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I think these 3 FTSE 100 stocks could be in for a wild ride in 2022!

financialnews1 on December 7, 2021

As a value investor, I enjoy hunting down cheap stocks, particularly in the FTSE 100 index. At the weekend, I spotted five beaten-down shares that have suffered a terrible 2021.

The FTSE 100’s five biggest fallers over one year

These are the FTSE 100’s five largest losers over the 12 months to Friday, 3 December.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

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Company Sector

One-year fall
Fresnillo Mining -22.3%
International Consolidated Airlines Group Airlines -22.5%
London Stock Exchange Group Financials -24.8%
Ocado Group Retailing -27.0%
Flutter Entertainment Gambling & betting -29.9%

Share price losses at these FTSE 100 flops range from 22.3% to almost 30%, with an average loss of 25.3%. Furthermore, I see three of the stocks as being particularly volatile next year:

Fresnillo: a play on precious metals

Fresnillo (LSE: FRES) — based in Mexico City and listed in London — was established in 2008. It’s the world’s largest producer of silver from ore and Mexico’s second-largest gold miner. Currently, Fresnillo operates seven mines, three development projects, and six exploration prospects. Its flagship mine has been in use for more than 500 years. In 2020, the firm produced 53.1m ounces of silver and 769.6k ounces of gold.

Fresnillo’s profitability is strongly tied to the prices of silver and gold, both of which have declined over the past year. This FTSE 100 share’s price has ranged from a high of 1,280p on 7 January 2021 to a low of 742.6p on 27 July. On Monday, it closed at 887.8p, valuing the miner at £6.5bn. I don’t own this share at present, but I’d buy at current price levels. However, I’d fully expect this mining stock to be similarly volatile in 2022.

IAG: airline fracture?

Shareholders in airline chain International Consolidated Airlines Group (LSE: IAG) have had a turbulent trip in 2020-21. Thank to Covid-19 lockdowns, the IAG share price has collapsed since January 2020. Over the past 12 months, the stock has ranged from a high of 222.1p on 16 March 2021 to a low of 122.06p on 26 November. On Tuesday, this FTSE 100 stock closed at 142.34p, leaping 10.64p (+8.1%) to value the airline group at £7.1bn.

I don’t own this FTSE 100 share, but I’m encouraged by recent rebounds in the IAG share price. In the past six trading sessions, this stock has leapt by 16.6% from its late-November low. This followed reports that the latest Covid-19 Omicron variant is less harmful than first feared. Even so, I wouldn’t buy IAG at present. I’d prefer to see how things develop going into 2022 and the spring holiday season.

Ocado: a FTSE 100 flop in 2021

My third FTSE 100 faller that could continue to struggle is online supermarket Ocado Group (LSE: OCDO), whose shares have endured a torrid 2021. At its 52-week high, Ocado stock surged to 2,886p on 27 January. On 28 January, I warned that this growth stock was a bubble waiting to burst. Sure enough, it’s been steeply downhill ever since. On Monday, the stock closed at 1,582p, down 2.7%. This values the loss-making high-tech grocer at £11.9bn. What’s more, this Footsie share currently trades just 36.68p (+2.4%) above its 2021 low of 1,545.32p on 12 October.

I don’t own Ocado shares at the moment — and I would decline to buy at current levels. In its 11 years as a public company, Ocado has run up massive losses chasing customers and revenues. Also, it burns through cash and has never paid a dividend. Lastly, I suspect this FTSE 100 share’s price could continue to bounce around wildly in 2022!

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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo and Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

What will new mortgage lending rules mean for house prices?

financialnews1 on December 7, 2021

Image source: Getty Images

House prices in the UK have risen by over 10% this year and continue to surge. On top of this, strict mortgage lending rules have made it even more challenging for first-time buyers to get onto the property ladder.

In response to a sea of criticism over the strict mortgage lending criteria, the Bank of England has revealed that it may consider softening the rules.

At first, the proposed changes point to a better deal for first-time buyers. However, experts have warned that the downsides of the changes may outweigh the positives.

Here’s what softer mortgage lending rules could mean for house prices in the UK.

What is meant by ‘softer’ mortgage lending rules?

