Financial Times Blog

Question: According to MSN:Money, what are items that no man over 40 should have in his home?

 

Venezuela devalues currency by 95% in effort to save off collapse – Pg. 1

–          Venezuela resorted to desperate measures to arrest economic collapse yesterday, lopping five zeros off the bolivar, devaluing it by 95% and tying it to an obscure state-run cryptocurrency

–          As it tries to curb hyperinflation – by some measurements, the worst in Latin American history – the government is also slashing fuel subsidies are raising the minimum wage by 3,000%

–          Annual inflation is running at more than 80,000%, and the IMF has predicted it will hit 1m% this year.  Prices are doubling every four weeks, making life desperately hard for millions of poor Venezuelans, many of whom are going hungry or fleeing

–          The massive rise in the minimum wage is to compensate workers for the dizzying price rises and comes into force next month.  It will take the monthly minimum wage from less than a dollar to about $30.  Business owners say it will have a devastating impact on employment

 

Germany to record world’s largest surplus for third years – Pg. 2

–          Germany is on course to have the world’s largest current account surplus for the third year in a row – a situation likely to bring further international pressure on Berlin to rebalance its economy

–          …7.8% of the country’s GDP, in 2018.  The figure is only slightly below the 7.9% recorded for 2017

–          The size of Germany’s surplus partly reflects its competitive companies and years of wage restraint, and the eurozone’s largest economy has also benefited from a relatively weak single currency

–          The US was set to record the biggest deficit at almost $420bn…

 

US banks tap the brakes on consumer credit – Pg. 12

–          …at the beginning of last year, household debt surpassed its last peak, in 2008, many pundits speculated about the possibility of a new financial crisis.  But US household debt – all $13.3tn of it, according to the New York Fed – is much lower, relative to both GDP and disposable income, than it was in the run-up to 2008

–          Quarterly write-offs of bad credit card debt at US banks peaked at nearly $19bn in the first quarter of 2010 and bottomed at below $5bn in 2015, … since then they have crept back above $8bn

 

Answer: (1) Figurines in boxes; (2) Posters without frames; (3) A condiment drawer; (4) Frozen dinner or snacks; (5) Instant coffee; (6) Sugary treats; (7) Soft drinks (Prof Note: GUILTY!); (8) Bar Décor; (9) Sports trophies; (10) Fake foliage; (11) Plastic shelves; (12) A futon; (13) A recliner with built-in cup holders; (14) Threadbare sheets and towels; (15) Clutter; (16) Sheets used as curtains; (17) A beer can or bottle collection; (18) A mattress with no frame; (19) Mismatched dishes; (20) A Bean Bag chair; (21) Sports paraphernalia; (22) DJ equipment; (23) Christmas lights as decoration; (24) A video game station (Prof Note: I just placed NES and SNES in my houses and was just playing MarioKart Saturday night.  Perhaps I should not admit to this!); (25) Novelty anything; (26) Glassware with Logos (Prof Note: I do have my Hopkins mugs!); (27) A grilled cheese maker; (28) Blankets as clothing; (29) A flimsy knife set; (30) Huge speakers; (31) Mounted weaponry; (32) Socks with holes; (33) Cheap cologne or body spray; (34) Ill-fitting clothing; (35) Wire or plastic hangers; (36) Fluorescent bulbs; (37) Bowling shirts; (38) A mess (Prof Note: I did very well on this one!)

20 August 2018

 

Question: According to MSN:Money, what are three (3) reasons you’re not making more money at work?

 

Beijing orders banks to support exporters as trade war fears rise – Pg. 1

–          China’s banking regulator has ordered banks to boost lending to infrastructure projects and exporters as Beijing seeks to counter mounting concerns about the intensifying trade war between the world’s two biggest economies

–          …disrupting US banks’ plans to expand in mainland China.  US lenders fear the dispute will hamper their scramble to take advantage of new rules allowing them full control of their mainland Chinese subsidiaries

–          China’s currency and stock markets have fallen since then, reflecting investor nervousness about slowing growth and the impact of the trade war

–          Pressure has been building on the renminbi, which fell almost 7% against the dollar….on August 15

–          So far about 10% of China’s annual exports to the US have faced punitive tariffs, …

–          (Prof Note: I do worry about this trade war.  In the last five years I feel as if much of the US educational system has been based on Chinese students.  If the students stop coming to the U.S., I am convinced many U.S. educational systems will implode!)

 

Mental health – Pg. 14

–          I could not have imagined how bad it would be for my self-esteem to be the only man in the school parents’ groups – recipient of emails routinely addressed to “Girls!”

