Biden talks up his plans to boost U.S. manufacturing as he visits Michigan


Democratic presidential nominee Joe Biden arrives at Detroit Metro Wayne County Airport on Wednesday.


AFP via Getty Images

Joe Biden on Wednesday gave a speech in Michigan about what his campaign described as “his plan to ensure the future is Made in America by all of America’s workers,” as the Democratic presidential nominee continued an effort to counter President Donald Trump’s “America First” stance.

Biden talked up his “Made in America” tax policy that his campaign had rolled out earlier in the day, noting features such as a new offshoring tax penalty and a 10% tax credit for companies making investments to create jobs for American workers.

The Democratic challenger also promised executive actions in his first week as president that ensure the federal government isn’t shirking on pledges to “Buy American.”

“I don’t buy for one second that the vitality of American manufacturing is a thing of the past,” he said. Biden also said the Republican incumbent “hasn’t stopped companies from closing plants and sending jobs overseas,” but instead has “rewarded companies that have cut jobs and failed to invest here at home with billions in tax breaks.”

Opinion: The pandemic revealed the cracks in U.S. manufacturing — here’s how to fix them

Biden has addressed boosting domestic manufacturing before, such as by making a July proposal for a $700 billion “Buy American” campaign.

As he spoke in Warren, Biden also blasted Trump in the wake of well-known journalist Bob Woodward’s new book saying that the president knew the coronavirus was “deadly stuff” but wanted to “play it down.” The Democratic challenger said that was “a life-and-death betrayal of the American people.”

The Trump campaign attacked Biden’s latest moves before the Democratic challenger’s speech.

“It’s fascinating to me that Joe Biden is suddenly trying to masquerade as an economic nationalist,” Steve Cortes, a senior adviser for Trump’s re-election campaign, told reporters during a conference call on Wednesday. “Welcome to the party, but unfortunately you have no credibility, because you’ve been acting in exactly the other direction for nearly a half century.”

The Trump team often has criticized Biden for his 1994 vote as a U.S. senator for the North American Free Trade Agreement, or Nafta, which now has been replaced by the U.S.-Mexico-Canada Agreement, or USMCA.

Trump is due to make his own visit on Thursday to Michigan, a key swing state, with a trip to Freeland.

Meanwhile, a United Auto Workers branch in Flint, Mich., representing General Motors
GM,
-0.60%

employees praised Biden ahead of his visit to their state, saying in a video that he “had their backs” amid the 2008 auto bailout. Unions for steelworkers and machinists also issued statements expressing support for Biden or criticizing Trump’s record on aiding U.S. manufacturing.

In a RealClearPolitics moving average of polls focused on top swing states that are likely to decide the election, Biden on Wednesday had an edge of 3.7 percentage points over Trump. Betting markets were giving the former vice president a 53.2% chance of winning vs. Trump’s 45.8%.

The S&P 500 index
SPX,
+2.41%

and the Dow Jones Industrial Average
DJIA,
+2.13%

were recently trading higher on Wednesday, rebounding after a three-day selloff led by the tech sector.



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Lyft says ride-hailing service continued to recover in August


Lyft on Tuesday released updated ride-hailing numbers that show an uptick in demand for rides.


Robyn Beck/AFP via Getty Images

Lyft Inc. said Tuesday that the ride-hailing recovery is progressing after a steep drop in demand because of the COVID-19 pandemic.

Lyft
LYFT,
+3.90%

said in a filing with the Securities and Exchange Commission that rides rose 7.3% in August from July (although August rides were down 53% year over year), and that in the week ended Sept. 6, it saw the highest number of rides since April. That brings its decline in rides to less than 50% year over year, the company said. In addition, Lyft said its Canadian business — its only operations outside the nation — was rebounding more quickly than its U.S. business, with weekly rides in Vancouver reaching a record high in the week ended Sept. 6.

The company also said it spent less on driver incentives in August as more drivers returned to its ride-hailing app.

Those numbers prompted the San Francisco-based company to say it now expects that its year-over-year change in revenue will outperform the change in rides in the third quarter that ends Sept. 30. Lyft also said its adjusted Ebitda loss for the third quarter will be less than $265 million, compared with an adjusted loss of $128.1 million in the same period a year ago.

See: Lyft revenue and riders fall by more than half, and California could soon be cut off

In its filing, Lyft also said it put an additional $17.5 million into the Proposition 22 campaign, the California ballot measure that aims to avoid complying with a new law that would mean classifying its drivers as employees. Instead, Lyft and larger rival Uber Technologies Inc.
UBER,
+3.24%
,
as well as other companies that rely on independent contractors, are proposing to exempt gig workers from the law.

