Connect with us

Uncategorized

Fed Braces as Another Big US Inflation Number Looms: Eco Week

Published

on

(Bloomberg) — US inflation data in the coming week may stiffen the resolve of Federal Reserve policy makers to proceed with another big boost in interest rates later this month.

Most Read from Bloomberg

The closely watched consumer price index probably rose nearly 9% in June from a year earlier, a fresh four-decade high, based on the median projection of economists in a Bloomberg survey. Compared with May, the CPI is seen rising 1.1%, marking the third month in four with an increase of at least 1%.

While persistently high and broad-based inflation is seen persuading Fed officials to raise their benchmark rate 75 basis points for a second consecutive meeting on July 27, recession concerns are mounting. There are signs, though, that price pressures at the producer level are stabilizing as commodities costs — including energy — retreat.

Even so, the inflation data are likely to draw heightened scrutiny globally after a faster-than-consensus result for May caused ructions in financial markets.

The US inflation data follow figures Friday showing stronger-than-expected job growth and an unemployment rate near a five-decade low, underscoring a tight labor market that’s helping to keep wage growth elevated.

Figures on producer prices, industrial production and consumer sentiment, as well as the Fed’s Beige Book, are also released in the coming week. Regional Fed presidents Thomas Barkin and Raphael Bostic will discuss the economy and monetary policy at separate engagements.

What Bloomberg Economics Says:

“After employment data showed the labor market remains rock-solid, surging gasoline prices will push June’s headline CPI to a fresh high. Even with growth slowing, the underlying shift toward services will prevent the economy from falling into a technical recession in the second quarter.”

–Yelena Shulyatyeva and Andrew Husby. For full analysis, click here

Further north, in a precursor to the sort of decision the Fed is facing, the Bank of Canada will accelerate hiking with a rate increase of 75 basis points, if investor bets are to be believed.

Elsewhere, the shaky economic economic backdrop is likely to focus the finance ministers and central bankers from the Group of 20 meeting in the Indonesian resort of Bali starting on Friday. Senior officials are set to discuss the latest on inflation, global risks, the war in Ukraine, and debt.

Meanwhile, global monetary tightening is likely to continue in earnest: aside from Canada, policy makers in Chile, New Zealand and South Korea may all deliver rate hikes of at least 50 basis points.

Click here for what happened last week and below is our wrap of what’s coming up in the global economy.

Asia

The Reserve Bank of New Zealand and the Bank of Korea meet Wednesday, with further major rate hikes expected in an attempt to tame inflation. Investors will watch how those forerunners of global monetary tightening communicate further action going ahead.

South Korea’s jobless data will come out the same day, while Australia’s employment report will be released Thursday, giving insight into the state of the economy in the second quarter.

Earlier in the week, US Treasury Secretary Janet Yellen is expected to meet with Japanese Finance Minister Shunichi Suzuki ahead of the G-20 meetings in Indonesia.

China is set for a bumper week of economic data that may shape the outlook for monetary and fiscal policy for the rest of the year.

Trade data on Wednesday will give more clues about softening global demand, ahead of Friday’s GDP figures, which are under more scrutiny as Covid outbreaks persist.

Fiscal data during the week will show the state of local government finances, while credit figures will be watched for signs of improving business and household sentiment.

Europe, Middle East, Africa

European Central Bank policy makers have until Wednesday to air views in public about their July 21 meeting before a pre-decision blackout kicks in. They’re preparing to start raising rates, and to unveil an accompanying crisis tool to mitigate the fallout on weaker euro members such as Italy.

ECB President Christine Lagarde will attend a meeting of euro-area finance ministers at the start of the week, though few other appearances are scheduled.

Likely to focus their minds is a temporary closure of the Nord Stream gas pipeline from Russia to take effect on Monday. German officials fear the shutdown for 10 days of routine maintenance may become permanent.

Among data due, euro-zone industrial production on Wednesday will probably signal slowing expansion as the second quarter progressed, while the state of the region’s worsening trade deficit — perhaps reflected in the euro’s drop to a two-decade low — will be revealed on Friday.

In the UK, economists expect gross domestic product to have barely increased in May after a decline the previous month, in figures due on Wednesday.

That picture of anemic growth amid rampant inflation is confronting Bank of England Governor Andrew Bailey, who’ll deliver a speech on Tuesday. A sickly economy will also greet the successor to Prime Minister Boris Johnson as the process of replacing him begins in earnest.

