Tag: Prof Note

16 January 2019

 

Question: Are Congressman paid during the shutdown in the U.S.?

 

German export machine shows signs of wear – Pg. 2

–        Germany’s economic growth slowed substantially in 2018, but the eurozone’s economic powerhouse appeared to have avoided a technical recession in the fourth quarter as strong domestic demand countered weaker export sales

–        The German economy grew by 1.5% in 2018, the weakest rate since 2013,…

–        The global economy in 2019 is forecast to grow less than 3% for the first time since 2009, …

–        Exports of goods and services make up a higher proportion of GDP than in any other big economy, at 47.2%.

 

US business fears profits cut because of government shutdown – Pg. 4

–        US companies are struggling to get decisions on everything from licenses to new regulations, as business groups warn that the longest government shutdown in the country’s history will soon take a toll on profits

–        Businesses say they have not been able to secure approval for new products, obtain import licenses or get clarity on rule changes for the past few weeks because of the political dispute that has brought Washington to a standstill

–        One big consequence is that 800,000 government employees have not been paid, leading to a slowdown in a consumer spending

 

Dimon warns over US shutdown – Pg. 11

–        …US government shutdown could bring the economy to a standstill

–        The US’s biggest bank reported a 16% decline in fixed income trading revenues for the fourth quarter, less than the drop its rival Citigroup reported this week

 

Fed extends Wells Fargo asset cap to year end – Pg. 12

–        Wells Fargo will continue to operate under the US Federal Reserve’s $2tn asset cap until the end of this year, rather than the cap being lifted “in the first part of 2019” as the bank had previously said

–        …the bank’s growth in both deposits and loans remain well below that of US rivals

–        Past instances of customer mistreatment in the auto loan, mortgage and wealth management business have emerged and, in October, two senior executives were suspended, reportedly after receiving letters from the OCC

–        (Prof Note: I continue to be bothered by the consistent lack of discussion concerning what happened to the honest employees that were pushed out for not making goals due to their ethics?  Has there been a study/effort to seek these individuals out and compensate?  If not, it begs the question, “What is the value of honesty and integrity?”)

 

Answer: Yes, it is guaranteed in the Constitution.  “Article I, Section 6 of the U.S. Constitution allows the lawmakers to still get paid their salaries, despite the federal government being shut down due to their inability to reach an agreement.”  (Prof Note: Basically, while they can cause suffering, they are insulated from that suffering!)

7 January 2019

 

Question: According to MSN: Money, what are painless ways to cut costs in 2019?

 

Saudi women win right to notification by text when husbands divorce them – Pg. 1

–          Women in Saudi Arabia who were previously divorced by their husbands without their knowledge will now receive a text message when a court ruling confirms their separation

–          …courts would send messages informing women of their marital status after decisions on divorce filings had been finalized

–          Men were previously allowed to divorce their wives, including the registration of divorce deeds at the court, without the woman’s knowledge

–          Women in Saudi Arabia have gained more rights over the past two years, following the launch of Crown Prince Mohammed bin Salman’s “Vision 2030” plan for economic and social reform

–          The kingdom lifted the ban on women driving last year, and restrictions have been loosened on female employment and mixing with the opposite sex

–          …female unemployment remains high at 31%,…

–          Saudi women remain forced to live under restrictions imposed on them by male guardianship rules.  They require the approval of a male relative to get married, travel abroad or leave prison

 

Why MBAs should keep going back to school – Pg. 11

–          When the Association of MBAs, the accreditation body for postgraduate management education, gives its approval to a business school’s MBA programme, it does so for a maximum of five years.  But when that same business school awards one of these degrees, it is for life

–          …argues for a new MBA business model, in which the degree is “rented”

–          The most enthusiastic early adopters of the lifetime access programmes have been graduates with less than 15 years of working experience

–          A more time-consuming way of accessing learning is to earn more than one masters degree

 

US banks ease loan payment rules for government staff laid off in shutdown – Pg. 13

–          Banks are offering hard-pressed US government employees forebearance on loan payments and fees, ….

