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Google to Offer Checking Accounts to Consumers

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Google will soon offer checking accounts to consumers, becoming the latest Silicon Valley heavyweight to push into finance. The project, code-named Cache, is expected to launch next year with accounts run by Citigroup Inc. and a credit union at Stanford University, a tiny lender in Google’s backyard. The Wall Street Journal reports: 

Big tech companies see financial services as a way to get closer to users and glean valuable data. Apple Inc. introduced a credit card this summer. Amazon.com Inc. has talked to banks about offering checking accounts. Facebook Inc. is working on a digital currency it hopes will upend global payments…

Google is setting its sights fairly low. Checking accounts are a commoditized product, and people don’t switch very often. But they contain a treasure trove of information, including how much money people make, where they shop and what bills they pay.

The company will have to convince a public that is increasingly wary of how tech companies are using personal data that it can be trusted with people’s finances. Federal regulators are examining whether the user information Google gets from its search engine, home speakers, email service and other apps gives the company an unfair advantage over competitors, the Journal has reported.

Mr. Sengupta said Google wanted to bring value to consumers, banks and merchants, with services that could include loyalty programs, but it wouldn’t sell checking-account users’ financial data. The company said it doesn’t use Google Pay data for advertising purposes and doesn’t share that data with advertisers.

Fifty-eight percent of people recently surveyed by consulting firm McKinsey & Co. said they would trust financial products from Google. That was better than Apple and Facebook but worse than Amazon.

“If we can help more people do more stuff in a digital way online, it’s good for the internet and good for us,” Mr. Sengupta said.

Facebook Unites Payment Service Across Apps With Facebook Pay

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Facebook Inc said on Tuesday it was launching Facebook Pay, a unified payment service through which users across its platforms including WhatsApp and Instagram can make payments without exiting the app. Reuters reports: 

The social network said the service would allow users to send money or make a payment with security options such as PIN or biometrics on their smartphones.

Chief Executive Officer Mark Zuckerberg said earlier this year the company is planning to unify the messaging infrastructure across its platforms.

He said the company would encrypt conversations on more of its messaging services and make them compatible as direct messaging was likely to dwarf discussion on the traditional, open platform of Facebook’s news feed in a few years.

Facebook said the new service will collect user information such as payment method, date, billing and contact details when a transaction is made and that it would use the data to show targeted advertisements to users.

Some of the World’s Richest Brace for a Major Stock Sell-Off

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Wealthy people around the globe are hunkering down for a potentially turbulent 2020, according to UBS Global Wealth Management. Bloomberg reports:

A majority of rich investors expect a significant drop in markets before the end of next year, and 25% of their average assets are currently in cash, according to a survey of more than 3,400 global respondents. The U.S.-China trade conflict is their top geopolitical concern, while the upcoming American presidential election is seen as another significant threat to portfolios.

“The rapidly changing geopolitical environment is the biggest concern for investors around the world,” said Paula Polito, client strategy officer at UBS GWM, in a statement. “They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

Nearly four-fifths of respondents say volatility is likely to increase, and 55% think there will be a significant market sell-off before the end of 2020, according to the report which was conducted between August and October and polled those with at least $1 million in investable assets. Sixty percent are considering increasing their cash levels further, while 62% plan to increase diversification across asset classes.

Study: Many Can’t Afford to Take Vacations This Season

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It will be a long winter for millions of Americans who won’t be able to head to the ski slopes or sunnier climes for a vacation. Some 33 million Americans, many of them millennials, are financially tapped out and will stay home this winter, according to a new WalletHub survey. New York Post reports: 

“It should be no surprise that 33 million Americans say they can’t afford to travel this winter,” said WalletHub CEO Odysseas Papadimitriou. “Even though unemployment is near record lows and the stock market is near record highs, there are a lot of things weighing on consumers financially right now.”

Papadimitriou said many cardholders are “racking up credit card debt at a pace reminiscent of the run-up to the Great Recession” — a time when millions of cardholders, many suddenly unemployed, couldn’t pay their card bills.

And, he added, “Student debt clearly is a problem.”
Indeed, some hoping to travel this holiday season are still paying last year’s debts, according to another study, conducted by NerdWallet.

“One in 12 Americans who put 2018 holiday travel expenses on a credit card are still paying for them,” said Kimberly Palmer, a personal finance expert with NerdWallet.

Capsule Living: A Cheap Option for Young People Flocking to LA

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Kay Wilson packed up her life in a hurry and moved to Los Angeles… only to find that what she paid in Pennsylvania for a nice studio apartment would only get her a 2.9-square-meter box in California. Her new home is a capsule, inspired by the famous hotels in Japan. AFP reports: 

Each room contains up to six capsules, which Wilson describes as “cozy.” They contain a single bed, a bar for hanging clothes, a few compartments for storing shoes and other items and an air vent.