See: The different routes Uber and Lyft could take as they fight California law

Amid another broad decline for tech stocks Tuesday, with the Nasdaq Composite Index
COMP,
-4.11%

falling 4.1%, Lyft shares rose 3.9% to $30.10, while Uber shares rose 3.3% to $34.32. Both stocks fell roughly 2% in after-hours trading following the filing.



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New China ban threat puts U.S. chip-equipment makers at forefront of tech stock rout



MARKETWATCH PHOTO ILLUSTRATION/ISTOCKPHOTO

Chip equipment makers led technology stocks lower Tuesday following reports that U.S. sanctions could spread to businesses like Semiconductor Manufacturing International Corp., China’s largest chip fabricator.

Shares of KLA Corp.
KLAC,
-7.74%
,
Lam Research Corp.
LRCX,
-6.86%
,
and Applied Materials Inc. AMAT all fell more than 6% as U.S. stock markets opened on Tuesday following Labor Day holiday weekend, while the PHLX Semiconductor Index SOX was down nearly 3%.

Over the weekend, reports surfaced that SMIC could be added to a U.S. “entity list” like telecom equipment maker Huawei back in May. On Monday, when U.S. markets were closed, SMIC
981,
+3.07%

shares dropped more than 20% in Hong Kong trading.

Meanwhile, the U.S. tech-heavy Nasdaq Composite Index
COMP,
-2.33%

was down 2.6% and the S&P 500 index
SPX,
-1.50%

was off 1.8% Tuesday.

Investors may be worrying that SMIC is just another one of many Chinese companies to get added to the list, given President Donald Trump’s recent bellicosity toward Chinese-owned apps TikTok and WeChat .

“Will the Trump Administration stop with only Huawei and SMIC?” speculated Evercore ISI analyst C.J. Muse in a Tuesday note. “Hard to say,” he said, warning that other chip makers in China could be next. Should the potential ban be limited to SMIC, then chip-related stocks have been oversold, Muse said.

Tech stocks have been getting battered since last week, when the tech sector gave up in two sessions at least half of seven week’s worth of gains from a strong earnings season .

Morgan Stanley analyst Joseph Moore said adding SMIC to the list “certainly would be a negative impact to our semiconductor capital equipment coverage”. Moore noted that SMIC had plans of spending $6.7 billion in capital equipment this year alone.

“The bigger issue is that the China risk factor for semiconductor capital equipment continues to grow, as U.S. Commerce Department actions continue to impact new areas,” Moore said.

Susquehanna Financial analyst Mehdi Hosseini took a much less fearful view of the development, remarking that “policy has also proven a double edged sword as efforts of the past few years in isolating China have not really proven a winning strategy”.

Hosseini said “with secular trends suggesting a bright future for chip consumption and thus [semiconductor capital equipment], especially as more of the demand shifts to cloud/commercial end markets, the pull backs caused by such headline risks can also offer a buying opportunity, in our view.



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Sanofi COVID-19 vaccine to cost below €10 and drug ingredients IPO planned within months, its France chief says


Sanofi’s experimental COVID-19 vaccine will cost less than €10 per shot, the pharma company’s France chief said Saturday.


Eric Piermont/Agence France-Presse/Getty Images

Sanofi
SAN,
+2.34%

stock rose 2.4% on Monday, after a senior executive said the French pharmaceutical giant’s COVID-19 vaccine will cost less than €10 and revealed plans to list its drugs ingredients unit in the next few months.

Olivier Bogillot, Sanofi’s chief in France, told France Inter radio on Saturday that the company’s coronavirus vaccine candidate, being developed in partnership with Britain’s GlaxoSmithKline
GSK,
-1.38%
,
was likely to be priced at less than €10 per shot but that a final price had not been set.

The potential vaccine, a slower effort than many of its peers, began human trials earlier this month, and it is hoped regulatory approval will be reached in the first half of next year.

Read: Sanofi looks to accelerate MS treatment with $3.68 billion Principia Biopharma acquisition

In the meantime, Sanofi is set to publicly list its active pharmaceutical ingredients (API) company, with an initial public offering planned in the coming months, Bogillot told France Inter radio. “The idea is to create a champion of active ingredients at the European level,” he said. The business could be valued at between €1 billion and €2 billion, sources told Reuters in July.

Sanofi announced plans in February to create a standalone company making API by combining its commercial and development activities with six of its production sites in Europe.

