Tag: Prof Note

28 September 2018

 

Question: According to MSN:Money, what are 6 things other governments provide that Americans still have to pay for?

 

Kavanaugh’s accuser stands by her allegations in gripping testimony – Pg. 1

–          …recounted a 36-year-old ordeal…

–          (Prof Note: How does one prove/disprove an event that occurred 36 years in the past without documentation?!  Contemporaneous notes!!!)

 

Chinese household debt rise compounds fears for growth – Pg. 2

–          The country’s ratio of household debt to GDP hit a high of 49.1% in 2017, marking an increase of nearly 20% over the past five years…

–          The report comes amid concern over the extraordinary rise in Chinese debt since the 2008 global financial crisis

–          …steep rises in house prices have led to an increase in mortgage debt, which, combined with the rapid rise of online consumer lending – which barely existed four years ago – have caused a sharp rise in household debt in the past two years

–          Household consumption as a share of GDP remains low by international standards at 39.1%.  In the US and EU, the same ratio is 68.4 and 55.6%, respectively

–          Rising debt and slower growth of household income are causing concern at the impact on consumption and growth

 

Fed faces questions on whether gentle tightening is at odds with booming economy – Pg. 4

–          The latest quarter-point increase leaves policy closer to neutral settings, but, as Mr Powell stressed, rates are still low enough to support growth

–          …the Fed envisages an expansion running above 3% this year, as strong household spending and fiscal stimulus more than outweigh an drag from Mr Trump’s trade wars

–          The Fed’s median forecast sees rates plateauing at 3.4% in 2020 and 2021, which is above its forecast for longer-run levels

–          That suggests policy will become restrictive the year after next, but only marginally…

–          Inflation is forecast to stick obediently close to the Fed’s 2% target – even as unemployment tumbles to just 3.5% – far below the Fed’s best guess of its sustainable rate

 

Answer: (1) College; (2) Healthcare; (3) Vacation; (4) Parental Leave; (5) Baby items; (6) Daycare

27 September 2018

 

Question: According to MSN:Lifestyle, what are habits of extremely likeable people?

 

US Fed raises interest rates and remains bullish despite trade war – Pg. 1

–          The Federal Reserve has raised short-term interest rates for the third time this year and signaled it would forge ahead with plans to tighten policy even as central bankers face White House pressure to keep down borrowing costs

–          The FOMC boosted the target range for its key rate by another quarter point to 2% – 2.25%, in the eighth increase of the current cycle, while teeing up another increase in December

–          Median forecasts released by the Fed’s policymakers pointed to one more rate rise this year, followed by three in 2019 and another in 2020 – in line with expectations

–          …bullish update on the economy, which it expects to grow more than 3% this year, …

–          The median of the latest forecasts suggest the middle of the Fed’s target range for interest rates would peak at 3.5$ in 2020, remaining at that level in 2021

 

Arab women face backlash over inheritance reform – Pg. 4

–          The Koran spells out in detail how legacies are to be divided, dictating that brothers receive twice the share of sisters

–          It has underlined the difficulty of upending a centuries-old status quo that shapes the contours of power and wealth across the Arab world

–          Equalizing inheritance rules would mark an epochal change

–          Inheritance laws are part of a broader web of legal and social barriers that perpetuate gender inequality in the Arab world.  The proportion of women who earn a salary is held down by a combination of early marriage, traditions that require women to be homemakers, and laws designed to protect females in the workplace that restrict the kinds of jobs and hours they can work

–          Only one in four women in the Middle East and north Africa is employed or looking for work, …

–          Only 27% of women in the Arab world have a bank or mobile money account…

–          Inheritance is often about land.  The proportion of real estate in the Arab world registered in the name of women is probably much lower than 10%,…

–          Egypt passed legislation earlier this year that imposes jail terms and fines on anyone who deprives another of inheritance rights (Prof Note: In the U.S. some states have a Tort: Intentional Interference with Inheritance.  In 1999 this Tort was introduced to Maryland, Geduldig v. Posner, but the courts refused to recognize it.  However, in their opinion they stated that a case having a series of defined attributes, and they listed these attributes, would require reconsideration of introduction of the Tort.  Go Egypt, GOOOOO!!!)

 

After the Crisis – Pg. 8-9

–          (Prof Note: Read entire two pages…)

 

Record US valuation gap prompts hunt for opportunity overseas – Pg. 21

–          A record-breaking divergence between US equities and the rest of the world has spurred some investors to tiptoe away from Wall Street in search of bargains in Europe and the developing world

–          While the S&P 500 has bounded from one all-time high to the next, and is now up 9% this year, international stocks remain in the doldrums

–          On book value, the S&P 500 now trades at a historic two-times premium versus the rest of the world, and on a price/earnings ratio, the US equity benchmark trades around a record premium to the MSCI World once the US is excluded

–          US consumer confidence is at a 17-year high, manufacturing activity rose to the highest level in 14 years in August and the economy grew at an annualized pace of 4% last quarter

–          …consumer confidence in the Eurozone tumbled to its lowest level in more than a year in September, and economic growth in emerging markets is near a seven-month low…

 

Answer: (1) They greet the world with a smile on their face; (2) They ask questions; (3) They are consistent; (4) They put the phone away; (5) They keep an open mind and don’t pass judgement; (6) They are authentic; (7) They are kind and generous; (8) They’re accountable for their mistakes; (9) They send thank you notes

22 September 2018

 

Question: According to MSN:Money, what are the 30 greatest threats to your retirement?

