Financial Times Blog

4 February 2019

 

Question: What are Tax Evasion and Tax Fraud?

 

Chinese graduates struggle to find jobs during slowdown – Pg. 2

–        China’s slowing economy and trade tensions with the US have hurt low-wage workers in the export industry.  Bu the effects are extending to graduates from top universities

–        Beijing Is increasingly concerned.  In December, the government introduced policies to help this year’s university graduates find work.  It also launched broad policies to stem lay-offs and made employment its top economic priority

–        University graduates entering the job market in 2018 have been hit by the US-China trade war as well as stricter controls on financial institutions, which have led to a dearth of capital in their preferred sectors of finance and tech

–        The average graduate salary expectation slipped by about 1% $790/mo in 2018

 

Germany pins hopes on consumers to drive growth – Pg. 3

–        According to the latest government forecast, the economy will grow by 1% in 2019 – less than expected, and notably reduced from the 1.5% increase in GDP in 2018

–        Private consumption, in contrast, was forecast to rise by 1.3% this year, up from 1% in 2018.  That means that private consumption would contribute no less than 0.7% to the overall 1% growth rate – a much higher share than in previous years

–        …German economic downturn is not on the horizon – thanks, above all else, to private consumption

–        Germany consumers have plenty of reasons to feel confident: unemployment is at a record low, salaries are rising and inflation continues to be relatively subdued

–        Purchasing power has been further boosted by a string of initiatives taken by the government of Angela Merkel last year, including pension and welfare increases and a cut to social contributions and taxes

–        Germans save about 10% of their disposable income in good times and in bad

–        In Germany, the government expects net wages to rise 4.8% this year, leaving plenty of money in the pockets of a workforce that can now look back on a full decade of economic growth

 

Answer: According to Title 26 of the Internal Revenue Code, “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payments thereof…” is guilty of tax fraud.

2 February 2019

 

Question: According to MSN: Money, what are nine (9) legal tax shelters to protect your money?

 

US job market defies worries over shutdown – Pg. 1

–        American employers added 304,000 jobs in January despite the month-long US government shutdown, the first major indicator to suggest the world’s biggest economy was largely unaffected by the bitter Washington stand-off

 

Strong US jobs data run counter to rate expectations – Pg. 2

–        The unemployment rate ticked up a tenth of a percentage point to 4%, partly because fo the temporary effect of the federal government shutdown, which kept some government employees unpaid and at home

–        The yield on the benchmark 10-year US Treasury was 5.67bps higher at 2.686%.

–        Average earnings rose 3.2% year-on-year in January

 

Fund managers count cost of big squeeze on fees – Pg. 11

–        As a whole, US-listed asset managers saw 1% trimmed off their stocks this week, even as the S&P 500 climbed back to its early-December level

–        Global equity markets suffered their worst quarter in seven years in the last three months of 2018 with the US stock market alone suffering its worst December since 1931

–        Shares in the fund managers lost 26% over the year – the worst annual decline since the financial crisis

–        Investors are growing increasingly skittish that fund managers can adapt to this radically changed environment.  Last year, passive equity funds sucked in another $472bn while active ones shed $488bn…

–        Fidelity sent shockwaves through the industry last summer after launching a zero-free index fund to gain market share

 

Fed at early stages of pivot towards next easing cycle – Pg. 16

–        The dollar’s status as the world’s reserve currency and the vast US government bond market ensures the Federal Reserve’s status as the dominant central bank

–        Many investors still pin their hopes on Beijing stimulating economic activity this year, but do so as China is enduring a credit crunch and trying to prevent a trade war with Washington

–        …the Fed faces a US economy experiencing signs of late-cycle weakness, especially in housing

–        US stocks may have enjoyed their best January since 1987, but the premium investors are demanding to buy credit has widened sharply and remains near a level seen in 2016

–        The US bond market is doing more than telling us the Fed has just paused; it’s suggesting the central bank is at the very early stages of a pivot towards the next easing cycle.  This week, yields on the two- and five-year notes dipped below 2.50%, the upper band of the current overnight fed funds rate

 

Answer: (1) Set up a retirement account; (2) Buy a home; (3) Protect your capital gains; (4) Open a health savings account; (5) Become an Angel Investor; (6) Use the Child Tax Credit; (7) Workplace Benefits; (8) College Savings Plans; (9) Owning a Business

31 January 2019

 

Question: According to MSN: Money, what is the world’s riskiest currency?

 

Dovish Fed abandons rate-rise course amid fears over muted global growth – Pg. 1

–        The Federal Reserve ditched guidance to investors that suggested further gradual rises in interest rates lie ahead, vowing to be “patient” in determining future changes given muted inflation and slowing global growth

–        US stocks and Treasury bonds rallied on the statement, with the yield on rate-sensitive two-year bond falling sharply

–        …kept the target range for its key rate unchanged at 2.25 – 2.5%.

–        …Fed’s new statement said: “in light of global economic and financial developments and muted inflation pressures, the committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes”

 

China updates foreign investment laws as US trade talks begin – Pg. 2

–        The new law…formally banks “forced” technology transfers and other illegal interference by government officials in the operations of foreign-invested enterprises

–        …China’s central bank approved a long-standing application by S&P’s to issue ratings for local debt offerings

 

Ireland central bank head set for ECB chief economist role – Pg. 3

–        Philip Lane looks set to secure the job of replacing Peter Praet as the ECB’s chief economist, becoming the first Irish member of the bank’s top-ranking executive board

–        Mr Lane, a Harvard-trained economist who heads Ireland’s central bank, was the only candidate nominated by European governments,…

–        …eight-year term at the Frankfurt-based central bank

–        Ireland is the only founding member of the euro to never have had an official on the six-member ECB executive board, which helps shape monetary policy for the single currency area

 

Answer: Australian Dollar