China to ramp up U.S. car, aircraft, energy purchases in trade deal: source - Reuters

WASHINGTON (Reuters) - China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, plus over $50 billion more in energy supplies, according to a source briefed on a trade deal to be signed on Wednesday.

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee

Aiding a sector that enjoys a rare trade surplus with China, Beijing would also boost purchases of U.S. services by about $35 billion over the same two-year period, the source told Reuters on Monday.

The Phase 1 agreement calls for Chinese purchases of U.S. agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year, the source said.

When combined with the $24 billion U.S. agricultural export baseline in 2017, the total gets close to the $40 billion annual goal touted by U.S. President Donald Trump.

The $32 billion agriculture increase over 2017 was confirmed by Myron Brilliant, the U.S. Chamber of Commerce’s head of international affairs, who spoke to reporters on Monday in Beijing.

The numbers, expected to be announced on Wednesday at a White House signing ceremony between Trump and Chinese Vice Premier Liu He, represent a staggering increase over recent Chinese imports of U.S. manufactured goods.

Two other sources familiar with the Phase 1 trade deal agreed with the rough breakdown of the purchases, without providing specific numbers.

A spokesman for the U.S. Trade Representative’s office could not immediately be reached for comment.

When the Phase 1 trade deal was struck on Dec. 13, U.S. officials said China had agreed to buy $200 billion in additional U.S. farm products, manufactured goods, energy and services over the next two years, compared to the baseline of 2017.

They said they would publish targets for the four broad areas, but would keep details of specific products classified to avoid market distortions.

Trump had mainly touted the increased farm exports, which would benefit a major political constituency that has been battered by Chinese retaliatory tariffs during his 18-month trade war with Beijing.

Company executives have been waiting eagerly for details of what other U.S. goods China would be buying more of, aside from farm products, after 18 months of tit-for-tat tariffs that have stalled U.S. business investment.

MANUFACTURING CHALLENGES

The $80 billion increase for manufactured goods includes significant purchases of autos, auto parts, aircraft, agricultural machinery, medical devices and semiconductors, said one of the sources, without giving the names of any specific suppliers.

The aircraft would likely be built by Boeing Co (BA.N), the No. 1 U.S. exporter, whose new sales to China have ground to a halt over the past two years. That would be a welcome shot-in-the arm for the planemaker, which has seen shares and earnings plummet as its best-selling 737 MAX aircraft remains grounded due to two fatal crashes in 2018 and 2019.

The source providing the purchase figures expressed skepticism about manufactured goods pledges by Beijing since the U.S.-China trade deal does not address any of the non-tariff barriers that have kept these U.S. goods out of the Chinese market for decades, including procurement rules, product standards and subsidies to Chinese state-owned firms.

With Chinese car sales flagging and excess domestic assembly capacity on the rise, it’s difficult to see the need for China to purchase significantly more U.S.-built cars. Among the most popular U.S.-built vehicles sold in China are BMW (BMWG.DE) and Mercedes-Benz (DAIGn.DE) sport-utility vehicles.

China also has major industrial policy goals to dominate the very manufacturing sectors in which it has pledged to pump up purchases of U.S. goods, further fueling skepticism.

Many economists and experts are dubious that the Phase 1 trade agreement will be implemented as written, despite what U.S. officials describe as an important enforcement clause in the deal.

That enforcement mechanism allows grievances to be aired through escalating consultations that would reach Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer.

If a U.S. claim of Chinese non-compliance cannot be resolved, Washington would have the right to reimpose tariffs on Chinese goods in proportion to the economic damage alleged. But nothing would preclude China from retaliating, returning the two sides to the current status quo, people familiar with the deal said.

Lighthizer on Monday called the deal a “huge step forward” for U.S.-China trade relations and “a really, really good deal for the United States.” He told Fox Business Network that Beijing’s compliance would be monitored closely.

“We expect them to live up to the letter of the law. We’ll bring cases, we’ll bring actions against them if they don’t,” Lighthizer said.

(This story has been refiled to correct day in fifth paragraph)

Reporting by David Lawder and Andrea Shalal; Additional reporting by Gabriel Crossley in Beijing; Editing by Simon Cameron-Moore

Our Standards:The Thomson Reuters Trust Principles.

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2020-01-14 05:45:00Z
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These important tax changes in the Secure Act have nothing to do with retirement - MarketWatch

On Dec. 20, President Donald Trump signed into law the imaginatively acronym-ed Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The new law is mainly intended to expand opportunities for individuals to increase their retirement savings. It also includes some other important tax changes that have nothing to do with retirement.

In an earlier column, I covered the three most important changes that can affect individuals. See here. But there’s more. In this column, I’ll cover the rest of the important changes for individuals. Here goes.

Penalty-free early retirement plan and IRA distributions allowed for births and adoptions

If you receive a distribution from a qualified retirement plan, a Section 403(b) tax-sheltered annuity plan, an eligible Section 457(b) deferred compensation plan, or an IRA, you must report the taxable portion as income on your return. Fair enough. But if you receive a distribution before age 59½ (an early distribution) you’ll also get hit with the dreaded 10% early distribution penalty tax on the taxable portion — unless a tax-law exception grants you relief.

New law: For 2020 and beyond, the SECURE Act allows penalty-free treatment for a qualified birth or adoption distribution. That means a distribution made during the one-year period beginning on the date when an eligible child of the account owner is born or the date when the legal adoption of an eligible adoptee of the account owner is finalized. An eligible adoptee means any individual (other than a child of the account owner’s spouse) who has not attained age 18 or is physically or mentally incapable of self-support.

Key point: The maximum penalty-free qualified birth or adoption distribution is $5,000, and this limit is apparently applied on an individual-by-individual basis. So, if both you and your spouse have an eligible retirement plan account or IRA, you can each apparently receive a $5,000 penalty-free qualified birth or adoption distribution.

Graduate fellowship and stipend payments can count as compensation for IRS contribution purposes

IRA contributions for the year generally cannot exceed your compensation (as defined) plus any net self-employment income for that year. However, if you’re married you can count your spouse’s compensation and/or self-employment income.

New law: For 2020 and beyond, the Secure Act stipulates that taxable amounts paid to aid you in the pursuit of graduate or postdoctoral study (such as a fellowship, stipend, or similar payment) count as compensation for IRA contribution purposes.

No more retirement plan loan borrowings through credit cards

Subject to tax-law limitations, employer-sponsored qualified retirement plans can make loans to plan participants. Some plans have allowed employees to access their plan loans using a credit card or similar mechanism.

New law: For plan loans taken out after 12/20/19, the Secure Act stipulates that borrowings cannot be distributed through credit cards or similar arrangements without causing the distributed amounts to be treated as deemed taxable distributions rather than tax-free loan amounts.

Unfavorable TCJA kiddie tax rates retroactively repealed

Before the Tax Cuts and Jobs Act (TCJA), the Kiddie Tax rules taxed a portion of an affected child or young adult’s unearned income (typically from investments) at the parent’s marginal federal income tax rate if that rate was higher than the rate the child or young adult would otherwise pay. The Kiddie Tax rules can potentially apply until the year an affected young adult reaches age 24.

For tax years beginning after 2017, the TCJA changed the deal to tax a portion of an affected child or young adult’s unearned income at the rates paid by trusts and estates. That change could cause the Kiddie Tax to be much more expensive when an affected child or young adult had substantial unearned income.

New law: Belatedly, our beloved Congress became concerned that the TCJA change unfairly increased the federal income tax bills of certain children and young adults, including those who are survivors of deceased military personnel, first responders and emergency medical workers. In effect, the Secure Act retroactively repeals the TCJA Kiddie Tax rate change for all affected children and young adults and reinstates the pre-TCJA Kiddie Tax calculation. So, the calculation is once again based on the parent’s marginal tax rate like before the TCJA was hatched. This development will be a meaningful tax-saver for kids and young adults with substantial investment income. Good!

Effective date: While the Secure Act’s repeal provision is generally effective for 2020 and beyond, you can choose to apply the repeal to 2018 and/or 2019 returns of Kiddie Tax victims. So, if you have a Kiddie Tax victim in your family, an amended 2018 return may be in order. You’ll probably want to follow the Secure Act change for the victim’s 2019 return as well.

Liberalized rules for tax-free Section 529 plan distributions

Section 529 plans are state-sponsored programs that allow you to make contributions to an account established to cover the designated account beneficiary’s qualified college expenses or to prepay qualified college tuition for the account beneficiary. Distributions to cover the beneficiary’s qualified college expenses are federal-income-tax-free. Tax-free 529 account distributions can also be used to cover up to $10,000 of annual qualified expenses to attend public, private, or religious elementary or secondary schools.

New law: The Secure Act sweetens the already-sweet 529 plan deal by allowing federal-income-tax-free 529 distributions to cover eligible apprenticeship costs. This change applies to distributions made after 12/31/18. The Secure Act also allows federal-income-tax-free 529 distributions to cover up to $10,000 of qualified student loan principal and/or interest payments. This change also applies to distributions made after 12/31/18.

Key point: The limited deduction for student loan interest is disallowed to the extent the interest is paid with a tax-free 529 distribution.

Increased penalty for failure to file federal returns

The Secure Act increases the penalty for failure to file affected federal tax returns to the lesser of: (1) $400 or (2) 100% of the amount of tax due. This change applies to returns that are due in 2020 and beyond, including any extensions. Previously, the dollar limit for returns due in 2020 was $330.

The bottom line

The SECURE Act includes important tax changes, including some that have nothing to do with retirement. Now you know. You’re welcome.

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2020-01-13 13:41:00Z
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Jeff Bezos says Amazon is donating $690,000 to Australian bushfire efforts - CNBC

Jeff Bezos, founder and CEO of Amazon, pictured on September 13, 2018.

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Billionaire Amazon founder Jeff Bezos has announced his company will donate $690,000 donation to bushfire relief efforts in Australia.

In an Instagram post on Sunday, Bezos pledged 1 million Australian dollars ($690,000) on behalf of the tech giant — an amount that has faced criticism by some on social media.

"Our hearts go out to all Australians as they cope with these devastating bushfires," Bezos said. "Amazon is donating 1 million AU dollars in needed provisions and services."

The figure was derided by some online, with people comparing the sum with Bezos' personal net worth.

Bezos has a net worth of $116.7 billion, according to Forbes, and according to a 2019 Business Insider analysis was earning almost $9 million an hour in 2018. Meanwhile, Amazon has a market capitalization of more than $930 billion.

The conglomerate's move to help tackle the bushfires was also compared to other high-profile contributions, with many pointing out that a string of celebrities with far less personal wealth than Bezos had donated more out of their own pockets.

Marvel star Chris Hemsworth, whose net worth is estimated at $76 million, matched Amazon's donation, while singer Pink, who Forbes says has a fortune of $57 million, pledged $500,000.

Billionaire Kylie Jenner has donated $1 million, while actress Bette Midler matched Pink's donation and rock bank Metallica gave more than $500,000.

Meanwhile, the CEOs of tech giants Apple and Google have also publicly responded to the crisis in Australia.

Alphabet CEO Sundar Pichai said on Twitter last week that the bushfires were "devastating" to witness, adding that the organization had donated to support relief efforts.

At the end of last year, Apple Chief Executive Tim Cook took to Twitter to announce that the company would be donating to assist with efforts in Australia. Neither Pichai nor Cook disclosed how much the companies had donated.

A spokesperson for Amazon was not immediately available for comment when contacted by CNBC.

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2020-01-13 12:56:00Z
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Nissan Examines Possibility of Breaking Away From Renault - Yahoo Finance

(Bloomberg) -- Nissan Motor Co. executives have examined the possibility of breaking away from Renault SA amid concerns that relations with the longtime French partner have turned dysfunctional after the ouster of former chief Carlos Ghosn, according to a person familiar with the matter.

Since last year, Nissan has been exploring the pros and cons of sustaining the alliance, particularly when it comes to engineering and technology sharing, according to the person, who asked not to be identified discussing confidential matters. Those studies predate Ghosn’s escape from Japan and were preliminary, so no decision has been made, the person said.

It’s unclear how feasible any separation would be given that Renault is Nissan’s biggest shareholder and the French partner has been pushing for a repair of ties.

Still, the comments illustrate the fragile state of the relationship between the Japanese and French auto giants after Ghosn, who balanced the world’s largest automotive alliance for years as head of both companies, was arrested late 2018 in Japan on allegations of financial misconduct. Ghosn’s legal odyssey took a dramatic turn recently when he fled Japan for Lebanon and became the world’s most famous fugitive.

Since Ghosn’s downfall, the two carmakers have struggled financially — their shares were the two worst performers among major automakers last year — and drifted apart at a time when the costs of electrification and autonomous driving are pressuring incumbent carmakers to team up or consolidate.

Relations between the two companies are “broken and likely beyond the point of repair,” Evercore ISI analyst Arndt Ellinghorst wrote in a note on Monday.

