You think you have it bad with 1% CDs? If you lived in Europe, you'd be thrilled.
In the topsy-turvy world of negative interest rates, the ECB’s deposit rate is minus 0.2%. But yields on the safest government bonds have fallen so far that a substantial slice of the securities the ECB will be looking to buy in their $63 billion dollar a month "stimulus" program, now falls below zero. Two-year German bonds, for instance, yield minus 0.4%.
Bond yields across the eurozone have tumbled, meaning investors are effectively paying a fee to have their money stored. They’d be making more in the mattress. Steve and Sinclair review a Wall Street Journal report on the state of interest rates going into 2016. How will it affect you and your investments?
In the Q & A, CPA Nick Stefaniak joins the A-Team to answer questions on "what happens if your parents or an ex-spouse dies owing a bunch of back taxes?" Are you liable? Always? Sometimes? Join us--Nick has the answers.
The future price of copper and the growth of companies that produce it could hinge on a single precious resource: water.
Scott Patterson writing for the Wall Street Journal reports that mining the important industrial metal requires huge volumes of water to control dust and separate copper from the earth.
But a seven-year drought enveloping Chile, the world’s largest producer, is forcing big mining companies to curb output and pitting them against small communities like Caimines, Chile high in the Andes. Steve and Sinclair examine the challenges for copper and how its price could fall in 2016 but rebound in 2017 to 2019.
Sinclair broadcasts live from the Economic Conference in downtown Phoenix, while Steve holds down the fort in studio. Certified Financial Planner Murray Titterington with IQ Wealth joins the A-Team for the Q & A to discuss how the PEP and Pease provisions are affecting more and more tax returns.
It has been so long since the Federal Reserve last raised interest rates that few people probably remember when it last happened: it was June 2006. The odds of a rate increase in December of 2015 are very high, but the increase will be very low: fractions of a percent. What will be the effects on bonds when it happens? Michael Pollock, writing for the Wall Street Journal, points out that even if the Fed raises rates gradually, higher short-term rates will eventually ripple through the markets and affect a wide range of financial products, but the impacts will be uneven.
Some borrowing costs are likely to rise closely in sync with short-term rates, but others won’t, And people who depend on interest income might not benefit from rising rates for months, and/or years. A sudden move from zero to 4% would be more than a four hundred percent shift and would shut down the financial system—which is still highly leveraged with derivatives- just as surely as the events of 2008 toppled the derivatives market. Steve and Sinclair examine the outcomes.
In the Q & A Segment, experienced real estate attorney Christopher McNichol of Gust Rosenfeld joins the A-Team to review the differences between options to buy real estate and first rights of refusal. He also makes a strong recommendation for anyone tying up a property with an option.
In the past 12 months, companies in the Standard & Poor’s 500 have doled out nearly $1 trillion to shareholders in the form of both dividends and stock buybacks, the highest level since 2007. For years, hedge fund managers have been big proponents of share buybacks. Now, though, they are viewing them with a more critical eye, says Sarah Max writing for Barrons. Worse yet, when corporations sell their bonds, they are no longer using the money to expand or create jobs. Instead, well known companies have gone into debt with bond sales at a pace of over a trillion dollars in the first nine months of 2015. That's more corporate debt than the U.S. treasury took on to form the budget deficit.
That borrowed money got poured back into the stock market to buy back shares to try to boost their share prices. It has been working for years, but suddenly the Law of Diminishing Returns is having its say.Steve and Sinclair review a timely article by Sarah Max of Barrons on the subject. In the Q & A, Steve answers some hard questions on annuities and income planning.
Corporate inversions are the rage as corporations look to save billions of dollars in taxes by buying or merging with a foreign company in a lower tax environment, often Ireland. The law firms making it happen are racking up big fees. Just ask the team at Skadden, Arps, Slate, Meagher & Flom LLP working on Pfizer Inc.’s $155 billion deal with Allergan PLC. Their immediate task is getting the biggest tax-lowering merger in history past U.S. authorities.
Meanwhile, they are facing off with the Internal Revenue Service to get tax-free treatment for Yahoo Inc.’s spinoff of its $20 billion stake in Alibaba Group Holding Ltd.—an effort the agency dealt a setback in September—as well as shepherding a pair of other big transactions that would move U.S. companies overseas.