To access a mortgage in the UK, buyers must meet certain criteria that are dictated by a set of mortgage lending rules. These rules were released in 2014 during a nationwide financial crisis.

The aim of the mortgage lending rules is to ensure that mortgage recipients are able to comfortably pay monthly rates, even in times of price inflation. To be sure of this, current lending rules place an additional 3% interest rate charge on new mortgages.

Mortgage lenders also carry out thorough checks on applicants’ finances and tend to favour buyers who have a more desirable profile.

Mortgage lending rules were introduced to ensure that homeowners could pay their monthly fees even in times of interest rate inflation or drops in income. However, interest rates for mortgages in the UK have remained low for longer than was originally anticipated.

More importantly, the strict rules have made it increasingly difficult for first-time buyers to get on the property ladder. This has created a first-time buyer crisis. As a result, the Bank of England has announced that it will consider softening it’s mortgage lending rules.

Softer rules could mean an end to the additional 3% interest rate and a looser affordability test.

How will these changes affect house prices?

The Bank of England has proposed mortgage lending rule changes to help first-time buyers access the mortgages they need.

On one hand, softer lending rules will make it easier for prospective buyers to access mortgages. It is thought that looser affordability criteria will open doors for hopeful homeowners who previously wouldn’t have made the cut.

On the other hand, more eligible buyers may not be what the UK property market needs. Some experts have warned that an influx of eligible buyers could cause house prices to soar further. As a result, the UK housing market could enter ‘bubble territory’.

A ‘housing bubble’ refers to a sudden increase in house prices caused by high demand and low supply.

The UK is currently facing a shortage of homes due to supply issues. If more buyers are able to access mortgages, this could increase competition and see UK housing prices surge yet further.

How can you prepare for changes to the mortgage lending rules?

A change to the Bank of England mortgage lending rules could significantly increase the cost of housing in the UK.

For this reason, prospective buyers might want to jump on the property ladder sooner rather than later. This is because a relaxation of the rules could ultimately lead to stronger demand and increased competition. If left too late, prospective homeowners may fall victim to a shortage of homes.

The best way to avoid a possible race for housing is to secure your mortgage as soon as you are able to do so. Our mortgage application mistakes guide could help you to reduce application errors, which would otherwise slow down the mortgage lending process.

Another way to secure your mortgage quickly is to get a head start on the paperwork and checks. The sooner you complete this process, the sooner your application can be accepted.

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Ruby Layram

Ruby is a freelance writer who enjoys writing about all things personal finance. After embarking on her own side hustle journey three years ago, Ruby is passionate about helping others to learn about the ins and outs of persona… Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

My plan for generating passive income for life from a £5-a-day investment

financialnews1 on December 7, 2021

For me, the most convenient way of generating passive income for life is buying shares that pay dividends. But choosing the right shares can be tricky.

Some of the businesses behind stocks are not suitable for a long-term approach to investing. If I pick the wrong shares, dividends could dry up later on. And sometimes a poor dividend performance can lead to a bad share-price performance.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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So my strategy aims to avoid stocks that can’t deliver a reliable and enduring stream of shareholder dividends.

The wonderful few

And legendary long-term investor Warren Buffett demands high standards from his stocks as well. He reckons the market is made up of many companies with low-grade and mediocre businesses. But there are also a few exceptional ones.

And the excellent businesses he targets tend to work like money compounding machines. They likely increase their revenues, earnings and cash flow on average each year and spit out an ongoing stream of rising shareholder dividends. He calls such beasts “wonderful” businesses.

So my plan is to find Buffett-style wonderful businesses. Then I try to buy some of their shares at opportune moments when the valuation makes sense of a long-term investment.

But having bought shares like that, I then need to decide what to do with the dividends that keep arriving in my share account. And those dividends are passive income to me because I didn’t have to do any ongoing work to earn them. As long as I keep holding the stocks, and as long as the underlying businesses keep thriving, those dividends will likely keep on coming.

Building passive income potential

But I’m in the building stage of my portfolio, so I’m not taking the dividend money out to spend it. Instead, I’m reinvesting them back into the shares of wonderful businesses. And that’s because I want my gains to compound in value and become larger and larger over time. One day, I’ll switch to spending the dividends and, by then, I’m aiming for them to be larger than they are today because I’ve been compounding.

