Day: June 25, 2020

‘Being anti-racist is a verb, so it requires action’: Don’t stop demanding racial equality — how to become a lifelong ally

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Maybe you posted a black square on Instagram FB, -3.39%, donated money to a racial-justice organization, reflected with friends about your own privilege, or purchased a title from one of the internet’s many anti-racism reading lists in the last three weeks.

But as nationwide protests and a reckoning with America’s racist past —and present — hurtle onward, activists say the work is far from done. In fact, they say, today’s conversations are only the beginning.

“Realize that what’s going on now is part of a long-term pattern of racial injustice, discrimination, exploitation and violence,” Paul Kivel, an educator, activist and author of the book “Uprooting Racism: How White People Can Work for Racial Justice,” told MarketWatch. “It’s really important for us to understand that we need to be always working for racial justice, whether there’s dramatic moments or not.”

The country’s current scrutiny of police violence, discrimination and historic inequalities doesn’t show signs of abating anytime soon. But in the event that it does, you can still work toward racial equality in your everyday existence — and stand with your Black friends and coworkers even after the statements of solidarity fade from social-media feeds.

You can start, of course, by understanding the history of Black-owned businesses and making the conscious decision to shop at them. (MarketWatch has your starter guide here.) Here are more ways to keep your foot on the racial-equality gas pedal at home, at work and out in the world:

Continue educating yourself

Become a “racial equity learner” and find ways to learn about how racial inequality persists today, said Rashawn Ray, a University of Maryland sociology professor and fellow at the center-left Brookings Institution.

“We need to educate ourselves about how racism looks and operates and what the history is, how it plays out today, and how are people of color organizing to address it,” Kivel said. “We should be turning and listening to people of color, and there’s wonderful films and books and YouTube GOOG, -2.21% clips and art and dance and music.” Race-focused book lists abound; they often include a mix of introductory texts about race and literature by Black authors.

Leslie Mac, an organizer and digital strategist, suggested reading “as many books and content from Black women as you possibly can.” She recommended contemporary works by authors such as Charlene Carruthers and Crystal Fleming, as well as historical works by authors like Frantz Fanon and Angela Davis.

“If you’ve ever heard that a Black writer or thinker is ‘too radical,’ that’s who you should be reading right now,” she said. “Any book that is imagining a world that looks different from the one that we have, and is not just talking about things in theory, is really useful right now and will move people beyond that 101 framing, which is ‘I know that racism exists.’”

As for learning from your Black friends or coworkers, “don’t have conversations that could easily be handled by a Google search,” Mac said. “You can have a conversation with them about their experiences, about your behavior with them. Those are conversations that can be fruitful,” she said. “But if you’re just looking to download information from Black people, just skip it.”

Talk to your friends and family — and speak up when you witness racism

The next step, Ray said, is to become a “racial equity advocate.” That means holding people accountable for their actions and statements about inequality at the dinner table, in your friend group and at work, he said. Don’t let racist statements go unchecked.

“Part of the fundamental way you know you’re an advocate is if you speak up and speak out when the group that’s being vilified is not present or when they cannot help themselves,” Ray said. “If you don’t say anything, you’re letting that racist statement ride, and it’s assumed that you support it even if you don’t. You have to purposely say something about it.”

Pushing back with responses like, “I actually don’t agree with that,” “I’m not sure if that’s true,” or “I’m not sure if we should be talking about people like that” can go a long way, especially if there are other people observing, he said.

You can also be an advocate in public. Notice a pattern of Black customers at your local restaurant not being served or only being seated in the back corner? Ask for the manager or write a letter to the head of the company later. See someone being mistreated by the police or others? Record video of the encounter. “Without mobile phones, we wouldn’t know what happened to George Floyd, Ahmaud Arbery, Christian Cooper,” Ray said. If you have the time and opportunity, you can also acknowledge what happened to the person and let them know you didn’t agree with it, he added.

The bare minimum you can do to promote racial equality is to break the silence, Kivel said. “Part of how racism continues is that we don’t talk about it — so we need to have the conversations with our family and friends, with our children, with our neighbors, in our workplaces,” he said.

‘When the tenor of the conversation shifts, people are still going to be sitting with their experiences of structural racism, systemic racism and the daily microaggressions — and they’re going to look to these same coworkers who blacked out their square on Instagram that day and put up the hashtag and sent them a note that said, “I am with you.”’

— Laura Morgan Roberts, a professor of practice at the University of Virginia’s Darden School of Business
Promote equality at work

Take ownership and responsibility for trying to positively change the culture of your workplace, said Laura Morgan Roberts, a professor of practice at the University of Virginia’s Darden School of Business who has researched and consulted on diversity.

Be on the lookout for microaggressions, listen for stereotypical comments disparaging a person’s qualifications, and “call out that flawed assumption or characterization” in the moment, she said.

Be proactive to ensure that people of color are included in meetings and important decisions, Roberts added; if you notice your Black coworker was left off an impromptu Zoom ZM, +1.22% meeting invite, take the extra step to loop them in. When a coworker of color does really well on a project or makes an important contribution to the team, shine a light on their accomplishments.

If you have some authority at work, use your newfound enlightenment on race to promote greater equality in hiring and promotion decisions, Roberts said. Make sure people of color are being considered for leadership roles, task forces and other opportunities that could benefit them and their career. “Their name might not be considered naturally when people talk about high potential, so throw that person’s name in the hat too,” she said.

If you’ve put yourself forth as an ally during this time, Roberts added, expect that coworkers of color might eventually approach you to share an experience they’ve had in the workplace — and be ready to offer validation, support, empathy and compassion, rather than dismissing or second-guessing their account.

“When the tenor of the conversation shifts, people are still going to be sitting with their experiences of structural racism, systemic racism and the daily microaggressions — and they’re going to look to these same coworkers who blacked out their square on Instagram that day and put up the hashtag and sent them a note that said, ‘I am with you,’” she said. “They’re going to test that commitment by sharing an incident or an episode that otherwise they would’ve never told their white coworker about.”

‘Being anti-racist is a verb, so it requires action for you to claim that particular mantle — and it requires consistent action.’

— Leslie Mac, an organizer and digital strategist
Leverage your money, time and clout

“Realize that because we have various benefits and privileges that we get from being white, we can use those to leverage resources for racial justice,” Kivel said. One of those resources is money, of course, but there’s also time, energy, experience, skills and connections, he said.

Support and volunteer with grassroots organizations led by people of color that are “organizing for systematic change for racial justice at an institutional level,” Kivel said, and addressing issues such as housing, jobs, education and health care. Mac said she often looks for Black-led organizations that truly understand that “all Black lives matter” — meaning they’re supportive of Black trans lives and Black LGBTQ+ lives. Scrutinize the work an organization does and see whether it’s working alongside other groups, she said, because “very rarely does good community organizing happen in a vacuum.”

“The piece that’s important is that whatever work you’re trying to do is to complement and be in concert with the work that Black, brown and Indigenous organizers are doing on the ground,” Mac added.

Use your power to influence systems

Interrogate the systems that you have direct influence over and participate in, whether that’s the PTA or a board you sit on, Mac said. “Being anti-racist is a verb, so it requires action for you to claim that particular mantle — and it requires consistent action,” she said.

In that vein, the third step in Ray’s framework is to become a “racial equity broker,” meaning you advocate for racially equitable and transparent policies in spaces like your workplace, place of worship, homeowners’ association and kids’ school. “You’re interrogating the rules, policies, practices and laws that are in place that govern what you do,” he said.

“Speaking as a white person in those kinds of public settings, whether it’s a school-board meeting or a city-council meeting, does carry weight,” Kivel said.

