Tag: Prof Note

4 September 2018

 

Comment from List-serve participation (w/ permission): Viewing a home for sale.

 

The neighborhood!  Loved your earlier recommendation to check it out during off-times – like late at night during the work week.

Purchased my home when the community was new and thriving.  Everything was perfect. Now, not so much.  The neighborhood is a hot mess of an abandoned property, renters who don’t take care of anything because they can’t or don’t have/want to, drug-addicted family (told to me personally, not just conjecture) with 8+ children who think screaming outside the home at all hours is normal., people with an extraordinary amount of junk in their backyard…… If I was selling my house, I probably wouldn’t mention any of these things.  Why would I?  And I’m not sure any potential buyer would notice it.  They’d be too busy looking at the kitchen cabinets or the garage.  The neighborhood is extremely important!

 

Question: According to MSN: Health & Fitness, what 20 things should be packed in a first-aid kit?

 

Brazil mourns lost treasures after museum blaze – Pg. 3

–          Among the millions of items on display were the fossil of the first known Brazilian woman, known as Luzia; Egyptian mummies and Etruscan vases; imperial archives; and native Indian artefacts.  It was to Brazil what the British Museum is to the UK or the Smithsonian to the US

–          The government costs as much to run a developed country, without delivering the same quality of services in education, security and health

–          The failing public services, corruption and slow economic recovery are fueling the rise of political radicalism, …

–          The museum was established 200 years ago by King Dom Joao VI.  The collection, which was partly assembled by the Brazilian royal family, included an extensive dinosaur fossil exhibit

–          (Prof Note: Such a loss to the global community)

 

Technology – Pg. 7

–          …board game Go, …enthralled by the 2016 contest between the world’s top player and a computer – a milestone in the history of artificial intelligence

–          People are limited in the range of possibilities they can perceive and analyze, forcing them to think inside “boxes”….

–          Humans rely on a mix of experience and intuition when tackling a problem too complex for them to analyze completely…

–          Quantum machines, which tap into the weirdness of quantum mechanics – a branch of physics that deals with the behavior of sub-atomic particles – are a long-held dream in the tech world.  By harnessing properties that extend beyond the limits of classical Newtonian physics, they hold the promise of exponential gains in computing power

–          Quantum machines are particularly well suited to certain types of probabilistic algorithms, …calculations that don’t proceed through a logical sequence of steps, like those carried out by today’s so-called classical computers, but instead rely on a certain element of chance to alight on the best result

–          A third area of focus involves complex optimization problems that have too many variables for today’s computers

 

NJ state fund feels heat over Toys R Us – Pg. 12

–          At a meeting this month, ex-workers plan to urge state officials to reconsider New Jersey’s relationship with Solus Alternative Asset Management if the hedge fund fails to provide hardship money for workers who lost their jobs

–          Solus, which has managed $300m for the New Jersey State Investment Council since 2014, was among creditors that forced Toys R Us into liquidation.  That fell hard on New Jersey, leading to 1,000 job losses at the chain’s HQ in the state and hundreds more at a nearby distribution centre and 25 stores

–          When Toys R Us filed for bankruptcy in September 2017, Solus was among creditors that provided “debtor-in-possession” financing, allowing the retailer to run while executives sought a buys (Prof Note: DiP financing is a super-senior form of debt, i.e. Solus has minimal risk or not receiving the funds back)

–          (Prof Note: This is huge, in my opinion.  My opinion is still being formed on this issue re: worker’s rights.)

 

Answer: (1) Hand sanitizer; (2) Latex-free gloves; (3) Nonstick adhesive pads; (4) Gauze pads; (5) Assorted self-stick bandages; (6) Butterfly Closures; (7) Cloth tape; (8) Self-adhesive gauze; (9) Irrigation syringe; (10) Antiseptic; (11) Antibiotic ointment; (12) Itch reliever; (13) Instant cold compress; (14) Digital thermometer; (15) OTC pain relievers; (16) Oral Antihistamines; (17) Stomach meds; (18) Scissors; (19) Tweezers; (20) Cotton scarf

1 September 2018

 

Question: According to MSN:Money, what are six (6) signs the next recession might be closer than we realize?

