Financial Times Blog

11 January 2019

 

Question: What are nine (9) states with no income taxes?

 

ECB warned to keep options open in winding up stimulus – Pg. 3

–        France’s top central banker has warned the ECB to take “gradual and pragmatic” approach to ditching its crisis-era stimulus, as the world’s monetary policy makers react to fears of a global economic slowdown

–        The bank has kept interest rates at record lows since 2016 but last month stopped expanding its 2.6tn (euro) bond purchase programme, in a step towards normalizing its policies after the financial crisis

–        Central banks face a delicate balancing act as they continue to withdraw their support at a time when fears of a global economic slowdown are mounting

 

Australia housing fall raises recession fear – Pg. 4

–        National house prices fell 1.3% in December, the largest monthly fall since 1983, which resulted in an annual decline of 6.1% last year.  Prices in Sydney, the country’s biggest property market, are down 11.1% from their peak…

–        …could torpedo Australia’s run of 27 years without a recession – a modern record

–        The fall in prices markets the end of a five-year expansion that saw prices in Sydney rise by 70% and household debt surge above 120% of GDP – one of the highest levels in the developed world

–        Economists warn Australia is vulnerable to a housing downturn as heavily indebted mortgage holders are likely to cut spending when they see the value of their most valuable asset fall and housing construction activity – a key contributor to growth over recent years – slow in the face of weaker returns

 

How to finance the rising burden of public spending – Pg. 9

–        According to the IMF’s latest Fiscal Monitor, the UK’s public sector net worth is minus 125% of GDP, second-worst (after Portugal) of the 31 countries analyzed

–        French public sector net worth was minus 42%, Germany’s minus 20% and that of the US minus 17%

 

BlackRock to cut 500 jobs in sign of testing market – Pg. 15

–        The world’s biggest investment group, with about $6.4tn under management, remains comfortably profitable – with a margin of more than 40% – but the asset management industry is under increasing pressure on fees at a time of weakening investor sentiment

–        The average share price of listed US investment management groups fell almost 26% last year, with BlackRock dropping 24%

–        The cuts amount to about 3% of BlackRock’s 14,900 staff

–        The group plans to plough the savings into priority areas such as factor investing, exchange traded funds and illiquid alternative strategies in private debt and equity

 

Answer: (1) Alaska; (2) Florida; (3) Nevada; (4) New Hampshire; (5) South Dakota; (6) Tennessee; (7) Texas; (8) Washington; (9) Wyoming

10 January 2019

 

Question: According to MSN: Money, what are sixteen (16) things retirees wish they’d done differently?

 

Market turmoil spurs Fed caution over pace of future rate increases – Pg. 1

–        Volatile financial markets and muted US inflation are bolstering arguments within the Federal Reserve to take more time before increasing interest rates further,….

–        Shifting signals from the Fed contributed to a rocky end to 2018, as investors fretted that the central bank was not taking sufficient account of slowing global growth and hazards such as the trade conflict between the US and China

–        The S&P 500 fell 14.3% in the last three months of 2018 as investor anxiety over the health of the global economy escalated

–        Investors were disappointed after the December meeting that the Fed stuck with guidance, pointing to “some further gradual increases” in rates

 

Three Fed policymakers urge cautious approach to rate rises – Pg. 2

–        …the outlook for 2019 is shrouded in uncertainty, given market gyrations and signs of slowing growth overseas

–        One measure of stock market volatility, the Vix, ended the year well above its historical average

 

Eurozone unemployment rate falls below 8% – Pg. 3

–        The Eurozone unemployment rate fell below 8% in November for the first time in a decade, underscoring the tightening in some of the block’s labour markets even though some member states are still suffering  high levels of joblessness

–        The Eurozone youth unemployment rate dropped below 17% in November for the first time since September 2008

 

Hedge funds suffer their worst year since 2011 – Pg. 19

–        They beat the S&P 500 for the first time in a decade

–        Hedge Fund Research’s main index which monitors funds across strategies, was down 4.07% last year compared with a 4.38% fall for the S&P.  The last time that happened was in 2008 at the height of the financial crisis, when hedge funds fell 19.03% and the S&P fell 37%

–        The only years that were worse were 2011, when the index was down 5.25%, and 2008 at the height of the financial crisis, when the index plummeted 19.03%

 

Answer: (1) Started saving earlier; (2) Maximized employer plan savings; (3) Used alternative retirement savings accounts; (4) Spent less; (5) Created more income streams; (6) Used after-tax retirement savings accounts; (7) Paid off debt sooner; (8) Planned for the retirement they wanted; (9) Stayed healthy; (10) Diversified Investments; (11) Saved with an HSA; (12) Rebalanced their portfolio; (13) Looked out for fees; (14) Stayed realistic about benefits; (15) Stayed realistic about retirement spending; (16) Used Catch-up contributions

9 January 2019

 

Question: According to MSN: Money, what are fifteen (15) reasons you’ll go broke in retirement?

