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Archives for August 2016

Worthy Reads: Two Fed Officials Offer Different Views on Risks From Low Rates

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Two Fed Officials Offer Different Views on Risks From Low Rates (Bloomberg) Will Rally in U.S. Dollar Be Self-Limiting? (WSJ) Financial statements are outliving their usefulness for investors — and here’s how to replace them (MarketWatch) The Fed Is Nearing Its Inflation and Employment Goals, Says Fed Official (Fortune) Blow to telecoms companies as EU outlaws network-wide ad blocking (FT)   … [Read more...]

Millennium Tower Boston

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Millennium Tower in Boston is a perfect example of what’s happening in Boston’s luxury condo market. From today’s Boston Globe: For proof that Boston has become a luxury housing mecca for wealthy people from around the world, look no farther than Downtown Crossing. At the high-end Millennium Tower, buyers have come from Greece, Hong Kong, and the Middle East, scooping up condos two or three apiece. There’s a real estate executive in San Francisco who markets luxury US properties in Asia, and claims on her website that she’s sold 7 percent of the tower — roughly 30 units. And then … [Read more...]

Bond and Pension Struggle in Puerto Rico

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You get an idea how the struggle between bondholders and pensions quickly turns into a political nightmare, as reported in the WSJ: San Juan, Puerto Rico—One of the thorniest tasks awaiting a seven-member board charged by Washington with cleaning up Puerto Rico’s debt crisis is deciding how to balance a $70 billion debt load with nearly $43 billion in unfunded pension liabilities. The issue is coming to a head now because the White House is set to name as soon as next week the members of that oversight board, drawn from lists of candidates submitted by congressional leaders in both … [Read more...]

Pension Survival Increases Risks

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"The public dispute over accounting standards is a signal to taxpayers, retirees and political reformers that fundamental flaws remain in how pensions measure their finances,” writes Steve Malanga in the WSJ. At issue, as he correctly points out, is the delusion that government pensions “on average estimate they will earn 7.6% a year on their portfolios.” Using a more realistic riskless rate (as if that exists!) increases the unfunded liability from about $1 trillion to $3 trillion. It’s all funny money. I’ve looked at the numbers in Newport, RI and it’s ugly. The stock market will not come to … [Read more...]

Worthy Reads: IRS Eases a Costly Tax Pitfall for Retirement Savers

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IRS Eases a Costly Tax Pitfall for Retirement Savers - Money Vancouver Foreign Tax Slowing an Already Cooling Home Market - Bloomberg U.S. SEC charges 71 municipal bond issuers for misleading investors - Reuters Subprime Auto Delinquencies Jump 17% In July, Net Losses Soar 28% - Zero Hedge Investor lessons from a market bubble that cost Isaac Newton a bundle - The MarketWatch   … [Read more...]

Low Interest Rates Threaten Insurers and Baby Boomers

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Here you get a glimpse at the problems facing insurers and baby boomers thanks to the Fed’s zero percent interest rate policy as reported earlier this month in the WSJ. Insurers reported a messy second quarter plagued by low interest rates and catastrophe claims, highlighted by a $2 billion charge at MetLife Inc. tied to a savings product popular with baby boomers. Life insurers MetLife, Prudential Financial Inc. and Lincoln Financial Group booked lower premiums and fees, while property-and-casualty insurer Allstate Corp. faced elevated levels of claims for severe weather, including a … [Read more...]