'Inactivity rules:' These are some of the quietest markets for 10 years

• Ben Moshinsky
 

• 7h
• 834

It's quiet out there. 20th Century Fox/YouTube

August is the quietest month, but this year's is particularly special.

This year the markets are dead.

While August is usually the month for taking a long holiday, in 2015, China's currency devaluation and stock market crash made sure the month was volatile.

In the years before that, the Eurozone sovereign debt crisis kept the August news flow moving.

Deutsche Bank's head of global fundamental credit stragy, Jim Reid, puts out a daily note on the markets for clients and is having a tough time coming to terms with the lack of movement.

He noted on Thursday he wrote: "Markets continue to behave like they've eaten too much cake and need to lie in the corner and do nothing in order to recover. Inactivity rules."

And the day before Reid said: "The sun is shining, markets are dull, if my knee surgeon was a more understanding person I’d be sneaking off early today to squeeze in a round of golf before dark." 

He noted that "the S&P 500 closed -0.52% yesterday which is actually the fourth biggest move up or down this month. Still, it marked the 33rd consecutive session that the index has failed to break +/- 1%."

But the starkest indicator of how dull things are is found in the US 10-year Treasuries market.

Reid cited a chart from Bloomberg News that shows "that the monthly trading range in 10 year US Treasuries is so far in August the lowest for 10 years."

Here is the chart:

Deutsche Bank

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Apple could be on the hook for $19 billion in taxes, and the Obama administration is livid

• Kif Leswing
 

• 19h
• 162,564
 
• 147

Getty

Apple  $106.97

AAPL

+/--1.07

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Disclaimer

The European Commission is expected to levy a judgment against Apple in the next few months that could total in the billions of euros.

JPMorgan has estimated that Apple could be on the hook for as much as $19 billion — or about 17 billion euros — the Financial Times reports.

The commission is accusing Apple of striking a sweetheart tax deal with Ireland, in which the iPhone maker would move its profits to wholly owned Irish subsidiaries to reduce its corporate taxes.

Apple has one major defender in its corner, though: the US Treasury Department and, by extension, the Obama administration.

The Treasury released a white paper on Wednesday, commissioned by Treasury Secretary Jack Lew, that did not mince words while defending American companies, including Apple, Starbucks, and Amazon.

It says that the Brussels-based investigation of Apple is "supranational" and essentially accused the European Commission of executing a power grab and unfairly targeting American companies.

Here's the money quote from the paper (emphasis added):

"The U.S. Treasury Department continues to consider potential responses should the Commission continue its present course. A strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU Member States."

Tax is one of the biggest and most touchy policy issues for Apple. Congress investigated Apple's tax arrangements in 2013, which led to CEO Tim Cook testifying before a US Senate subcommittee.

Apple has billions of dollars held offshore that it would love to bring back to the US, but Cook has said that he thinks the system is unfair.

"The money that's in Ireland that he's probably referring to is money that is subject to U.S. taxes. The tax law right now says we can keep that in Ireland or we can bring it back," Cook told The Washington Post. "We've said at 40 percent, we're not going to bring it back until there's a fair rate. There's no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law."

"It's important for everyone to understand that the allegation made in the E.U. is that Ireland gave us a special deal. Ireland denies that," Cook said.

Based on the release of Wednesday's paper, it sounds as if Apple can continue to rely on the Treasury's support while navigating this multibillion transatlantic spat.

SEE ALSO: Inside Apple's Irish holding companies

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A new study should have Coke and Pepsi terrified

• Kate Taylor
 

• 19h
• 32,526
 
• 28

Flickr/Maya83

People in Berkeley, California, significantly cut back on soda after the city introduced a tax on sugary beverages.

That's according to a study of low-income neighborhoods that was published in the American Journal of Public Health on Tuesday. The study found that soda consumption dropped 22% after Berkeley imposed a penny-per-ounce tax on sugar-sweetened beverages.

The city's tax passed in 2014 and went into effect in May 2015. The new tax made a 20-ounce bottle of Coke 20 cents more expensive for distributors. This extra cost is passed on to consumers.

Researchers tracked changes in soda consumption after the tax went into effect, comparing surveys of Berkeley residents' reported beverage consumption from April to July 2014 against survey results from April to August 2015.

Researchers also compared soda consumption in low-income Berkeley neighborhoods against neighborhoods with similar demographics in nearby Oakland and San Francisco. In cities where no tax had been implemented, soda consumption actually increased by 4% in the same period.

Getty Images/Justin Sullivan

While higher costs associated with the tax likely played a role in deterring consumers, other factors may have been at play as well.