Elsewhere around Europe, consumer-price data for June will underscore the cost-of-living shock reverberating around the continent, albeit unevenly.

The Czech Republic’s inflation rate is already among the region’s highest, and it’s set to rise further, to above 17%. Lower but still hefty will be equivalent numbers in Scandinavia. Sweden’s price growth is likely to reach 8.3%, according to economists.

Further south, data from Ghana on Wednesday will likely show inflation at almost triple the 10% ceiling of the central bank’s target, a possible impetus to raise rates for a third time this year.

Nigerian data on Friday are expected to show inflation accelerated for a fifth month. A significant quickening might persuade policy makers to raise borrowing costs the following week.

Also on Friday, Israeli data may show inflation remaining stubbornly above the government’s 1% to 3% target.

Latin America

In a light week for Brazil, weekly trade figures should feature more torrid export readings while May retail sales figures may build on better-than-expected April results.

With its economy likely slowing into a second-half recession as rising interest rates and double-digit inflation bite, Chile’s central bank is in a tight place. Most analysts look for an ninth straight hike, pushing the key rate to 9.5%.

In Mexico, a pick-up in headwinds — stubborn inflation, rising interest rates and less buoyant sentiment — argue for some slowing in the manufacturing and retail figures for May and June.

Argentine inflation data due look to head higher from May’s 60.7%, which prompted the central bank to boost its key rate to 52%.

Peru posts June unemployment for the capital, Lima, and May economic activity, which declined for a third month in April. The economy is below its pre-pandemic level.

In Colombia, May data on manufacturing, industrial output and retail sales should underscore why analysts have been marking up their 2022 GDP forecasts. Amid a host of challenges, its economy is seen leading growth among the region’s big economies this year.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.

Uncategorized

American Weed Stocks Are Cheap. They’re About to Get a Sales Bump.

Published

on

However bad the year has been for most stocks, it has been especially harsh for state-licensed cannabis sellers.

In just the past month, the


AdvisorShares Pure US Cannabis


exchange-traded fund (ticker: MSOS), which tracks America’s multistate operators—or MSOs—fell 25%, while the


S&P 500


dropped 7%.

Continue Reading

Uncategorized

How Do Mega Backdoor Roths Work?

Published

on

A mega backdoor Roth is a unique 401(k) rollover strategy that’s designed for people whose incomes would ordinarily keep them from saving in a Roth Individual Retirement Account. The advantage of using a Roth IRA to save for retirement is being able to make tax-free qualified withdrawals. But not everyone can contribute to these accounts; higher-income earners are excluded. That’s where the mega backdoor Roth comes into play. If you have a 401(k) you’d like to roll over, you could use this strategy to enjoy the tax benefits of a Roth IRA without having income be an obstacle.

Make sure you’re taking advantage of every opportunity to maximize your retirement assets by working with a financial advisor.

Roth Account Basics

Before diving into the specifics of a mega backdoor Roth, there are a few things to know about Roth accounts, including Roth IRAs and Roth 401(k)s.

First, these accounts are both funded with after-tax dollars. That means when you make qualified withdrawals later, you won’t pay income tax on the money since you already paid it upfront. This is the key characteristic of Roth accounts and what makes them so appealing to investors who anticipate being in a higher tax bracket at retirement.

Next, your ability to contribute to a Roth 401(k) is not restricted by your income. But it is for a Roth IRA. For the 2021 tax year, you must be within these modified adjusted gross income limits to make a full Roth IRA contribution:

  • Single filers: MAGI of $125,000 or less

  • Married filing jointly: MAGI of $198,000 or less

  • Head of household: MAGI of $125,000 or less

You can make partial contributions above those income limits. But your ability to contribute phases out completely once your MAGI hits $140,000 (if you file single or head of household) or $208,000 if you’re married and file a joint return. For 2021, the full contribution allowed is $6,000 with a $1,000 catch-up contribution for savers aged 50 and older.

Finally, Roth 401(k) accounts are subject to required minimum distribution rules just like traditional 401(k) accounts. This rule requires you to begin taking money from your 401(k) starting at age 72. A Roth IRA, on the other hand, is not subject to RMD rules.

What Is a Backdoor Roth?