By most standards, the accommodation is still not cheap — $750 per month plus taxes. That works out at around $800, which is slightly more than the 26-year-old was paying in Bethlehem, around 70 miles outside Philadelphia.

“I couldn’t afford a studio by myself. Not at all,” she told AFP. “It’s $1,300 or more.”

Jeremiah Adler, founder of UP(st)ART, said each capsule costs roughly half the rent of a studio in Los Angeles — the US entertainment capital, and one of its most expensive cities.

A $45,000 Loan for a $27,000 Ride: More Borrowers Are Going Underwater on Car Loans

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John Schricker took out a loan to buy a car in 2017. Then he took out another. And then another. In two years, the 40-year-old electrician signed up for four auto loans, each time trading in the previous car and rolling the unpaid balance into the next loan. He recently bought a $27,000 Jeep Cherokee with a $45,000 loan from Ally Financial Inc. The Wall Street Journal reports: 

Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon—referred to as negative equity, or being underwater—can leave car owners trapped.

Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago, according to car-shopping site Edmunds. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans. Five years ago the average was about $4,000.

Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt. Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer.

Dow, S&P 500 End at Record Highs

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The Dow and S&P 500 closed at fresh records Thursday even after reports emerged of “fierce internal opposition” in Washington over a new agreement with Beijing to cancel tariffs in stages. MarketWatch reports: 

The Dow Jones Industrial Average rose 182.24 points, or 0.66%, to a record 27,674.80, while the S&P 500 index gained 8.4 points, or 0.27%, to an all-time high of 3,085.18. The Nasdaq Composite index added 23.89 points, or 0.28%, to 8,434.52, its second-highest close in history, according to Dow Jones Market Data.

Major U.S. stock indexes have been setting new records in recent sessions, with investors encouraged by reports of progress on an interim trade deal between the U.S. and China…

In U.S. economic data, the Labor Department estimated that 211,000 Americans filed new unemployment claims in the week ended Nov. 2, a one month-low and below the 215,000 predicted by economists polled by MarketWatch.

Man Underpaid His Property Taxes By $8.41. The County Seized His Property, Sold It—and Kept the Profits

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An 83-year-old retired engineer in Michigan underpaid his property taxes by $8.41. In response, Oakland County seized his property, auctioned it off to settle the debt, and pocketed nearly $24,500 in excess revenue from the sale. A state law allows counties to effectively steal homes over unpaid taxes and keep the excess revenue for their own budgets. Reason reports: 

Uri Rafaeli, who lost his property and all the equity associated with it, is just one of thousands of people to be victimized by Michigan’s uniquely aggressive property tax statute. The law, passed in 1999 in an attempt to accelerate the rehabilitation of abandoned properties, empowers county treasurers to act as debt collectors. In the process, it creates a perverse incentive by allowing treasurers’ offices to retain excess revenue raised by seizing and selling properties with delinquent taxes—even when the amount owed is miniscule, and even when the homes aren’t abandoned or blighted at all. 

Organizations representing property owners like Rafaeli say the practice is unconstitutional, inequitable, and unreasonably harsh. They call it “home equity theft”—a process that’s a close relative to the civil asset forfeiture laws that have been used by police departments to similarly deprive innocent Americans of their property without due process. They are now asking the state Supreme Court to restrict the practice. 

“Michigan is currently stealing from people across the state,” says Christina Martin, an attorney with the Pacific Legal Foundation, a nonprofit law firm now representing Rafaeli and other homeowners in a class-action lawsuit that will go before the Michigan Supreme Court in early November.

“Counties have been authorized to take not just what they are owed, but to take people’s life savings.”

Dow Rips to a Record High

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The Dow Jones Industrial Average reached a milestone on Monday, now up nearly 18% on the year. The Dow joining the S&P 500 and Nasdaq Composite at record levels, as investor sentiment was lifted by strong earnings, a rebound in economic data and a potential U.S.-China trade deal. CNBC reports:

The 30-stock measure rose 114.75 points, or 0.4%, to 27,462.11, its first all-time high since mid-July. Chevron led the way higher for the Dow, rising 4.6%. Trade bellwethers Boeing and Caterpillar also rose more than 1% each. 

Apple is by far the best-performing Dow stock since the index hit its previous record, rallying more than 25%. Intel, J.P. Morgan Chase and United Technologies are all up at least 10% in that time.  

Meanwhile, the S&P 500 climbed 0.4% to a fresh all-time high of 3,078.27. The Nasdaq advanced 0.6% to 8,433.20, also reaching record levels.

Monday’s rise brought the Dow’s year-to-date gain to nearly 18%. That would be the biggest one-year gain for the Dow since 2017, when it jumped 28.2%. The S&P 500 is up more than 22% for 2019 and is on pace for its biggest one-year gain since 2013, when it rallied nearly 30%. The Nasdaq is also up more than 27% this year. 

