Investing

U.S. billionaire Ray Dalio said it is important for new investors to have a diversified portfolio as economic and geopolitical headwinds continue to rage on. 
The Bridgewater Associates founder also shared that the biggest mistake investors can make is “believing that markets that performed well, are good investments, rather than more expensive.”

Ray Dalio speaks during the 2023 Forbes Iconoclast Summit at Pier 60 on June 12, 2023 in New York City. 
Taylor Hill | GGetty Images

U.S. billionaire Ray Dalio says new investors should have a diversified portfolio as economic and geopolitical headwinds persist.
“I would like to have diversification, because what I don’t know is going to be much greater than what I do know,” said Dalio, founder of one of the world’s largest hedge funds, Bridgewater Associates.

“Diversification can reduce your risk without reducing them sharply, if you know how to do it well,” he said at the Milken Institute Asia Summit in Singapore last week.
“Pay attention to the implications of the great disruptions that are going to take place because the world will be radically different in five years. And it’s going to become radically different year by year,” he explained.

It’s like going through a time warp. We’re going to be in a different world. And the disruptors will be disrupted.

Founder, Bridgewater Associates

The artificial intelligence evolution has caught the hedge fund manager’s attention too — but Dalio said he recommends investors put money in companies that adopt this new technology, rather than those creating them. 
“It’s like going through a time warp. We’re going to be in a different world. And the disruptors will be disrupted,” Dalio said. “I don’t need to pick those who are creating the new technologies. I need to really pick those who are using the new technologies in the best possible way.” 

Asia, an ‘exciting region’

Speaking to the audience at the summit in Singapore, Dalio said the city-state is a “very special place, in what will be a very exciting region.” 

“The world landscape is changing, the world order is changing … And with Singapore as essentially a hub, it’s a terrific place to be.” 

Asked about the growing number of family offices being set up in Singapore, Dalio shared the three biggest considerations one should take when choosing a country to invest in.
A country needs to have a good income statement and balance sheet, an environment of civility where “people [are] working together to make good things happen,” he said. The side that the country takes when an international conflict arises is also an important factor to consider, he added.
He highlighted that the biggest mistake investors make is “believing that markets that performed well, are good investments, rather than more expensive.” More

Starting in October, health insurance is poised to act as a countervailing force that buoys inflation for about a year, economists said.
Health insurance prices have been declining roughly 3% to 4% a month since October 2022.
For a year starting in October, the CPI for health insurance will start rising just over 1% month over month.

Suriyapong Thongsawang | Moment | Getty Images

Why health insurance inflation is hard to measure

Health insurance prices are a tricky thing for economists to quantify.
The BLS doesn’t measure direct consumer costs such as monthly premiums. That’s because those premiums don’t buy the same quality of insurance. Benefits and risk factors vary from policy to policy, for example.
“Price change between health plans of varying quality cannot be compared, and any quality adjustment methods to facilitate price comparison would be difficult and subjective,” according to a BLS fact sheet.

Instead, the agency measures health insurance inflation indirectly based partly on health insurers’ profits. Profit margins serve as a proxy of consumer prices.

The BLS updates those calculations once a year in October.  
It appears that health insurance prices measured in the CPI “will start rebounding” again, said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Health insurance prices have been declining roughly 3% to 4% a month since October 2022, helping to pull down inflation at a time when other metrics proved stubbornly high.
Now, for a year starting in October, the CPI for health insurance will start rising just over 1% month over month, said Mark Zandi, chief economist at Moody’s Analytics.

How health insurance profits affect inflation

Early in the Covid-19 pandemic, health insurers’ profits jumped. Consumers were still paying premiums but were generally disallowed from visiting doctors or hospitals for elective procedures.
But consumers used their insurance more often in 2021. Insurers’ aggregate profits shrank because they paid out more insurance benefits relative to 2020. Hence, the monthly inflation readings flipped negative.
The BLS’ updated calculation will assess insurers’ profits in 2022, which were stronger than the prior year — and that’s the dynamic that will be reflected in the forthcoming CPI update, Zandi said.

Why health insurance inflation matters

The U.S. Federal Reserve raised interest rates aggressively starting early last year to rein in persistently high inflation. Financial experts expect the central bank is near the end of that cycle, if not already there.
Annual inflation has come down significantly from its 9.1% pandemic-era peak in June 2022 — the highest since 1981 — to 3.7%. But it’s not yet back to target.
Anything that keeps inflation elevated may increase the odds the Federal Reserve raises borrowing costs again, economists said. Federal Reserve chair Jerome Powell said in August that inflation “remains too high” and that the Fed is “prepared to raise rates further.”

