Pathlight Investors’ Top Recommended Reads - August 2014

  • Posted on: 9 December 2015
  • By: admin

Ready for some more great articles?  Here's our picks for August 2014:  

US corporate taxes – why is there so much indignation over inversions when other tax evasion techniques (such as REITs, MLPs, etc) are much costlier?  Reuters Breakingviews.   



Auto sales – cautious comments in a Reuters article.  Caution is beginning to set in among some auto experts who feel the current pace of sales is being artificially inflated.  “a combination of cheap loans with extended terms, deep incentives from some dealers, and unsustainably high values for used cars, is making it far too easy for many Americans to buy new vehicles” – Reuters    


US companies + int’l cash – US firms have kept int’l earnings overseas tax-free and took advantage of record low rates to borrow against the money and return capital to shareholders.  However, w/rates heading higher, this strategy’s days could be numbered.  WSJ.   


Crude exports – Commerce Department halts US crude export considerations according to Reuters.  “The Commerce Department has put on hold at least three companies' requests for permission to sell lightly processed crude abroad” – Reuters


China regional GDP numbers are latest encouraging eco data point from the country.  Of the 30 regions and provinces that released their local GDP data, 23 reported first-half economic growth accelerated from the first quarter.  About three-quarters posted growth that was higher than the national average of 7.4 percent in the first six months.  Reuters  


Border bill vote scuttled by GOP revolt; an emergency meeting by Boehner and his new leadership revealed they didn’t have anywhere near the amount of votes needed to pass the legislation.  House Republicans will meet again Fri morning to discuss the matter.  The Senate also was unable to pass a bill.  NYT   


Fed officials increasingly beginning to signal the possibility of rates being hiked sooner than anticipated – Hilsenrath article in the WSJ – a number of regional Fed presidents, inc. San Francisco’s John Williams, have acknowledged a more rapid improvement in the country’s jobs market and as a result appear more comfortable w/the prospect of rate “normalization” taking place sooner than previously expected.  Williams had previously seen this process occurring in H2:15 but now feels rate increases should begin a “touch sooner”.  Williams was clear however that his new view wasn’t a “game changer” and that he still foresees “quite a bit” of slack in the economy.  The Fed’s more hawkish members meanwhile are growing more vocal in expressing their views that rate increases need to begin sooner than many realize.  WSJ.  


Taxes – will Congress take near-term action?  Probably not but the public “shaming” from Congress will likely intensify.  The inversion scrutiny is heating up as more deals get announced.  Any solution needs to come through Congress – it seems hard for action to be taken outside of legislation (i.e Treasury can't unilaterally impose new rules according to most tax experts).  It had been looking like Congress wouldn’t do anything this year (as both sides focus on the mid-terms) and given the GOP wants to have the whole inversion issue considered as part of a broader tax code overhaul, this topic wasn’t really anticipated to be addressed until '17.  That being said Congress increasingly is taking notice and there may be some shifting in how people are viewing the topic (see the comments from Sen. Wyden  That being said, Congress is “deeply divided” and getting any law passed looks very unlikely for now (  Regardless of if legislation happens, an aggressive public "shaming" process is underway and this could have an effect on sentiment (and may make companies hesitant to pursue these types of deals).  If/when WAG "inverts" (many think it will) that could be an important tipping point (as it will be the first name brand US retail firm to pursue this move).  The Senate will be holding a hearing to discuss tax inversions on Tues Jul 22. 



And On A Lighter Note…


Driver stops to help ducklings, gets ticket: