TruXta
tired
I don't believe that's right. Got a source?They do, but more reliably on the timescale of a big corporation rather than a single punter wanting a secure retirement.
I don't believe that's right. Got a source?They do, but more reliably on the timescale of a big corporation rather than a single punter wanting a secure retirement.
Big corps don't expect to retire at a specific time. They don't need to cross their fingers at 58 and hope that a big crash doesn't wipe out their comfortable retirementI don't believe that's right. Got a source?
Meh. 30 years of saving is plenty good enough for a retirable ROI. Did the stock markets even crash properly in 2008? How long did it take for them to set record highs after?Big corps don't expect to retire at a specific time. They don't need to cross their fingers at 58 and hope that a big crash doesn't wipe out their comfortable retirement
Meh. 30 years of saving is plenty good enough for a retirable ROI. Did the stock markets even crash properly in 2008? How long did it take for them to set record highs after?
That depends entirely on how long you've been saving up, and when you started. If you started in 1980 and retired in 2010 you'd still at least triple your money.The point is still valid, if you go to retire while the market is in shit, it hurts very badly for retirement. The problem is this setup is still the best thing available to the averag person
Thanks, didn't know that.They “lifestyle” retirement funds, which normally means a 10% switch per year from equities to bonds as you approach retirement precisely to avoid this volatility problem
Several European countries have set up a new transaction channel that will allow companies to continue trading with Iran despite US sanctions. The announcement was made on Thursday.
The channel, set up by Germany, France and the UK, is called INSTEX — short for "Instrument in Support of Trade Exchanges."
"We're making clear that we didn't just talk about keeping the nuclear deal with Iran alive, but now we're creating a possibility to conduct business transactions," German Foreign Minister Heiko Maas told reporters Thursday after a meeting with European counterparts in Bucharest, Romania.
"This is a precondition for us to meet the obligations we entered into in order to demand from Iran that it doesn't begin military uranium enrichment," Maas said.
The payment channel allows for European countries to continue trade with Iran but could put them on a collision course with Washington.
Between 2008 and 2017, 466 of the S&P 500 companies spent around $4 trillion on stock buybacks, equal to 53 percent of profits. Another 30 percent of corporate profits went to dividends. When more than 80 percent of corporate profits go to buybacks and dividends, there is reason to be concerned.
Some may argue that if Congress limits stock buybacks, corporations could shift to issuing larger dividends. This is a valid concern — and we should also seriously consider policies to limit the payout of dividends, perhaps through the tax code.
Why wouldn’t it be better for our national economy if, instead of buying back stock, corporations paid all of their workers better wages and provided good benefits? Why should a company whose pension program is underfunded be able to buy back stock before shoring up the pension fund?
If reality was exactly reflected by all the stock market falls people have posted news about on this thread, netted off only by the posted-about gains, the Dow would be at about -10,000 by now.
Italian govt plans to separate commercial lenders from investment banksItaly has today entered it's 3rd (technical) recession of the decade since the CC.
Amazing stuff and all on the same 'hard' currency!
ROME (Reuters) - The Italian government intends to approve in coming months new banking regulations, including a rule that separates banks’ commercial and investment businesses, Deputy Prime Minister Luigi Di Maio said on Friday.
Speaking to parliament’s lower house, Di Maio also said that if the government needed to enter the capital of troubled Banca Carige it would take control of the lender.
Since 1993, investment and commercial banks can operate in Italy under one roof.
In June, when the populist coalition made up of the far-right League party and the anti-establishment 5-Star Movement took power, it agreed in principle that the two divisions of the banking sector were best kept separate to protect savers.
Di Maio, who is also the 5-Star’s leader, said that the government aims to approve the new rules “in the coming months”. The governing coalition will also press for “a reform of the European banking supervision and the creation of a EU-wide fund to guarantee savers”.
Di Maio also mentioned “a fund to guarantee savers to be funded by putting aside up to 60 percent of bank managers’ bonus for five years”.
Last month Italy set up a 1.3 billion euros ($1.49 billion)fund to cover potential costs of emergency measures to shore up Carige after the European Central Bank (ECB) put the bank under temporary administration following a failed attempt to raise new capital from investors.
“So far we do not know whether we will have to use public funds, but if we decide to put people’s money into the bank then (Carige) will be owned by the people,” said Di Maio.
Picassos, a glass piano and missing billions: scandal of 1MDB reaches courtThe Malaysia Scandal Is Starting to Look Dire for Goldman Sachs
28/12/18
Couldn't happen to a nicer company.
“This trial is hugely important for Malaysia,” said Bridget Welsh, associate professor of political science at John Cabot University, who is an expert on Malaysian politics. “This is not just an issue of accountability, this is a huge international scandal which has really shamed Malaysia.”
The ramifications of the trial will be felt not just in Malaysia but globally; it was US attorney general Loretta Lynch who described 1MDB as “the largest kleptocracy case” in the world, and 1MDB investigations ongoing in 12 countries.
In the US, the justice department charged two former Goldman Sachs bankers with conspiring to launder billions of dollars embezzled from Malaysia’s state development fund.
“This trial involves not just Malaysia and Najib, this involves the whole global financial system and the people who gamed the system to their advantage,” added Welsh.