When assessing inflation trends, policymakers tend to prefer a gauge that strips out food and energy prices, which can be volatile. This measure is known as “core” inflation.
Getting back to target would require consistent core CPI readings of about 0.2% a month, economists said.  
The health insurance index has been subtracting about 3 basis points, 0.03%, a month from the core CPI, Zandi said. In October, that will change. It will add over 1 basis point, 0.01%, to monthly core CPI, he estimated.
In the past year, health insurance has reduced core CPI more than 0.2 percentage points. It will increase it by less than 0.1 percentage point in the coming year, Zandi said.
“It’s small in the grand scheme of things,” he said. “But when you’re fighting for every basis point on inflation, it matters.” More

CrowdStrike IPO at the Nasdaq exchange June 12, 2019.
Source: Nasdaq

While macro uncertainty continues to distract investors, it is prudent to focus on companies that are well-positioned to navigate challenges with their solid execution and deliver attractive growth over the long term by capitalizing on secular trends. 
Here are five such stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Zscaler

First, we will look at cybersecurity solutions provider Zscaler (ZS). Earlier this month, the company reported its fiscal fourth-quarter results and outlook, which topped Wall Street’s expectations. That said, management cautioned that deals are taking longer to close due to a challenging macro backdrop.
Praising Zscaler’s performance, TD Cowen analyst Shaul Eyal said that the rising demand for the company’s Zero Trust solutions and disciplined spending drove the fourth-quarter outperformance.
The analyst noted that over the past seven quarters, Zscaler’s annual recurring revenue (ARR) has doubled to $2 billion from $1 billion. Other interesting points that the analyst focused on included the company’s large deals, a strong pipeline, and growing federal contracts. (Zscaler serves 12 of the 15 U.S. cabinet-level agencies.)  
Further, the company continues to invest in AI and sees huge growth potential for its AI-powered features. It provides data protection capabilities to prevent the leakage of sensitive data through generative AI.  
Overall, the analyst reiterated a buy rating on ZS stock with a price target of $195, saying, “Investments in AI, Cloud and go-to-market are set to accelerate growth.”

Eyal holds the 9th position among more than 8,500 analysts tracked on TipRanks. In all, 70% of his ratings have been profitable, with each generating an average return of 25.5%. (See Zscaler’s Financial Statements on TipRanks)

CrowdStrike Holdings

Another cybersecurity stock in this week’s list is CrowdStrike (CRWD), which recently reported upbeat fiscal second-quarter results and issued solid guidance.
In reaction to the impressive performance, Needham analyst Alex Henderson raised his price target for CRWD stock to $200 from $170 and reiterated a buy rating on the stock. The analyst noted that the company achieved strong growth in new products under its Identity, Cloud, and LogScale Security Information and Event Management (SIEM) offerings.
The analyst also highlighted management’s commentary about the company’s generative AI cybersecurity product called Charlotte AI, which they believe can immensely improve execution for customers by automating workflows. He added that the use of AI helped the company enhance its own adjusted operating margin, which increased by 472 basis points to 21.3% in the fiscal second quarter.
Henderson called CRWD one of his top recommendations in cybersecurity and said, “Crowd is taking market share with relatively stable pricing and strong new product uptake.”
The analyst also said that the company’s managed services, which are core to the Falcon Complete offering, are enjoying high demand and differentiate the platform from others like Microsoft (MSFT).    
Henderson ranks 162nd among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 58% of the time, with each rating delivering a return of 15.1%, on average. (See CrowdStrike’s Technical Analysis on TipRanks) 

Chipotle Mexican Grill

Next up is Mexican fast food chain Chipotle Mexican Grill (CMG). Baird analyst David Tarantino, who ranks 357 out of more than 8,500 analysts on TipRanks, said that CMG remains his top idea for investors with a 12-month horizon.
The analyst observed that the stock has pulled back since the mixed second-quarter results due to concerns about late Q2 2023 and early Q3 traffic, subdued Q3 restaurant margin outlook, and macro factors. Nevertheless, he feels that this pullback has created an attractive opportunity to buy CMG stock based on multiple positive catalysts that could emerge in the months ahead.
“Specifically, we expect signs of strong same-store traffic momentum and further pricing actions to lead to an upward bias to EPS estimates and support robust valuation metrics on CMG heading into year-end,” said Tarantino.
Additionally, he sees the possibility of CMG accelerating its unit growth to the high end of its target of 8% to 10% annually, supported by the hiring of additional construction managers this year. Tarantino estimates that a combination of about 10% unit growth and mid-single-digit comparable sales could drive low-to-mid teens revenue growth and more than 20% EPS increase, a profile which he believes deserves a premium valuation.
Tarantino reaffirmed a buy rating on CMG stock with a price target of $2,400. His ratings have been successful 62% of the time, with each rating delivering an average return of 10%. (See CMG Hedge Fund Trading Activity on TipRanks).