There’s nothing certain or guaranteed, of course. Even if I choose wonderful businesses I could still lose money. All stocks carry risks. But I reckon following the approach of successful investors could serve me well in the years ahead. And investing £5 a day in dividend stocks is a good place to begin.

The sum works out at just over £152 a month, or £1,825 a year. For the price of daily lunch out, I could be making a big difference to my financial future. And, for me, the best way is to invest that money every month. And I’d deduct it as an expense from my income before anything else. Then I’d put it in a tax-efficient ‘wrapper’ such as a Stock and Shares ISA, or a Self-Invested Personal Pension (SIPP). And within those accounts, I’d buy my stocks.

I’d start my search here…

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

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You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2 penny stocks to buy for 2022

financialnews1 on December 7, 2021

I’m focusing on penny stocks today and the first one I’m looking at is ULS Technology (LSE: ULS). The share price is 72p as I write, but I think this could rise considerably from here.

The company provides software and services in the property, legal and financial industries. Its flagship offering is eConveyancer, which is an online comparison tool for residential conveyancing quotations. It also owns DigitalMove, another online platform that centralises and streamlines the conveyancing process.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

It released its half-year report last week that showed revenue growing 48% to £10.2m. The gross margin also improved, reaching 40% and up from 38.8% in the same period one year ago. However, the business remains loss-making. The underlying loss before tax was £1.48m, which increased from £0.64m and does make this penny stock higher-risk.

The firm said this was due to continued investment in eConveyancer and DigitalMove. I think this is the right thing to do as these platforms have the potential to streamline the house-moving process. This is an area that’s ripe for disruption from a technology-led company, in my view.

However, what derisks this penny stock is its net cash position. As I write, the company’s market value is about £50m, but there’s cash totalling £23.1m on the balance sheet. This provides the management team with considerable flexibility to invest in its digital platforms.

There’s never a guarantee of success, of course, particularly if the housing market slows. But with a new CEO coming on board in 2021, and a robust balance sheet, I think ULS Technology could be a much larger business in 2022. It’s a buy for my portfolio.

Eating out

The next company is Restaurant Group (LSE: RTN) as the share price dipped back under 100p in October. The firm released a strong trading update in November and the shares almost reached 100p again. However, recent market weakness related to the Omicron variant has meant the share price has slipped back to 84p as I write.

Restaurant Group operates around 400 restaurants and pubs, including Frankie & Benny’s, Wagamama, and Chiquito. The trading update back in November said that the company was outperforming its market (defined as the Coffer Peach restaurant and pub benchmark in the trading update). Management then upgraded its guidance for adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) to a range of £73m to £79m.

I consider Restaurant Group a recovery play. With this in mind, the company should perform well next year as I believe there’s still a lot of pent-up demand for dining and socialising after lockdowns.

However, this does come with some risk. The company said recently it experienced a minor improvement in UK airport passenger volumes, which increased sales in its concessions business. Any further travel restrictions related to Omicron will likely impact this business division.

Nevertheless, I think this stock should continue to trade well next year as the demand for restaurants and pubs stays high. I’m considering adding the shares to my portfolio.

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Dan Appleby has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The IAG share price leapt 8% on Monday! Here’s why

financialnews1 on December 7, 2021

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This could be what caused the latest cryptocurrency flash crash

financialnews1 on December 7, 2021

Image source: Getty Images.

Cryptocurrency markets took a nosedive over the weekend. It’s par for the course for long-time crypto investors, but those newer to the space might have been left scratching their heads and asking what on Earth happened.

There are never any certainties when it comes to digital assets. But here, I’ll run through the theories as to why the crypto weekend party got crashed and what could be in store moving forward.

What happened to the cryptocurrency markets over the weekend?

It was not a pretty time to be a crypto investor, that’s for sure. The price of Bitcoin (BTC) took a steep dive, pulling down other digital assets with it.

According to CoinMarketCap the price of Bitcoin dropped off a cliff from $57,000 (£43,000) on Friday to lows of around $45,000 (£34,000) by Saturday. This marked a sharp 20% decline in the leading cryptocurrency.