Vote

“It’s important to think about who we vote for and that we support candidates of color — not indiscriminately, because we care about what they stand for [and] what their politics are,” Kivel said. He urged voting for candidates who are working toward goals like affordable housing, health care for everyone and safe communities. Consider candidates’ stances, behavior and past records on racism, he added: “Are they going to take us toward racial justice, or are they going to entrench us further in division?”

‘They get a get-out-of-jail-free card’: How qualified immunity protects police and other government officials from civil lawsuits

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As the deaths of unarmed Black people such as George Floyd, Breonna Taylor and Rayshard Brooks have reignited the national debate on excessive force and police accountability, activists have called for an end to qualified immunity, a legal doctrine that protects law-enforcement officers and other government officials from lawsuits over their conduct.

The Supreme Court this month declined to hear a handful of cases related to qualified immunity, putting the ball squarely in Congress’s court.

MarketWatch spoke with legal experts about how qualified immunity works, how it came to be, what it looks like in practice, and how critics across the ideological spectrum are working to challenge it:

What is qualified immunity?

Qualified immunity, a type of legal immunity, is a defense that a government actor can pose to defend against a civil lawsuit, said Taryn Merkl, senior counsel at the Brennan Center for Justice and a former assistant U.S. attorney in the Eastern District of New York. It essentially protects a government official from a lawsuit unless that official violated a statutory or constitutional right that was “clearly established,” Merkl told MarketWatch, and it “can be posed very early on in a case to prevent the lawsuit from going forward at all.”

Supreme Court Justice Samuel Alito wrote in an opinion for the 2009 case Pearson v. Callahan that qualified immunity balanced two key interests: “the need to hold public officials accountable when they exercise power irresponsibly and the need to shield officials from harassment, distraction, and liability when they perform their duties reasonably.”

Qualified immunity is only applicable in civil lawsuits.

Many courts have interpreted the “clearly established” piece of qualified immunity to mean that there needs to be a prior case that held that somebody’s actions in similar circumstances violated a person’s rights, Merkl said. “Some courts have held that unless there are facts that almost match the facts of an alleged violation, it wasn’t clear to the officer that what he did was unconstitutional,” she said.

Qualified immunity is only applicable in civil lawsuits — which, as the libertarian Institute for Justice points out, are often families’ and individuals’ only means of seeking relief in the absence of criminal charges being brought.

Amir Ali, the director of the MacArthur Justice Center’s Washington, D.C. office and a Harvard Law School lecturer, sees it this way: “Qualified immunity is basically a rule that police officers, correctional officials and other public officials are above the law and above the Constitution,” he told MarketWatch. “It says that even when a police officer engages in gross misconduct, whether it be police brutality or murder as we’ve seen time and time again in video after video, that they’re granted immunity from any suits trying to hold them accountable for their conduct.”

Why do critics want to end qualified immunity?

Qualified immunity has united skeptics and critics across the ideological spectrum, including conservative Supreme Court Justice Clarence Thomas, liberal Justice Sonia Sotomayor, the American Civil Liberties Union and the libertarian Cato Institute. A principal concern is the idea that it insulates officers from liability for potential constitutional and statutory wrongs, “but also that it encourages a culture of lack of accountability,” Merkl said.

‘Qualified immunity gives government officials a rubber stamp to violate your rights, as long as they do so in a way that no one has ever thought of before.’

— Robert McNamara, a senior attorney at the Institute for Justice

“Whether you subscribe to a world of bad apples or you think the whole tree is rotten, we’re already talking about somebody who is a bad enough apple that they’ve done something that no reasonable officer in the circumstance would have done,” Ali said. “But qualified immunity says even that person is going to walk away with impunity — if the victim isn’t able to find a case out there that happens to look pretty much exactly like this case.”

Robert McNamara, a senior attorney at the Institute for Justice, argued that qualified immunity “makes it almost impossible to hold government officials accountable for violating the Constitution” — and in a certain way, he added, “it makes it more difficult to make a government official liable the more unusual and egregious their conduct is.”

“They get a get-out-of-jail-free card simply because they violated your rights in a way that is slightly different,” McNamara told MarketWatch. “Qualified immunity gives government officials a rubber stamp to violate your rights, as long as they do so in a way that no one has ever thought of before.”

The 2001 Supreme Court decision Saucier v. Katz outlined a two-step test to determine whether an official would receive qualified immunity: A court must first consider whether the facts alleged demonstrate that a constitutional right was violated, and if so, it must examine whether that right was “clearly established.” Qualified immunity applied unless the official’s conduct violated a clearly established right. But eight years later in Pearson v. Callahan, the Court held that while this two-step protocol was “often beneficial,” it wasn’t mandatory.

“What the Supreme Court has said is that in evaluating a qualified-immunity defense, courts can skip directly to the second prong — meaning if a court thinks that the law is not clearly established, they don’t have to address the question of whether this person’s constitutional rights were violated,” Ali said.

In 1982, the Supreme Court redefined the qualified-immunity doctrine so that it no longer turned on evidence of an officer’s good faith but, instead, focused on whether the law was ‘clearly established.’

This effectively deprives families seeking some legal remedy and accountability of their day in court, Ali said. It also leads to a “perverse outcome” for people whose rights are violated in the future, he added: If the courts never decide in a certain case whether there was a constitutional violation, they don’t create the precedent necessary to show that the law was clearly established — thus leaving the door open for another government actor to do the same thing down the line.

“You end up in this Catch-22 where courts are saying, ‘Well, you’ve got to point to a case that looks just like this one where we said it was a constitutional violation’ — but then they’re never creating those cases or issuing those decisions which made clear it was a constitutional violation,” he said.

In the years since the 2009 Pearson case, “appeals courts have increasingly ignored the question of excessive force,” according to a Reuters investigation published in May.

“In such cases, when the court declines to establish whether police used excessive force in violation of the Fourth Amendment, it avoids setting a clearly established precedent for future cases, even for the most egregious acts of police violence,” the report said. “In effect, the same conduct can repeatedly go unpunished.”

What was the doctrine originally intended to do?

The 1871 Civil Rights Act, a Reconstruction-era law largely aimed at protecting Black Americans from violence, allowed people who were deprived of their constitutional rights by state or local officials acting “under color of law” to sue in federal court. This provision launched the U.S. Code’s Section 1983, which would form the basis for many cases against police officers.

Nine decades later, the Supreme Court created qualified immunity in 1967 “on the ground that it reflected common-law, good-faith immunities available under state law,” Joanna Schwartz, a professor at the UCLA School of Law, told MarketWatch in an email.

“At the time, the Court described the immunity as necessary to protect officers from personal liability when they have acted in good faith,” she said. “The justifications for the doctrine have changed over time — now the Court focuses not only on financial liability for officers but also on the need to shield them from the costs and burdens of defending themselves from insubstantial cases.”

The qualified-immunity doctrine, she added, “has shifted a great deal in the decades of its existence.”

“It originally just protected good-faith behavior. Then in 1982, the Court redefined the doctrine so that it no longer turned on evidence of an officer’s good faith but, instead, focused on whether the law was ‘clearly established,’” she said. “And the definition of ‘clearly established’ law has shifted over time. Now, law is only clearly established if the Supreme Court or a court of appeals has held unconstitutional virtually identical conduct to the case on point.”

How has this played out in practice?

Critics of qualified immunity say a number of cases highlight the doctrine’s shortcomings. For example, there’s Jessop v. City of Fresno, Calif., in which a pair of businessmen alleged that police officers had stolen some $225,000 in cash and rare coins they had seized while executing search warrants. The officers were deemed entitled to qualified immunity because “at the time of the incident, there was no clearly established law holding that officers violate the Fourth or Fourteenth Amendment when they steal property seized pursuant to a warrant.”