Nissan didn’t immediately respond to a request for comment on Monday, a holiday in Japan. Renault declined to comment. The Financial Times reported earlier that Ghosn’s escape from Japan had spurred Nissan executives to accelerate secret contingency plans to potentially split from Renault.

The board of the Renault-Nissan alliance is scheduled to meet on Jan. 30 and the meeting could lead to announcements about joint projects, according to another person familiar with the matter.

(Updates with scheduled alliance meeting in final paragraph)

--With assistance from Reed Stevenson.

To contact the reporters on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net;Ania Nussbaum in Paris at anussbaum5@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, ;Tara Patel at tpatel2@bloomberg.net, Ville Heiskanen

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

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2020-01-13 11:26:00Z
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As businesses hold back, U.S. consumers seen boosting big banks' profits - Reuters

NEW YORK (Reuters) - Consumer lending is expected to propel profits for big U.S. banks when they unveil fourth-quarter results this week, though stress in corporate lending and uneven capital markets may cast a shadow over results.

FILE PHOTO: Signs of JP Morgan Chase Bank, Citibank and Wells Fargo & Co. bank are seen in this combination photo from Reuters files. REUTERS/File Photos

Balances for individual borrowers keep reaching new records as the U.S. job market has stayed robust, prompting people to spend, and as interest rates have declined, prompting them to borrow — especially on credit cards.

Overall, U.S. consumer-loan balances at the 25 largest banks reached $1.19 trillion the last week of December, up 13% from a year earlier, according to Federal Reserve data. The biggest annual increase came from cards, where outstanding debt rose 16%.

The banks held another $1.46 trillion in residential mortgage loans.

(GRAPHIC: U.S. consumer leverage declined as incomes rose - here)

That spells good news for quarterly profits at JPMorgan Chase & Co and Citigroup Inc, which have been working to grow their card businesses in recent years. The Fed’s decision to lower rates in 2019 boosted mortgage activity, which will help major home lenders like Wells Fargo & Co. Those three banks are scheduled to report results on Tuesday.

“The consumer-lending business is going to be very profitable for the banks,” RBC Capital Markets analyst Gerard Cassidy said in an interview.

Americans borrowing to buy cars and pay for vacations has been a mainstay for industry profits recently. Consumer strength has helped offset weakness in trading, underwriting or business-loan demand at various points, with bank executives cheering it as a sign that the U.S. economy is not on the brink of recession.

Analysts expect tepid business borrowing to have continued through the fourth quarter. Global trade disputes, political uncertainties and market fluctuations have left CEOs wary of seeking financing to buy competitors or invest in operations, they said.

However, those issues could take a back seat to the thriving U.S. consumer.

As Americans’ loan balances have climbed, their incomes have grown even faster. That debt is now about equal to disposable personal income after climbing to as much as one-third higher in 2007.

Analysts say they are also encouraged that banks appear to be lending more responsibly to consumers, partly due to new regulations. Consumer delinquency rates are low at 2.8%, compared with an average of 4.3% since 2003, according to Fed data. In the recession, the rate reached 8.2%.

However, analysts cautioned that credit mistakes often occur in the best of times and that it is hard to see them with the economy growing for the 11th straight year.

Higher real-estate values have allowed property owners to raise cash by selling or refinancing. As competition has heated up in cards, some borrowers have been transferring zero-interest balances from one bank to another for a small fee, without paying off the debt.

And although unemployment is at a 50-year low and wages are higher, there are still lots of consumers living paycheck-to-paycheck.

A Fed survey last year found 39% of Americans would have a hard time handling an unexpected $400 expense. People with credit cards generally are not at such risk, but still about 16% said they would put the expense on a card.

Slideshow (3 Images)

Fred Cannon, research director at Keefe, Bruyette & Woods, said a rise in unemployment in the next recession would expose bad loans. “There certainly could be some problems,” he said.

(GRAPHIC: Consumers are making timely payments on their debt - here)

Reporting by David Henry in New York. Additional reporting by Imani Moise and Elizabeth Dilts Marshall; Editing by Nick Zieminski

Our Standards:The Thomson Reuters Trust Principles.

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2020-01-13 06:10:00Z
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Airline passenger allegedly storms cockpit, attacks flight attendant, injures 6 officers - New York Post

Authorities took a man into custody after he allegedly assaulted a flight attendant and attempted to storm the plane’s cockpit last week.

A fellow passenger on the flight described the Jan. 9 incident to news outlets, saying that the plane was about to land when the suspect headed towards the cockpit in a “full sprint.” A flight attendant and six law enforcement agents were injured in the ensuing scuffle.