Lululemon

Athletic apparel retailer Lululemon (LULU) impressed investors with its fiscal second-quarter performance and improved outlook. The company experienced strong momentum in North America and a spike in its international business, mainly due to robust sales in China.
Commenting on the 61% growth in sales from Greater China, Guggenheim analyst Robert Drbul said that he continues to believe that China holds significant growth potential for Lululemon, as the company aims to quadruple international revenues by 2026. He also highlighted that Lulu intends to open a majority of its 35 new international stores, scheduled for this year, in China. 
The analyst raised his Fiscal 2023 and 2024 earnings estimates and believes that demand for the company’s merchandise remains strong, as competitive pressures from upcoming athletic brands seem overestimated.  
Drbul maintained a buy rating on LULU and a price target of $440, justifying that the company “stands to benefit from favorable secular tailwinds (health, wellness, casualization, and fitness, including at-home).”
Drbul ranks No. 958 out of more than 8,500 analysts tracked on TipRanks. Additionally, 57% of his ratings have been profitable with an average return of 5%. (See Lululemon Insider Trading Activity on TipRanks)

Acushnet Holdings

The last stock on this week’s list is Acushnet Holdings (GOLF), a manufacturer of golf products. Tigress Financial analyst Ivan Feinseth believes that the company is well-positioned to benefit from the ongoing growth in golf, driven by product launches and biannual new golf ball design introductions.
The analyst highlighted that GOLF’s strong brand name continues to be a growth catalyst, as its Titleist brand golf balls remain the preferred choice of PGA and LPGA Tour players. He also noted the strong growth in Titleist golf clubs, Titleist gear, and FootJoy golf wear segments, fueled by a wide range of innovative launches, including new TSR models that rapidly emerged as the most-played model on the PGA tour.
Feinseth increased his price target for GOLF to $68 from $62 and reiterated a buy rating, while emphasizing that the company is enhancing shareholder returns through ongoing dividend increases and share repurchases.
“GOLF’s incredible brand equity, driven by its best-in-class and industry-leading product lines, including FootJoy and Titleist, are major assets and the primary drivers of its premium market valuation,” said Feinseth.  
Feinseth holds the 289th position among more than 8,500 analysts tracked on TipRanks. His ratings have been profitable 58% of the time, with each rating delivering an average return of 10.9%. (See Acushnet Stock Chart on TipRanks) More

Rows of glass vials in a biologics laboratory in Sweden. Photographer: Mikael Sjoberg/Bloomberg
Bloomberg Creative | Bloomberg Creative Photos | Getty Images

Company: Catalent (CTLT)

Business: Catalent develops and manufactures solutions for drugs, protein-based biologics, cell and gene therapies, and consumer health products worldwide. The company operates through four segments. First, there’s Softgel and Oral Technologies, which provides formulation, development, and manufacturing services for soft capsules for use in a range of customer products. Biologics provides biologic cell-line, and it develops and manufactures cell therapy and viral-based gene therapy. This segment also handles the formulation, development and manufacturing for parenteral dose forms, including vials and prefilled syringes. The Oral and Specialty Delivery segment offers formulation, development and manufacturing across a range of technologies, along with integrated downstream clinical development and commercial supply solutions. Finally, the Clinical Supply Services segment offers manufacturing, packaging, storage, distribution and inventory management for drugs and biologics, as well as cell and gene therapies in clinical trials.
Stock Market Value: $8.86B ($49.16 per share)

Activist: Elliott Investment Management

Percentage Ownership:  n/a
Average Cost: n/a
Activist Commentary: Elliott is a very successful and astute activist investor, particularly in the technology sector. Its team includes analysts from leading tech private equity firms, engineers, operating partners – former technology CEOs and COOs. When evaluating an investment, the firm also hires specialty and general management consultants, expert cost analysts and industry specialists. The firm often watches companies for many years before investing and have an extensive stable of impressive board candidates. Elliott has not disclosed its stake in this investment, but based on the firm’s history, we would expect it to be approximately $1 billion.

