Bloggy Business Today

By Lucia Mutikani

WASHINGTON |
Fri Sep 30, 2011 10:14am EDT

WASHINGTON (Reuters) – Incomes fell for the first time in nearly two years in August and consumers dug into their savings to keep spending, according to a government report that showed the impact of the weak jobs market.

The Commerce Department said on Friday spending rose 0.2 percent, in line with economists’ expectations, after increasing 0.7 percent in July. When adjusted for inflation, however, spending was unchanged after rising 0.4 percent in July.

Consumer spending accounts for about 70 percent of U.S. economic activity, so the flat inflation-adjusted reading adds to a picture of shaky GDP growth.

Income slipped 0.1 percent, the first decline since October 2009 and contrasted with economists’ forecast for a 0.1 percent advance. Private wages and salaries dropped $12.2 billion after increasing $23.8 billion in July.

“What you’re basically getting is a scene where consumers are losing momentum, they’re losing momentum on income and as a result of that they’re slowing down on spending,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities in New York.

Employment growth ground to a halt in August, and the jobless rate remains at a lofty 9.1 percent, eroding consumers’ buying power. The September payrolls report is due next Friday.

U.S. stocks opened lower after the data, while bond prices soared, pushing the 30-year yield down to 2.93 percent. A deepening gloom is taking hold in financial markets as investors worry that with no quick end to the euro-zone crisis in sight, the global economic slowdown will worsen.

Manufacturers are retrenching. Industrial conglomerate Ingersoll Rand Plc was the latest, cutting its third-quarter and full-year earnings forecast to below market estimates, citing weak demand at its key North American residential and commercial markets for security technology.

The Chicago PMI manufacturing index and Thomson Reuters/University of Michigan consumer sentiment survey due later on Friday will give a further reading on the U.S. outlook.

Consumer spending growth slowed sharply to a 0.7 percent annual pace in the second quarter after advancing 2.1 percent in the first three months of the year.

Overall economic growth rose at a 1.3 percent rate in the second quarter after expanding only 0.4 percent in the January-March period.

Last month, real spending on goods fell 0.2 percent, while services ticked up 0.1 percent.

Disposable income was unchanged for the first time since September, but when adjusted for inflation fell 0.3 percent, the largest drop since October 2009.

With real disposable income weak, savings fell to an annual rate of $519.3 billion,

Article source: here

By Lucia Mutikani

WASHINGTON |
Fri Sep 30, 2011 10:14am EDT

WASHINGTON (Reuters) – Incomes fell for the first time in nearly two years in August and consumers dug into their savings to keep spending, according to a government report that showed the impact of the weak jobs market.

The Commerce Department said on Friday spending rose 0.2 percent, in line with economists’ expectations, after increasing 0.7 percent in July. When adjusted for inflation, however, spending was unchanged after rising 0.4 percent in July.

Consumer spending accounts for about 70 percent of U.S. economic activity, so the flat inflation-adjusted reading adds to a picture of shaky GDP growth.

Income slipped 0.1 percent, the first decline since October 2009 and contrasted with economists’ forecast for a 0.1 percent advance. Private wages and salaries dropped $12.2 billion after increasing $23.8 billion in July.

“What you’re basically getting is a scene where consumers are losing momentum, they’re losing momentum on income and as a result of that they’re slowing down on spending,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities in New York.

Employment growth ground to a halt in August, and the jobless rate remains at a lofty 9.1 percent, eroding consumers’ buying power. The September payrolls report is due next Friday.

U.S. stocks opened lower after the data, while bond prices soared, pushing the 30-year yield down to 2.93 percent. A deepening gloom is taking hold in financial markets as investors worry that with no quick end to the euro-zone crisis in sight, the global economic slowdown will worsen.

Manufacturers are retrenching. Industrial conglomerate Ingersoll Rand Plc was the latest, cutting its third-quarter and full-year earnings forecast to below market estimates, citing weak demand at its key North American residential and commercial markets for security technology.

