Opinion The Big Crunch


  Tuesday, 2 May 2017 | 1:27 PM ET

Trump's 'tax holiday' could be a windfall for these stocks

Apple may be famous for keeping cash overseas, but many other companies stand to benefit if President Donald Trump gets his way with a tax holiday.

The tech giant's quarterly results Tuesday are expected to show overall cash reserves of more than $250 billion, with the vast majority stockpiled offshore. That cash has been accumulated at a rate of $3.6 million an hour in recent months, according to The Wall Street Journal.

On a per-share basis, the company's foreign earnings left overseas come to more than $40 a share, according to CNBC calculations using figures from a recent report by the Institute on Taxation and Economic Policy.

Unlike Apple, most companies do not report overseas cash breakdowns. But regulations do require that they report money that will be reinvested overseas and thus exempted from U.S. taxation. For many companies, that figure will include a substantial cash element.

Here's how Apple's vast sum compares with other companies' overseas holdings on a per-share basis.

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  Friday, 28 Apr 2017 | 3:31 PM ET

Trump has presided over the calmest first 100 days for stocks since at least Kennedy

One of our arguably most bombastic presidents ever has resulted in one of the calmest stock markets in history.

Since President Donald Trump has assumed office, we've seen dozens of executive orders, some failed attempts at sweeping legislation, many early morning tweets and yet surprisingly little stock-market volatility.

The S&P 500 index posted a daily move of more than 1 point only three times in Trump's first 100 days, which is far below average. For President Obama's first 100 days, the market swung more than a point 47 out of the first 71 trading days. For George W. Bush's, that figure was 35.

For the last two presidents, major events sparked periods of high volatility during their first terms. But even for presidencies without immediate national emergencies, the first 100 days are typically a period of rapid change, and the market reacts with big swings in either direction. But for Trump, daily returns have generally been very close to zero.

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  Friday, 28 Apr 2017 | 1:27 PM ET

Companies are holding a $2.6 trillion pile of cash overseas that's still growing

Posted ByNick Wells
Dollars dollar
Thomas Mukoya | Reuters

American companies looking to avoid paying domestic tax rates are holding about $2.6 trillion in overseas earnings, a number that has been rising steadily for years, according to new research from Capital Economics.

Part of President Donald Trump's tax plan calls for a "holiday" that would lower the U.S. rate to incentivize companies to repatriate — bring home — that money.

At 35 percent, the U.S. corporate tax rate is the highest in the world. That's caused many multinationals to keep their overseas earnings abroad in tax shelter countries like Ireland and Luxembourg.

»Read more
  Friday, 28 Apr 2017 | 11:32 AM ET

Foreign countries are sapping US productivity, study shows

Posted ByMark Fahey

Where did America's productivity growth go? Some of the missing gains can be found overseas, along with the diverted profits of U.S. corporations, according to recent research.

American companies have become adept at stashing their earnings in foreign countries. Legal tax avoidance practices have not only allowed companies to shortchange the IRS, but they have also depressed official labor productivity growth statistics, according to a National Bureau of Economic Research working paper.

That lost economic output has cut almost 0.1 percent each year from productivity growth rates — a small but not insignificant change for rates averaging less than 2 percent a year.

"The current international accounting system allows a lot of flexibility — you might say too much flexibility — which allows companies to shift their profits to low-tax jurisdictions," said Fatih Guvenen of the University of Minnesota, one of four authors on the working paper. "A lot has been written about that in the context of taxation, but the same problem also matters for how we measure GDP in official statistics."

The study is another piece of evidence to help explain one of the biggest economic mysteries of our time: Why do official figures show slowing productivity growth when innovation by U.S. firms seems as strong as ever? Profit shifting has ramped up over the last two decades, the same period over which productivity growth has declined.

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  Friday, 21 Apr 2017 | 8:47 AM ET

The words being used in earnings calls show changing feelings about Trump

Three months into the Trump administration, executives at public companies are wondering if the change in leadership will make much of a difference at all.

In first-quarter earnings calls, S&P 500 executives expressed both enthusiasm for the pro-business attitude of the Trump administration and concern about the sweeping changes he might make to public policy. But in the second quarter so far, the mood has grown more muted, according to a CNBC analysis.

The number of mentions of the president has decreased, and sentiment toward the new administration has shifted from optimism to doubt that promised changes will happen.

"There's still uncertainty," BlackRock CEO Larry Fink told analysts and investors on Wednesday." There are significant issues related to tax reform, infrastructure spending, and so we need to see how this all evolves."

Less than half the S&P 500 companies that have reported earnings so far in April mentioned the new president in their earnings calls with investors, according to a CNBC analysis. That's down from nearly 80 percent during the same period in January.

»Read more
  Tuesday, 18 Apr 2017 | 3:08 PM ET

Here are the US states — and the companies — that use the most H-1B visas

It could soon be a lot harder for U.S. companies to recruit skilled workers from overseas.

President Donald Trump signed an executive order Tuesday for a comprehensive review of visa programs that allow U.S. companies to hire foreign workers instead of their American counterparts.

On the campaign trail, Trump often railed against the H-1B visa, a nonimmigrant visa that lets U.S. companies employ foreign workers in specialty occupations. The H-1B has been a favorite of the tech industry, and tech leaders are anxious to keep it. But a recent research paper estimated the use of the visa had suppressed overall tech industry wages by up to 5.1 percent.

New Jersey would be the state most affected by a change to the visa system. In 2017, employers in the Garden State applied for around 5,400 H-1B visas per one million people, according to a CNBC analysis of data from MyVisaJobs.com, an aggregator of visa applications. Delaware, California and Massachusetts also are high on the list.

»Read more

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