17 Feb Weekly Reads: 02/17/2017
The Week’s Best Articles: Week of February 13, 2017
Retirement Saving: Make Accounts Harder to Tap – click here
With the rise of contribution based retirement plans, saving for retirement has become an even larger issue domestically. Interestingly, a Wall Street Journal study shows that if accounts are harder to access they are more likely to be used for savings! Perhaps part of tax overhaul should include more incentives (and disincentives for raiding) for saving via dedicated retirement accounts.
Taxes: Understanding Nanny Tax – click here
Many people across the country employ in home help ranging from nannies to house cleaners. For many these services are not accounted for appropriately on most tax returns. This article gives a quick glimpse of things to consider/avoid when using these sorts of aides.
Lake Oroville: What Has Happened So Far? – click here
With record rains and reservoirs nearing capacity it isn’t surprising that stories like this are beginning to pop up. This article from the LA Times does a good job outlining what has happened at Lake Oroville and why the high water levels pose such a danger.
Treasuries: America’s Largest Creditors Selling Bonds – click here
The U.S. is one of the largest debtors in the world. Thankfully historically there has been no shortage of individuals (and countries) that have been willing to buy our debt. Lately many of our creditors have been selling a portion of their holdings. Whether this is born from a desire to protect their weakening currencies or as a statement against President Trump it bears watching.
North Korea: Half Brother of Leader Killed by Poison – click here
If the stories coming out of North Korea couldn’t be any wilder. The half-brother, and once heir to the Presidency, of the current leader was killed by two women who stabbed him with poison. North Korea never disappoints.
Equity Markets: Foreign Stocks Outperforming – click here
As investors there are constant examples of why a diversified portfolio of US stocks, foreign stock, bonds (of varying classifications) and other asset classes is the preferred way to invest. Most recently the strength seen in foreign equity markets, relative to the US, is an example of this.
Interest Rates: Rate Hikes Likely – click here
Not surprisingly chairwoman Janet Yellen indicated on Monday that waiting to long to continue raising interest rates would be a mistake. We have long been a believer that rates will rise this year and her comments only reinforce this view.
Interest Rates: TIPS Demand Suggesting Inflation to Come? – click here
One common theme over the past several years has been the demand for US Government bonds. Both foreign and domestic investors alike have been pilling into the securities. Recently, demand for TIPS (or government bonds that carry inflation protection) have seen near record demand. TIPS markets are a great way to quickly get an idea of where the market believes inflation is heading.
Exchange Rates: Currency Manipulation – Fallacy or Real? – click here
A bit dense but a good overview of exchange rates and how arbitrage absent other factors will drive currencies to an equilibrium level. This is an important topic to understand due to President Trump’s repeated fixation on currency “manipulation” by the Chinese and other government’s around the world.
Debt: Household Debt Near 2008 Peak, but Looks Different – click here
During the late 2000s the rise in home prices forced borrowers to take on higher and higher levels of mortgage debt (primary mortgages and HELOCs). Today student debt and auto debt make up a growing percentage of households’ total. This transition is interesting but ultimately hides the truth: that without an overall reduction in aggregate debt households are borrowing the same amounts just in different places. This means for many they continue to live well above their means.