What’s happening?

On Aug. 29, Elliott and the company entered into a cooperation agreement pursuant to which Catalent agreed to temporarily increase the size of the board from 12 to 16 directors and appoint Steven Barg (global head of engagement at Elliott), Frank D’Amelio (former CFO and EVP, global supply, of Pfizer), Stephanie Okey (former SVP, head of North America, rare diseases, and U.S. general manager, rare diseases at Genzyme) and Michelle Ryan (former treasurer of Johnson & Johnson). The company will reduce the size of the board at the 2023 annual meeting; it agreed to nominate a slate of 12 candidates, including the four new directors. Catalent also agreed to establish a strategic and operational review committee, charged with conducting a review of the company’s business, strategy and operations, as well as its capital allocation priorities. This committee will include new directors Barg and Ryan. Further, John Greisch (former president and CEO of Hill-Rom Holdings) has been appointed executive chair of the board and will also chair the newly formed committee. Elliott agreed to abide by certain customary voting and standstill provisions.

Behind the scenes

Catalent is an outsourced manufacturer in the pharmaceuticals industry. This is a stable business in a growing industry operating in an oligopoly. It’s one of the three largest global contract development and manufacturing organizations, next to Lonza and a division of Thermo Fisher. The company was always seen as a market leader, but in the middle of 2022 the tides began to turn, largely due to two main factors. First, Catalent was negatively affected by a Covid cliff: During the pandemic, the government mandated that the company shut down much of its manufacturing and start producing Covid vaccines. This production led to $1.5 billion in revenue that recently went to zero. Second, Catalent had several self-inflicted wounds, including an acquisition that did not pan out like they expected and operational and regulatory issues. These are fixable issues that have sunk the stock from $142.35 in September 2021 to $48.82 this month, but they do not necessarily adversely affect the long-term intrinsic value of the company. That makes this situation an excellent opportunity for an activist.

In its most simplistic form, there are two basic elements to an activist campaign: success in the activism (for instance, getting the company to adopt your agenda) and execution of the activist agenda. Elliott has already accomplished the former, having entered into the cooperation agreement for four board seats. There’s also the establishment of a strategic and operational review committee and appointment of Greisch as executive chair of the board and as chair of the newly formed committee. While this committee’s purview is business, strategy and operations, we expect it will put an emphasis on strategy.
This is a very strategic asset, and there are likely to be several interested acquirers. In fact, on Feb. 4, Bloomberg reported that fellow life sciences conglomerate Danaher had expressed interest in purchasing Catalent at a “significant premium.” Catalent ended Feb. 3 at $56.05 per share, and the stock popped nearly 20% the following trading session. Ultimately, a deal with Danaher never materialized. Additionally, companies like Merck could be interested in buying the company or parts of it. Another possibility is an acquisition by private equity, of which Elliott’s PE arm could be an interested party. While as an activist Elliott will do whatever it feels is necessary to enhance shareholder value, in the past the firm has made significant use of the strategy of offering to acquire its portfolio companies as the best catalyst to enhance shareholder value. We would not be surprised to see that happen here. Catalent is the right size for Elliott, which recently partnered on buyout deals for Citrix Systems and Nielsen Holdings, each for roughly $16 billion. Elliott has also recently shown interest in this industry, partnering with Patient Square Capital and Veritas Capital to acquire Syneos Health (SYNH) for $7.1 billion. That acquisition is expected to close in the second half of 2023. Like Catalent, Syneos is an outsourced pharma solutions company: It outsources R&D for pharmaceutical companies, whereas Catalent outsources manufacturing.
Elliott quickly got Catalent to pursue a strategic exploration agenda, which indicates to us that there was not a lot of pushback by management. We expect that this review will conclude with a sale of the company. However, it is worth noting that Catalent has a relatively new CEO at the helm, Alessandro Maselli, who was promoted from president and COO in July 2022. A lot of the operational issues happened during his watch. If this does turn from a strategic review to an operational review, there is no guarantee that he keeps his job.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

Unable to come up with the cash for steep college tuition bills all at once, many families opt to pay the tab over time.
That option can become expensive if students fall behind, the Consumer Financial Protection Bureau finds.

Peopleimages | Istock | Getty Images

Unable to come up with the cash for steep college tuition bills all at once, many families opt to pay the tab over time. Such plans can be helpful for families trying to spread out college costs.
However, a new report by the Consumer Financial Protection Bureau warns of a number of risks associated with these payment plans, including snowballing charges and aggressive collection practices.