–          He [the accountant] said he had done worth 25,000 (sterling), but had written off 50%.  (Prof Note: You MUST stay on top of bills and play experts off each other, e.g. How long should “X” have taken.  This is why, and I do realize this takes $$$, I always run legal bills through other counsel.  It is also easier to negotiate when one is on top of the bills.  I have found VERY unscrupulous lawyers and accountants that absolutely place their thumb on the scale when weighing their smelly fish!)

–          Nobody had seen this coming, because I had hidden my struggles from everyone

–          I resolved to do everything possible to get better: group therapy, cognitive behavioural therapy, drama therapy and art therapy, yoga and qigong

–          Being self-employed had been wonderful for several years, and in adversity I lost focus and felt alone

–          Sharing financial difficulties was excruciating, but I have learnt that if I need help I should have the humility to ask for it

–          (Prof Note: Mental health is important.  It is real and it is serious.  When my family was murdered and my five-year saga began the first thing I did was take my own, very difficult to take, advice.  I raised my hand, phoned trusted peers, and said, “I am in trouble, I need help.”  Without exception each provided me that help.  Some agreed to take payment as I insisted I needed to be a priority in their lives (I was/am blessed).  Occasionally I am blasted by a list-serve member, that is summarily deleted, for pushing everyone to earn and build and protect wealth.  Just as in this case, please read the entire article, assistance, the best assistance, often must be purchased.  Build your war chest, protect your war chest, it may be your recovery, your justice, your medical care, and can lead, in my opinion, to your finding happiness.  Just my opinion.)

 

How AI can spot exam cheats and raise standards – Pg. 11

–          Technology is being deployed by those who set and mark exams to reduce that fraud – which remains overall a small problem – and to create far greater efficiencies in preparation and marking, and to help improve teaching and studying

–            Coursera has patented a system to take images of students and verify their identify against scanned documents

–          Online publishers in some subjects, such as mathematics and finance, create unique questions by randomly changing the numerical variables used in exam questions

–          Isabelle Bajeux-Besnainou, dean of McGill University’s Desautels Faculty of Management, says algorithms can be used to update tests (Prof Note: I MISS ISABELLE!  How we let her go at GWU is a mystery!  How many GWU finance professors/deans have been featured in the FT?  This is the second time for Isabelle!  Go Isabelle, GO!!!)

 

Answer: (1) You’re not boosting your skills (Prof Note: I am a huge proponent of increasing skills so that employers fear one leaving rather than the employee fears being made redundant, etc.); (2) You don’t take initiative (Prof Note: Be strategic in the initiatives taken.  Does this advance both the corporation and my personal skill set(s)?  If you spend 5 years learning a proprietary system whose skills are non-transferable, have you placed your career and family finances at risk?); (3) You haven’t actually asked for a raise (Prof Note: I do not agree with this either.  I think the employer needs to be aware of market value and skills value.  Annual compensation should be reviewed and discussed and adjusted, as necessary.  Employees are the best asset!)

18 August 2018

 

Question: According to MSN:Money, what are 15 hidden fees to watch out for in retirement?

 

Scrap quarterly reports, says Trump – Pg. 1

–          President Donald Trump has asked the SEC to consider scrapping the demand that public companies in the US report their earnings every three months, weighing in on a practice many blame for corporate short-termism

–          Critics of the quarterly system have argued that the longstanding tradition is costly, distracts companies from focusing on longer-term goals, and may deter companies from going public

–          Its defenders say it improves transparency and argue that longer intervals between financial disclosures create more incentive for insider trading (Prof Note: The short the periods, the more seasonality investors can understand.  In my opinion, critical to investing, especially when layering macro-economic trends atop)

–          US companies are not obliged to provide such forecasts but most do, running the risk of being punished by investors if they miss their targets

 

US grocers scramble for position in ecommerce battleground – Pg. 8

–          Does the future of grocery shopping depend on diverless cars, meal kits or automated warehouses….Kroger, one of America’s largest grocers, is betting on all of the above

–          Walmart is rolling out same-day delivery across the US and testing robots to assemble “click and collect” orders, where shoppers order items online and pick them up at stores

–          The escalating competition was underscored by Amazon’s announcement this month that subscribers to its Prime service in two small cities could order groceries from While Foods via a mobile app for roadside pick-up 30 minutes later

–          The proliferation of options is allowing customers to spend less time in stores and divide their shopping among multiple retailers, making it hard for any one company to corner the market,…

–          While online food shopping has become even more common across Europe and Asia, Americans have remained stubbornly loyal to physical grocery stores.  Online sales accounted for about 2% of the $800bn in US grocery market last year, compared with more than 5% in France, more than 7% in the UK and nearly 17% in South Korea…

 

Global markets shrink as buybacks surge – Pg. 11

–          The global equity market is shrinking at the fastest pace in at least two decades, as a wave of corporate share buybacks swamps the overall volume of companies going public, issuing new stock or selling convertible debt

–          US companies have been particularly hyperactive buyers of their own stock, thanks to the earnings boost delivered by tax cuts and the robust economy

–          …recasts that the overall volume of US buybacks will reach a record-breaking $1tn in 2018

–          The overall value of the global equity market is still increasing, thanks largely to rising stock prices – something that is partly attributable to buybacks.  The total market capitalization of the FTSE All-World index has climbed from about $35tn a decade ago to $57tn on Wednesday

 

Subprime mortgages: say a little prayer – Pg. 16

–          The non-QM [Qualified Mortgage] segment is still a tiny fraction of America’s $1.7tn mortgage market – a total of some $12bn in origination this year

 

Answer: (1) Advisory fees; (2) 401(k) Ratios; (3) 12b-1 fees; (4) Annuity Fees; (5) Yearly fees; (6) Loads (Prof Note: Front- and Back-end fees); (7) Taxes; (8) Retirement Plan Early-Withdrawal Penalties; (9) Trading Fees; (10) Penalties for failing to take required distributions; (11) Annuity Rollover fees; (12) Surrender Fees; (13) Inactivity Fees; (14) 401(k) Administrative Fees; (15) Beneficiary Fees

17 August 2018

 

Question: According to MSN:Money, what are 50 mindless ways you’re burning through your paycheck?

 

Walmart basks in US economic glow – Pg. 11

–          Walmart unveils its strongest US sales growth in more than a decade yesterday as the number of visitors to its stores climbed and ecommerce accelerated

–          …Walmart shares up almost 10%, established the company as one of the winners from a US economy characterized this year by low unemployment and robust consumer spending

–          The retailer said comparable store sales in the US rose 4.5% in the quarter that ended in July, driven by groceries, clothing and seasonal items like air conditioners and paddling pools

–          DIY retailer Home Depot, a housing market bellwether, said low employment, rising home prices and wages pushed consumer confidence to record highs, supporting its business

–          …US consumer spending has accelerated

–          (Prof Note: Last week after my flight from Nevis I stopped in a Walmart for groceries around 2am.  I saw one of the ugliest scenes in a retail store.  Two young girls, 20s, were berating the cashier for not offering a price they saw but the cashier was holding to the price as marked.  I still remember them saying, “That is why you work at Walmart.”  (they said other things but I will spare everyone the ugliness)  I remember thinking at the moment, as both parties looked to me in line to support their position, “Just do not drag me into this.  I am too tired for a battle.  I do not want to be involved.”  The young women stormed out and I settled my transaction and departed telling the cashier, “There is honour in working at Walmart!”.  However, I still wonder if I should have engaged on behalf of the cashier.  I remember thinking, “There is honour is working at Walmart at 2:00am.”  However, I just felt exhausted.  I wonder if I did the right thing.  Perhaps I should have risen…only so many battles one can fight in life.  However, my point, there is honour in working all jobs!)

 

Rising rates and China slowdown imperil Hong Kong property sector – Pg. 17

–          As a revitalized US dollar hits the highest level in more than a year, it is not simply emerging markets that are grappling with the fallout.  A booming Hong Kong  property market is at risk

–          The Hong Kong Monetary Authority was forced to intervene and buy the local currency this week for the first time since May to prevent the breaking of a peg with the US dollar that has been in place since the 1980s

–          …spaces as small as 117 sf have been sold for $290,000 this year ….

–          Shares in large Hong Kong-focused developers have fallen this year, ….

 

Growing cost of US companies’ junk debt raises doubts about length of expansion – Pg. 17

–          Companies with speculative grade credit ratings are spending a growing portion of profits on interest payments as debt costs rise, causing concern as investors and economists debate the durability of the US expansion

–          The deterioration in riskier company balance sheets comes after a surge in borrowing by groups, boosting their reliance on floating rate debt as they take advantage of low funding costs and a hefty appetite for their obligations by lenders

–          …nearly $3tn of loans are outstanding from junk-rated groups.  Most are pegged to a floating rate such as Libor.  Three-month Libor has risen more than 60bps this year to 2.3%, lifting floating rate loans higher alongside it