President Donald Trump touted the records, saying in a tweet: “Stock Market hits RECORD HIGH. Spend your money well!”

Apple Announces $2.5 billion Plan to Ease California Housing Crisis

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Faced with ever-increasing housing prices, people are leaving San Francisco and the Bay Area, and Apple, whose corporate home is in Cupertino, California, wants to do something about it. Mashable reports:

On Monday, the company announced a $2.5 billion plan to alleviate the issue by investing in affordable housing and helping Californians — especially first-time home buyers and low-income families — buy a home.

“Affordable housing means stability and dignity, opportunity and pride. When these things fall out of reach for too many, we know the course we are on is unsustainable, and Apple is committed to being part of the solution,” Tim Cook said in a statement.

The $2.5 billion plan includes a $1 billion affordable housing investment fund, which will provide the state of California and other entities with an “open line of credit to develop and build additional new, very low- to moderate-income housing faster and at a lower cost.”

Another $1 billion will go towards a first-time homebuyer mortgage assistance fund, which should help homeowners with financing, with a focus on increasing access to first-time homeownership for “essential service personnel, school employees and veterans.”

Additionally, Apple will commit $300 million towards building affordable housing in Apple-owned and available land, a $150 million towards a Bay Area housing fund, and $50 million towards supporting vulnerable populations.

US Debt Surpasses $23 Trillion for First Time

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The federal government’s outstanding public debt has surpassed $23 trillion for the first time in history, according to data from the Treasury Department released on Friday. The Hill reports: 

Growing budget deficits have added to the nation’s debt at a speedy rate since President Trump took office. The debt has grown some 16 percent since Trump’s inauguration, when it stood at $19.9 trillion. It passed $22 trillion for the first time just 10 months ago.

Of the $23 trillion figure, just under $17 trillion was in the category of debt held by the public, which is a more useful gauge of the debt the government has to pay down, and the number typically used in calculating the nation’s debt burden. The other $6 trillion comes from loans within government bodies.

Still, the $23 trillion figure marks a milestone.

Black Unemployment is at Record Low

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Nonfarm payrolls rose by 128,000 in October, exceeding the estimate of 75,000 from economists surveyed by Dow Jones. The unemployment rate ticked higher to 3.6%, in line with estimates, but remains around the lowest in 50 years. The unemployment rate for African Americans nudged down to a record low 5.4%. CNBC reports: 

The total employment level as measured in the household survey jumped to 158.5 million, also a new high.

The pace of average hourly earnings picked up a bit, rising 0.1% to a year-over-year 3% gain, also in line with estimates. The average work week was unchanged at 34.4 hours.

“This report is yet another sign that the economy is still strong right now and adds to a list of indicators that are looking optimistic of late,” said Steve Rick, chief economist at CUNA Mutual Group. “The vigor of this labor market, along with a more positive housing market and solid Q3 GDP, should offer some welcome reassurance.”

Early Retirement May Speed Up Cognitive Decline

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While retiring ahead of schedule may be easier on the body, a new set of research has found that it may not be so beneficial for the mind. The study, conducted at Binghamton University, finds that an early retirement can accelerate the usual rate of cognitive decline among the elderly. Study Finds reports:

The research team analyzed China’s new rural pension scheme (NRPS), as well as China’s most recent Retirement Longitudinal Survey (CHARLS), in order to investigate the effects of early retirement and pension benefits on individual cognition among adults over the age of 60. For reference, CHARLS is a representative national survey of China’s population over the age of 45 that tests respondents regarding mental cognition, episodic memory, and overall mental wellbeing.

After going over all of the data, the research team noted a clear trend: individuals receiving pension benefits were experiencing much more rapid mental decline than their counterparts still on the workforce. The most prominent indicator of mental decline among retirees was delayed recall, a trait widely considered to be an accurate predictor of dementia. Surprisingly, females seemed to experience even sharper mental decline after retiring early. Overall, the results support the hypothesis that decreased mental activity accelerates cognitive decline.

US GDP Rose a Better-Than-Expected 1.9% in the Third Quarter

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The Commerce Department on Wednesday said economic activity in the U.S. grew at an annualized rate of 1.9% in the third quarter, down slightly from the 2% pace in the second quarter. Economists polled by Dow Jones had expected the economy to grow at a 1.6% rate. CNBC reports: 

The better-than-expected print was the result of continued consumer spending as well as government expenditures, the government report said. Personal consumption expenditures, a gauge of spending by American households, rose at a 2.9% annualized rate while government spending grew at a 2% rate.

Imports, which are a subtraction in the calculation of GDP, increased during the third quarter. The most recent report on the U.S. trade deficit showed the imbalance at $54.9 billion at the end of August as imports outpace exports in the last full month of summer.

Growth in gross private domestic investment, however, continued to decline in the three months ended September 30 with a read of -1.5%, but far better than the -6.3% contraction in the second quarter.