Steve and Sinclair review a Wall Street Journal report on whats behind the Pfizer-Allergan merger and why it is a slam dunk to occur. Hint: Pfizer stands to save at least $3 billion in taxes.
CFP®, CIMA® Murray Titterington joins the A Team to review and recap new social security rules and how widow and divorce benefits work in the new environment.
When the Federal Reserve finally decides to raise short-term interest rates from near zero, it will be Simon Potter’s job to make it happen. The 55-year-old, British-born head of markets at the Federal Reserve Bank of New York had never worked at a securities-trading firm before taking his current post three years ago, according to Katy Burne, writing for the Wall Street Journal.
The economist manages the Fed’s $4.2 trillion securities portfolio and runs a team of nearly 500 traders and analysts. Now, Mr. Potter will be faced with one of the trickiest trading assignments around: making it more expensive to borrow money when the financial system is swimming in cash. Steve and Sinclair review Potter and his approach in segment 2.
In the Q & A session, estate planning attorney Richard Dwornik joins the A-Team to discuss problems and solutions on many old A-B and A-B-C living trusts with credit shelter provisions. This is very common on trusts written between 1990 and 2009.
Is the saying “older but wiser” just an old wives’ tale? A study of adult intelligence, published in March in the journal Psychological Science, tested this long held idea against the data. The results challenge some common assumptions—including the idea that mental acuity, like athletic prowess, always declines with age.
The new research suggests that we do get both slower and wiser at the same time, up to a certain age. For example, testing showed that our vocabularies continue to grow, peaking as late as age 70. Twenty years ago, tests of vocabulary indicated that it crested much earlier, at age 50. Is 70 the new 50?. Steve explores in segment 4 today.
In segments 2 and 3, gold expert Nick Grovich dissects opportunity in the metals market--what to buy, what to avoid, and why.
According to a study of 4,500 Dutch consumers in the Journal of Economic Psychology, unhappy people save less, spend more and have a higher propensity to consume. Americans are spending just as fast as Europeans, says the University of Utah. Researchers are finding that we are all spending money--often more than what's coming in--for a new set of reasons.
Many retiring professionals continue to spend $80,000 to $120,000 annually after retirement and have no intention of slowing down or cutting back. If a couple spends $100,000 a year, they will need $3,000,000 to come from somewhere--that's without LTC or inflation.
What drives us—the majority of people in fact-- to spend too much even when we seem to make all the right moves? Steve and Sinclair review an intriguing report from the Wall Street Journal. Then, in the Q & A segment, Steve reviews his method for addressing all of a client's liabilities, and the step by step process involved in building a durable retirement income plan, while also growing capital.
Amid all the talk of pension plans' demise, one type of defined-benefit plan is growing fast. Cash Balance Plans are gaining popularity among business owners and medical practitioners who are behind on retirement savings.
Kiplingers reports that many business owners are turning to these plans to turbocharge their retirement savings. Cash-balance plans have generous contribution limits that increase with age. People 60 and older can sock away well over $200,000 TO $300,000 annually in pretax contributions. In 401(k)s, total employer and employee contributions for those 50 and older are limited to only $57,500. Steve and Sinclair review the fundamentals.
After claiming responsibility for the Paris terrorist attacks, ISIS apparently has a new foe, according to Fortune Magazine and other outlets.
Hacker collective ANONYMOUS posted a video Saturday on YouTube in which it declared a cyber war on ISIS (Islamic State In Syria). In the nearly two-and-a-half-minute video, a person wearing the group’s signature Guy Fawkes mask read a statement in French promising that the hacktivist organization would attack ISIS in cyberspace with the ultimate goal of weakening the terrorist organization.
Reports are that 5500 twitter accounts have already been shut down, but police are saying that is not necessarily a good thing. Cyber-clues are important in tracking criminals. Steve and Sinclair review the background of the "hack-tivist" group, Anonymous.
In the Q & A Segment, CFP Murray Titterington and CPA Nick Stefaniak join the A-Team to review and recap Social Security claiming rules and tax scenarios that crop up when one spouse is working and the other is retired.