 

IMF haunted by past Argentine mistakes – Pg. 2

–          Memories of the fund’s involvement in Argentina in the lead-up to the 2001 economic collapse run bitter and deep in the country, making the current involvement of the IMF, led by its managing director, hugely sensitive

–          Yesterday, the peso found its footing but only after a 12% plunge against the US dollar on Thursday which came despite the central bank’s decision to jack up interest rates by 15% to 60%.  Argentines, who have long preferred to save in dollars, have been on edge since the run on the peso began

 

Catholic Church – Pg. 5

–          Conservatives have regrouped to fight Pope Francis’s relaxation of old doctrinal anathemas, which he sees as vital to the spiritual renewal of a two-millennia-old institution serving a notional 1.2bn Catholics around the world.  Shortly after taking over from Pope Benedict XVI – who took the almost unheard of step of resigning in circumstances the Vatican has never explained – he said the Church had to find “a new balance” or it would collapse “like a house of cards”

–          Conservatives in the Church, who had things pretty much their own way for half a century but especially under popes John Paul II and Benedict XVI, are desperate to discredit Francis

–          Cardinals nominated by Francis, who will be 82 in December, are now thought to be close to a majority in the electoral college for the next pope

–          Famously, or infamously from a traditionalist standpoint, he has called for an inclusive, non-judgmental tolerance towards homosexuality

–          Francis has not changed core doctrine.  But he has cast orthodoxy in a new light

–          While this power battle may do immense damage to the Church, it will also prolong the anguish of abuse victims, who are already angry at Francis’s hesitant attempts to deliver them justice

–          (Prof Note: I remain aghast that the Pope has not visited PA)

 

California to be first US state to impose female quota for boards – Pg. 8

–          A bill requiring at least one woman on every public company board by next year, and two women for every board of five members and three for boards of six by 2021, passed the California legislature this week and was sent to the governor to sign into law

–          Woman comprised 19.8% of board seats on Fortune 1000 companies in the US last year, …

–          In California women make up 20.8% of directors of Fortune 1000 companies.  The state ranks eighth overall among US states for the percentage of women on boards, although it still only has an average of 1.65 women per board, …the national average is 1.75 women per board

–          Although this would be the first government-mandated quota for women on company boards in the US, there is precedent for doing so in European countries.  Norway, Iceland, Finland and Sweden all have government-mandated quotas for the number of women on boards

–          In the second quarter of 2018, almost 35% of new director seats went to women…

 

Answer: (1) The unemployment rate will struggle to push lower; (2) The yield curve is flattening; (3) Inflation has begun picking up; (4) Home sales are beginning to decline in key markets; (5) Credit card debt and late payments are on the rise; (6) The economic cycle suggests a contraction

30 August 2018

 

Question: According to MSN:Money, what are five (5) things to do now so you can retire before age 40?

 

Fed chiefs face political backlash over push to bolster bank buffers – Pg. 1

–          Jay Powell faces an intensifying debate within the Federal Reserve over calls for it to boost big lenders’ capital requirements to rein in financial risks – a move that would trigger fierce blowback from Republicans eager to ease regulation

–          …the decision rests with the Fed’s board, chaired by Mr Powell, who insisted in June there was no current need to lift the buffer because financial stability risks were under control

–          The buffer – which is part of the post-financial crisis regime and has never been imposed – would require banks to build an extra margin of capital over a period of up to a year, giving them extra scope to support lending in a downturn

 

Argentina requests early release of IMF bailout funds – Pg. 2

–          The turmoil in emerging markets has called into question how Argentina will meet its $82bn financing needs for this year and next, while navigating a looming recession and high inflation before a presidential election next year

–          The peso has weakened by 10% against the dollar since the start of the month – and 40% this year – cementing its position as one of the biggest losers in the broader emerging market rout triggered by the fall in the Turkish lira

–          Argentina’s short-term debt obligations mean that it has roughly $50bn of peso and dollar-denominated debt coming due by the end of next year.  The bulk are peso-denominated Lebacs, or fixed-rate bills issued by the central bank with interest rates as high as 52%

 

Japan ‘womennomics’ hindered by ambiguity over gender equality – Pg. 3

–          Mr Abe’s government has focused heavily on impediments to work, such as lack of childcare, and achieved some success.  Compared with 2012, there are 2m more women in the workforce.  With female employment rates matching many European countries, the surge in working women has been an important factor in the recent run of strong economic growth

–          Scholars say this ambiguity about gender equality has deep roots.  In 1947, when US occupiers drafted its constitution, Japan became one of the first developed countries to outlaw gender discrimination

–          A sexual division of labour helped deliver rapid growth in the 1960s and 1970s: the wages of salaried men rose in line with long working hours but women stayed at home to care for children or do poorly paid part-time jobs

 