A backdoor Roth offers a work-around for people whose incomes are above the limits set by the IRS. When you execute a backdoor Roth, you roll money over from a traditional IRA to a Roth account. This way, you won’t have to pay taxes on your retirement savings in the Roth IRA when it’s time to make withdrawals. And you’re not subject to required minimum distribution rules either.

But there is a catch. You have to pay income tax on the money you roll over to a Roth account. So while you could save money on taxes in retirement, you’re not escaping the tax liability of a traditional IRA altogether.

How a Mega Backdoor Roth Works

A mega backdoor Roth is a backdoor Roth that’s designed specifically for people who have a 401(k) plan at work. This type of backdoor Roth allows you to contribute up to $38,500 to a Roth IRA or a Roth 401(k) in 2021. This is in addition to the regular annual contribution limits the IRS allows for these types of accounts. To execute a mega backdoor Roth, two conditions have to be met. Your 401(k) plan needs to allow the following:

You can ask your plan administrator whether your 401(k) meets these criteria. And if your plan doesn’t allow for in-service withdrawals or distributions, you could still attempt a mega backdoor Roth if you plan to leave your job in the near future.

If your plan meets the criteria, then you can take the next steps to execute a mega backdoor Roth. This is typically a two-step process that involves maxing out after-tax 401(k) contributions, then withdrawing the after-tax portion of your account to a Roth IRA.

Again, whether you can follow through on the second step depends on whether your plan allows in-service withdrawals. If it doesn’t, you’ll have to wait until you separate from your employer to roll over any after-tax money in your 401(k) into a Roth IRA.

You also need to watch out for the pro rata rule. This IRS rule says you can’t only withdraw pre- or post-tax contributions from a traditional 401(k). So if you’re completing a mega backdoor Roth, you couldn’t just withdraw post-tax contributions if your account holds both pre- and post-tax funds. In that case, you may have to roll over the entire balance to a Roth IRA.

Benefits of a Mega Backdoor Roth

There are three key benefits associated with executing a mega backdoor Roth. First, you can contribute significantly more to a Roth IRA upfront this way. For 2021, the contribution limit is $38,500 on top of the regular annual contribution limit and any catch-up contribution limits that may apply.

You’ll need to know the maximum amount you’re allowed to contribute to the after-tax portion of your 401(k). So for 2021, the IRS allows a maximum contribution of $58,000 or $64,500 if you’re 50 or older. You’d subtract your 401(k) contributions and anything your employer adds in matching contributions to figure out how much you could add to the after-tax portion.

Next, you can enjoy tax-free withdrawals in retirement. This is a benefit you may otherwise not being able to get if your income is too high to contribute to a Roth IRA. By reducing your tax liability in retirement, you can help your investment dollars go further. And you may have a larger legacy of wealth to pass on to future generations.

Finally, a mega backdoor Roth IRA would allow you to sidestep required minimum distribution rules. This means that you could retain control over when you choose to take distributions from a Roth IRA.

So who is a mega backdoor Roth right for? You may consider this move if you:

  • Have an eligible 401(k) plan at work

  • Have maxed out traditional 401(k) contributions

  • Are not eligible to contribute to a Roth IRA because of your income

  • Have additional money that you want to invest for retirement

  • Want to leverage the higher Roth IRA contribution limits allowed by a mega backdoor rollover

Talking to your financial advisor can help you decide if a mega backdoor Roth makes sense. And your 401(k) plan administrator should be able to tell you if it’s possible, based on your plan’s guidelines.

Mega Backdoor Roth Alternatives

If you can’t execute a mega backdoor Roth because your plan doesn’t allow it, there are other ways to increase your retirement savings. For example, you could try a regular backdoor Roth instead. This might be something to consider if you still want to enjoy the tax benefits of a Roth IRA but your plan doesn’t fit the criteria for a mega rollover. You could also elect to make Roth 401(k) contributions to your retirement plan at work. This way, you still get the benefit of contributing after-tax dollars and making tax-free withdrawals. You’d be subject to the regular contribution limits and you’d still have to take the required minimum distribution. But that may outweigh the value of tax savings in retirement.

