You are currently browsing the Capital Comments weblog archives for March, 2010.
31. March 2010 by Dan Walkow, CFA, CMT.
Investors who are under the illusion that all is well in Canada in regards to provincial finances may want to think twice.
Ontario leads the defict parade in Canada and for an interesting comparision between Ontario, Canada and California check it out here.
Posted in Tax, Taxation, Economics | No Comments »
31. March 2010 by Dan Walkow, CFA, CMT.
Hiking taxes and raising fees are not exclusive to most States in the USA; Canadian provinces are faced with growing deficits and tax hikes are front and center both on the consumption and income sides of the ledger.
The squeeze also continues on the the service and government spending side where services and budgets are being slashed to narrow the budget margin.
Expect more, alot more. Deficit reduction is going to be a multi-year process and we are only beginning to see federal governments both in the USA and Canada implement larger tax grabs. Mindful of the early stages of the economic recovery most governments are introducing tax hikes in bite size chucks but as things improve its going to accelerate.
One wants to revisit your tax planning strategy and prepare accordingly.
See the recent article at the Financial Post on provincial tax hikes here.
Posted in Tax, Taxation | No Comments »
29. March 2010 by Dan Walkow, CFA, CMT.
Posted in Investing | No Comments »
28. March 2010 by Dan Walkow, CFA, CMT.
WITH all the hoopla over the health care bill, hardly anybody noticed that a job creation bill that President Obama signed on March 18 makes it much harder for United States citizens to avoid taxes by hiding money in overseas bank accounts.
Congress is attacking some of these schemes, courtesy of interesting provisions aimed at curbing tax avoidance that legislators wrote into the new jobs bill, known as the Hiring Incentives to Restore Employment Act.
The most substantive section of the bill states that foreign financial institutions will face a 30 percent tax on their United States investments if they refuse to disclose information about accounts they have opened for American citizens in offshore jurisdictions. Another aspect of the bill eliminates a clever derivatives strategy used by investors to make their tax bills on dividends disappear.
The law was written broadly and covers banks, hedge funds, securities houses, derivatives dealers, commodity traders and private equity firms. Indeed, any financial firm that holds or trades assets for its own account or for clients must comply with the new reporting requirements.
The United States continues to put legal means in place to compel offshore investors and advisors to declare and pay tax on offshore investment accounts and investments. Canada, as always, is a little behind the USA in this regard but you can be sure that that gap will close soon as well. DGW
Read the full article at the New York Times here.
Posted in Tax, Taxation | No Comments »
26. March 2010 by Dan Walkow, CFA, CMT.
The great bull market in bonds, read the decline in interest rates is over. It has been a fantastic cycle since 1981 for bondholders and mortgage holders for almost a full generation. Interest rates always went down and until recently stayed down. Its over.
The massive monetary stimulation by governments the world over now has to be financed and given massive amount of financing required the price of money (interest rates) is on the rise; its only the beginning.
Last year’s meltdown and subsequent “monetary rescue” by central banks is a game changer and has signifigant ramifications for investing and borrowing alike.
For investors this means bond prices will be under pressure and capital appreciation of fixed income investments will be limited at best and pose signifigant downside risk over the next several years.
For borrowers such as mortgage holders the risk of increasing mortgage rates is almost a certainty, in my opinion, time to lock in that floating rate or at the very least refinance using one of those split mortgages where you can fix a portion and let the balance float. If you do not you will face higher mortgage costs in a few years perhaps as much as double.
We have and continue to position client portfolios with a rising interest rate environment in mind, you should too!
Read what Bill Gross at Pimco, perhaps the worlds largest and most successful bond investor has to say here.
Posted in Inflation, Fixed Income | No Comments »
23. March 2010 by Dan Walkow, CFA, CMT.
A California client of Swiss bank UBS was sentenced to six months home detention for tax evasion in the latest case stemming from a U.S. government probe of citizens hiding billions of dollars in offshore assets.
John McCarthy, a businessman from the wealthy seaside enclave of Malibu, also was placed on three years supervised probation on Monday and fined $25,000 for his guilty plea to a single felony count of failing to report a foreign bank account from 2003 through 2008.
In addition to the fine, McCarthy was ordered to make restitution of more than $485,000 he owed to the government, which he already has paid, and to perform 300 hours of community service, which he can do while under home detention.
He had faced a maximum penalty of five years in federal prison and $250,000 in fines.
But Judge Valerie Baker Fairbank said she weighed in McCarthy’s favor his cooperation with authorities, the fact that he had no prior criminal record and had otherwise “led a responsible, law-abiding life.”
Here is the kind of treatment one can expect if caught stashing money offshore and failing to report a foreign account!
Posted in Tax, Taxation | No Comments »
15. March 2010 by Dan Walkow, CFA, CMT.
As economist Xie points out, residential prices in China relative to per capita income are far and away the highest in the world. The housing price-to-income ratio in urban China is over 20, which means it takes the average citizen’s total wages for 20 years to buy an average dwelling. (By comparison, the highest housing affordability ratio for a U.S. city — Honolulu — is 8.2.)
Read more: http://www.time.com/time/magazine/article/0,9171,1971284,00.html#ixzz0iFWqVIxE
Posted in Economics | No Comments »
15. March 2010 by Dan Walkow, CFA, CMT.
At the beginning of the year we described China as one of our “5 biggest risks” of 2010. Last week we mentioned (see here) the risks in the Chinese economy appear to be mounting as property prices surge and inflation begins to rear its ugly head. Well, it looks as though we’re not the only ones who are concerned about the sustainability of the Chinese economic recovery. According to Westpac Bank in Australia the leading economic indicators in China are beginning to roll over:
Read more at the Pragmatic Capitalist here.
Posted in Investing, Economics | No Comments »
15. March 2010 by Dan Walkow, CFA, CMT.
China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand. This is worth a read go here.
Posted in Investing, protectionism, Economics | No Comments »