Other coins and tokens saw even bigger drops in value. One interesting element in all this was that Ethereum (ETH) didn’t go down by quite so much. This may be a sign that the number two crypto is starting to decouple from the movements and whims of Bitcoin.

Why did this cryptocurrency crash happen?

Only recently, the digital asset market took a tumble, with lots of factors contributing to the decline. This weekend’s flash crash appears to be no different, with no single major catalyst. However, here are the main theories as to why the market is suffering right now:

  1. Fears around the Omicron variant have shaken global equity markets, and this fear spilt into crypto.
  2. Digital assets tend to move in line with the stock market, but they are the first things to be sold during periods of uncertainty.
  3. There’s a lot of leverage trading, which means using borrowed money. The volatility means even a small dip can trigger a big sell-off where traders are forced out of their positions.
  4. Further applications in America for a Bitcoin ‘spot-ETF’ linking to the cryptocurrency itself have been rejected.
  5. There’s ongoing uncertainty around the regulation of digital assets in the US and around the globe.

What’s next for the cryptocurrency market?

What happens with global stocks is likely to continue to have an effect on the digital asset market. Regardless of tech advances, if stock markets fall or stall, so too will crypto.

The difference, however, is that stock market drops are usually much smaller than the epic cryptocurrency tumbles. So buying shares is going to be a safer way to invest if you’re not a fan of volatility. Because whether the crypto market goes up or down, no one will argue against it being extremely volatile.

By investing in companies you also have the ability to protect your gains from tax using a stocks and shares ISA account. Doing this is much more straightforward than navigating the current crypto taxation rules in the UK – rules that most people don’t fully understand!

Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

: My mom’s secret lover paid her mortgage. After they split, she met a con artist on a dating app for seniors who put his name on the deed

financialnews1 on December 7, 2021

Dear Quentin,

My mom has been unemployed and on Social Security Insurance since 2017. Somehow In 2018, she “bought” a new house in Georgia that I suspected she could not afford. A year later she confessed to me that it was actually purchased by a family friend with whom she had had a secret romantic affair for over 30 years.

Mr. Secret is in an unhappy, open marriage and has no intentions to divorce. He never moved into the house with my mom, but they had a notarized agreement stating that he would pay the mortgage, and she would pay the utilities. They also agreed to put the deed solely in my mom’s name so that his wife or children would not inherit the house in the event he died.

By 2019 their affair came to an end and Mr. Secret asked my mom to move out of the house so that he could sell it, but she refused. As the deed was in her name he could not evict her, so he told her he would let the house go into foreclosure.

Due to her poor credit my mom was unable to have the mortgage transferred into her name. She made partial payments towards the mortgage as best she could, but she struggled to do so.

“‘My mom continues to struggle to pay the mortgage. Somehow she’s been able to have it deducted directly from her bank account.’”

In 2020, she “fell in love” with a new guy she met on a dating app for seniors. Within less than a month of meeting New Guy, he paid to bring the mortgage up to date and moved into the home with my mom. A few months later, he bought the house and they had his name added to the deed.

Unfortunately, New Guy turned out to be an abusive con artist and their relationship ended in less than 6 months with my mom filing a restraining order against him. He also stopped paying the mortgage after he moved out, leaving my mother to struggle again to pay it herself.

She reluctantly moved tenants into her extra bedrooms as it was her only way to generate income, but according to her this income is still not enough to cover all of her expenses.

My mom continues to struggle to pay the mortgage. Somehow she’s been able to have it deducted directly from her bank account, but the monthly amount due has recently increased by a few hundred dollars (for unknown reasons) and the new payment amount exceeds the amount she had previously budgeted for (causing her to be short on other bills).

“‘The mortgage is still solely in New Guy’s name so she isn’t able to speak with the lender to make payment arrangements.‘”

The mortgage is still solely in New Guy’s name so she isn’t able to speak with the lender to make payment arrangements. I asked my mother what prevents New Guy from evicting her since the mortgage is in his name, and both of their names are on the deed.