–          …is waiving all current account fees, including overdraft charges, for those whose pay has stopped and whose pay cheque is deposited directly with the bank.  It has pledged to work with customers at risk of missing payments on home, car or credit card loans

–          The shutdown affects roughly a quarter of the federal agencies – those deemed “non-essential”, including national parks and the work for the IRS.  Some 800,000 workers are affected, either by being put on leave of absence or working without pay

–          (Prof Note: Today I had a long conversation with an individual in this “non-essential” category.  It is real and it is tough.  This person is fiscally disciplined but their tenants are also “non-essential” creating a larger burden if tenants cannot make rent payments.)

 

Answer: (1) Raise your auto insurance deductible (Prof Note: Be certain that the deductible is not raised to a point it is an issue if an incident occurs); (2) Delay big purchases (Prof Note: Research and determine the best discounts and times of year for these purchases); (3) Improve your credit score (Prof Note: Remember home mortgages are based on credit score and a lower score can mean higher mortgage rate.); (4) Use credit cards that offer rewards (Prof Note: I am a HUGE fan of this.  Just be responsible with credit card purchases); (5) Reach for a sweater instead of the thermostat; (6) Read books on mobile devices; (7) Close your self-storage unit (Prof Note: Mixed feelings about this.  A cluttered home can/may lead to sadness.  Be mindful of personal well being); (8) Compare prices online; (9) Use coupons when you shop (Prof Note: While this is prudent, I personally cannot stand coupons, e.g. Bed Bath & Beyond 20% off…arrggg…I just want to purchase the product); (10) Stop paying for recorded music (Prof Note: But for concerts, I do not know how musicians support themselves); (11) Sign up for a retail store credit card to get a one-time discount; (12) Don’t forget to ask about senior discounts; (13) Buy health insurance; (14) Get rid of your telephone landline; (15) Set up an automatic savings plan; (16) Get a roommate; (17) Don’t buy a brand new car; (18) Pay attention to the price per unit when grocery shopping; (19) Take time to read grocery expiration dates (Prof Note: I specifically look at the milk cartons and purchase these latest expiration date available)

5 January 2019

 

Question: According to MSN: Money, what are ten (10) money mistakes everyone makes at the beginning of the year?

 

Powell seeks to soothe markets after year’s shaky beginning – Pg. 1

–          Federal Reserve chair Jay Powell offered an upbeat assessment of US economic prospects following a strong jobs report yesterday, easing fears of a 2019 downturn that had spooked global investors in recent weeks

–          …Mr Powell said the Fed would take a “patient” approach to monetary policy tightening, contributing to a rally which sent the S&P 500 up 3% by afternoon…

–          As markets soured in recent weeks, Mr Trump lashed out at Mr Powell over the Fed’s plans to increase interest rates.  But Mr Powell brusquely asserted his independence.  Asked if he would quit if asked to by Mr Trump, he replied, “No” (Prof Note: Central Bank independence is critical and, I fear, lost in today’s global market)

 

US shutdown exposes Democratic faultlines – Pg. 2

–          (Prof Note: I will provide a rare opinion of this silliness.  Our elected officials are elected to benefit constituents.  While I am not naïve and can understand a “greater good” argument, i.e. short suffrage for a greater good, the willingness of Congress to shutdown for the holidays and go home disgusts me.  You stay there, while the public suffers, and you work it out.  One does not leave for the holidays.  Being a member of Congress is not a job that one leaves at 5:00pm but it is an honour earned and bestowed.  It must be treated as such!  90% of a job is showing up on time (and staying there).)

