Alexandra ScaggsRead Biography
What would it mean for markets if the US brought back all those untaxed foreign corporate profits? We look at what’s known, what’s unknown, and known unknowns. (Some of it depends on whether the repatriation is literal or figurative. It’s complicated.)
If you’re still harbouring hopes for a globalised world, the Federal Reserve might be able to help. One analyst says central-bank intermediation could alleviate the global dollar-funding pressures introduced by post-crisis regulations.
Donald Trump will be the next president of the United States. The outcome has stunned not only Hillary Clinton supporters but also the pundits who failed to anticipate his rise, the professional pollsters who bafflingly underestimated his chances of defeating Clinton, and perhaps even a non-trivial number of his own voters. As a candidate, Trump won not only despite having broken traditional rules of politics, but also despite violating many of the social norms that govern decent, humane behaviour.
Well, it’s been a little bumpy for this blog’s favourite only option to trade in election prediction markets. PredictIt is currently experiencing high trading volumes. We thank you for your patience. — PredictIt (@PredictIt) November 9, 2016
So, Virginia and Florida started leaning towards Trump, making the election a closer call than some pundits expected. No official swing-state surprises just yet. But traders appear to be considering the possibility of a Trump presidency, and it’s not terribly pretty.
Central bankers say they’re apolitical. But politics, money and policy are inseparable. So when monetary authorities either ignore (or pretend to ignore) that fact, it’s fair to worry their actions could lead to unexpected political fallout.
If it walks like a dealer and talks like a dealer… apparently, it’s not always a dealer. Sometimes it’s an unregulated trader. Bear with us here. First, some background. On Monday, there was a Treasury market-structure conference at the New York Fed, where regulators said in no uncertain terms that the no-oversight party is over. They’ve put rules in place requiring transaction reporting for banks, as well as broker-dealers registered with the Financial Industry Regulatory Authority. But there’s more work to be done, which we’ll get to shortly.
This is a marvelously weird apparent prank. There seems to be an actual entity — it’s registered in Wisconsin — called YNOFACE Holdings Inc, which said in a SEC filing Wednesday that it had acquired more than 4.2 bn shares of Bank of America on September 22, and nearly 800 million shares on August 15 with an exchange of shares.
Alexandra Scaggs joined FT Alphaville in June 2016. She previously covered US interest rates for Bloomberg, where she wrote about the Fed’s first only 2015 rate hike, created some work for lawyers when her story on Treasury auctions was cited in a class-action lawsuit, and also did the occasional broadcasty type of thing. Before that, she wrote about US equities at the Wall Street Journal and unintentionally specialised in having mild profanities printed in the paper. Her stories have also appeared below gas jokes and a photo of the destruction from Typhoon Haiyan.
Who would’ve thought that this election year could lead to corporate tax reform in the US? Goldman Sachs Group analysts say there could be some semblance of a bipartisan effort to rework the way multinational US companies are taxed during the next presidential term. They estimate there’s a 50-per-cent chance the corporate tax code will be reworked next year. (In short, the voters have spoken, and they want Big Business to pay.) The US taxes corporate income at the highest rate of any OECD country, at 39 per cent. And unlike any other G7 country, it taxes companies’ income earned abroad, though it gives credits for taxes paid to foreign governments. That would be onerous, if the taxes weren’t delayed until foreign income is brought back onshore. Perpetually. That gives companies a big incentive to keep their foreign income offshore, reinvest it in financial markets, and pay lower dividend and capital-gains tax rates instead. And, hey, look, they’ve responded! S&P 500 companies pay a median tax rate of 28 per cent, according to Goldman Sachs’s analysis:
Citigroup suggests a rather grim fix for oil-exporting countries struggling with the drop in crude prices: Lower ambitions for economic growth, and fewer unskilled immigrants. Limiting immigration is a tactic that’s appealed to other countries recently (we’d make a snarky comment about the UK, if only we Yanks were in any place to feel superior). But we’re willing to at least entertain the logic, since GCC countries — the United Arab Emirates, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia — are in a very different situation than Europe and the US. They’ve historically relied heavily on foreign nationals’ labour in the private sector, and employed domestic workers in oil-funded government jobs.