“Not only does that show you how absurd the doctrine is — because officers shouldn’t need a case where other officers have stolen something pursuant to a warrant to know that it is wrong — but what it tells you is that if you live in the Ninth Circuit, which actually governs a huge part of this country, that officers are free to go do it again and they won’t be held accountable,” Ali said. “So the next officer who executes a search warrant in the Ninth Circuit is free to pocket some of the proceeds.”

Another prominent case is Baxter v. Bracey, in which a court granted qualified immunity to officers who released a police dog on a burglary suspect who was sitting on the ground surrendering with his hands in the air. A prior case, meanwhile, had established that “the Fourth Amendment prohibited unleashing a dog to attack a suspect who had surrendered by lying on the ground.”

“But the court nevertheless held that the police had not ‘knowingly’ violated Baxter’s rights, because in that prior case, the suspect was laying on the ground, whereas Baxter was sitting on the ground with his hands up,” writes Jay Schweikert, a policy analyst at the libertarian Cato Institute.

What are the best arguments for keeping qualified immunity in place?

The International Association of Chiefs of Police, a professional association of more than 31,000 members in 165 countries, calls the doctrine “an essential part of policing and American jurisprudence” that “allows police officers to respond to incidents without pause, make split-second decisions, and rely on the current state of the law in making those decisions.”

“This protection is essential because it ensures officers that good faith actions, based on their understanding of the law at the time of the action, will not later be found to be unconstitutional,” the IACP said in a statement. “The loss of this protection would have a profoundly chilling effect on police officers and limit their ability and willingness to respond to critical incidents without hesitation.”

‘The loss of this protection would have a profoundly chilling effect on police officers and limit their ability and willingness to respond to critical incidents without hesitation.’

— International Association of Chiefs of Police

Attorney General William Barr spoke out against reducing qualified immunity earlier this month, and White House Press Secretary Kayleigh McEnany later called the idea a non-starter. South Carolina Sen. Tim Scott, who is leading Republican senators’ police-reform efforts, said the prospect of ending qualified immunity would be a legislative “poison pill” for the GOP.

“I don’t think you need to reduce immunity to go after the bad cops, because that would result certainly in police pulling back,” Barr told CBS News. “Policing is the toughest job in the country, and I frankly think that we have — generally, the vast, overwhelming majority of police are good people. They’re civic-minded people who believe in serving the public. They do so bravely. They do so righteously.”

McNamara argues that the concern over law-enforcement officers’ need to make split-second decisions under pressure “is already baked into the constitutional standard” with its question of reasonableness. The Fourth Amendment specifically prohibits “unreasonable” searches and seizures, he pointed out.

“All qualified immunity does is take a government official who made a decision that we can all agree was unreasonable and ask whether that unreasonable decision is new,” McNamara said. “I just don’t see why it should matter whether it was new — what should matter is whether it was unconstitutional.”

Could employees be bankrupted by lawsuits if not for qualified immunity?

“No,” Schwartz said. “Officers are virtually always indemnified, meaning that they don’t pay anything in settlements and judgments against them.” In Schwartz’s 2014 study of police-misconduct settlements and judgments across 81 U.S. law-enforcement agencies between 2006 and 2011, she found that governments had paid about 99.98% of the millions of dollars awarded to plaintiffs in civil-rights lawsuits.

“Law enforcement officers in my study never satisfied a punitive damages award entered against them and almost never contributed anything to settlements or judgments — even when indemnification was prohibited by law or policy, and even when officers were disciplined, terminated, or prosecuted for their conduct,” she wrote in the study.

What’s one big misconception about qualified immunity?

“The idea that removal of the doctrine will have an immediate effect on officer behavior is not likely to be the case,” Merkl said. “Removal of the doctrine could, however, cause municipalities and departments to reconsider their training strategies and their policies to increase officer accountability, because they may be subject to additional financial risk.”

How could qualified immunity be ended?

Rep. Justin Amash, a former Republican turned libertarian, and Rep. Ayanna Pressley, a Massachusetts Democrat, this month introduced the “Ending Qualified Immunity Act,” while House Democrats’ “Justice in Policing Act” calls for eliminating qualified immunity for law enforcement. Democratic Sens. Ed Markey of Massachusetts, Kamala Harris of California and Cory Booker of New Jersey are leading a similar effort on the Senate side. And Sen. Mike Braun of Indiana, a Republican, introduced a bill Tuesday to limit qualified immunity for police officers.

States are also “perfectly capable” of passing laws that hold officers accountable for constitutional violations, Ali said. A Colorado police-reform bill recently signed into law says that “qualified immunity is not a defense to liability.”

At the national level, “it could happen through congressional action,” Schwartz said. “The Supreme Court could also decide to take this up in the fall.”

Deep Dive: How to invest in health-care stocks without worrying about who wins the election

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There’s plenty of uncertainty for the health-care industry and its investors.

Half of U.S. states are now reporting rising coronavirus infections. And Joe Biden is beating President Trump in election polls, with the potential for Democrats taking both chambers of Congress.

But even if the Democrats once again transform the U.S. health-care system, companies that develop new treatments and improved medical technology will continue to be rewarded.

Ashtyn Evans, a senior health-care analyst at Edward Jones, named six players she expects to perform well over the next three to five years. With that longer-term focus, Edward Jones doesn’t set price targets for buy-rated stocks.

“A Democratic sweep can be a big risk for health care. But if you think about where we can position for the long term, the companies that focus on innovation and not just on cost-cutting and M&A [mergers and acquisitions], are where we would point investors to,” she said in an interview.

Evans said Biden “is not advocating a single-payer system,” meaning fully socialized medicine, which would be “the biggest risk to the system.”

A Biden victory probably pushes that threat back at least four years. But there may be “other pressures on the edge of big pharma, including pricing pressure,” she said.

Ashtyn Evans, a senior analyst at Edward Jones.

Edward Jones

She recommends investors focus on innovation in medical products and services, as well as companies with geographically diverse businesses.

Here are the six stocks Evans named as “buys,” followed by her comments about each company.

Company Ticker Share of sales in U.S. Share of sales outside U.S. Est. sales growth – next fiscal year Est. sales growth – fiscal year +2
Eli Lilly and Co. LLY, -1.45% 57.0% 43.0% 7.7% 4.7%
Merck & Co. MRK, -1.62% 43.6% 56.4% 7.3% 5.1%
Novartis AG ADR NVS, -1.83% 34.2% 65.8% 5.8% 4.3%
Medtronic PLC MDT, -4.80% 51.6% 48.4% 13.6% 8.3%
Abbott Laboratories ABT, -4.38% 35.7% 64.3% 12.2% 8.1%
Thermo Fisher Scientific Inc. TMO, -2.48% 48.4% 51.6% 8.3% 6.1%
Data source: FactSet

The table includes percentages of sales for the most recently completed full fiscal years within and outside the U.S. and estimated total sales growth figures for the next two fiscal years, based on consensus estimates among analysts polled by FactSet. Scroll the table to see all the data.

Eli Lilly

Shares of Eli Lilly & Co. LLY, -1.45% have returned 22% this year through June 23. (All total returns in this article include reinvested dividends.) The dividend yield on the shares is 1.86%.

Evans expects the company’s earnings to increase at an annualized rate of 15% over the next five years, on the strength of its drug pipeline. “They have gotten smaller over time by spinning off non-pharma, non-innovative businesses,” she said.

On June 16, Elli Lilly announced that a Phase 3 study showed its Verzenio medication had “significantly reduced” the risk of recurrence of certain early-stage breast cancers.

Evans expects 60% of the company’s sales in 2022 to come from newly launched medications, as it continues to be a leader in diabetes treatment.

Merck

Merck & Co.’s MRK, -1.62% shares are down 14% this year and have a dividend yield of 3.16%.

During 2019, sales of Merck’s Keytruda immuno-oncology medication totaled $11.08 billion, or 24% of Merck’s total sales. Immuno-oncology drugs use the body’s immune system to fight cancer. Sales of Keytruda increased 55% last year. “This could be a $20 billion annual product by the mid-2020s,” Evans said.

Novartis

Novartis AG NVS, -1.83% is headquartered in Basel, Switzerland. The company’s American depositary receipts are down 2% this year and have a dividend yield of 2.22%.

The company has a widely diversified portfolio of medications, according to Evans, “with a lot of innovation in cancer development as well, in different areas from Merck: Gene therapy to transfer genetic material into a patient for a cure.”

She describes these as “high-price, highly innovative, patient-specific treatments.”

Medtronic

Medtronic PLC MDT, -4.80% is based in Dublin, but its shares are listed on the New York Stock Exchange. The stock is down 17% this year and has a dividend yield of 2.48%

Evans called Medtronic “one of the most diversified” medical-technology companies, including cardiac devices, diabetes pumps, pacemakers and robotic surgery equipment. She likes its geographical diversification and its tax advantage from being domiciled in Ireland.

Abbott Laboratories

Shares of Abbott Laboratories ABT, -4.38% are up 6% this year and have a dividend yield of 1.58%.

Abbott manufactures generic drugs, diagnostic systems, nutritional products and medical devices. Evans sees a strong growth path for the company because of its exposure to emerging markets with increasing access to health care. She also sees a short-term benefit from the company’s coronavirus testing systems.

Thermo Fischer Scientific

Thermo Fischer Scientific Inc. TMO, -2.48% is up 10% in 2020. The company pays a small dividend for a yield of 0.25%.

The company provides equipment and systems used for pharmacological research. “They benefit from increased funding in the biotech space to develop new drugs,” Evans said.

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Outside the Box: My dad left me his IRA when he died, is there a way to share it with my siblings?

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Q: My father passed last year with an IRA valued at $90K with me as the sole beneficiary. I have a brother and a sister that should have been named. Is there a way to draw a legal document that would instruct the broker to split (roll?) the account into three separate inherited IRAs? I am in a much higher tax bracket than my siblings and don’t want to administer the RMDs.

— Joe

A.: Sorry about your dad, Joe. I appreciate you wanting to share the funds with your brother and sister, but as the sole named beneficiary, all of the IRA is legally yours.

“The simplest way to get your siblings funds is for you to take distributions from the IRA and simply give the money to them after adjusting for the change in your income tax bill from adding the distributions to your income. There would be nothing to administer because you each would do as you please with the cash. Anytime one gives money to someone that is not their spouse, they should consider gift taxes. However, the amount of money involved here is low enough that avoiding a gift tax is possible.

Read: Why your first five years of retirement are critical

You could reduce the tax impact somewhat by paying the funds out over more than one tax year.

If the extra income from paying them out would put you in an even higher bracket than you would face without the distribution, you could reduce the tax impact somewhat by paying the funds out over more than one tax year. Also, if you didn’t want to take your share soon, you could hold back your portion and take your distributions under the RMD rules since your dad passed before 2020.

Read: If you want to live to 100, do this one thing

Alternatively, you can try to petition the court to have the IRA split. The brokerage firm will not deviate from the designation without court order. You would likely need to show that not splitting three ways was a clear error and not what your dad wanted. This is typically done by pointing to the beneficiary designations on other accounts or what’s written in the will or a trust.

The track record on these petitions does not favor the outcome you desire. By law, the beneficiary designation supersedes the will or a trust and is presumed to reflect the deceased’s wishes. Successful petitions typically involve nefarious reasons such as undue influence, fraud, forgery, etc.

Petitioning is not a DIY undertaking. You’ll have a better chance if you engage a good lawyer so there is a cost and hassle factor that has to be considered versus you taking the money out, paying at your tax rate, gifting to your siblings, and being done. Remember, that if this were split like you wanted, your siblings would pay tax on their share at their rates. Therefore, if the petition even succeeds, the cost evaluation comes down to the anticipated legal expenses compared with the difference in taxes saved by splitting versus the taxes paid at your rate.

Read: A traditional 401(k) is better than a Roth 401(k) — except in this surprising situation

Your situation highlights the importance of beneficiary designations. If your two siblings had been also been named, you could easily split into three inherited IRAs and each of you would then make your own choices about taking funds out. In your case, each beneficiary could have chosen to take the funds out over many years, subject to the Required Minimum Distribution rules applicable to Inherited IRAs.

If you have a question for Dan, please email him with ‘MarketWatch Q&A’ on the subject line.

Dan Moisand is a financial planner with Moisand Fitzgerald Tamayo. His comments are for informational purposes only and are not a substitute for personalized advice. Consult your adviser about what is best for you. Some questions are edited for brevity.

The ‘work-from-home’ ETF is here. Get ready for some surprises.

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For all the weirdness of the past few months — the Zoom fatigue, the challenge of caring for children and pets and aging parents alongside co-workers — the coronavirus pandemic that’s kept millions of white-collar workers in their homes, not their offices, has presented new opportunities.

It seemed only a matter of time before someone launched an ETF for that, and on Thursday, that fund, the Direxion Work From Home ETF — sporting the ticker WFH, naturally — will start trading.

As it does, a look at what’s inside the portfolio shows some surprises. For such a clearly delineated theme that squares so neatly with the reality of life for so many right now, one of the biggest ironies is how nuanced the fund’s holdings actually are.

The fund is made up of 40 equally-weighted companies ranging from old standbys like Amazon.com Inc. AMZN, -1.08% and Microsoft Corp MSFT, -2.01% to the lesser-known, like Proofpoint Inc. PFPT, -0.71% and Perficient Inc PRFT, -5.24%.

It has of-the-moment pandemic darlings, like Zoom Video Communications Inc. ZM, +1.22% — and some old guards like Hewlett Packard Enterprise Co HPE, -4.13%. And its reach stretches from Shenzen, China, with companies like Xunlei Ltd. XNET, -1.33% , to Cincinnati Bell Inc. CBB, +0.13%

“This is global in nature, and the benefit of what they’ve done here is that they’re not just picking the poster children of the working-from-home phenomenon,” said Todd Rosenbluth, head of ETF and mutual-fund research for CFRA. “This fund gives you a mixture of up-and-comers whose business model is being driven by that theme, and some megacaps that will get stock price growth from many things. This is not really a pure-play work-from-home ETF, which I think is positive.”

Direxion says the fund will focus on companies that fall into four buckets representing sub-themes: remote communications, cyber security, project and document management, and cloud technologies.

Rosenbluth also thinks WFH should sit in an investing sweet spot. As an index-based fund, it offers more diversification, and the benefit of stock-picking from an experienced management team, than if investors were to try to select individual stocks themselves.

But it’s a lot less idiosyncratic than many actively-managed funds, most notably some of the ones run by a company like ARK Invest, which represent strong convictions by a small management team about clear winners among innovative technology leaders.

Still, this ETF, like any fund, will have to prove itself. “I don’t think any investors would dispute that we are going to be working from home and thus using the benefits of cloud computing and telecoms,” Rosenbluth said in an interview. Investor interest and flows into the fund will likely be robust because most people agree with that thesis, he noted.

But what will keep people invested is the performance of the individual companies, and thus the fund’s overall returns, Rosenbluth said.

As ARK’s CEO, Cathie Wood, told MarketWatch in early June, even her team struggles to understand how much of a moat some of the early technology winners really have.

WFH will charge a 45-basis point fee, track the Solactive Remote Work Index, and rebalance semiannually.

See:The first — and only — negative-fee ETF didn’t make it. Here’s what that tells us about investing.

Retire Better: Why your first five years of retirement are critical

This post was originally published on this site

If you’re a glass half full person, here’s some good news: About half of retirees are able to maintain their spending levels—in other words, their lifestyles—during their first five years of retirement. 

On the other hand, half aren’t. 

That’s according to a study by the federal government’s Consumer Financial Protection Bureau (CFPB), which looked at retiree spending habits over a 22-year period ending in 2014.

Obviously, retirees are like snowflakes: no two are alike. Yet the study says most tend to have one important thing in common: They usually spend more in their first five years of retirement than at other times, and then it begins to decline. For example, if you’ve dreamed of traveling the world, checking things off from your bucket list and so forth, you’re more likely to do so in the early stages of your golden years than the latter ones, when you may be slowing down.

And it’s not just splurging in Italy or taking the grandchildren to Disney World. The CFPB cites an external study by the Employee Benefit Research Institute, which notes that retirees also tend to buy fewer clothes, fewer home furnishings and other things as time goes by. 

Read: I want to retire to a rural location with four seasons that gets me out of New York state — so where should I go?

But there’s something else you need to know about why spending declines after a few years, and it’s important. More on that below. 

Naturally, being able to maintain spending is easier for some than others. The CFPB report says that 27% of retirees were able to spend based solely on income from pensions, Social Security, annuities and other sources of income. Another 24% wear able to so by dipping into savings and selling off investments, in addition to the above things. 

But remember: if you dip too deeply into these things—your principal—it raises the chances of you running out of money later on. There’s a common rule of thumb that you should never take more than 4% of your principal a year, but this is something you should discuss with a trusted financial adviser.

So the first five years are telling, and can reveal how the rest of your life, financially, is likely to go. 

Perhaps you’ve heard that a sound retirement is best compared with a three-legged stool: One leg is a pension, one is Social Security, and the third is personal savings. But the stool has gotten wobblier over the years. Fewer companies have defined pension plans than ever before, shifting responsibility to employees to save through 401(k), IRA and other plans. But tens of millions of Americans, for a variety of reasons, haven’t saved much, if anything: Nearly 70% have less than $1,000 stashed away, according to a 2019 survey by GOBanking rates. Countless other studies say pretty much the same. 

Read: My retirement income is $95,000 a year, and I want a walkable, affordable beach town to spend the winter. Where should I retire?

This leaves Social Security, which was never meant to be a primary source of income, yet for millions, that’s exactly what it is. According to the Social Security Administration, “50% of married couples and 70% of unmarried persons receive 50% or more of their income from Social Security.” Even worse: “21% of married couples and about 45% of unmarried persons rely on Social Security for 90% or more of their income.”

If you’re already in retirement, you know where you stand. If you only have one or one-and-a-half of those legs of the stool, chances are you’re still working (or trying to in this economy), and chances are you’ve downgraded your standard of living. It very well could be that Social Security is just about all you’ve got. 

However, for younger workers, perhaps 10 to 15 years away from retiring, the CFPB study offers data that could help strengthen your finances as your career winds down. 

It showed that homeowners (59%) are more likely to be able to maintain spending in retirement than renters (30%). And not surprisingly, homeowners who paid off their mortgages before retiring were in even better shape. Think about that: No monthly payment to anyone.

If this isn’t you, you might want to consider the cost advantages of downsizing. If you’re still working and can’t relocate, can you at least find something smaller and/or cheaper? I recognize that this may be difficult, and perhaps painful, but if it helps you get a better grip of your finances, it may be worth considering. 

And here’s a no-brainer: Stay out of nonmortgage debt. It’s awfully hard to live well in retirement if you’re saddled with car loans, credit card or even student loans—yes, some retirees still have student loans. Get this stuff off your books as fast as you reasonably can. Focus on paying off whatever has the highest interest rate first. 

Finally, remember how I said there’s something else you need to know about why spending declines after a few years? Many people, forced into a corner financially, have no other choice. The CFPB found that retirees who couldn’t maintain their standard of living wound up slashing spending by 28% over their first five years in retirement. Of that number, 17% cut spending by more than half. 

This is sobering data. Nobody wants to cut their spending—their lifestyle—by half. But if retirement is still on the horizon for you, consider taking steps now to bolster your situation—before you’re forced to later. 

Now my question (s) of the month: If you are eyeing retirement what are you doing now to strengthen your finances? And if you are already in retirement, have you been forced to make any changes? Tell me your stories. Write to me—Paul Brandus—at RetireBetterMarketWatch@gmail.com. Thanks and I hope you’re staying safe this summer. 

Where Should I Retire?: I want to get out of New York state and retire to a rural location with four seasons — where should I go?

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Dear MarketWatch,

I currently live in upstate New York (Saratoga County). I will retire from my state government job with an $80,000 public pension. If I stay, I won’t have to pay state income taxes on my pension, Social Security and the first $20,000 annually from my deferred compensation. Despite all of that, all the other taxes in New York make retiring here seem very expensive.

I’m looking for a rural retirement location with four seasons and where I can have a hobby farm. I like living less than 45 minutes from a town with a vibrant downtown, golf, fishing, hiking, hunting, and skiing. The location must be affordable, including housing, as I will have a mortgage and also want good health-care options.

To add to the wish list, I’d love to be closer to my family who are in Fort Collins, Colo., and Mesa, Ariz.), or least be within 90 minutes of an airport so I can visit often.

Any suggestions would be most appreciated!

Sandy

Sandy,

Let’s look out West for that four-season retirement spot and also get you closer to family. Your $80,000 pension already makes you better off than many retirees, and that’s before any investment or other income, so you have plenty of choices. Natural beauty and amenities often come with a price premium, of course. I’ll suggest three smaller cities and leave you to scout out the nearby rural options and the hobby farm possibilities.

The cost of farmland varies widely across the U.S., depending on local conditions and what the land is used for, but on the whole, it’s cheapest in the mountain states region, which includes Wyoming and Montana. I’m assuming you have worked out the time commitment and financial implications of having such a farm and already know that hobby farms don’t qualify for the tax breaks that small farms do.

As always, spend some time in any place you’re considering and make sure to experience it in all kinds of weather. Sometimes no matter how perfect a place may sound on paper, it’s the intangibles that capture your heart — or turn you off.

Cheyenne, Wyoming

Wyoming, as you may know, has no state income tax. For someone who wants out of New York state taxes, that’s a big plus. It’s also 45 minutes from your family in Fort Collins, so that eliminates one set of airline tickets without, I hope, being too close.

You’re definitely in cowboy country here. In Cheyenne, the state capital, you’ll find 65,000 people, one of the biggest hospitals in the state, several golf courses — and the world’s largest outdoor rodeo festival in Cheyenne Frontier Days. Laramie, home to the University of Wyoming and just over half the size of Cheyenne, is an hour away.

Don’t worry about hunting opportunities. Your closest option for downhill skiing, Snowy Range Ski Area, is 90 minutes away, on the other side of Laramie.

The downside: the cost of housing is above the national median, even though the overall cost of living is just below the national average. Of course, that’s for Cheyenne, and you’re looking for something more rural but with land. You can see what’s on the market right now across Laramie County on Realtor.com (owned, as is MarketWatch, by News Corp.)

If the Laramie area (in Albany County) is more to your liking, here’s what your money buys there.

Pocatello, Idaho

The tourism office calls this town of 57,000, located in the southeast corner of the state, an unassuming mountain town, but it’s livelier than you might expect given Idaho State University and its 12,000 students. You’ll find golf, fishing in the Snake River, skiing just 30 minutes away (only $43 for a lift ticket!) and plenty of hiking trails. You didn’t mention cycling, but the website Singletracks rates Pocatello No. 3 among the best affordable mountain bike towns .

To top off all the outdoor opportunities, you’d be sandwiched between two vastly different national parks —- Crater of the Moon National Monument and Grand Teton National Park.

