Senin, 30 Desember 2019

The Decade of Debt: big deals, bigger risk - Reuters

NEW YORK (Reuters) - Whatever nickname ultimately gets attached to the now-ending Twenty-tens, on Wall Street and across Corporate America it arguably should be tagged as the “Decade of Debt.”

FILE PHOTO: A picture illustration shows a $100 banknote laying on $1 banknotes, taken in Warsaw, January 13, 2011. REUTERS/Kacper Pempel/File Photo

With interest rates locked in at rock-bottom levels courtesy of the Federal Reserve’s easy-money policy after the financial crisis, companies found it cheaper than ever to tap the corporate bond market to load up on cash.

Bond issuance by American companies topped $1 trillion in each year of the decade that began on Jan. 1, 2010, and ends on Tuesday at midnight, an unmatched run, according to SIFMA, the securities industry trade group.

In all, corporate bond debt outstanding rocketed more than 50% and will soon top $10 trillion, versus about $6 trillion at the end of the previous decade. The largest U.S. companies - those in the S&P 500 Index .SPX - account for roughly 70% of that, nearly $7 trillion.

Graphic: Long-term debt for S&P 500 here

What did they do with all that money?

It’s a truism in corporate finance that cash needs to be either “earning or returning” - that is, being put to use growing the business or getting sent back to shareholders.

As it happens, American companies did a lot more returning than earning with their cash during the ‘Tens.

In the first year of the decade, companies spent roughly $60 billion more on dividends and buying back their own shares than on new facilities, equipment and technology. By last year that gap had mushroomed to more than $600 billion, and the gap in 2019 could be just as large, especially given the constraint on capital spending from the trade war.

The buy-back boom is credited with helping to fuel a decade-long bull market in U.S. equities.

Graphic: S&P 500 shareholder payouts here

Meanwhile, capital expenditure growth has been choppy at best over 10 years. This is despite a massive fiscal stimulus package by the Trump administration, marked by the reduction in the corporate tax rate to 21% from 35%, that it had predicted would boost business spending.

Graphic: Capital expenditure of S&P 500 here

One byproduct of stock buy-backs is they make companies look more profitable by Wall Street’s favorite performance metric - earnings per share - than they would otherwise appear to be.

With companies purchasing more and more of their own stock, S&P 500 EPS has roughly doubled in 10 years. Meanwhile net profit has risen by half that, and far more erratically.

Graphic: S&P 500 earnings per share here

Graphic: Reported earnings for S&P 500 here

The corporate bond market has not only gotten bigger, it has gotten riskier.

With investors clamoring for yield in a low-rate world, debt rated only a notch or two above high-yield - or junk - bond levels now accounts for more than half of the investment-grade market, versus around a third at the dawn of the decade.

Graphic: BBB/Baa issuance spikes here

Reporting by Joshua Franklin and Kate Duguid in New York; Editing by Dan Burns and Dan Grebler

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2019-12-30 06:19:00Z
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Minggu, 29 Desember 2019

Here’s What Putting $10,000 in These Assets Would Have Returned in 2019 - Bloomberg

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Here’s What Putting $10,000 in These Assets Would Have Returned in 2019  Bloomberg
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2019-12-29 16:01:00Z
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Tax-Free Portfolio Yielding 10% - Seeking Alpha

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  1. Tax-Free Portfolio Yielding 10%  Seeking Alpha
  2. Retirement 2020: What to Watch for in the New Year  Barron's
  3. Can I Retire Securely by Saving Only in an IRA?  The Motley Fool
  4. This new law will change the rules when it comes to retirement savings | Money Smart  KENS 5: Your San Antonio News Source
  5. Sweeping Changes to Retirement Savings Rules on Tap for 2020 | Rossi  nj.com
  6. View full coverage on Google News

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2019-12-29 15:00:00Z
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Beware of 2020's Stealth Social Security Cut - The Motley Fool

Many people spend years looking forward to turning 62. That's because 62 is the first age at which most workers can claim retirement benefits from Social Security, and a large fraction of older Americans choose to start getting monthly checks from Social Security as soon as possible.

If you're going to be eligible for Social Security for the first time in 2020, however, there's something you need to know. Under laws that took effect more than 35 years ago, the benefits that you'll receive will be less than what people in a similar position in 2019 received. That's because lawmakers back then dealt with potential financial difficulties for the program by instituting new rules that effectively reduced how much those hitting early retirement age will get from Social Security.

What lawmakers did to take away benefits now

Social Security has always been a dangerous issue to discuss in Washington, and lawmakers in the early 1980s knew that they were entering a potential minefield. Yet they also needed to ensure the long-term financial security of the program. As part of a compromise, Congress agreed to raise the full retirement age, which at the time was 65.

Two Social Security cards on top of a $100 bill.

Image source: Getty Images.