Auditing in crisis – Pg. 7

–          The idea that a company’s reported figures should give a “true and fair” representation of its assets, liabilities, financial position and profit or loss has a long pedigree.  It dates back to the first audits in the 19^th century and was written into law in Britain after the second world war.  In the 1970s, it was transposed into European legislation.  If there is a foundational principle underpinning the assurance offered by audits, this is it

–          ….the accounts should not overstate profit or performance so that the directors (and shareholders) can rely on them as a basis for determining that any dividends are not paid out of capital.  It is a view that requires auditorial judgment

–          …means sticking to a mechanical interpretation of the accounting rules, irrespective of whether the financial results that they produce is at all representative of the company’s real position

–          One of the ideas underpinning fair value accounting was to eliminate the capacity of bosses to squirrel away profits through “big bath” provisions.  This was to stop them “smoothing” their results in ways that made it difficult for external investors to discern the underlying performances of the business

–          Not only did the application of the key standard on fair value accounting for financial instruments – IAS 39 – enable banks to conceal vast losses before the financial crisis, paying fat bonuses to managers on the fictitious profits they conjured, it also made it harder to throw off the post-crisis hangover

–          The [Big Four] have an overwhelming grip on the listed company market in Britain and the US, auditing 98% of the FTSE 350 and 99% of the S&P 500 respectively

–          No less importantly they dominate the counsels of the profession

–          One of the key auditing judgments is about whether the profits made by company are legally “realized” (meaning either turned to cash or as near as makes no difference) and consequently available to be distributed to shareholders.  In 2005, the FRC proposed abolishing this statutory link, describing it as “rigid” and an “unnecessary obstacle” to meaningful accounts

–          Its solution was to remove any legal requirements whatsoever, making it potentially easier for companies to pay dividends out of shareholders’ own capital and disadvantaging creditors – something the very first audits were designed to stop

 

Grosvenor eyes 30,000-home portfolio – Pg. 12

–          The property company that owns much of central London’s wealthiest areas has unveiled plans to expand into large-scale residential development

–          Grosvenor said yesterday that under its new plans, it would aim to work as “master developer”, orchestrating the planning, design and build of large housing schemes, typically of between 2,000 and 5,000 homes, along with associated infrastructure

–          Grosvenor would identify the development sites on greenfield or brownfield land, shepherd them through the design and planning process, and then pass individual parts of them on to housebuilders

 

Answer: (1) Save each month until it hurts (Prof Note: What have I been saying???!!!); (2) Determine which type of passive income suits you best (Prof Note: Fixed Income, Equity, Real Estate, etc); (3) Determine your passive income’s purpose (Prof Note: You must know your lifestyle and the cost of that lifestyle); (4) Hold yourself accountable; (5) Don’t make withdrawals

28 August 2018

 

Question: According to CNBC, what are four (4) things extreme savers refuse to spend money on?

 

US and Mexico in breakthrough on restructured trade agreement – Pg. 1

–          The US and Mexico have reached a breakthrough in efforts to revamp the Nafta trade agreement, potentially ending an acrimonious impasse in relations between the countries since Donald Trump took office

–          It was unclear whether Canada…would sign up to the deal

–          The two sides agreed to stricter rules for Mexican car exports to the US, including requirements that 75% of the content be made in North America, and that 40 – 45% of the content be made with workers earning at least $16/hour – a measure aimed at discouraging manufacturers from relocating to Mexico

–          The deal keeps tariff-free trade for farm products, but with new measures on health standards

 

European Economy – Running out of steam – Pg. 7

–          Yet the labour shortages rippling through central Europe are the result of demographic decline and economic success.  Having peaked in the late 1990s, the region’s population is now shrinking, wizened by emigration and tumbling birth rates

–          ..the combined population of Poland, Hungary, the Czech Republic and Slovakia – known as the Visegrad Four, or V4 – will fall from about 64m in 2017 to just 55.6m by 2050, or about 13%

–          …economies are set to expand by around 4% this year

 

Higher yielding trades hit by macro pain – Pg. 18

–          …four key areas: Emerging market local currency denominated debt, Eurozone bank shares, high-yield corporate paper and Italian government bonds….

–          …dominant market trend is the surging US dollar and an increasing sense that, in growth and interest rates policy terms, the US is moving ahead of other countries

–          ..US equities have recovered from February’s volatility shock with the S&P 500 back in record territory

–          The divergence in economic outlook between US and other countries has injected greater discernment into the market – European and Asian junk bond indices have suffered while the US is up 1.7% on the year

 

Answer: (1) Excess living space; (2) Lunch and dinner everyday; (3) Things that aren’t important to them; (4) Excessive car payments