Both housing and the cost of living are below the national average. It’s also one of the choices that comes up using MarketWatch’s “where should I retire?” tool. (Coeur d’Alene, at the other end of the state, does too, but it’s pricier.)

Here’s what’s on the market now in Pocatello and Bannock County.

Yes, Idaho has a state income tax but its “tax freedom day”, as calculated by the National Tax Foundation and taking all federal, state and local taxes into account, actually comes a few days earlier than Wyoming’s. That’s a good reminder that income taxes aren’t the only tax to consider.

One downside is the local airport’s limited service. But the airport in Idaho Falls (population 63,000) just an hour away has more options. That’s also your closest “big city,” though you’ll find some of the state’s largest hospitals in both Pocatello and Idaho Falls. Both Salt Lake City (with its major airport) as well as Jackson Hole and the Tetons are about 2½ hours away.

Bozeman, Montana

A reader recently flagged Livingston, a town of 7,000 on the way to Yellowstone National Park, as a retirement destination. The New York Times has called it “the literary town on the Yellowstone River”. Another writer described it as having “a blue-collar heart and a bohemian soul.”

The big city, just 30 minutes away, would be fast-growing Bozeman, now about 51,000 people and home to Montana State with almost 17,000 students. Among the many reasons I like college towns is that state universities often let retirees audit classes for free. That’s the case here.

Montana checks the box on low taxes (including no sales tax) — its “tax freedom day” is April 6, the same as Idaho’s — and Bozeman has a large hospital. The local economy has been strong, with unemployment below the national average. Unfortunately, housing costs are above average, even within 20 miles of Bozeman. So finding your new home and farm may take some looking.

To see what’s on the market across Gallatin County (home to Bozeman), click here.

Outside Bozeman, Mt.

courtesy Bozeman CVB

In some ways, this is the most rural choice; the nearest really big city — Salt Lake City — is 400 miles.

What you do get in exchange is plenty of outdoors. It’s no coincidence that the big ski resort an hour south of Bozeman is called Big Sky, with one run that goes on for 6 miles. Fishing is big here. Golf courses are plentiful. You can get to Yellowstone National Park in less than two hours. On the way is Livingston as well as the rugged Absaroka-Beartooth Wilderness (nearly 1 million acres, with many peaks above 12,000 feet) and hot springs.

With all there is to do, will there be time for a hobby farm?

A word of warning: winter is no joke here. Bozeman on average gets more than 5 feet of snow. But that’s similar to what you now get in Saratoga County. Winter is long, with frost into late May. The flip side is a low-humidity summer.

And if you want a break from all that snow, what better time to visit the family in Mesa? Even better, you can catch a non-stop flight from Bozeman Yellowstone International Airport.

Readers, where do you think Sandy should go?

Deep Dive: Bank stocks may ‘rally powerfully’ once investors realize their concerns are overblown

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Bank stocks have taken a beating, and investors have plenty to fear, including the Federal Reserve’s stress tests, whose results will be released June 25. Investors expect low interest rates to hamper profits, and a decimated economy to increase loan losses.

There’s a lot to take in, especially as the reopening of the U.S. economy is marked by rising coronavirus infections in half of the states.

But some concerns are overblown, and banks’ own change in behavior following the 2008 crisis is expected by many analysts to serve them and their shareholders well.

Doug Peta, chief U.S. investment strategist at BCA Research, said the five bank stocks listed below are ideally priced for long-term investors.

BCA is an independent research firm based in Montreal and founded in 1949. It has more than 60 analysts and doesn’t manage money or run brokerage services. Clients include institutional money managers of all types.

Here’s how the KBW Bank Index BKX, -4.81% has performed this year:

FactSet

The index comprises 24 stocks of universal and large regional U.S. banks. You can see it’s above its low when the U.S. stock market bottomed in March. It also took a dive two weeks ago, after the Federal Reserve projected the federal funds rate would remain near zero through 2022.

If you look at the “big four” U.S. banks — J.P. Morgan Chase & Co. JPM, -3.33%, Bank of America Corp. BAC, -3.95%, Citigroup Inc. C, -4.04% and Wells Fargo and Co. WFC, -4.07% — and add U.S. Bancorp USB, -4.48% of Minneapolis, the stocks are trading on average for 1.2 times tangible book value, down from 1.6 a year ago:

Bank Ticker Price/ tangible book value Price/ tangible book value – 1 year ago
J.P. Morgan Chase & Co. JPM, -3.33% 1.61 1.92
Bank of America Corp. BAC, -3.95% 1.24 1.55
Citigroup Inc. C, -4.04% 0.73 0.64
Wells Fargo & Co. WFC, -4.07% 0.83 1.43
U.S. Bancorp USB, -4.48% 1.74 2.52
Averages 1.23 1.61
Source: FactSet

These are the largest five U.S. banks by total assets, excluding the investment-banking giants Goldman Sachs Group Inc. GS, -3.30% and Morgan Stanley MS, -1.96%. The big four have diversified businesses, including lending, underwriting, money management and brokerage services. Peta described U.S. Bancorp as a “pure-play commercial bank.”

In an interview, Peta said current valuations for the group are “awfully low, based on history,” and that buying the stocks at similar valuations “has proven to be a really good entry point.”

Moving parts

Let’s look at three areas scaring investors away from big bank stocks: 1. Stress tests; 2. Loan quality; and 3. Interest rates.

Stress tests and dividends

The Federal Reserve concludes its annual two-part stress-test process June 25 at 4:30 ET. The regulator will announce which of the 34 large U.S. banks and U.S. subsidiaries of foreign banks have passed the first part, the Dodd-Frank Act Stress Tests (DFAST).

Some of the economic fallout from COVID-19 has been considerably worse than the Fed’s “severely adverse scenario” that was released in February. So the regulator is augmenting DFAST, but hasn’t provided much detail on how.

One change, described by Federal Reserve Vice Chair for Supervision Randal K. Quarles on June 19, is a “sensitivity analysis” that will consider banks’ capital levels under “a rapid V-shaped recovery,” as well as a “slower, more U-shaped recovery,” through which the economy regains only a small portion of what it lost by the end of 2020, and a “W-shaped double-dip recession,” through a second wave of coronavirus containment.

The second part of each bank’s stress test is the Comprehensive Capital Analysis and Review (CCAR). We’ll find out June 25 which of the bank’s capital plans were accepted by the Fed, but we won’t get all the details until the banks make their own announcements June 29.

Even with the group stress-tested under that last dire scenario, Janney Montgomery Scott Director of Research Chris Marinac wrote in a report on June 22: “While share buybacks may be postponed longer, we feel most banks’ common dividends are secure.” Approval of the Fed to maintain their dividends would do a lot to improve investors’ confidence in the stocks.

Peta said: “My base case is, no, don’t expect mandated dividend cuts. There is nothing in what [Federal Reserve] Chairman Powell has said publicly that is leaning in that direction.”

On the other hand, KBW managing director Brian Kleinhanzl wrote in a note on June 19 that “Quarles’ comments about dividend payouts were opaque in the Q&A and dividend cuts can still not be ruled out.”

Even if dividends are cut or suspended, Peta sees an opportunity to double-down. “If you are a shareholder of a bank trading below book [value], you should vastly prefer a dividend cut to a secondary offering that will dilute your holdings. I really think a one- or two-quarter interruption of the dividend or reduction would be a buying opportunity,” he said.