Investing in a Health Savings Account (HSA) is another option. While these accounts are not specifically designed for retirement, they can yield multiple tax benefits. Contributions are tax-deductible and grow tax-deferred. Withdrawals are tax-free when used for eligible healthcare expenses. And at 65, you can take money out of an HSA for any reason without a tax penalty. You’ll just owe ordinary income tax on any withdrawals that are not used for healthcare expenses.

Finally, you could open a taxable brokerage account to invest. This doesn’t necessarily save you money on taxes since you’ll owe capital gains tax when you sell investments at a profit. But it could help you to diversify your investments and there are no limits on how much you can invest in a brokerage account annually.

Bottom Line

A mega backdoor Roth strategy could work well for higher-income earners who want to take advantage of Roth account benefits. There are certain rules that need to be followed to make it work, however, so you may want to talk to your plan administrator or a tax professional before going ahead. Keep in mind also that even if you can’t complete a mega backdoor Roth rollover, you still have other options for growing retirement savings.

Tips for Retirement Planning

  • If you’re saving for retirement in a 401(k) or IRA, pay attention to the fees you’re paying. For instance, check the expense ratios for each fund you’re invested in to understand how much you pay to own that fund on an annual basis. You can then compare that to the fund’s performance to determine whether the fees are justified. Also, consider any administrative fees you might be paying and how those affect your net returns.

  • Consider talking to your financial advisor about a mega backdoor Roth and whether it could be right for you. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. You can get your personalized recommendations in minutes just by answering a few simple questions. If you’re ready, get started now.

Photo credit: ©iStock.com/designer491

Continue Reading

Uncategorized

Alibaba Is Tumbling. Chinese Tech Stocks Have a New Headache.

Published

on

Chinese tech stocks were tumbling on Monday as two of the embattled sector’s leading players faced fresh fines from market regulators over disclosure rules.

China’s State Administration for Market Regulation announced Sunday a wave of penalties for improperly reporting past deals, in breach of competition law.


Alibaba


(ticker: BABA) and


Tencent


(0700.H.K.) were among the companies fined as a result.

Continue Reading

News

Bitcoin oversold Bitcoin oversold
Cryptocurrency57 seconds ago

Mike McGlone: Ethereum and Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling...

next ethereum fork next ethereum fork
Cryptocurrency8 mins ago

Chainlink protocol developers refused to support next Ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the...

predictit news predictit news
Cryptocurrency13 mins ago

PredictIt news: CFTC shuts down PredictIt prediction market in US

Important PredictIt news: The U.S. Commodity Futures Trading Commission (CFTC) has issued an order to shut down one of the...

is bitcoin mining profitable is bitcoin mining profitable
Cryptocurrency33 mins ago

Is bitcoin mining profitable today? Bitcoin mining difficulty drops for third month in a row

Is bitcoin mining profitable? The difficulty of mining bitcoin began to drop precipitously as the largest-capitalization cryptocurrency’s price fell below...

wazirx news wazirx news
Cryptocurrency41 mins ago

WazirX news: Indian authorities froze assets of WazirX

WazirX news: India’s economic intelligence agency froze assets of Binance-bought WazirX after allegations of money laundering Indian authorities have seized...

us recession and stock market us recession and stock market
Forex2 days ago

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ...

usd to euro rate usd to euro rate
Forex2 days ago

Euro rate chart: the euro is not going into a trap

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy,...

european stock market news european stock market news
Forex2 days ago

European stock market news: Europe started to lag behind the rise in U.S. stock prices

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the...

dollar rate exchange dollar rate exchange
Forex2 days ago

Dollar rate today live: What is happening to the dollar today?

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as...

u.s. stock market capitalization 2022 u.s. stock market capitalization 2022
Forex2 days ago

U.S. stock market capitalization 2022: Morgan Stanley advises against buying U.S. stocks

U.S. stock market capitalization by 2022 leaves much to be desired. The key U.S. stock market indexes – DOW Jones,...

eur/usd chart eur/usd chart
Forex2 days ago

EUR/USD: European Union’s main currency problems

EUR/USD: The pair stayed in the flat, as investors refrained from making big bets before the U.S. labor market data...

asian stock market charts asian stock market charts
Forex2 days ago

Asian stock market charts: Major Asian indicators are up 0.88%

What’s happening on the Asian stock market charts right now? The major Asian indicators are mostly up 0.88%. Some indicators,...

nonfarm payrolls and recession nonfarm payrolls and recession
Forex2 days ago

Nonfarm Payrolls and Recession: July’s NonFarm Payrolls Surprise – What Next?