 

US Politics – Pg. 8

–          If confirmed, Mr Kavanaugh would likely become the swing voter on the court the next time it examines abortion rights

–          #MeToo has already had a tangible effect on US politics, motivating more women to become politically active

–          A total of 524 women ran for Congress this year – a new record.  Even more notably, nearly half of those women won their primaries, with 255 women advancing to their general election

–          (Prof Note: Regardless of the outcome, I find the important lesson that actions, even alleged actions, no matter how old, can be brought back, decades later, for accountability.  Live a noble life!)

 

Wall St hits record highs on $14.5bn funds inflow – Pg. 15

–          The US stock market’s march to record highs this week was driven by a $14.5bn inflow to US equity funds

–          Investors have welcomed clarity on the next round of trade tariffs between the US and China and responded positively that the levies imposed by the Trump administration – and by Beijing in retaliation – were less severe than some had expected

–          The US economy also received a boost from recent data that showed wages grew at their fastest pace in nine years during August.  Average hourly earnings grew 2.9% from the previous year, the quickest rate of growth since June 2009

 

Answer: (1) Grown kids siphoning off your retirement money; (2) Keeping too much house; (3) Having a mortgage in retirement; (4) Giving too much away, too early; (5) Medical expenses; (6) Long-Term care expenses; (7) Being part of the sandwich generation; (8) Unexpected major expenses; (9) Defined contribution retirement plans in the military; (10) Defined contribution retirement plans in the private sector; (11) The Pension crises across the nation; (12) The myth of spending less in retirement; (13) Taking 401(k) loans; (14) Contributing only your company’s default minimum to your 401(k); (15) Investing too conservatively for retirement; (16) Withdrawing your 401(k) money when leaving a job; (17) Not saving enough for retirement; (18) Retiring too early; (19) Not getting full employer matching contributions; (20) Investing too heavily in company stock (Prof Note: Can you say, “Enron”?!); (21) Having inadequate life insurance; (22) Not having disability coverage; (23) Saving for college instead of retirement; (24) Ignoring the impact of inflation; (25) Faulty decision-making; (26) Poor asset allocation; (27) Boredom; (28) Neglecting your own needs; (29) An unexpected layoff; (30) Lifestyle inflation

21 September 2018

 

Question: According to MSN, what are four (4) retirement planning misakes you probably don’t even realize you’re making?

 

Markets at record high as boom in US drives investor confidence – Pg. 1

–          The S&P 500 index climbed 0.8% by midday in New York, led by technology stocks that have powered much of this year’s equity market rally as well as economy-sensitive sectors such as materials and banks

–          The DJIA also rose 1% to hit a new high, …

–          …domestic economy has received a big fillup from the Trump administration’s swingeing tax cuts

–          Investors now believe the US central bank will continue to raise interest rates in 2019, pushing the yield on the 10-year US government bond to a high of 3.09% yesterday, within touching distance of a seven-year high

 

OECD warns of chilling effect of trade conflicts – Pg. 4

–          The forecasts expect the world economy to grow 3.7% this year and next, a healthy rate compared with the early years of this decade.  Bu the OECD has cut its growth expectations from its May forecast by 0.1% in 2018 and 0.2% in 2019

–          The OECD’s forecast for UK growth was downgraded by 0.1% both this year and next, leaving the projections showing a sluggish 1.3% growth rate this year and 1.2% in 2019

–          The OECD expected jobs growth to remain strong in its largely rich country members

 

Trump threatens Beijing over global postal rates – Pg. 4

–          Mr Trump has threatened to take action if the Universal Postal Union, a UN body, does not change rules that make it cheaper to ship small items from China to the US than within the US itself.  …forces the US Postal Service to subsidize mail form China and other countries, damaging US retailers

–          If the US does take action, it could prompt other countries to increase the prices the US pays to ship packages internationally

–          The UPU sets terminal dues, which dictate how much national post offices must pay their counterparts for handling international mail.  China is classed among the least developed countries, so it pays only a fraction of what developed country post offices do

–          The USPS lost more than $125m handing inbound mail from across the world in 2016.  While a US business pays $7-$9 to send a 1lb package from Los Angeles to New York using priority mail retail rates, the USPS receives only $2.50 for a similar package originating in
China and travelling the same route

–          Terminal dues, which apply to packages up to 4.4lbs were set before the ecommerce explosion, which has connected US shoppers directly with retailers around the world through sites such as Amazon, Alibaba and Ebay

 

Answer: (1) Relying too heavily on Social Security (Prof Note: Be realistic early about the lifestyle desired in retirement and plan for it); (2) Assuming your living costs will drop drastically (Prof Note: I talk to a lot of expats on Nevis.  The general theme is that their costs went up in retirement, as their interests increased); (3) Not taking advantage of catch-up contributions; (4) Forgetting about taxes