Loan losses and reserves

The big banks have been careful with their loan portfolios in the years following the 2008 credit crisis. Check out these 10-year compounded annual growth rates for the five banks’ total loans from the end of 2009 through the end of 2019:

Bank Compounded annual growth for total loans and leases – end of 2009 through 2019
J.P. Morgan Chase & Co. 4.3%
Bank of America Corp. 0.7%
Citigroup Inc. 1.5%
Wells Fargo & Co. 1.7%
U.S. Bancorp 4.2%
Source: FactSet

Over recent years, banks have shied away from leveraged loans (that is, highly leveraged lending that was greatly curtailed under the 2010 Dodd-Frank banking reform legislation), with the slack, especially for junior-lien loans, taken up mainly by private investment funds, according to Peta.

“Small- and mid-cap borrowers had been effectively orphaned by commercial banks,” he said, adding that after private investment funds raised capital in 2010 and 2011, “there was competition among direct lending funds [and] a degradation of standards. So borrowers were calling the shots,” he said.

These comments also apply to “excesses in the bond market,” driven by “a frenzied competition among fixed-income investors to find yield,” regardless of risk, Peta added.

So the banks were left out of a lot of the riskier lending activity during the long economic expansion that ended in the first quarter. This makes the pandemic crisis, as bad as it is, completely different from the 2008 crisis. Here’s an FDIC article and a paper by Thomas L. Hogan, a senior fellow at the American Institute for Economic Research and a former fellow at Rice University’s Baker Institute for Public Policy, explaining the evolution of the U.S. loan market.

Credit quality was very strong through the first quarter, although banks began to set aside billions in reserves for expected loan losses in the second quarter and subsequent quarters.

Many sell-side analysts have written that they expect banks’ second-quarter provisions for loan-loss reserves to be similar in size to the first-quarter provisions. The provision is the amount a bank adds to loan-loss reserves during a quarter in anticipation of loan losses. Yes, it is the movement of money from one bucket to another. But it directly reduces net income and lowers tier 1 common equity ratios, which are the “strictest” of the capital ratios that regulators scrutinize.

This table shows massive increases in provisions for loan losses and declines in net income in the first quarter from a year earlier:

Bank Provision for loan loss reserves – Q1, 2020 ($mil) Provision for loan loss reserves – Q1, 2019 ($mil) Net income – Q1, 2020 ($mil) Net income – Q1, 2019 ($mil)
J.P. Morgan Chase & Co. $8,285 $1,495 $2,852 $9,127
Bank of America Corp. $4,761 $1,013 $4,010 $7,311
Citigroup Inc. $6,446 $1,968 $2,519 $4,653
Wells Fargo & Co. $4,005 $845 $653 $5,860
U.S. Bancorp $993 $377 $1,166 $1,692
Source: FactSet

That was a painful quarter, but the five banks were still profitable. With the reopening of the U.S. economy, the boost to loan quality from the great increase in unemployment benefits included in the CARES Act, mortgage loan forbearances and various government lending programs for businesses, it is quite possible that second-quarter provisions will be lower than expected, and even that banks begin making much smaller provisions in succeeding quarters.

“This leaves room for bank stocks to rally powerfully once you close the gap between expectations of what will be written down on banks’ books and a much more benign outlook,” Peta said.

Yield curve and profitability

On June 11, the KBW Bank Index dropped after bank stocks had plunged out of fear that an extended period of low interest rates would mean narrower net interest margins for banks, leading to a drop in earnings. The idea is that a narrowing of the rate curve — the spread between short-term and long-term interest rates on U.S. Treasury securities — automatically means a narrow spread between what banks earn on loans and investments and what they pay for funds.

Odeon Capital Group analyst Richard Bove refuted that assertion.

Peta agrees with Bove, because “under the new duration-matched regime, net interest margin has become insensitive to the shape of the curve.” Matching funding and asset durations isn’t new. Banks learned painful lessons during the savings and loan crisis of the 1980s, when the Federal Reserve raised short-term rates to double digits to fight inflation, leaving some lenders with single-digit-rate loan portfolios losing money every day. This is why banks tend to sell most of the fixed-rate residential mortgage loans they make.

Peta shared two charts illustrating that there is no longer a link between banks’ net interest margins and the yield curve for U.S. Treasury securities:

BCA Research Inc.
BCA Research Inc.

NerdWallet: Where to find extra money in your own budget

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This article is reprinted by permission from NerdWallet.

You’re not the only one with a tight budget. Millions of Americans are currently struggling with unemployment, lost hours and lowered wages.

There’s little comfort in knowing that others are feeling strapped. But you may be relieved to hear there are ways to make things easier — even if you’re out of work or can’t make more money.

We talked to financial experts for advice about getting more mileage out of the money you have available right now. Here are their tips for finding extra money in your monthly budget.

Go line by line

Depending on where you live, you’re probably spending a lot of time at home these days. Devote at least some of the free time to analyzing your finances.

Go over every single transaction in your checking account, savings account, credit card bills and so forth, says Robinson Crawford, certified financial planner and founder of the adviser firm Montebello Avenue in Phoenix.

Crawford says you can use a budgeting system to make this step easier. Try an app, Excel file or some other tool.

Once you see all of the dollars going in and out, you’ll be able to identify areas for savings. And you’ll be ready to start making some (or all) of the changes outlined below.

Pick up the phone

As you look at your line items, focus on the largest bills first, suggests Cady North, CFP, founder of North Financial Advisors LLC, with offices in San Diego and Washington, D.C.

Lowering substantial, recurring payments has the potential to reap the biggest savings. For example, even if you already received an automatic rebate from your auto insurance company, it doesn’t hurt to call up and see if you can negotiate additional savings. That’s particularly applicable if you’re not driving right now.

Another option? If you have student loans, your federal student loan payment has likely already been suspended, but you’ll want to take the extra step to ensure you’ve stopped your automatic payments. That is, if you don’t want to continue making payments right now.

Also see: ‘Higher education essentially preserves intergenerational racial and class inequality’: How coronavirus could make it worse

If you choose to contact companies and service providers you do business with, be honest about how COVID-19 has affected you. Crawford recommends telling them about your situation and why you’re asking for help, especially if you’ve been laid off. They’re likely to empathize.

“Part of the reasoning should be, ‘Listen I’m trying to do everything to keep all of my bills paid. I want your service. I want to keep you. I want to stay as a customer.’”

Unplug and unsubscribe

After the big expenses, seal smaller holes in your spending. Try looking around your house, recommends Shehara L. Wooten, CFP, founder of investment adviser Your Story Financial LLC.

Unplug electronics when they’re not in use. Stop buying disposable paper towels and paper plates — switch to reusable towels and plates instead. Monitor the thermostat and lights as you spend increased amounts of time at home.

You can also pull the plug on unnecessary subscriptions. Crawford says now might be the right time to cancel those streaming services and online shopping memberships, especially ones you haven’t found use for even while you’ve been cooped up at home.

“If you’re not watching one of your streaming subscriptions during COVID, news flash: You’re never going to watch it.”

If you still like (and use) your subscriptions and aren’t willing to give them up completely, cut them out temporarily. Some companies allow you to go online and pause your account for a period of time.

“That’s a way to get $15, $20 here and there extra in your budget,” North says.

Get money back

Finally, while you may not be able to find a new job right now, there could still be methods to expand your budget that you hadn’t considered.

One way is to sign up for cash-back shopping sites or apps to earn money back when you purchase groceries and other essentials, Wooten points out. With some apps, you scan your receipt after a transaction for post-purchase savings.

Read: Strategies to attack debt, beef up savings, and prepare for another emergency

As you free up money, make sure you’re devoting those newfound funds to absolute necessities first, like food and shelter.

Every change you can make — no matter how major or minor — can make a difference.

More from NerdWallet:

Courtney Jespersen is a writer at NerdWallet. Email: courtney@nerdwallet.com. Twitter: @CourtneyNerd.