However, the provisions didn't take effect immediately. The intent of waiting was to ensure that those who were close to retirement wouldn't get punished by the law changes at a time at which it was too late for them to do anything about it.

Instead, increases to the full retirement age got implemented on a delayed basis. It went rose from 65 in two-month increments for those born between 1938 and 1942, and stayed at 66 for those born between 1943 and 1954. More recently, another set of two-month incremental increases began a few years ago for those born in 1955. Those increases will continue until those born in 1960 and later have a full retirement age of 67.

What that means for those turning 62 in 2020 is that their full retirement age will be 66 and eight months. That's up two months from the full retirement age of 66 and six months for those who turned 62 in 2019.

Just how much money are new Social Security recipients losing?

The consequences of full retirement age rising by two months aren't immense, which is why it's fair to characterize the move as a stealth Social Security cut. Over time, though, the slight reductions will add up.

As an example, say that you're turning 62 in 2020 and were an above-average earner throughout your career, therefore qualifying for a full retirement monthly benefit of $1,800 from Social Security. Because your full retirement age is 66 and eight months, retiring at 62 means that you're getting your benefits 56 months early. That will result in your getting a Social Security check each month equal to 71 2/3% of your full retirement amount, or $1,290.

However, someone who turned 62 in 2019 and had the same earnings history and full retirement age benefit would receive slightly more. Because the full retirement age applying here was 66 and six months, claiming at 62 is just 54 months early. The 2019 retiree got 72 1/2% of their full retirement monthly benefit, or $1,305. That's $15 per month higher.

You can't just wait it out

If you think you can avoid the problem by holding off longer before claiming your Social Security benefits, think again. The change in full retirement age affects your benefits no matter when you claim.

For example, say you wait until age 70 to claim. You'll get 40 months' worth of delayed retirement credits, which will boost your check by 26 2/3%. The monthly check will be $2,280. However, for the person who turned 62 in 2019 instead of 2020, the increase would be slightly greater, with 42 months adding up to a 28% boost. That makes the corresponding monthly check $2,304 -- $24 higher every month.

Cuts will continue

Those turning 62 in 2021 and 2022 will also have to deal with this Social Security cut, until the full retirement age finally maxes out at 67. However, some policy makers believe that further increases to Social Security's retirement age could be forthcoming. Staying aware of them is critical to make sure that you don't get any nasty Social Security  surprises.

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2019-12-29 14:03:00Z
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Can I Retire Securely by Saving Only in an IRA? - The Motley Fool

There's a reason 401(k) plans are regarded as a valuable retirement savings tool: Their generous annual contribution limits make it feasible for workers to retire with more than enough money to live on for decades.

Currently, the annual contribution limits for 401(k)s are $19,000 for workers under 50, and $25,000 for those 50 and older. In 2020, these limits are increasing to $19,500 and $26,000, respectively. Plus, employers that sponsor 401(k)s often match worker contributions to varying degrees, which means those who save in a 401(k) can often sock away more than what the annual limits allow for, since employer contributions don't count toward them.

There's just one problem with 401(k)s, though: Not everyone has access to one. In fact, an estimated 49% of private sector workers did not have the option to save in a 401(k) in 2014, as reported in 2018 by the National Institute on Retirement Security.

IRA sign up in the clouds with right arrow underneath it

IMAGE SOURCE: GETTY IMAGES.

If you don't have the option to save for retirement in a 401(k), you may be wondering if an IRA will suffice. The annual contribution limits for IRAs are much lower than those of 401(k)s: just $6,000 for workers under 50, and $7,000 for those 50 and over. And, those limits are holding steady going into 2020, so workers won't get an added opportunity to save in the coming year. The good news, however, is that if you manage your IRA wisely, you could potentially retire quite comfortably with that money alone.

Maximizing your IRA

If you're limited to saving for retirement in an IRA, financial security could very well be yours if you do three key things:

  1. Start saving at a young age.
  2. Max out every year.
  3. Invest your savings wisely.

Many people delay their retirement savings for years after entering the workforce, largely because they graduate college with debt, but also because they figure they have plenty of time to save for their golden years. But if you start funding your IRA at age 22, and you retire around age 67, you'll have a solid 45 years to invest your savings for added growth. And if you're willing to live frugally so you can max out year after year, you'll wind up socking away quite a bundle.

Now, let's talk investments. Loading up on stocks in your IRA is generally the way to go, because that's where you'll usually be looking at the most aggressive growth. With an IRA, you can choose to invest in individual stocks, or in mutual funds that are stock-based. A mix of both could serve you well, but if you're not well-versed in vetting individual companies, mutual funds may be the way to go. That said, opting for index funds over actively managed mutual funds is a great way to keep your investment fees to a minimum, thereby getting to retain more of your returns.