She said the police told her New Guy could not evict her since she has a restraining order filed against him (this doesn’t make sense to me). She also believes that since she has been making the mortgage payment herself that gives her additional protection from eviction (I’m not sure if that is correct either).

My mother has been looking for employment to increase her income but has not had any luck, and she has refused my suggestions to move into a more affordable apartment or senior living community that is within her means. I have helped her financially for most of my adult life, but I have my own debts now and cannot help her anymore without hurting myself.

Do you have any advice on how to advise her? What protections (if any) does she have from being evicted from her home? If New Guy dies what claims could his children make to this home? If my mother dies what would my responsibilities be?

I’m pretty sure she does not have a will in place, and honestly I want nothing to do with the house except to remove her belongings when she passes.

A Very Concerned Child

Dear Very Concerned,

This is an unfortunate sequence of events. 

Each of the three parties — your mother, Mr. Secret and New Guy — all wanted something. Your mother wanted these men to pay her mortgage, or at least part of it, and they wanted love, romance and/or a stake in a property. It has become a toxic situation. Your mother is now left struggling to pay a mortgage on a home that she only has a 50% share in.

There are so many lessons from this sad tale. Don’t buy a home that you can’t afford. And never put somebody else’s name on the deed of your home. Once you have done that dastardly deed — unless it was done under duress or as part of some kind of fraud — there is very little she can do to reverse it. 

Your mother’s next course of action will depend on what equity — if any — she has in the house. If there’s enough, she could file a partition action, thereby compelling New Guy to sell the property, assuming he won’t sign a quit claim and give up his right to the home. She should, of course, consult a real-estate attorney to consider her options.

“‘Your mother’s next course of action will depend on what equity — if any — she has in the house.’”

If your mother lives in a judicial foreclosure state, the foreclosure must go through the court system. In non-judicial foreclosure states where the process is often speedier, the lender might only notify the owners that they are in default before putting their home up for auction. The process can take months or years, depending on the state.

What happens if New Guy predeceases your mother? It depends on what kind of tenancy they have. If they are listed on the deed as “tenants in common,” they each own 50% and, should one of them die, they can leave your half to a third party. So, yes, if New Guy passed away, his children would receive his share unless otherwise specified in his will. 

If they have “joint tenancy with the rights of survivorship,” they each have an undivided interest in the home, and if New Guy dies, his share goes to the other person listed on the deed, in this case your mother. And vice-versa. This can also be used for bank and brokerage accounts. But their arrangement should be brought to a conclusion sooner rather than later.

It’s hard to tell what is true and what is fiction in this story. According to the tale told by your mother, New Guy is sitting back and is willing to allow his credit score to take a hit. Whether or not your mother’s name is on the deed of this home, I don’t recommend dipping into your own pockets.

This situation is complicated enough with three parties. 

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

• My married sister is helping herself to our parents’ most treasured possessions. How do I stop her from plundering their home?
• My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else
• My brother’s soon-to-be ex-wife is embezzling money from their business. How do we find hidden accounts?
• ‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’

TaxWatch: IRS clears up questions for businesses that were banking on a valuable pandemic tax credit

financialnews1 on December 7, 2021

A tax credit hatched in the pandemic’s early stages as a way to help businesses keep staff on the payroll came to an early end.

The Employee Retention Credit was created in the CARES Act of March 2020. Lawmakers extended and broadened the refundable credit to the point that it would pay up eligible businesses up to $7,000 per quarter per worker.

The Internal Revenue Service ended the tax credit in the third quarter, so it’s now telling businesses what to do next if they were banking on the credit for 2021’s fourth quarter. Businesses will now have time to avoid penalties as they pay back advanced tax-credit money, or make up shortfalls on tax payments.

On Monday, the IRS said businesses that had advance payments for the fourth quarter “will avoid failure to pay penalties if they repay those amounts by the due date of their applicable employment tax returns.”

Companies that reduced their tax deposits by Dec. 20 would avoid failure to deposit penalties if, among other things, they sent over the amount of retained tax “on or before the relevant due date for wages paid on Dec. 31, 2021.” Those dates can vary, the IRS noted.

The IRS guidance can be read here.

Few businesses accessed this credit applying to payroll taxes, Treasury Department research showed. But businesses that did use the credit viewed it as critical for their bottom line.