 

Duetsche’s dire year puts bankers at risk of double-digit bonus blow – Pg. 1

–        …bonuses in some business areas were set to be down between 15% and 20%

–        The bank will report preliminary 2018 results on February 1 and will disclose its final bonus pool on March 22, when it will publish its annual report

–        Discouraged by dwindling pay and worried about senior management’s long-term commitment to the unit, a number of high-profile executives and managing directors have defected

 

Germany slowdown raises Eurozone fears – Pg. 2

–        Industrial activity in Germany fell by 1.9% between October and November – the third straight month of decline – as sectors from consumer goods to energy weakened

–        Germany’s GDP fell in the third quarter and a further fall in the fourth quarter would place the country in a technical recession, defined as two consecutive quarters of negative growth

–        Germany generates about a third of all economic output in the Eurozone and the fall in industrial production in an economy that relies heavily on manufacturing bodes ill for the region

 

The ‘tuna bond’ scandal threatens to spell more trouble for Credit Suisse – Pg. 9

–        When the US Department of Justice charged three former Credit Suisse bankers with fraud and overseas bribery, the allegations had a familiar ring

–        It is the second time since November 1 that senior employees of a big global bank have been indicted for allegedly helping to rip off a developing nation

–        Goldman itself has also been criminally charged by Malaysian prosecutors and it is still under US investigation

 

US federal shutdown leaves traders starved of key data – Pg. 19

–        Essential or not, some of the agencies produce data vital to market participants – not only on wall Street but on Main Street

 

Answer: (1) You abandon stocks; (2) You invest too much in stocks; (3) You live too long; (4) You spend too much; (5) You rely on a single source of income; (6) You can’t work; (7) You get sick; (8) You tap the wrong retirement accounts; (9) You don’t consider state taxes; (10) You bankroll the kids; (11) You are underinsured; (12) You get scammed; (13) You borrowed from your retirement savings; (14) You have no emergency savings; (15) You are forced to declare bankruptcy

8 January 2019

 

Question: According to www.healthcentral.com, what are ten (10) signs of Bipolar Disorder?

 

Wall St big hitters back new exchange to challenge NYSE-Nasdaq dominance – Pg. 1

–          The venue – Members Exchange, or MEMX – will be backed by US financial heavyweights, including Fidelity Investments, TD Ameritrade and Morgan Stanley, …

–          Though more than a dozen exchanges and 30 alternative trading venues vie for business on Wall Street, three groups – owners of the NYSE, Nasdaq and CBOE – account for two-thirds of daily trading in US equity markets

–          The planned launch comes amid a long-running battle between the biggest exchanges and their users over trading practices, including rising fees for market data and rebates for sending business to a particular venue.  MEMX said it would offer lower pricing on market data, connectivity and transaction fees

–          …the need for competition had become particularly acute since the mutually owned Bats Global Markets and Direct Edge were sold in the past decade.  Both venues, which account for just under a fifth of the US market, are now owned by CBOE Global Markets

–          MEMX is assembling a management team with potential CEO candidate Roger Staiger

 

Eurozone gloom as growth forecasts fall – Pg. 2

–          Eurozone growth forecasts for this year have dropped to fresh lows, reflecting how global trade war concerns and political uncertainty are weighing on economic activity

–          Germany is now forecast to grow more slowly than France while Italy, the eurozone’s third-largest economy, is also expected to be one of the worst performers, with growth of just 0.7% forecast for 2019

–          …expect Eurozone GDP to rise just less than 1.6% this year – 0.4% lower than forecast last March…

–          Germany is now forecast to expand at less than 1.5% in 2019, 0.4% below consensus forecasts from March

–          Trade is one of the components with the largest downward revision, reflecting global tension over a tariff war between the US and China

 

America’s students should take the less indebted path – Pg. 9

–          Average tuition increased 498% between 1985 and 2011.  US student loan debt has soared to $1.5tn, causing many borrowers to delay home ownership, marriage, children and retirement.  Nearly 40% of student borrowers may default on loans by 2023, …

–          In this casino-like system, the house (the college) always wins the student loan dollars

 

We must prepare now for the likelihood of a recession – Pg. 9

–          …credit spreads have widened considerably, commodity prices have softened and investors have started demanding higher yields for short-term US bonds than for those with longer terms

–          The overall judgment of financial markets is that recession is significantly more likely than not in the next two years

–          In the US, inflation is again running below the Federal Reserve’s 2% target and comparisons of the yields on ordinary and inflation-adjusted bonds suggest investors expect this to continue for the next decade….employment is usually a lagging statistic

–          Given that we are starting from very high debt levels and low unemployment, a recession is more likely outcome

–          There is more likely to be too little credit flow than too much, asset price deflation is more probable than a bubble and excess austerity is a bigger risk than profligacy

 

Answer: (1) Decreased need for sleep; (2) Racing thoughts and accelerated speech; (3) Restlessness and agitation; (4) Overconfidence; (5) Impulsive and risky behavior; (6) Hopelessness; (7) Withdrawal from family and friends and lack of interest in activities; (8) Change in appetite and sleep; (9) Problems with memory, concentration, and decision-making; (10) Preoccupation with death and thoughts of suicide