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Archives for August 2019

This Money Market Fund is Paying 47 Times More than its Competition

August 9, 2019 By E.J. Smith

Fidelity investments may be sparking a war among money market funds by offering a 1.91% yield on money in new brokerage and retirement accounts. That's 47 times higher than Fidelity competitor, TD Ameritrade, 10 times higher than Charles Schwab and 27 times higher the E*Trade. Vicky Ge Huang reports on Fidelity's move at AdvisorHub, writing: “I am not surprised to hear that Fidelity is offering better interest rates,” said Greg O’Gara, senior wealth management analyst at Aite Group. “They continue to try to reach out to their client base and prospects by offering superior product alternatives … [Read more...]

Who’s Really Moving the Market?

August 9, 2019 By Jeremy Jones, CFA

After a recent spate of losses in stock markets, a wave of buying began, but it wasn't retail investors stepping in to take advantage of lower prices. Instead, the publicly traded companies themselves were propping up markets by buying back shares. Bloomberg's Lu Wang reports: As the S&P 500 slumped 6% over six days through Monday, companies boosted share buybacks to almost $10 billion a day from $3 billion previously, the firm [JPMorgan Chase & Co.] estimates. With stocks sinking and bonds rallying, the big gap in performance spurred a rotation to equities among funds that need to go … [Read more...]

Luxury Buyers Race to Beat New NYC Taxes

August 8, 2019 By E.J. Smith

As though New Yorkers weren't taxed enough already, New York City has imposed a new set of transfer taxes on properties selling for $2 million or more. Buyers raced to close their real estate deals to beat the taxes which could be up to 3.15% on deals. The number of luxury deals closed in June was record-breaking. Over $4.8 billion worth of property changed hands. The WSJ's Josh Barbanel reports: As the deadline to beat the tax increase neared, the buying frenzy only intensified. Of the 673 June transactions of at least $2 million, 351 closed in the final seven days. That week alone accounted … [Read more...]

Post-Financial Crisis Regulation Could Worsen the Next Crisis

August 8, 2019 By Jeremy Jones, CFA

At the Financial Times, Amin Rajan explains that a lack of liquidity, which was strangled by post-2008 Financial Crisis regulation, could deepen any future financial crisis. Put simply, traditional market makers for fixed-income products cannot now warehouse risk because of the effect of the regulation to enhance global financial resilience introduced after the 2008 crisis. This is best shown by US investment grade credit. It grew by 43 per cent between 2007 and 2018, while dealer inventories were just 6 per cent of what they were in 2007, according to JPMorgan Asset Management. The new … [Read more...]

Do Lower Mortgage Rates Matter if House Prices Are Still High?

August 8, 2019 By Young Research

Mortgage rates are hitting lows not seen since 2016. But do low rates even matter if housing prices are unaffordable? MarketWatch's Jacob Passy reports: “There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” Freddie Mac FMCC, -1.54% said in its report. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.” Ultimately, the low supply of homes available for sale will at least partially … [Read more...]

Are Munis a Shelter from the Storm? Not so Fast

August 7, 2019 By E.J. Smith

The Wall Street Journal reports that Americans in high tax states like New York and California are jumping into municipal bonds to shelter their investments from taxation. Maybe these are residents who can flee from the high tax states they call home, as so many others have. Now that the federal government has stopped subsidizing these states' high taxation, residents are feeling the full burden of their states' big-spending ways. The Journal reports: Investors in high-tax states like New York and California are piling into municipal bonds this year, fueled in part by the 2017 tax overhaul … [Read more...]

This Has Never Happened to German Bonds Before Now

August 7, 2019 By Jeremy Jones, CFA

For the first time ever, Germany's yield curve is completely negative. Bunds from 2 year to 30 year are all yielding negative rates. Bloomberg's John Ainger reports: German 30-year bonds rallied to send yields across the whole of its debt market below 0% for the first time after President Donald Trump ratcheted up the U.S. trade war with China. The euro area’s biggest economy joined Denmark and Switzerland in the region in offering negative returns to investors should the notes be held to maturity, taking the total stock of investment-grade debt yielding less than 0% to $14 trillion … [Read more...]

Can You Guess Which Regulator is Upset With Elon Musk Now?

August 7, 2019 By Young Research

Back in September of 2018, the SEC sued Elon Musk over tweets in which the agency claimed he had made “false and misleading statements.” The issue involved statements Musk had made about potentially taking Tesla private, and funding for that effort which he told his followers was "secured." Now another federal agency is coming for Musk over statements he's made regarding Tesla. This time, it's the National Highway and Traffic Safety Administration (NHTSA). The agency is upset over Musk's claims that the Model 3 sedan Tesla is building has the “lowest probability of injury of any vehicle … [Read more...]

Can You Guess Where Financial Firms Are Going When they Flee the Northeast’s High Taxes?

October 2, 2019 By E.J. Smith

If you answered Palm Beach County in Florida, you're right. When tax reform capped state and local tax deduction from federal returns, financial firms and their employees were exposed to the naked truth about the high state taxation in the Northeast. With governments in New York, Massachusetts, and Connecticut drowning in obligations, taxes aren't coming down soon. That's why so many financial firms and employees are voting with their feet and heading for low tax Florida instead. Many wealthy retirees have already made this sound financial choice, and it's no surprise to see profit-making … [Read more...]

Has Amazon Been Caught in an Anti-Trust Trap?

August 6, 2019 By Jeremy Jones, CFA

Regulators are looking hard at all of the major tech companies with an eye toward anti-trust violations. At Bloomberg, Spencer Soper reports that one particular Amazon practice may fall into that category. He writes: Amazon.com Inc.’s determination to offer shoppers the best deals is prompting merchants selling products on its marketplace to raise their prices on competing websites, a testament to the company’s growing influence over the e-commerce market. Amazon constantly scans rivals’ prices to see if they’re lower. When it discovers a product is cheaper on, say, Walmart.com, Amazon … [Read more...]

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