The Chicago PMI manufacturing index and Thomson Reuters/University of Michigan consumer sentiment survey due later on Friday will give a further reading on the U.S. outlook.

Consumer spending growth slowed sharply to a 0.7 percent annual pace in the second quarter after advancing 2.1 percent in the first three months of the year.

Overall economic growth rose at a 1.3 percent rate in the second quarter after expanding only 0.4 percent in the January-March period.

Last month, real spending on goods fell 0.2 percent, while services ticked up 0.1 percent.

Disposable income was unchanged for the first time since September, but when adjusted for inflation fell 0.3 percent, the largest drop since October 2009.

With real disposable income weak, savings fell to an annual rate of $519.3 billion,

Article source: here

By Chris Vellacott

LONDON/NEW YORK |
Fri Sep 30, 2011 10:22am EDT

LONDON/NEW YORK (Reuters) – When Irish rockers U2 took to the main stage at this year’s Glastonbury music festival, a small but vocal group of activists raised a large balloon emblazoned with the words “U Pay Tax 2?”

Most people in the 60,000-strong crowd barely noticed the stunt on a rain-lashed night, but the world’s media latched on to the protest and gave it prominent mention in their reports of the eagerly awaited performance by one of rock and roll’s biggest acts.

Years ago the band transferred some of its assets from Ireland to the Netherlands, as did members of the Rolling Stones, prompting the New York Times to label the Netherlands “The New Tax Shelter Hot Spot.”

U2′s music triumphed on that muddy June night, but the tax habits of the world’s super-rich have since become a hot topic.

Cash-strapped western governments are on the offensive against their own elites. Wealth taxes are up, loopholes are being closed and crackdowns on offshore havens and Swiss bank accounts are gaining momentum.

“Flogging the rich always becomes a national sport in times of crisis,” says Catherine Tillotson, managing partner at consultancy Scorpio Partnership.

Some super-rich are volunteering funds: billionaires Warren Buffett and L’Oreal SA heiress Liliane Bettencourt recently made statements offering to shoulder more of the tax burden.

In the United States, President Barack Obama has called for a new minimum tax called the “Buffett Rule” for American households that make more than $1 million annually. A recent USA Today/Gallup poll showed 66 percent of Americans support increasing income taxes for wealthy individuals.

Proposed changes to the U.S. tax code may not materialize soon — the proposal is a “political statement and not a serious legislative proposal,” said Scott A. Hodge, president of Washington-based research group the Tax Foundation.

But the debate and recent moves have underlined a longstanding truth: it is much harder for wealthy Americans to avoid taxes than for their European counterparts.

“You are definitely better off not being American,” said John Christensen, director at Tax Justice Network, which campaigns against tax havens.

NO ESCAPE

U.S. citizens are liable to U.S. tax wherever they are in the world, making it virtually impossible for them to become legal tax exiles — a possibility open to Europeans, many of whom have set up home in tax havens like Monaco and Britain’s Channel Islands.

Americans cannot even escape these obligations by renouncing their citizenship, says Sydney E. Unger, a partner in the tax department

Article source: here

By Chris Vellacott

LONDON/NEW YORK |
Fri Sep 30, 2011 10:22am EDT

LONDON/NEW YORK (Reuters) – When Irish rockers U2 took to the main stage at this year’s Glastonbury music festival, a small but vocal group of activists raised a large balloon emblazoned with the words “U Pay Tax 2?”

Most people in the 60,000-strong crowd barely noticed the stunt on a rain-lashed night, but the world’s media latched on to the protest and gave it prominent mention in their reports of the eagerly awaited performance by one of rock and roll’s biggest acts.

Years ago the band transferred some of its assets from Ireland to the Netherlands, as did members of the Rolling Stones, prompting the New York Times to label the Netherlands “The New Tax Shelter Hot Spot.”

U2′s music triumphed on that muddy June night, but the tax habits of the world’s super-rich have since become a hot topic.