 

Beijing to cut bank reserves by $117bn in latest move to lift economy – Pg. 3

–          China’s central bank will inject $117bn into the banking system by cutting the share of deposits that commercial banks must hold in reserve, …

–          Global markets fell this week on China slowdown worries,…

–          The People’s Bank of China said yesterday on its website it would cut the required reserve ratio (RRR) by 1%, with the cut divided into two stages of 0.5%, each effective on January 15 and January 25

 

Answer: (1) Not having a plan in place (Prof Note: I spent no less than a full day over the holidays putting together the 2019 plan); (2) Not reassessing an automatic savings strategy (Prof Note: I spent no less than a day regarding investment strategies, cash flow needs, etc.); (3) Ignoring retirement account contributions; (4) Putting off taxes (Prof Note: I pay taxes quarterly so am unclear why someone would put this off but understand how it can be done); (5) Not adjusting tax withholding (Prof Note: Be diligent and ensure you have cash as soon as possible); (6) Not checking life insurance beneficiaries (Prof Note: this should be part of your wealth management plan.  Beneficiaries need review for EVERY major life change); (7) Staying disorganized for yet another year (Prof Note: I truly believe that organization is correlated to happiness.  Also, create that home inventory…finally); (8) Not paying off debt (Prof Note: There is good debt and bad debt…be certain you are paying off the correct kind); (9) Not reviewing investments (Prof Note: GUILTY!  I need to be better about this but also focus largely, at this point in life, on blue clips and passive investment in indices); (10) Biting off more than you can chew (Prof Note: This thought is omnipresent with me.  What can I afford?  What do I want to afford?  What developments do I want to embark?  What responsibilities can I accept and comfortably carry?)

4 January 2019

 

Question: According to MSN: Money, what are six (6) tax surprises new retirees face?

 

Apple’s China warning sends tremors through stock markets – Pg. 1

–          Apple’s abrupt warning over weak Chinese sales has stoked fears for the health of the global economy, rattling financial markets and leading traders to ramp up bets that the Federal Reserve is more likely to cut interest rates than raise them in 2019

–          The iPhone maker’s first cut to its revenue forecast in 16 years put its shares on track for a 9% decline yesterday – its biggest one-day drop in five years….

–          The tech-heavy Nasdaq index was down 2.3% by afternoon trading in NY…while the S&P 500 fell 1.9%

–          The sharp drop in Apple shares means the company’s market capitalization has fallen below Alphabet, at $680bn.  The iPhone maker’s valuation had already been overtaken by tech rivals Amazon and Microsoft at the end of last year.  Apple’s value peaked at $1.12tn in early October

–          ..US 30-year Treasury yield to a one-year low of 2.9%, …

–          The Fed Funds futures market, where traders speculate on the direction of interest rates, indicated that there was no chance the Fed would lift rates in 2019, and a 30% chance the US central bank would ease policy this year

–          The US yield curve, a popular gauge of impending economic downturns, has also signaled danger ahead

 

Median price for a Manhattan apartment falls below $1m – Pg. 2

–          The median price of a Manhattan apartment has fallen below $1m for the first time in three years, …

–          The median price paid for co-operatives and condominiums in the prime borough of New York City – some of the most expensive properties in the US – fell 5.8% to $999,000….

–          There was a 25.5% fall in the median sales price of new developers compared to the same period a year earlier, reflecting fewer sales of the highest priced apartments.  The median sales price for resale co-ops and condos rose 2.8%

–          (Prof Note: Simple Math…over the past year jumbo mortgages have increased 100bps.  So, assuming a $1,000,000 purchase price, 40% downpayment, i.e. $600,000 mortgage, and current 4.60% rate, how much more does the 100bps increase cost the purchaser?  Answer: $125,000 over the 30 years.  Now, couple this with the tax law change of limited deductibility of property taxes and the market is finally pricing reality.)

 

US car sales defy downturn prediction – Pg. 12

–          General Motors estimated that US auto sales rose slightly last year to 17.3m, defying predictions that 2018 would be a down year for the US industry – …

–          Ford also announced a 3.5% drop in 2018 …

–          GM predicted a cyclical slowdown in November when it announced it was cutting 11,000 jobs and idling four US factories to prepare for it

–          Profits held up well in 2018 too, despite the impact of US tariffs on commodity prices

 

Answer: (1) You stop paying Social Security payroll tax on your income; (2) You may start paying taxes on your Social Security Benefits; (3) You stop paying Medicare payroll taxes on your income; (4) Your standard deduction increases once you reach 65; (5) You may qualify for a homestead exemption on your property taxes; (6) You may see your taxes and other costs increase as a result of RMDs