Spring 2017 - Did you know?
Spring 2017 - Did you know?

Spring 2017 - Did you know?

 

By:

J. Reed Murphy
J. Reed Murphy
CIMA®

President
Chief Investment Officer

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Spring 2017 - Did you know?

A quiz to test your market and economy knowledge.

Automobile manufacturing. North Korea. Tax repatriation. These are just a few of the headlines shaping the market. How well are you keeping on top of the stories? Test your knowledge of important news stories and trivia related to the commentary.

Rotation of Carousels

Question: Which way do carousels rotate?

  1. Clockwise
  2. Counter clockwise

Answer:

  1. Counter clockwise

Carousels in the U.S. and mainland Europe all rotate counter clockwise, while those in the UK turn clockwise. Though very different from what we see at carnivals today, the modern carousel can trace its history back to a game played by Arabian and Turkish horsemen in the 12th century. The game was introduced to the west during the Crusades. It was adopted and transitioned into a game played during jousting festivals. The platform carousel as we now know it was developed in the mid-19th century and became a popular attraction at fairs throughout the U.S. and Europe. The oldest existing carousel was made in 1780 in Germany.

Tesla Passes GM

Question: Tesla recently passed GM (and Ford) as the largest U.S. car company with a market capitalization of approximately $50 billion. However, which company produces more revenue?

  1. Tesla at $50 billion in revenue and GM at $50 billion
  2. Tesla at $24 billion in revenue and GM at $76 billion
  3. Tesla at $18 billion in revenue and GM at $96 billion
  4. Tesla at $7 billion in revenue and GM at $166 billion

Answer:

  1. Tesla at $7 billion in revenue and GM at $166 billion

In mid-April, electric auto maker Tesla surpassed both GM and Ford in market cap with over a $50 billion valuation. This caused wide debate among industry analysts, as Tesla delivers fewer than 80,000 vehicles in 2016 while GM deliver more than 10 million. In addition, Tesla is expected to lose $950 million over the next year while analyst estimates see GM and Ford earning in excess of $9 billion and $6 billion, respectively. Investors are buying into the vision of founder Elon Musk, whose revolutionary technology increased the functionality of electric vehicles. Musk projects Tesla as being on the verge of becoming a mass-market manufacturer since the company has recently introduced an affordable Model 3 sedan and a Model X SUV. Musk’s vision will need to come to full fruition for the company to maintain its current valuation.

Tax Repatriation May Help States

Question: As highlighted in our recent market commentaries, there is an estimated $2.5 trillion in unremitted foreign cash by U.S.-based companies. It is expected that if a repatriation holiday is established much of that would come back to the U.S. with economic benefits down to the state level. What is the #1 state for companies with headquarters and unremitted earnings?

  1. California
  2. New York
  3. Delaware
  4. Illinois

Answer:

  1. California

California companies have well over $600 billion in unremitted foreign earnings. California and New York are among the states with the most Fortune 1000 company headquarters. Both the number of companies and the amount of business these companies do overseas contributes to these results:

Exhibit #1

– Source: Strategas Research Group

North Korea’s Economy

Question: North Korea continues to be in the news for their nuclear development and missile tests. While the country has been the subject of sanctions of many countries for a long time, just how big is the country’s economy relative to other entities? Pick the correct order of economies from largest to smallest.

  1. China, North Korea, South Korea, Illinois
  2. North Korea, South Korea, Texas, Illinois
  3. Texas, North Korea, Illinois
  4. All 50 U.S. states are each bigger than N. Korea

Answer:

  1. All 50 U.S. states are each bigger than N. Korea

While it is difficult to determine precise numbers on a country intentionally deceptive, the Hyundai Research Institute estimates that the country, with a population of 25 million, had a GDP of roughly $25 billion in 2015. By comparison, the U.S. 2015 GDP was above $17 trillion. Inside the U.S., California has the highest state GDP with $2.5 trillion, putting it ahead of France, India, and Canada. Illinois ranks 5th on the list of U.S. states with a GDP of $771 billion. The last state on the list, with a population of just over 600,000, is Vermont which had an estimated 2015 GDP of $30 billion, $5 billion greater than all of North Korea.

Attractiveness of the U.S. Corporate Tax System

Question: According to Tax Foundation, how does the United States rank in the OECD International Tax Competitiveness Corporate Tax Score out of 35 countries? (1 = highest)

  1. Tenth
  2. First
  3. Thirty-fifth
  4. Second

Answer:

  1. Thirty-fifth

The U.S. has grappled with the issue of corporate tax rates for a number of years. The Tax Foundation evaluates International Tax competitiveness on a yearly basis and has found that the U.S. ranks 35th. Tax reform that improves this score could drive more business to the U.S.

Exhibit #2

– Source: Strategas Research Group


 
Tags:  Market Quiz, Market Trends, News and Markets, North Korea, Tax Repatriation, Tesla, U.S. Economy

Note:  The content of this article is for guidance and information purposes only and is not intended to be construed as advice. Information provided is not intended to provide investment, tax, or legal advice.