Personal Finance

Canada’s Pile Of Household Savings Is Mostly Held By The Rich, And Won’t Be Spent

Posted by Daniel Wong, betterdwelling.com

on Wednesday, 14 July 2021 6:53

Canadians have an epic pile of savings accumulating, but it’s not as big as most economists think. Oxford Economics‘ Tony Stillo took a deep dive into the household savings rate this week. The firm found the gross numbers exaggerate the total that can actually be used. Further, wealthier households represent more than half of the savings accumulation. In the end, only 13% of the epic pile is forecast to actually be used in the near future. Talk about a letdown.

Canadian Household Accumulated $184 Billion
Canadian households accumulated a big pile of savings since the pandemic started. The firm estimates $184 billion in gross excess savings from Q1 2020 to Q1 2021. The second quarter of this year should add even more, due to the third-wave lockdowns. It may sound like a lot, and you may have heard the “revenge spending” narrative. However, it may not be so impressive.

Only $100 Billion Of Those Savings Are Liquid
First off, the liquid excess savings are much smaller than the gross excess savings. Only $100 billion are actually liquid, by the firm’s estimate. Their analysis shows households used $22 billion in capital to reduce their debt. Another $62 billion has already gone to housing and equities.

Wealthier Households Represent More Than Half Of The Savings
Wealthier households represent most of the savings, which means less will be spent. Stillo’s team estimates over half of the savings are from the top two income quintiles. It’s a big detail since wealthier households have a lower marginal propensity to consume. In plain English, the households with savings already have few buying restraints. Additional cash only provides a minimal influence to increase consumption…read more.

Inflategate Strikes Again

on Wednesday, 14 July 2021 5:47

 

Inflation is getting so bad Arizona might have to raise the price of its iced tea above $0.99.

Okay, it’s not that horrific yet, but consumer prices did surge 5.4% in June from a year ago, the biggest increase in 13 years.

What happened: As the US reopened for business, consumers swiped their credit cards with fury. Combine that with supply shortages across the economy and massive government stimulus, and you get sweeping price increases.

But there are nuances

The WSJ’s David Harrison divided the inflation report into four categories to show that price hikes aren’t occurring uniformly across the economy. In some sectors…

  • Prices that plummeted early in the pandemic and are surging to catch up. Think airfares (24.6% annual increase in June) and hotels (16.9%).
  • Prices that are booming thanks to supply shortages. Used cars are the star of this category, with their price increases accounting for more than a third of June’s total price hikes. Economists expect prices to return to normal levels when supply chain wrinkles are ironed out.
  • Prices that will remain higher permanently. You could be paying more at restaurants over the long term thanks to an extended labor shortage and higher wages.
  • Prices that aren’t increasing that much. Rents are inching upward at a rate of 1.9% per month. For comparison, rents on a primary residence rose at a nearly 4% rate before the pandemic.

As always with inflation stories, we must close by turning to the Fed, whose main job is to keep prices stable. Will June’s inflation boom change Chair Jerome Powell’s view that price hikes are transitory?

Probably not. As we mentioned, the bulk of the price increases were in sectors battered by the pandemic (hospitality) or those battling supply shortages (used cars). Higher inflation might stick around a little longer than initially expected, but investors are betting more typical price growth will return, just like the handshake.

Read More

 

 

This company sells passports to Americans looking for a tax break on their bitcoin profits

Posted by Mackenzie Sigalos, CNBC.com

on Tuesday, 13 July 2021 6:59

Russian expatriate Katie Ananina has spent the last three years helping people dodge taxes on their bitcoin gains. It is all part of her mission to stick it to the man, one case of tax avoidance at a time.

As the name suggests, Plan B Passport offers crypto-rich clients a path to a second passport in their pick of seven, mostly tropical, tax-haven states, all of which are exempt from capital gains taxes on crypto holdings.

“I was smart enough to figure out that $200 in bitcoin will be worth $100,000 at some point,” said Ananina. “I don’t think the government should have 40% of that.”

Origin story
Ananina isn’t your stereotypical bitcoin maximalist, a phrase used to describe people who believe that bitcoin, and not necessarily other cryptocurrencies, is the future of finance.

Born and raised in Chelyabinsk, a city in central Russia, 90 miles north of the Kazakhstan border, the former professional sailboat racer moved to the States in 2016 after landing a green card, thanks to her status as one of the world’s top sailors.

Five and a half years ago she spoke no English, but you’d never know it to meet her.

For Ananina, the appeal of bitcoin was laid bare when she saw the Russian currency drop 50% during the two months she was living in Spain while competing for the Russian national sailing team in early 2015…read more.

The IEA Warns Of Another Oil Price War

Posted by Tsvetana Paraskova, oilprice.com

on Tuesday, 13 July 2021 6:40

The oil market has been on edge for a week now, entertaining the possibility of a new price war within the OPEC+ alliance, the International Energy Agency (IEA) said on Tuesday, adding that the current impasse is also threatening to derail the global economic recovery.

In June, global oil demand is estimated to have jumped by as much as 3.2 million barrels per day (bpd) to 96.8 million bpd, the agency said in its closely watched Oil Market Report for July.

For the rest of the year, oil demand will continue to rebound thanks to solid economic growth, rising vaccination rates, and easing of restrictions in many economies, the IEA said.

Yet, the oil market is jittery because of the ongoing OPEC+ deadlock, with increased volatility that helps neither producers nor consumers, the agency noted.

“At the same time, the possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery. The uncertainty over the potential global impact of the Covid-19 Delta variant in the coming months is also tempering sentiment,” the IEA’s monthly report says…read more.

Unopened Super Mario 64 game from 1996 sells for $1.56M

Posted by AP

on Monday, 12 July 2021 7:18

An unopened copy of Nintendo’s Super Mario 64 has sold at auction for $1.56 million.

Heritage Auctions in Dallas said that the 1996 game sold Sunday, breaking its previous record price for the sale of a single video game.

A spokesman did not immediately respond to an inquiry about who purchased the game.

Super Mario 64 was the best-selling game on the Nintendo 64 and the first to feature the Mario character in 3D, the auction house said in a statement.

The sale follows an unopened copy of Nintendo’s The Legend of Zelda selling at auction Friday for $870,000. Valarie McLeckie, Heritage’s video game specialist, said the auction house was shocked to see a game sell for more than a $1 million two days after the Zelda game broke its past record.

In April, the auction house sold an unopened copy of Nintendo’s Super Mario Bros. that was bought in 1986 and forgotten about in a desk drawer for $660,000…read more.