It is important to carefully review the terms before signing up for these plans, experts say.
“Tuition payment plans offered by schools may look like a good option, but this report shows student borrowers can end up paying high fees, be forced to sign away their legal rights or even have their transcript withheld by their school,” said Rohit Chopra, the CFPB’s director, in a statement.

Nearly 4 million students use payment plans

Nearly all colleges offer some sort of tuition payment plan, the CFPB found. Close to 4 million students may use the option each term, according to bureau estimates.
While colleges market the plans as an alternative to student loans, families should understand they’re in effect taking on debt when they sign up for them, the bureau says.
Under the plans, tuition and other education expenses are typically spread out into several payments over a semester or academic year.

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The plans can be administered directly by the school, or by a third-party payment processor. In cases of the latter, families may not always know with whom to communicate if they’re struggling to meet a bill or just have questions about the plan’s terms, said Elaine Rubin, director of corporate communications at Edvisors.
“Students often are confused on how to resolve issues with the payment plan and may not understand the full role of the third-party servicer,” Rubin said.
Most college payment plans are interest-free, but there can be enrollment fees and other charges involved, the CFPB found.

Higher education expert Mark Kantrowitz has also noticed how the plans can become costly.
“If the family misses a payment, some tuition payment plans may be converted into private student loans with unfavorable terms,” he said.

Risks rise for those who fall behind

The CFPB’s report outlines the risks to students with these plans if they fall behind on payments. The penalties, it points out, can be more severe than with federal student loan delinquencies.
Late fees can be steep, with some colleges and payment processors dinging people more than $100. (The average late penalty was $30.)

At least 1 in 3 colleges reserve the right to withhold students’ transcripts as a debt collection practice. Some institutions also report late payments to credit bureaus.
“In some cases, students could risk removal from classes, meal plans and campus housing when they miss a payment on a tuition payment plan,” the CFPB warned. More

Life Changes

A new provision allows money saved in a 529 plan to be converted into a Roth individual retirement account tax-free after 15 years, up to a limit of $35,000.
“It becomes a no-brainer at this point,” says Marshall Nelson, a wealth advisor.

To be sure, 529 college savings plans already had a lot going for them.
Now, thanks to “Secure 2.0,” a slew of measures affecting retirement savers, they’re about to be even more attractive.

Starting in 2024, savers can roll unused money from 529 plans over to Roth individual retirement accounts free of income tax or tax penalties. Among other limitations, the 529 account must have been open for 15 years and account holders can’t roll over contributions made in the last five years. Rollovers are subject to the annual Roth IRA contribution limit, and there’s a $35,000 lifetime cap on 529-to-Roth transfers.
“It becomes a no-brainer at this point,” said Marshall Nelson, wealth advisor at Crewe Advisors in Salt Lake City.

The benefits of a 529 plan

These plans have been steadily gaining steam for a number of reasons.
In some states, you can get a tax deduction or credit for contributions. Earnings grow on a tax-advantaged basis and, when you withdraw the money, it is tax-free if the funds are used for qualified education expenses such as tuition, fees, books, and room and board, or even apprenticeship programs.
A few states also offer additional benefits, such as scholarships or matching grants, to their residents if they invest in their home state’s 529 plan.

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Here’s a look at other stories offering a financial angle on important lifetime milestones.

Further, you can now put some of the funds toward your student loan tab: up to $10,000 for each plan beneficiary, as well as another $10,000 for each of the beneficiary’s siblings.
And yet, total investments in 529s fell to $411 billion in 2022, down nearly 15% from $480 billion the year before, according to data from College Savings Plans Network, a network of state-administered college savings programs.
“Last year, we saw a pretty noticeable reduction in contribution behavior,” said Chris Lynch, president of tuition financing at TIAA. Regular contributions to a 529 college savings plan took a back seat to paying more pressing bills or daily expenses.

We’re going to see a spike in 529 usage.

Marshall Nelson
wealth advisor at Crewe Advisors

Plus, there was a major sticking point: Many would-be college students are rethinking their plans altogether. Some are opting out entirely or considering a local and less expensive in-state public school or community college. 
Now, 529s offer more flexibility, even for those who never enroll in college, Lynch said.
“A point of resistance that potential participants have had is the limitation around, what happens if my kid gets a scholarship or decides they’re not going to college.”
In such cases, you could transfer the funds to another beneficiary, or withdraw them and pay taxes and a penalty on the earnings. If your student wins a scholarship, you can typically withdraw up to the amount of the scholarship penalty-free.