As you know, nonfarm payrolls and the recession are always closely related. The U.S. Federal Reserve sees its main goal...

stock market today stock market today
Forex2 days ago

Stock market today: Stock Europe closes the week with a fall

Stock market today: In trading on Friday, key stock indicators in Western Europe are showing a decline amid weak financial...

Best US brokers Best US brokers
Forex2 days ago

Top brokers USA

Due to the strictness of the supervisory agencies to the investment market in the United States, traders who choose a...

nasdaq chart today nasdaq chart today
Commodities2 days ago

Nasdaq 100 index rises for third straight week 

The Nasdaq chart today, which reflects the value of stocks of U.S. technology companies, rose 20% from its June low....

carbon emissions and climate change carbon emissions and climate change
Commodities2 days ago

4 Dividend Stocks Offering Double-Digit Yields: An Easy Way To Earn Passive Income

Carbon emissions and climate change are well known, so many global companies are concerned about this factor. Today it is...

China's military exercises near Taiwan China's military exercises near Taiwan
Commodities2 days ago

Situation in Taiwan leads to detours and delays in global transport

China’s military exercises near Taiwan have pushed the situation in the region to the limit. Therefore, some ships carrying liquefied...

historical price of gasoline in the US historical price of gasoline in the US
Commodities2 days ago

Demand for gasoline in the U.S. has fallen below pandemic levels

According to the U.S. Energy Information Administration, average monthly gasoline consumption has fallen below the 2020 level. The demand surge...

oil prices in asian countries oil prices in asian countries
Commodities2 days ago

Saudi Arabia raises oil prices in Asian countries to record levels

Aramco is raising Arab Light oil prices by 50 cents in September. It is a record increase in oil prices...

current electricity prices UK current electricity prices UK
Commodities2 days ago

Current electricity prices UK: Marginal annual energy costs in the UK jump above £4,000

Current electricity prices in the UK are rising fast. According to Investec Bank Plc, the price ceiling paid by households...

oil prices chart oil prices chart
Commodities2 days ago

Oil prices daily adjusted upward

The price of October futures for Brent at London’s ICE Futures Exchange stood at $95.74 per barrel, up $1.62 (1.72%)...

current gold price current gold price
Commodities2 days ago

Current gold price stabilizes after rally

Current gold prices on Thursday morning grew slightly; with the second day remaining above $1,800 per troy ounce; markets are...

futures wheat price futures wheat price
Commodities2 days ago

Futures wheat prices: wheat rose sharply on the Chicago Exchange

Futures wheat prices as well as soybeans in Chicago rose sharply on Thursday. Wheat quotations recovered from 6-month lows on...

daily crypto news daily crypto news
Cryptocurrency4 days ago

Latest crypto news: What happened on the crypto market as of August 4 morning

Daily crypto news: Starbucks will develop loyalty program with web3 tools, Solana developers found alleged culprit of ecosystem exploit, ZBExchange...

staking cardano ada staking cardano ada
Cryptocurrency4 days ago

Bank Sygnum adds support for staking Cardano (ADA)

Swiss digital bank Sygnum announced that staking Cardano ADA is now available to its users.  Sygnum Bank customers can now...

next ethereum update next ethereum update
Cryptocurrency4 days ago

Next Ethereum update will attract more investment from institutions

Next Ethereum update will be a deciding factor in increasing institutional investment in cryptocurrency A Bloomberg Intelligence report suggests that...

news about coinbase news about coinbase
Cryptocurrency4 days ago

Breaking news about Coinbase: Court finds ex-Coinbase employee accused of insider trading not guilty

Breaking news about Coinbase: A federal court in Manhattan has found not guilty a former employee of Ishan Wahi, whom...

inflation in Europe by country inflation in Europe by country
Forex4 days ago

Inflation in European Union: Producer prices in the euro area rose by 1.1% in June and by 1.3% in the EU

Inflation in the European Union: Euro-area producer prices (PPI) rose 1.1% in June 2022 compared to the previous month, when...

dollar rate today dollar rate today
Forex4 days ago

The dollar rate today is stable against the euro and the yen

During trading the dollar rate today practically does not change against major world currencies; traders are waiting for a report...

Trending

©2021-2022 Letizo All Rights Reserved