Matthew Dingley was taken into custody after his flight United Express flight from Dulles International Airport landed at Newark, NBC New York reports. He reportedly began acting erratically during the flight and stormed the cockpit as the plane neared its destination.

“This guy was in a full sprint, right up to the cockpit, hits the cockpit, starts banging on it,” fellow passenger Mike Egbert told NBC New York. According to him, after a flight attendant attempted to intervene, Dingley began to attack her.

Egbert described the flight attendant as, “A slight woman, petite, and this guy was clocking her.”

Another passenger on the plane apparently had law enforcement experience and was able to help get the situation under control. Unfortunately, things didn’t end there.

Port Authority Police took Dingley into custody, but only after he continued to fight with them.

“He picks up a police officer, throws the police officer…his back,” Egbert described. “If he did actually get into that cockpit lord knows what would have happened.”

The flight attendant was taken to a nearby hospital, although she has since been released. Six Port Authority Officers were injured during the incident, although they are reportedly expected to recover.

Dingley has been charged with aggravated assault, criminal trespassing, resisting arrest and interfering with transportation, NJ.com reports.

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2020-01-13 08:45:00Z
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4 Reasons to Roll Over Your 401(k) Into an IRA - The Motley Fool

There are a lot of reasons to love 401(k)s: They have higher contribution limits, the money comes right out of your paycheck every month so you don't have to remember to transfer it, and your employer might match some of your contributions. But 401(k)s also have their drawbacks. Here are four reasons you may want to consider rolling over your 401(k) into an IRA.

1. IRAs have more investment choices

Most 401(k)s contain a few investment options selected by your employer. You might be happy with these options, but if you're not, there isn't much you can do about it. You can request that your employer add more investments, but it does not have to comply. Or you could roll over your 401(k) savings into an IRA.

Image source: Getty Images.

IRAs offer a virtually unlimited selection of investments, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more. You can spread your money among as many of these assets as you choose, and change your asset allocation as often as you like. Not everyone will feel confident enough to choose their own investments from such a broad selection, but if you prefer to have more control over your retirement savings, an IRA is a better choice for you.

2. IRAs often charge lower fees

All retirement accounts, including IRAs, charge fees. Your brokerage will have a fee schedule, and your investments may have their own fees. Mutual funds, for example, charge an annual fee called an expense ratio. This is usually a percentage of your assets. 

401(k)s also have fees, which can be higher than IRA fees, especially for smaller companies. Having fewer employees means that each one has to shoulder a greater portion of the 401(k)'s administrative fees. The investments your employer selects for the plan may also have higher fees than you'd like to pay. These can eat into your profits and slow the growth of your retirement savings over time.

With an IRA, you're free to choose low-cost investments and work with the broker that's most affordable for you, so you can reduce what you're paying in fees and help your savings grow more quickly.

3. Roth IRAs aren't subject to required minimum distributions (RMDs)

Required minimum distributions (RMDs) are mandatory withdrawals from retirement accounts that begin at 72 unless you're still working and own less than 5% of the company you work for. The only accounts not subject to RMDs are Roth IRAs. These accounts are funded with after-tax dollars, and the government doesn't tax distributions, so it has no reason to make you withdraw money from these accounts early.

RMDs may force you to withdraw more money from your retirement accounts than you'd like to, raising your tax bill and hampering the growth of your savings. But stashing some of your money in Roth IRAs can help you avoid this. You're free to draw upon this money as needed, and you don't have to use it at all if you don't want to. 

Roth IRAs aren't the best choice for everyone, though. They make sense if you expect you'll be in the same or a higher tax bracket once you retire, but if you think you'll be in a lower tax bracket once you retire, a traditional IRA might make more sense. You'll pay taxes on your distributions, but you'll lose a smaller percentage of your income to the government. 

4. Rolling over your 401(k) lets you manage all your funds in one place

It's not impossible to manage your retirement savings if they're spread out among several different accounts, but it's definitely easier when they're all in one place. You can see all of your investments and fees together and make changes to your asset allocation without having to log into multiple retirement accounts.

Consider rolling over your 401(k) to an IRA if any of the above benefits appeal to you, but think through the decision carefully. The larger contribution limits and possible 401(k) match might make it worth staying with your 401(k) if you're happy with its investment choices and fees.

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2020-01-12 13:17:00Z
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