"The greater-than-predicted reduction in consumption in Berkeley could also reflect effects of the campaign surrounding the tax, which may have shifted social norms," the report says.

Berkeley is one of the few cities in the US to successfully pass a soda tax, though similar laws have been proposed around the country and world. In July, Philadelphia passed a tax increase of 1.5 cents per ounce of sugar-added and artificially sweetened soft drinks — a tax expected to raise approximately $91 million over the next year.

Philadelphia is still the only major US city to pass such a tax. Internationally, however, efforts have had more success — soda taxes have been passed in countries including Britain, France, Hungary, and Mexico.

A 10% tax on sugar-sweetened beverages in Mexico in January 2014, which made soda more expensive for consumers, was associated with a 12% reduction in sales of taxed drinks.

While critics have said that the reduction isn't enough to significantly affect consumers' health, it was enough to cause concern for soda giants attempting to grow their sales in the country.

Big soda's reaction

Julia Calderone/Tech Insider

Unsurprisingly, the soda industry isn't pleased with efforts to turn customers away from sugary beverages. The American Beverage Association, the industry's main lobby group, has already invested millions of dollars to fight laws to tax and label sugary beverages.

Per capita soda sales have dropped 25% since 1998, but the number of bottles and cans purchased is still rising. As consumers have become more nutrition savvy, many have cut soda consumption without government intervention. Adding soda taxes is simply another step in thebattle between the soda business and nutrition advocates.

So far, soda giants are trying to recoup lost sales in two ways: convincing consumers that sweet sodas are OK to drink, and investing outside of traditional sugary drinks.

If soda companies want to persuade people to continue to drink soda, they need to cut sugar and calories. To start, the American Beverage Association has an initiative to cut calories from beverages consumed per person by 20% by 2025.

Sales of smaller cans and bottles at Coke and Pepsi have increased in recent years. Reuters

One way to do that is by making serving sizes smaller — essentially making more money by selling less soda and reducing the effect of taxes in areas taxing sugary drinks by the ounce.

"In markets like North America, we are moving towards selling smaller packages instead of bigger packages," Coca-Cola President James Quincey said in a Q&A after the company reported second-quarter earnings in July.

Persuading people to buy soda in smaller cans isn't enough, though. Increasingly, soda giants are diversifying and investing in healthier options that won't be affected by sugar taxes.

PepsiCo CEO Indra Nooyi said in April that less than 25% of the company's global sales are from soda. Rather, the company is focusing on healthy snacks and noncarbonated beverages — a process the company calls "future-proofing."

Coca-Cola and Pepsi are relying on healthier beverages, like Coca-Cola-owned Smartwater, to make up for soda's declining sales. Flickr

Coke said in July that sparkling-beverage sales by volume decreased 1% in the second quarter.

With more governments considering soda taxes on the city, state, and national levels, Coke and Pepsi have reason to believe that soda consumption will continue to fall. However, they may be able to find salvation in less sugary beverages.

The Berkeley soda study found that when people decreased their soda consumption, they replaced it with healthier choices. Water consumption (bottled or tap) increased 63% in Berkeley after the soda tax went into effect.

As consumers continue to cut soda out of their diets and governments around the world push to cut sugar even more, expect much of those companies' growth to be in bottled water, sports drinks, and juice — not the sodas that made Coke and Pepsi famous.

SEE ALSO: Coca-Cola's business shows a bleak future for soda

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Gold's biggest buyers aren't buying like they used to

• Akin Oyedele
 

• 9h
• 3,834
 
• 7

REUTERS/Chris Wattie

The world's central banks are still net buyers of gold, but they may be slowing down those purchases.

Central banks bought an estimated 166 tonnes of gold and sold 22 tonnes in the first half of 2016, according to Macquarie analysts, making a net purchase of 144 tonnes.

This was not much changed from the net purchases they made in 2013 and 2014, but it was less than the 179 tonnes they bought at the same time last year, Matthew Turner and his team wrote in a note this week.

"There is still no appetite for sales, but outside of Russia and China few purchasers either," Turner wrote. "The outlook is for lower but still substantive net purchases."

Macquarie noted that Venezuela's gold buying was a big caveat.

Amid an economic and debt crisis, Venezuela swapped and sold its gold reserves to raise money, sending its stockpiles to a record low, according to the Financial Times.

Macquarie

The country's reserves plunged by 79 tonnes in the first half of this year and by 59 tonnes in 2015. And so including Venezuela significantly pulls down the aggregate purchases central banks made.

"Central banks remained on the buy side of the gold market in 1H 2016, though Venezuela's falling reserves were or will become a drag," Turner wrote.