It was the beginning of weeks of volatility that led the Fed to recalibrate its message, with more than one misstep along the way.
In doing so, the central bank went beyond fine-tuning its language or adjusting to changing conditions. Interviews with officials as well as analysis of Fed minutes and policymakers’ public statements suggest the emergence of a long-elusive consensus that interest rates would likely never return to pre-crisis levels, and that once established relationships, such as inflation rising when unemployment fell, no longer worked.
It was only a matter of time before Apple issued a credit card. The world’s first company to reach a $1tn market value has more cash on hand and more global reach than most banks, so why shouldn’t it act like one? The move, which is in partnership with Goldman Sachs, is something that many of its shareholders have long advocated. Carl Icahn, who dumped the stock a few years ago over concerns about the company’s China sales, told me Apple should be a bank way back in 2013. But it is also an example of a market trend known as financialisation.
That is a wonky term used mostly by academics to describe the rise of finance and financially-oriented behaviour throughout our economy. This catch-all covers everything from criticisms that companies are prioritising value for shareholders, to claims that some executives are manipulating balance sheets to boost their short-term results. It also takes in companies that focus more on finance than their core businesses and those that load up on corporate debt. The trend is ubiquitous.
Apple is not alone in trying to act like a bank: academic research shows that the share of revenues coming from financial relative to non-financial activities in US corporations began to climb in the 1970s and then increased sharply from the 1980s onwards. This mirrors the rise of finance in the economy itself.
Such financialisation has been a key driving force in the global economy for several decades. But I now believe we have reached what I call Peak Wall Street, the apex of that trend, and there will be diminishing returns for companies that choose to focus more on markets than the real economy.
The evidence is all around us. Consider the decline of Kraft Heinz. The company demonstrates how a strategy focused on short-term financial results can backfire.
The packaged foods group is partly owned and run by Brazilian private equity group 3G, which made its name through extreme cost-cutting and zero-based budgeting that focused on profit margins rather than growing sales. The private equity group has been accused of eschewing longer-term investment while employing short-term financial tricks such as paying suppliers late in order to improve free cash flow. Kraft Heinz has lost more than half its equity value since its creation in a 2015 merger.
Then there is the US shale industry. Activist investors — or barbarians at the gate to their critics — have been swarming, looking for companies with bloated budgets that need trimming. There are plenty of targets, thanks to an overexpansion funded by investors seeking higher yields.
The energy bond market has tripled in size in the past decade, but much of the money has funded higher executive salaries and an output glut. Debt-laden companies are now ripe for forced consolidation by private equity and other investors.
You could come up with dozens of other timely, high-profile examples of companies that have stumbled after making Faustian bargains to please Wall Street. (General Electric comes to mind: it was forced last year to commit more than $15bn to support losses from a long since spun-out insurance division.)
The multiyear explosion in share buybacks, which increase earnings per share by reducing the number of shares, reflects the trend. Warren Buffett may argue that buybacks are a welcome use of spare cash. But I think they are best done at the start of a credit cycle, rather than at the end, which is where we appear to be now. Most companies are buying back shares not as a vote of self-confidence in their own future, but as a way to boost their share prices — a classic financialised move.
The US Federal Reserve’s surprise decision in January to pause interest rate increases may keep buybacks coming for a bit longer. That is because lower rates make it cheaper to borrow money to pay for all those shares. But the fact that the Fed was forced into a U-turn by choppy markets is another sign of too much financialisation. Easy money has become a morphine drip that too many companies and investors can’t seem to do without, even though we are nearly 10 years into an economic recovery.
In fact, low interest rates have papered over myriad political and economic problems not just for 10 years but for several decades. Total financial assets are now more than triple the size of the real economy. The corporate bond market is now worth $13tn — twice as much as in 2008.
Debt is, of course, the lifeblood of finance. But it is also the biggest indicator of future crises. The OECD, the Paris-based club of mostly rich nations, last week warned about the record amount of debt in the corporate bond market in its historically low ratings. More than half of investment grade bonds issued in 2018 were of the lowest possible quality.
This may amplify the effects of an economic slowdown that many feel is imminent. “The amount of corporate bond investments that may be expected to default in the case of an economic downturn may be considerably larger than that experienced in the financial crisis,” the OECD said.
Already heavily indebted sectors such as energy are experiencing higher levels of default. Financialisation has risen for nearly five decades now. But like everything else in the market, what goes up must eventually come down.
No interest-rate rise this year, and more cheap loans for banks
Indeed. Worth remembering that they are a political, not technical, organisation and their products are political, not technical. However, they can only deny technical reality for so long.I havent read it every year but I'm fairly sure they have gone on about worrying investment trends in regards oil production before.
As I've often pointed out, it is meaningless to contemplate forward forecasts of production separate from historical records of discovery. They can't produce what they haven't discovered, so the historical discovery trend defines the range of plausible forward profiles and, therefore, the scope for arguing about detail.And there is still the same room for us to argue about detail that there has always been - eg whether, even if the investment is there, its actually possible to sustain production.
It really bothers me that the amount of hydrocarbons in the ground exceeds the amount we'd be able to burn without wrecking the climate. Fucking geology, man
Doesn’t change the fundamental point that this is a big limit on growth, but the limit is much more stringent than that predicted by peak oil.