Livability: Rethinking big city life? Here are 8 smaller places that still have the urban perks

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Over the past few months, the COVID-19 pandemic has prompted many people to re-examine their living situations. Amid shutdowns, for instance, having easy access to open space — or a backyard at the very least — emerged as a new priority for many. Meanwhile, the economic turmoil accompanying the pandemic gave city-dwellers reason to question whether it’s really worth paying a premium to live in a big, crowded metropolis.

A recent national survey by Ipsos found that 42% of people have either moved or thought about moving since March, and rural areas, small and midsize cities were their top choices.

Becoming a suburbanite, or transitioning to small-town living, doesn’t mean you need to completely abandon life as an urbanite, though. Some of the country’s best small and midsize towns are within proximity of major metropolises. That means you can enjoy the wide open spaces and quaint downtowns, but still zip into the big city for amenities and attractions (when they reopen, of course) like pro sports, malls, museums and amusement parks.

Ahead, eight awesome small cities that are close to big cities — so you can enjoy the best of both worlds.

1. Castle Rock, Colorado (population, 64,827)

Proximity to Denver: 30 miles

A southern suburb of Denver, residents in Castle Rock enjoy wide open spaces (5,475 acres of it, to be exact) with the snow-capped Rocky Mountains serving up a glorious backdrop. Plus, the city sets itself apart with ultra unique amenities like “Challenge Hill,” an outdoor, 200-step incline (think: a stair stepper, but make it scenic), golf courses galore, horseback riding trails and a growing craft brewery scene. A straight shot north on I-25 takes you to Denver, where you’ll find restaurants captained by James Beard Award-winning chefs, more breweries, world-class museums, pro sports teams and funky dive bars dotting Colfax and Broadway.

2. Ann Arbor, Mich. (population, 113,998)

Proximity to Detroit: 45 miles

Ann Arbor, Michigan

iStock/Getty Images

Small town charm collides with collegiate charisma in Ann Arbor. Here, the beloved Literati Bookstore bestows upon the community a public typewriter where customers can write anonymous letters and inspiring messages. Installed on some businesses and homes are tiny fairy doors — architectural doubles of human-sized doors — to serve as portals for the mythical creatures bringing magic and whimsy to Ann Arbor.

Perusing the farmers markets, catching a festival or cheering on the Wolverines can easily fill up weekends in Ann Arbor, which you can rightfully call by its nickname, A-squared, once you live here. But in less than an hour, you can also be in downtown Detroit, enjoying an incredible arts scene and cultural gems like the Motown Museum and the General Motors Center for African American Art inside the Detroit Institute of Arts.

Also read: With New York City offices still closed, companies consider downsizing—or heading for the suburbs

For an architectural case study on the future of stadiums, pay a visit to Little Caesars Arena, where the Pistons and Red Wings play. The deconstructed layout allows for restaurants and retailers to be connected to the stadium, and remain open even when no games or concerts are scheduled.

3. Santa Fe, N.M. (population 84,612) 

Proximity to Albuquerque: 65 miles

Santa Fe, New Mexico

AFP/Getty Images

An artistic wonderland packed with art festivals, galleries and wildly inventive margaritas, Santa Fe has rightfully established itself as “The City Different.” Several time-honored traditions bring residents together here, including the Canyon Road Farolito Walk during Christmastime, Santa Fe Opera tailgating, and a consensus that green chile reigns supreme. But Santa Fe goes to bed pretty early, so if you’re looking for a night out on the town, slip away to downtown Albuquerque. Even better? A $10 train ticket can transport you between the two cities. With a population of 560,200, Albuquerque reigns as New Mexico’s biggest city. Old Town features dining and artisan shops, plus the city has a botanical garden, brewpubs in Nob Hill and a bona fide nightlife scene that keeps Central Ave. thrumming with youthful energy.

4. Gettysburg, Penn. (population: 7,633)

Proximity to Baltimore: 50 miles; proximity to Washington, D.C.: 80 miles; proximity to Philadelphia: 110 miles

You’re already familiar with Gettysburg because of its historical significance and its famed landmarks like Gettysburg National Military Park. But there’s plenty of farm-to-table bounty here, with unpretentious and delicious eateries and cideries. A regional Pie Trail epitomizes small town living, right? But the beauty of Gettysburg is that depending on which way you venture, you can end up in some of the East Coast’s biggest cities. The historic city is within proximity of Washington, D.C., Baltimore and Philadelphia, so you’ll never run out of weekend getaways to experience big-city arts, culture and sports.

5. Asheville, N.C. (population: 92,452)

Proximity to Charlotte, N.C.: 120 miles

Asheville, North Carolina.

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Tucked in the Blue Ridge Mountains, Asheville excels when it comes to mountain town living. With a cool and laid-back persona, this North Carolina city is home to a highly regarded craft beer scene, plus there’s plenty of outdoor adventures (Hiking! Mountain biking! Whitewater rafting!). Residents here love dogs and have an appreciation for great food (nearby farms supply the bounty to restaurants). And as an added bonus, there’s very little traffic. Instead, jam out at one of the acclaimed live music venues. But when you’re craving a big city experience, Charlotte is 120 miles away and is bidding for attention. It’s home to the U.S. National Whitewater Center, a must-visit attraction for intrepid types to try out white-water courses on kayaks and rafts. Go on a self-guided barbecue tour, shop the 7th Street Public Market, and enjoy the nightlife. (We double-dare you to ride the mechanical bull at Dale Earnhardt Jr.’s Whisky River.)

6. Hamilton, Ohio (population: 62,359) 

Proximity to Cincinnati: 17 miles; Proximity to Dayton: 32 miles

Over the past few years, Hamilton has pumped $65 million into its downtown, and the revitalization efforts are bringing about a thriving arts and culture scene and market-rate apartments. Residents here can enjoy a variety of public art sculptures, the 300-acre Pyramid Hill Sculpture Park & Museum, and jazz and comedy performances at the Fitton Center for Creative Arts. Seasonal festivals like IceFest, where ice sculptors chisel works of art out of blocks of ice, bring the community together even in the doldrums of winter. Located within the Cincinnati-Dayton metroplex, it’s easy to zip between the two big cities, whether it’s for a work commute or to enjoy a day exploring the bigger cities’ attractions like the Cincinnati Zoo and Botanical Garden.

See: 4 questions to ask before retiring to the suburbs

7. Franklin, Tenn.

Proximity to Nashville: 21 miles

One visit to Franklin makes it easy to see why this small city outside of Nashville is growing fast. Franklin has all the charm of a historic Southern town, including a seriously picturesque Main Street and downtown, friendly people and fantastic restaurants cooking up Tennessee favorites from scratch. But it’s also home to headquarters of major corporations like Nissan NSANY, -2.97% and Mars Petcare, which means residents have access to career opportunities they’d usually only find in a much bigger city. Living here means being just a short drive from Nashville’s world-famous music venues, but don’t discount the creative scene in Franklin — you don’t have to leave city limits to see up-and-coming artists at open mic nights or international superstars at Pilgrimage, a two-day music festival that draws acts like Justin Timberlake and the Foo Fighters.

Read: Americans are eyeing homes in the suburbs as pent-up demand hits housing market

8. Hood River, Ore. (population: 7,806)

Proximity to Portland, Ore.: 60 miles

Postcard-perfect, Hood River sits on the front porch of the Columbia River Gorge and the Cascade Range. The 35-mile Hood River Fruit Loop packs a lot of charm per square mile, with snow-capped peaks, orchards, lavender fields, fruit stands and alpacas. Plus, it’s the windsurfing capital of the world if you’re looking to take up a new socially distanced-approved hobby. An hour’s drive along I-84 will get you to Portland, where there’s plenty of coffeehouses, breweries and museums to explore. And, until you’re comfortable flying again, there’s an acclaimed Japanese Garden to help satiate your wanderlust.

Read the original article on Livability.