The credit was supposed to run through the end of the year, due to provisions in the $1.9 trillion American Rescue Plan. But the infrastructure bill trimmed the credit’s lifespan so it would end for many businesses at the conclusion of the third quarter.

That put credit recipients in a bind if they received advances for the end of the year, or if they reduced the payroll tax they were sending along for the fourth quarter.

Dow Jones Newswires: Australia’s central bank says omicron won’t derail economic recovery

financialnews1 on December 7, 2021

SYDNEY — The Reserve Bank of Australia left its official cash rate steady at 0.10% at its monthly policy meeting Tuesday, indicating it will be some time before the required conditions for an increase will be in place and addressing concerns about the omicron variant of the COVID-19 virus.

“The emergence of the omicron strain is a new source of uncertainty, but it is not expected to derail the recovery,” RBA Governor Philip Lowe said in a statement. “The economy is expected to return to its pre-delta path in the first half of 2022.”

But even as the economy rebounds in 2022, the central bank’s first rise in interest rates since 2010 appears to be still some way off.

“The board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range,” Lowe said. “This will require the labor market to be tight enough to generate wages growth that is materially higher than it is currently…This is likely to take some time and the board is prepared to be patient.”

Despite the RBA’s cautious guidance, financial markets are pricing in interest rate increases in 2022 and 2023, betting that global inflation pressures will eventually wash into the domestic economy.

Australia’s resource-rich economy contracted by 1.9% in the third quarter, as more than half its population was forced back into lockdowns due to the rapid spread of the delta variant.

But a fourth quarter recovery is now emerging amid data showing surging employment demand and strong retail sales as consumers return to malls supported by a mountain of household savings built up during lockdowns that stretched for more than three months.

The next meeting of the RBA board will be in February, when it is expected to taper its weekly government bond buying. Some economists expect it will abandon quantitative easing entirely given a rapid recovery in the economy and the emergence of stubborn inflation pressures.

“At its February meeting, the board will consider the bond purchase program, Lowe said.

By mid-February, the RBA will hold a total of 350 billion Australian dollars of government bonds, with these holdings providing significant support to the economy, Lowe said.

In reassessing its QE program, the RBA will consider the actions of other central banks; how the Australian bond market is functioning; and, most importantly, the actual and expected progress towards the goals of full employment and inflation consistent with the target.

Dow Jones Newswires: China’s exports stay strong as surplus narrows in November

financialnews1 on December 7, 2021

BEIJING — China’s exports beat market expectations in November, though the growth rate decelerated from October due to a higher base compared with the same period a year ago.

Outbound shipments rose 22% from a year earlier in November, slowing from a 27% increase in October, the General Administration of Customs said Tuesday. The result surpassed the 16.1% growth rate expected by economists polled by The Wall Street Journal.

Buoyed by robust global demand, exports have been China’s single biggest growth driver since the recovery from the pandemic began. The strong growth has repeatedly shrugged off market expectations that exports would soon lose steam after other parts of the world gradually got back online. But the resurgence of coronavirus in China’s trade competitors drove demand back to China, where stringent prevention measures kept business and production humming.

Exports to the Association of Southeast Asian Nations, China’s biggest trading partners, grew 22.3% from a year earlier, up from October’s 18%, according to calculations by The Wall Street Journal based on official data.

Shipments to the European Union, the No. 2 trading partner, slowed to 33.5% on year, compared with October’s 44.3%. Exports to the U.S., the No. 3 trading partner, rose 5.3%, down from 22.7% in October.

Economists have posited that the outbreak of Omicron variant of the coronavirus may pose a complicated impact on China’s foreign trade, as it may keep demand for Chinese goods high as many economies are hit hard again by the new variant, while the possible spread of Omicron in Chinese ports may add to logistics strains.

Meanwhile, China’s imports increased 31.7% on year in November, when both volumes and prices of imported coal and natural gas rose, the customs bureau said. That compared with a 20.6% increase in October and the 19.8% growth rate expected in the WSJ poll.

China’s trade surplus stood at $71.72 billion in November, narrowing from October’s $84.5 billion and lower than the $82.2 billion consensus.

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