Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (862)	6/8/2018 10:18:43 AM
From: elmatador	Respond to of 13800

Good to remind that new things driving many sectors: cloud,autonomous vehicles & EV's, data streaming, 5G, cheaper better smartphones, laptops, and desk tops all of which with better faster memory and wireless alternatives everywhere. Let me tell you something. I went back to Brazil from Nigeria during the worse of the Debt Crisis of the 80s and told my friend over caipirinhas that the country's economy had gone down hill and I could see in the streets. My friend told me: There are a lot of activities going on, but on the surface of things go unperceived. I and a few people, not many, now can have a PC. Not the most modern. Not the most souped up. Neither a mass market. But we can buy one. I used to go to Catalao, the citry of his wife, he continued. And I needed two buses, Now I can travel with a direct buis journey. You see, the service sector is providing some small improvements here and there and it is not the big bang. Thus no one notices. Then he said: the food producers of Sta Catarina (the southern state) continue to produce food: sausages salami, and ham and frozen chickens etc. And they have not had a recession in any single year. The recession is around here (in Sao Paulo) where people deals with nuts and bolts and welding torches and assemble bits and pieces The industry has suffered a lot. and industry is visible and they have unionized workers.and that make them vocal and noisy and all that. Peter Drucker, told this in another way. Jobs are being destroyed in the old sector faster than jobs are being created in the new sector, therefore, creating a bubble of unemployment. To which I have to add: Old sectors have ways and means to protect their incumbency and delay the move to new sectors. By taking advantage of old technologies getting cheaper or suppliers tweaking with the old technologies to get a few extra years of economic life.

To: robert b furman who wrote (862)	6/10/2018 2:46:15 AM
From: elmatador	Respond to of 13800

Guess What? Companies Are Bringing Their Cash Home Tax reform seems to be working in at least one way. By Mark Whitehouse For all the flaws of the tax reform that Congress passed back in December, there's one area where it appears to be working: Getting U.S. companies to bring back the enormous piles of money they have stashed abroad. Now the question is what they will do with it. Before 2018, the U.S. government taxed companies' foreign earnings in a highly unusual way. It applied the 35 percent U.S. corporate rate to their global income (minus foreign taxes paid), but collected the tax only when they brought the money home. So companies left it abroad, building a stockpile of as much as $3.1 trillion. The Tax Cuts and Jobs Act of 2017 changed all that, bringing the U.S. more in line with other countries. For one, it lowered the corporate tax rate to a more competitive 21 percent. It also largely eliminated taxation of foreign earnings, and imposed a one-time tax -- 15.5 percent on cash, 8 percent on other assets -- on what companies had already accumulated. The Trump administration predicted that the changes would trigger a flood of money back into the U.S., but many were skeptical. Companies already held so much cash domestically that they were giving it back to shareholders in the form of stock buybacks and dividends. Also, many other countries still had lower tax rates than the U.S., so why not deploy the money there? Well, an influx seems to be happening. Before 2018, U.S. nonfinancial corporations tended to add about $50 billion to earnings held abroad every three months. But in the first three months of 2018, that number turned to a negative $158 billion, according to the Federal Reserve. That's the biggest reversal on records going back to 1946, and much more than companies brought back in 2005, the last time the government triedsomething similar. Here it is as a percentage of gross domestic product: The repatriation is also reflected in Bureau of Economic Analysis data on dividends received from abroad. They amounted to $340 billion in the first three months of 2018 -- again, a record: Interestingly, companies left extra money abroad -- and received fewer dividends from their overseas investments -- in the last three months of 2017. This might illustrate a perverse incentive that the tax changes created. As of Dec. 20, when Congress passed the reform, corporate executives knew they would be getting a big break on their foreign stash in 2018. So, it seems, they left more overseas in 2017 to take maximum advantage. In any case, money is coming back. But what are companies doing with it? The real testof the tax reform, after all, will be whether it prompts the kind of investment that boosts employment, growth and productivity in the longer run. The Fed data offer some clues. In one positive sign, nonfinancial companies' capital expenditures increased by about $14 billion -- or 3 percent -- in the first quarter of 2018, compared with the previous quarter. They also gave more money back to shareholders: Stock buybacks were up by about $20 billion, but still well within the range seen in previous quarters. This is perhaps less encouraging -- unless the shareholders find productive ways to invest the money elsewhere. It's still early days, and the true impact of the tax reform probably won’t be known for years. But give credit where credit is due: In terms of bringing money back home, the new tax law is proving some of its critics wrong. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. To contact the author of this story: Mark Whitehouse at mwhitehouse1@bloomberg.net