The price of gold is up 24% this year, and further price increases could add more central banks to the list of buyers, Turner noted.

Central banks buy gold to diversify their reserves. And because the central banks own massive stockpiles of gold, investors watch central-bank buying and selling to gauge sentiment toward the precious metal.

Gold futures fell 1%, or $14.35 an ounce, on Wednesday to $1,331.75 amid a sell-off across precious metals.

SEE ALSO: The 17 countries with the biggest piles of gold

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I've tracked every penny I've spent for the last 6 years — here's the biggest lesson I learned

• Justin Malik, Budgets Are Sexy

• Aug. 23, 2016, 10:11 AM
• 670,062
 
• 8

The author, Justin Malik.Justin Malik

Just one week of tracking every penny in and out of my life was enlightening, but maybe not in the way you’d expect. I thought I’d find insights about the actual data and where I could save money, and while that was somewhat true, the bigger lesson was one of awareness.

In January 2010, I was wrapping up my last few classes of my MBA at Pepperdine University in beautiful Malibu, California. One of my first assignments in the new year was simple:

Track all of my income and expenses for one week and write about the experience.

The only rule: to track every single penny in and out of my life, whether it was spending thousands on a car or finding a quarter on the street.

This was right up my alley – as a data-obsessed Excel nerd and Myers-Briggs type ISTP, also known as "The Craftsman," I quickly built a spreadsheet to help me track it all, complete with pivot tables to summarize the data by date and category.

Over six and a half years and 7,500 rows later, my spreadsheet is alive and well, still summing up my income and expenses into pretty charts.

While I watch my overall financial health every month and year and break it apart by category during tax season, I’ve never sat down and looked at the key takeaways — that is, until J. Money asked me to.

Today, I’m going to do something I’ve never done: I’m going make my expenses public and share seven surprises of this experiment:

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1. Living with roommates didn't save me a ton

In the last 6 years, I’ve lived in 6 different places in Southern California and in 4 different roommate scenarios. I went from a “Seinfeld” phase (living alone in a 1 bedroom apartment in Santa Monica, CA) to a “New Girl” or “Golden Girls” phase when I had 3 roommates at a house in West Hollywood, CA, and everything in between.

Yes, the rent & utilities were significantly cheaper in the latter ($13,500 vs. $17,700 living alone), but living with roommates brings in additional expenses:

• Cleaning was difficult, so we got a housekeeper (-$650/year)

• My groceries went up because not everything gets split perfectly and food & supplies might “go missing” (-$250/year)

• Restaurant expenses increased because I was around more friends and acquaintances and was pressured to go out with them (-$750/year)

• I spent a lot more on “gifts” (-$500/year)

Adding those factors in, I was still saving $2,000/year on rent, but that only equates to $166/month, which I probably could’ve negotiated when I lived alone, or found a comparable apartment for that much less. Also, I wasn’t sharing a kitchen, family room space, and parking — instead, when I was living alone, I used every square inch of my apartment and lived on my own terms.

If you’re deciding to live with roommates, these are things to consider. Is it worth it to save $100-200 on rent to deal with the complexities of having one or more roommates? For many people, like me, that extra cost makes sense … or maybe you’re an extrovert and simply love having people around.

2. Having a significant other has been expensive for me

How does your relationship status affect your finances? Here’s how it affected mine.

When I was single, I spent somewhere around $1,000/year on gifts, but once I was in a relationship this more than tripled! It didn’t mean I was spending a lot more on my girlfriend, necessarily, but when you’re a couple, you get invited to all sorts of engagement parties, weddings, birthdays, baby showers, and more, and you’ll likely be chipping in for the gifts as well. Add in gifts for your significant other and his or her family, and it’s easy to see that you’ll be spending much more than normal.

But that’s not all. While your groceries and restaurant expenses could stay the same if everything is split evenly, you’ll likely attend more events as a couple, so it’s safe to assume that expenses will go up in multiple ways.

For me, the gifts category was the most noticeable: I spent a whopping $3,600 in gifts in 2015 compared to $765 in 2010. While a good portion of the gifts went to family, I dove in to the line level and found that this was indeed mostly due to the change in relationship status.

3. Cat ownership isn’t as expensive as I thought

This clearly depends on your parenting preferences, but luckily, I’ve done it both ways:

In 2014, I was very relaxed with my cat — maybe 1 vet appointment, she was fed dry kibble, and she didn’t need a litter box because she went outside. She was also old enough that she didn’t need toys and distractions. Cat-related expenses were very minimal.