Assuming you stick to this plan, there's a good chance your IRA will manage to generate an average annual 7% return over a 45-year period, since that's a bit below the stock market's average. Now, let's assume that you max out your account for 45 years at the current annual contribution limits between the ages of 22 and 67. When we apply that 7% return, you're left with -- wait for it -- $1.75 million. That's certainly enough for a decent retirement, because if you withdraw from that amount of savings at an annual rate of 4%, which many financial experts recommend, you'll be looking at $70,000, and that doesn't include the money you get from Social Security or other sources.

So there you have it: An IRA is enough to buy you financial security during your golden years. You just need to make sure you fund it for as many years as possible, contribute as much as you can, and invest it wisely.

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2019-12-29 11:36:00Z
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Sabtu, 28 Desember 2019

Elon Musk says Las Vegas tunnel will hopefully be operational by 2020 - CNN

His idea to bore tunnels underground to alleviate traffic in highly congested cities like Los Angeles and Las Vegas initially began as a joke in 2016 but has now become a full-fledged business aptly named the Boring Company with several nascent projects in major cities, including Chicago and Baltimore.
He tweeted Friday night that the Boring Company is completing its first commercial tunnel in Vegas from the Las Vegas Convention Center to the Strip, before it works on other projects.
Musk and the Boring Company have been working to revolutionize the way people travel with high-speed Loop and Hyperloop transportation systems. Underground tunnels will transport people in cars or passenger "pods," allowing commuters to bypass traffic and get around cities faster.
When completed, the Las Vegas project will consist of two tunnels, each about a mile long. Passengers will be transported via autonomous vehicles at up to 155 miles per hour, the company says.
As hawk-eyed Twitter users have pointed out, Musk, who also founded electric-car maker Tesla (TSLA)and rocket company SpaceX, had originally tweeted in March that the Vegas tunnel could be operational by the end of 2019. He then tweeted in May that the company would begin digging in two months — but the company did not actually start until November.
The Boring Company did not respond to a request for comment on Saturday.
A spokesperson for the Las Vegas Convention and Visitors Authority told CNN Business that Musk's 2020 fully operational deadline was in line with what was previously announced in November and that the tunnel would be complete in time for the 2021 Consumer Electronics Show.
"Nothing has changed on the anticipated timeline for development," she said. "We just broke ground mid-November and have its anticipated completion for the CES 2021 show."
In December 2018, Boring completed a test tunnel in Hawthorne, California that's used for developing Loop and Hyperloop. While Musk demonstrated a Tesla Model X that descended into the tunnel and drove a mellow 35 miles per hour during opening night, he envisions Hyperloop transport that will eventually reach 600 miles per hour. If that happens, US transportation could see a serious upgrade, but a lot of shifting deadlines stand in Musk's way for now.

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2019-12-28 18:36:00Z
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McDonald's employees help woman who mouthed "help me" at drive-thru - CBS News

When a woman walked up to a McDonald's counter in Lodi, California, this week, she didn't order a Big Mac. Instead, she indicated she needed help.

According to the San Joaquin County Sheriff's Office, the woman told an employee at the counter to call 911, providing the license plate of the vehicle she had arrived in. She also asked them to hide her. 

Police said the distressed woman used the bathroom and attempted to place an order at the counter, but the nearby suspect, Eduardo Valenzuela, demanded she order using the drive-thru instead. While driving through, she mouthed, "Help me," to an employee. 

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McDonald's employees in Lodi, California immediately called police after a woman came up to the counter begging for help.   San Joaquin County Sheriff's Office

Deputies arrived just after her request for help, and the McDonald's employees immediately directed them to the drive-thru. They ordered the woman to pull over. Valenzuela was sitting in the passenger seat. 

Trending News

A police investigation revealed that Valenzuela had a history of being violent with the woman. On that particular day, he threatened her with a firearm and told her to take him to visit his family, according to the San Joaquin County Sheriff's Office

Police found a stolen firearm from another state in the trunk of the vehicle. Valenzuela was booked in the San Joaquin County Jail for criminal threats, stolen property, and felon in possession of a firearm.

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Eduardo Valenzuela was booked in the San Joaquin County Jail for criminal threats, stolen property, and felon in possession of a firearm. San Joaquin County Sheriff's Office

Police thanked the employees for providing a "safe place" for abuse and human trafficking victims. The McDonald's location is owned by the Golden State Restaurant Group, which certifies each of its establishments as a "safe place." 

"Safe Place is a national youth outreach and prevention program for young people in need of immediate help and safety," the restaurant group said on its website. More than 20,000 community and business locations across the U.S. participate in the program. 

"We are proud of our team for doing their part in being A SAFE PLACE!" Golden State McDonald's wrote on Facebook. "We are proud to be in support with both A Safe Place and all of our law enforcement!" 

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2019-12-28 17:05:00Z
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