “What???  Did you say, ‘his weekend house’?”  He looked at me and said, “Roger, my son means the world to me.  The location was not lost on me.  However, I want the best for my son.”  Great man!); (16) Pricey engagement rings (Prof Note: Read my published article, Engagement Ring, on pricing an engagement ring.  You gotta pay what she’s worth!); (17) Collectibles; (18) Baby gadgets (Prof Note: With the notable exception of a LugBug!  I never leave home without my LugBug!  I use it on all my suitcases.  www.lugbug.com); (19) Giant desserts (Prof Note: If you want to look like me, don’t pass up the giant dessert); (20) Putting standard items on credit (Prof Note: This is ridiculous!  Put EVERYTHING on the credit card for the free points!)