Cat bills in 2014: $312

Compare that with the very next year, when I took a more proactive approach: I fed her high-quality, raw cat food and had a couple of her broken teeth extracted by the vet’s recommendation.

Cat bills in 2015: $1,375

That’s a $1,000 difference, but even in the more expensive case, $115/month, or less than $4 a day, to give my cat the best and have a furry friend around was worth it for me.

4. 'Gold' or 'Platinum' health insurance hasn't been worth it

Being self-employed is expensive. It feels much worse than receiving a paycheck from a company because I have to pay quarterly taxes on my income, which is about a third of my earnings. On top of that, I have to pay for my own health insurance.

As a hypochondriac, I opted for the “Gold” plan, thinking that it would be better long-term. But just 3 years after quitting my steady job, I’m worth $8,800 less due to monthly health insurance costs, and to add insult to injury, I’ve only used my “awesome” gold plan a couple of times.

Average cost per year: $3,500, or roughly 10% of my total expenses

5. Tax season is not only a breeze, but also fun!

I don’t think you’ll hear this anywhere else… Ignoring quarterly taxes, I enjoy tax season. This is what it consists of:

Sort my spreadsheet by date and category

Eliminate the categories that aren’t applicable

Send it to my accountant

Done. This whole process takes a few minutes and it’s fun to see the year as a whole.

6. Despite the odds of winning, playing the lottery makes sense (to me)

Everyone has their opinion on this, and mine is somewhere in the middle. I only play the lottery if the expected return is greater than the cost of the ticket.

Basic math shows that your odds of winning the lottery, or at least matching all the numbers, are horrific. But basic math also shows that when the lottery reaches certain thresholds, your expected return is actually really good when you take into account the smaller prizes. On top of that, the law of utility makes a great case: even if you played $1 on the lottery twice a week, you’d only be spending around $100/year.

Is that going to ruin your finances? Probably not if you’re reading this article. However, if you won, would it affect your life? Most definitely… and that’s why I play. The lottery also gives back to schools which I like.

As for the numbers, I’ve spent less than $400 in 6 years on the lottery and won back 10%. Is $1 a week worth a chance to win $100,000,000 or even $1,000,000,000? For me it is.

7. The juicy details aren't really that juicy

The numbers are fun and tracking finances to this level of detail makes tax season enjoyable, but to me, the biggest impact of this experiment has been my attitude.

Just one week of tracking every penny in and out of my life was enlightening, but maybe not in the way you’d expect. I thought I’d find insights about the actual data and where I could save money, and while that was somewhat true, the bigger lesson was one of awareness.

Every time I spent any amount of money, I was thinking about my new spreadsheet: the fact I’d have to spend time updating my table for this trivial purchase, what it would mean to my balance, and if this expense was actually “worth it.” This simple homework assignment threw me out of “auto-consumption” mode and made me question every purchase I made. It’s like a meditative practice for minimalists.

After 6 years of doing this, that awareness is stronger than ever. I know what I can afford. I know what it’ll mean if I make a large purchase or if I take on a new monthly expense. It’s easy to see how this will impact my bottom line and my future finances.

My challenge for you (and the downloadable template!)

This jolt of mindfulness and awareness is the reason I ask listeners of my podcast to go through this challenge. Track every penny in and out of your life – just for a week. Try it. There’s no harm.

If you struggle and fail, no worries; but if you succeed and you can keep doing it for a month, a year, or more, your awareness will continue to improve and you’ll know exactly what you spend and make, and more importantly, what you can afford to spend or make.

Does it make sense to move? Can I afford to quit my job to start a business?

These questions are easy to answer when all the numbers are nicely summed up by category. Best of all, it only takes a couple of minutes a day to log your receipts if you stick with it.

While I only give away my spreadsheet template to listeners of my podcast, I’ve made it available to Budgets Are Sexy readers today. Grab the spreadsheet here, complete with macros (Excel automation) that I hand-coded myself, and watch the video tutorial here.

Justin Malik is a serial entrepreneur who launched a podcast as a social experiment to help come to terms with performance-based social anxiety. In his podcast, Optimal Living Daily, he reads to you from the best blogs he can find, covering personal finance, personal development, minimalism, and more (with author permission of course).  Bloggers read on his show, and his spin-off podcast, Optimal Finance Daily, include J. Money himself ofBudgetsAreSexy.com, IWillTeachYouToBeRich.com, MrMoneyMustache.com,TheMinimalists.com, Sivers.org, MarcAndAngel.com, and many more. Learn more atOLDPodcast.com.

Read the original article on Budgets Are Sexy. Copyright 2016