–          Coverage ratios on all new loans tracked by S&P Global Market Intelligence’s LCD this year have fallen to the lowest levels since 2008 but have yet to collapse to the troughs seen during the dotcom boom and bust and financial crisis

 

Answer: (1) Paying too much on housing (Prof Note: Yes, a commute is generally not pleasant but you are actually paying yourself during that time if traveling to less expensive housing option(s)); (2) Pending too much on car costs (Prof Note: Compare car insurance rates); (3) Wasting Energy (Prof Note: Motion sensors and timers); (4) Buying movie theater popcorn (Prof Note: Can you say, “Monopolistic pricing?!”); (5) Not planning meals ahead of time (Prof Note: Planning does save $$$); (6) Grocery shopping without a list (Prof Note: Just this AM I was purchasing a gallon of milk, ONLY a gallon of milk, when the man behind me in line was there with two containers of bleach.  As he was waiting he grabbed a box of donuts…clearly an impulse purchase); (7) Buying coffee (Prof Note: we all know my views of Starbucks and the associated costs!); (8) Paying for cable (Prof Note: I cut the cord over a year ago, if not longer); (9) Buying brand-name products; (10) Not changing the thermostat (Prof Note: I have actually gone to window units and A/C smaller spaces); (11) Ignoring your phone bill (Prof Note: Read EVERY bill carefully); (12) Drinking bottled water (Prof Note: Those silver things against walls actually dispense free water….amazing); (13) Using regular lightbulbs (Prof Note: Daylight LEDs); (14) Smoking cigarettes (Prof Note: Do people even still do this?!); (15) Buying lunch at work (Prof Note: Do the math…brown bag it!); (16) Eating out for dinner (Prof Note Do the math…AGAIN!); (17) Grabbing fast food; (18) Ordering Appetizers (Prof Note: Hands off my Nachos!); (19) Shopping online (Prof Note: What??? Pay attention in class?  Blasphemous!); (20) Requesting faster shipping; (21) Paying ATM fees; (22) Withdrawing Money at the ATM (Prof Note: Do people still use money?); (23) Putting your money in a high-fee checking account (Prof Note: Now this is just silly!); (24) Paying unnecessary bank fees (Prof Note: I am not joking when I tell you I told my bank, “You must FEAR me if I get a fee!”); (25) Putting your paycheck in a regular bank account; (26) Carrying credit card debt (Prof Note: Unless for emergencies…true emergencies); (27) Using a credit card with a high annual fee (Prof Note: This actually reminds me that I need to check this); (28) Paying unnecessary fees, in general; (29) Collecting stuff you don’t need (Prof Note: I NEED the original Buddy L Steam Shovel!); (30) Spending too much on snacks; (31) Signing up for a gym membership (Prof Note: I did not develop my washboard abs by going to a gym!); (32) Throwing your child a huge birthday party; (33) Shopping impulsively; (34) Buying books (Prof Note: But for Foundations of Real Estate Financial Modelling, Second Edition, Routledge, 2018.  In fact, purchase extras for gifts to family and friends); (35) Not using coupons (Prof Note: I have walked out, more than once, from a Bed, Bath and Beyond, over a manager not providing me the 20% coupon!); (36) Buying new instead of used; (37) Skipping breakfast; (38) Paying multiple student loans; (39) Ignoring your credit reports (Prof Note: Again…silliness!); (40) Not using your benefits package; (41) Driving around with flat tires; (42) Manually paying your bills (Prof Note: I 100.0% do NOT agree with this at ALL!!!!  Manually pay ALL your bills.  Set a scheduled and review and pay everything manually.  It takes me about 8 – 10 hours a month to pay everything but I know where every penny goes!); (43) Hitting the bars (Prof Note: At least take a shot or two prior to entering!  Also, take Uber home!); (44) Throwing out leftovers; (45) Buying basic items at the grocery store; (46) Paying too much for car insurance; (47) Gambling (Prof Note: I actually think gambling, in moderation, is a great business tool to just judge other’s risk tolerances.  Plus, the drinks are free.); (48) Paying too much in 401(k) fees; (49) Shopping at the wrong retailers (Prof Note: In southern, Maryland there are only two stores open 24 hours, i.e. Walmart and Harris Teeter.  There is $1 difference in a single bag of lettuce and the Walmart lettuce is bigger!); (50) Paying too much in taxes (Prof Note: Hire the experts BUT they must know they are being watched and scrutinized.  Two years ago my accountants and I had a blowout of biblical proportion over losses, i.e. passive or active.  Classification matters and knowledge is power and CASH in your pocket!)