The added benefit of being able convert any leftover funds into a Roth IRA tax-free after 15 years, up to a limit of $35,000, “helps to eliminate that point of resistance,” he said.
“We’re going to see a spike in 529 usage,” Nelson predicted.
Even if someone in their mid-20s put $35,000 in a Roth IRA and just left it alone, that could be close to $1 million 40 years down the road, he said.
“It’s something I see catching on,” Nelson added. “Now they have the option to use that money to supplement retirement; that’s a huge win.” More

Amid mounting concerns over rising interest rates and inflation levels Bridgewater Associates’ founder Ray Dalio said he prefers cash and does not want to own bonds.
The billionaire investor pointed out that when debt accounts for a substantial share of a country’s economy, the situation “tends to compound and accelerate.”
Dalio says the biggest mistake that most investors make is “believing that markets that performed well are good investments, rather than more expensive.”

Ray Dalio, billionaire and founder of Bridgewater Associates LP, speaks during the Milken Institute Conference
Bloomberg | Bloomberg | Getty Images

As concerns mount over rising interest rates and inflation levels, billionaire investor Ray Dalio says he prefers to hold cash for now, not bonds.
“I don’t want to own debt, you know, bonds and those kinds of things,” the founder of Bridgewater Associates said when asked how he would deploy capital in today’s investment environment.

“Temporarily, right now, cash I think is good … and the interest rates are fine. I don’t think [it] will be sustained that way,” Dalio told an audience at the Milken Institute Asia Summit in Singapore on Thursday.
Dalio’s comments come as the yield on the 30-day U.S. Treasury bill climbs above 5% while investors can get 4% on certificates of deposit and high-yield savings accounts.

Dalio says the biggest mistake that most investors make is “believing that markets that performed well are good investments, rather than more expensive.”
When asked how a new industry watcher should deploy capital, Dalio’s advice was: Be in the right geographies, diversify, pay attention to the implications of disruptions and pick asset classes that are creating new technologies and using them “in the best possible way.”

Rising debt

Touching on how to address the rising global debt, the hedge fund manager pointed out that when debt accounts for a substantial share of a country’s economy, the situation “tends to compound and accelerate … because you have to have interest rates that are high enough for the creditor and not so high that they are harming the debtor.”

“We’re at that turning point of acceleration. But the real problem comes when individuals or investors don’t hold the bonds, because it comes as a supply-demand, one man’s debts or another man’s assets,” he explained.
Dalio cautioned that investors will sell their bonds if they are not receiving real interest rates that are high enough.
“The supply-demand [imbalance] isn’t just the amount of new bonds. It’s the issue of ‘do you choose to sell the bonds?'” he explained.

When there’s a sell-off in bonds, prices fall and yields rise, as they have an inverse relationship. As a result, borrowing costs will increase and drive up inflationary pressure, thereby posing an uphill task for central banks.
“When the interest rates go up, the central bank then has to make a choice: Do they let them go up and have the consequences of that, or do they then print money and buy those bonds? And that has inflationary consequences,” Dalio explained.
“We’re seeing that dynamic happen now. I personally believe that the bonds longer term are not a good investment,” he stressed. More

IRS Commissioner Danny Werfel ordered the agency to immediately stop processing new claims for the employee retention credit.
The ERC, which was created to support small businesses during the Covid-19 pandemic, can be worth thousands of dollars per employee.
It has sparked a flood of specialist firms falsely promising businesses they qualify for the complicated tax break.

IRS Commissioner Danny Werfel speaks at a Senate Finance Committee hearing in Washington, D.C., on April 19, 2023.
Al Drago | Bloomberg | Getty Images

IRS increasingly alarmed by ‘unscrupulous actors’

“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” Werfel said.
The IRS has received approximately 3.6 million claims over the course of the program and the current open inventory has more than 600,000 claims, most of which have been received over the past 90 days.

As of July 1, 2023, the IRS criminal investigation division has initiated 252 investigations involving more than $2.8 billion of potentially fraudulent ERC claims. Some 15 of the 252 investigations have resulted in federal charges and six of the 15 have resulted in conviction, Werfel said.
“We want businesses to step back and talk to a trusted tax professional, not a promoter out looking to take a big chunk of a refund,” he said.
The agency is working on a settlement program for small businesses that may have wrongly received the refund. More