Cash-strapped western governments are on the offensive against their own elites. Wealth taxes are up, loopholes are being closed and crackdowns on offshore havens and Swiss bank accounts are gaining momentum.

“Flogging the rich always becomes a national sport in times of crisis,” says Catherine Tillotson, managing partner at consultancy Scorpio Partnership.

Some super-rich are volunteering funds: billionaires Warren Buffett and L’Oreal SA heiress Liliane Bettencourt recently made statements offering to shoulder more of the tax burden.

In the United States, President Barack Obama has called for a new minimum tax called the “Buffett Rule” for American households that make more than $1 million annually. A recent USA Today/Gallup poll showed 66 percent of Americans support increasing income taxes for wealthy individuals.

Proposed changes to the U.S. tax code may not materialize soon — the proposal is a “political statement and not a serious legislative proposal,” said Scott A. Hodge, president of Washington-based research group the Tax Foundation.

But the debate and recent moves have underlined a longstanding truth: it is much harder for wealthy Americans to avoid taxes than for their European counterparts.

“You are definitely better off not being American,” said John Christensen, director at Tax Justice Network, which campaigns against tax havens.

NO ESCAPE

U.S. citizens are liable to U.S. tax wherever they are in the world, making it virtually impossible for them to become legal tax exiles — a possibility open to Europeans, many of whom have set up home in tax havens like Monaco and Britain’s Channel Islands.

Americans cannot even escape these obligations by renouncing their citizenship, says Sydney E. Unger, a partner in the tax department

Article source: here

By Sam Forgione

Thu Sep 29, 2011 8:07am EDT

THE ISSUE: The SP Indices/Case Shiller recorded a fourth consecutive month of increases. Existing home sales jumped in the latest report. Low-rate mortgages have boosted affordability measures. Is it time for investors to start looking for real estate?

NEW YORK (Reuters) – After a five-year slide from the price peak reached in 2006 is it finally time for the housing market to rebound?

Not for single-family homes, which are still being jack hammered by foreclosures and unemployment, analysts say. And not for home builders, whose stocks remain deeply depressed.

Looking more broadly at real estate, there are ways to invest. As ever, it’s all about location — but, these days, it’s more about locating credit than a patch of green turf:

REITS:HOUSING ALTERNATIVE

A key problem with single family homes is that consumers are having problems getting financing, says Paul Hickey of Bespoke Investment Group. REITs are a solution.

“Rental REITs may be more attractive until credit markets become looser,” Hickey said.

Hickey cited Avalon Bay as a favorite. Another strategist, Joel Beam of Forward Management, also likes Avalon, and added Equity Residential and Camden

Moreover, with their regular income payouts, REITs suit the demands of investors fed up with volatile equities and looking for ways to safely add income.

REIT FUNDS:SPREADING THE RISK

REITs have attracted more funds every year since 2008, said Lipper analyst Tom Roseen.

REITs can be extremely specialized in how they generate income and invest their holdings.

“With ETF REITs, you have to make sure it is broadly-based, because they can be very niche-focused,” he said. “When you buy mutual fund or ETF REITs, you get a broader range of REITs and get to diversify recent risks.”

EARTH-MOVERS, NOT HOMEBUILDERS

While the home building sector is not ready to rebound, one strategist said to look for companies better-placed for an industrial recovery, naming Caterpillar, the earthmoving giant, and MeadWestvaco Corp, which makes packages for many consumer products.

The strategist, Sam Turner, director of large cap portfolio management at Riverfront Investment Group, said also picked KLA-Tencor, a tech stock that is involved in chip making, because it “offers better risk/reward for your cyclical dollar.”

Turner is skeptical about REITs.

“We removed our overweight to REITs several weeks ago,” citing concerns that “a rally in treasuries was getting mature” and that the valuations were depreciating.

He was particularly negative on SPDR SP Homebuilders ETF as a fund whose components are made up of over one-quarter public housing builders.

“We advise investors to look under the ETF hood,” he said.

Meanwhile, David Kreinces, founder and portfolio manager at ETF Portfolio

Article source: here