Monthly Money Matters - August 2015
Submitted by Hilpan Moxie Wealth Management, Inc. on August 2nd, 2015A BIT OVERSTATED In one of Japan’s biggest-ever accounting scandals, an investigative panel found that Mr Tanaka (CEO, Toshiba) and two predecessors had incited subordinates to cook the firm’s books and inflate profits by ¥152 billion ($1.2 billion) over seven years to 2014. Prior to Tanaka’s resignation on July 21st, he quoted: “INCREASING profits is important.” (source: The Economist)
PAYS TO BIKE Being fit (and thin with it) is a becoming a marker of status. With estimated earnings of $240,000 in revenue every day, & a whopping $87.6M in just one year Soul Cycle, a predominant NY spin-class culture, generates their money from hosting classes rather than through membership fees. (source: The Economist)
FINANCIAL PLANNING 70% of investors say they have a financial plan, but barely more than half of those with a plan, 54%, say it is a written plan. Those figures translate to only 38% of all U.S. investors having a written plan. Retired investors are a bit more likely than nonretired investors to say they have a plan and to say it is a written plan. Ahem, ahem, “FPR!”(source: Gallup)
COST OF VOLCKER The Office of the Comptroller of Currency (OCC), who oversees national bank regulation, reckons the world’s largest “market-making” banks will have collectively spent over $400M in 2014 and a bit less going forward. The OCC’s annual supervision costs will rise by $10M. Another 39 banks it examines will have additional direct costs of only several million dollars a year. (source: The Economist)
BLACK HAWK DOWN On July 20th Lockheed Martin, America’s biggest defense contractor, agreed to pay $9 billion to buy Sikorsky, which makes helicopters, from United Technologies (UTX). It is the largest deal the defense business has witnessed in two decades. (source: The Economist)
CA DROUGHT Now well into its fourth year, one of the worst droughts in California in more than a century continues to cause economic insecurity for many families in the region, particularly in the agriculture sector. Department of Labor is announcing up to $18 million in National Dislocated Worker Grant (formerly referred to as National Emergency Grants) funding to the state of California to provide jobs for workers dislocated by the drought, with $3 million released initially. (source: Department of Labor)
THE GOOD FIGHT? In America, the fight to increase the federal minimum wage to $7.25 an hour to $15 an hour, or 77% of median hourly income. Campaigners have had some success; several big cities, including New York plan to phase in a $15 minimum wage. (source: The Economist)
HSA Health Savings Accounts opened in 2014 ended the year with an average balance of $6,544; whereas those opened in 2005 had an average balance of $19,269 at the end of 2014. HSAs with either individual or employer contributions accounted for 70 percent of all accounts and 86 percent of the assets in 2014. Four percent of these accounts ended the year with a zero balance. (source: Employee Benefit Research Institute)
$ICK LEAVE 39% of the US private sector workers, according to new data from the Bureau of Labor Statistics are without paid sick leave.. That’s nearly 44 million people in the United States who can’t get a day off because they have the flu; need to care for a sick child; who might have to choose between going to the doctor and paying the electric bill. . . That’s 44 million too many. (source: Department of Labor – DOL)
BULLS v BEARS Bullish sentiment rose above 30% for just the second time since April in the latest AAII Sentiment Survey. The rebound occurred as bearish sentiment fell for a second consecutive week. Neutral sentiment, meanwhile, tied a 27-year record for the most consecutive weeks of staying at or above 40%. (source: American Association of Independent Investors - AAII)
SHY OF 4% According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose in June to 3.98 from 3.84% in May, but remained just below 4.00 percent for the seventh straight month. (source: National Association of Realtors – NAR)
HOME BUYER PROBLEMS Although most in the U.S. want to own a home someday, younger renter households perceived a variety of financial barriers ahead. Those aged 18–39, 92% percent expected to buy homes eventually, but 62% thought it would be difficult to get a mortgage. The main obstacles include insufficient savings to make a downpayment and pay for closing costs (42%) and an insufficient credit history (47 percent). (source: Harvard University Joint Center for Housing Studies)
REITS Conventional wisdom says that higher rates are generally bad for REITs. The most popular REIT index is the NAREIT Equity REIT Index. Last July, the NAREIT Index declined 3.2%. The S&P 500 was up 1.5 percent during the same period. The yield on the 10-year Treasury note gained 0.1 percent during that time. (source: NAREIT)
MORE JOBS The national unemployment rate in June was 5.5%, not seasonally adjusted, down from 6.3 percent a year earlier. Unemployment rates were lower in June than a year earlier in 351 of the 387 metropolitan areas, higher in 28 areas, and unchanged in 8 areas. (source: BLS)