The French drugmaker said at the time it would decide whether to list the new company on Euronext Paris by 2022. It would be the world’s second largest API company, behind Switzerland’s Lonza
LONN,
+2.70%
,
with approximately €1 billion in expected sales by 2022, Sanofi said earlier this year.

The company said the spin off would help balance the industry’s “heavy reliance” on Asia for drug ingredients, which was highlighted through the disruption at the beginning of the coronavirus pandemic.



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This eye-opening experience has me rethinking how Social Security figures into my retirement planning


Our family’s goal was to achieve financial independence assuming we will have no Social Security benefits. Our full retirement ages are over two decades away, and cuts to the program seem likely. We decided to consider any benefits we may receive as a bonus and haven’t paid much attention to Social Security.

I recently shared that I’ve been helping my parents with their finances as they transition into retirement. Seeing how valuable their Social Security payment is has been eye-opening.

With a paid-off home and cars and a low
tax-burden in retirement
, they live a comfortable lifestyle with
most of their expenses covered by their Social Security benefits and a very
small pension. 

They need little money
from their investment portfolio. This means they could have saved substantially
less and retired sooner or spent substantially more on the way to retirement.

Seeing this made me
realize that ignoring Social Security can be an expensive mistake. So I sought
out to answer three questions:

  1. What are our Social
    Security benefits as things stand today? 

  2. What impact does
    retiring early have on future Social Security benefits? 

  3. How should we
    incorporate uncertain future Social Security benefits into our financial
    projections?

How you accumulate Social Security benefits

Social
Security calculates your benefit based on the average of your highest 35 years
of earnings. You must have at least 10 years of earnings to qualify for Social
Security retirement benefits.

To better understand how you accumulate Social Security benefits
and how retiring early impacts your benefits, it is important to understand the
terms AIME, PIA, and bend points.

AIME
are your average indexed monthly earnings. Social Security adjusts your income
for inflation that occurs over your working lifetime.

For example, my first year of having taxed Social Security earnings was 1995. The $2,920 of income I earned cutting grass and making pizzas is currently worth over double that amount, $6,163, in 2020 dollars.

You can find the inflation adjustment
multipliers by year
 on the Social Security website.

PIA is your primary insurance amount and is calculated based on your AIME over your highest-earning 35 years.

The next important concept to understand is applying bend points to
determine your retirement benefits
. The concept of bend points
is analogous to our
progressive income tax system
. It is designed to benefit lower
earners more and be progressively less beneficial to higher earners.

Up to the first bend point — $960 in 2020 — your income is replaced at 90% of your AIME. If your AIME is exactly $960, you will qualify for a monthly benefit of $864 at your full retirement age.

AIME above the first bend point up to the second bend point — $5,785 in 2020 — is replaced at only 32%. For example, someone with a PIA of $1,960 would receive $1,184.

Above
the second bend point up to the maximal amount, income is replaced at only 15%.

The impact of early retirement

Retiring before
accumulating 35 years of taxable earnings means having years of zero (or very
low) taxed earnings factored into your average earnings. This will lower your
AIME and PIA.

How much you value these
benefits is an individual decision that depends on what other assets you have
to support you in retirement. How much confidence you have in the Social
Security system remaining viable by the time you are eligible for benefits may
also impact your decision.

In any case, it is worth
knowing where you stand with regards to accumulating Social Security benefits.
Then you can make an educated decision.

The difference between retiring early and claiming benefits early

It
is important to make a distinction between retiring early and claiming Social
Security benefits early.

Let’s focus on retiring early, meaning to stop earning or drastically reduce your taxable wages. This will impact the Social Security benefit you accumulate over your working lifetime if you have not yet accumulated 35 years of earnings. It will also impact you if you have accumulated 35 years of earnings and if the earnings you are forgoing later in life would be greater than the earnings you have already accumulated. Either scenario will decrease the average earnings compared to your potential top 35 years of earnings.

Claiming
Social Security benefits prior to your full retirement age is an entirely
separate decision. Full retirement age is currently between 66 and 67 years of
age depending on your date of birth.

You may claim Social
Security retirement benefits as early as age 62. This will reduce your monthly
retirement benefit. Conversely, you can delay receiving benefits beyond your
full retirement age. In this scenario, you will claim a larger monthly benefit
when you do begin. 

Projecting your Social Security benefits

You can obtain your estimated Social Security benefit by setting up an online account
with “my Social Security
.” You can then access your earnings
records and estimated benefits on their website.

When calculating your estimated benefits, Social Security assumes you will continue to work until your full retirement age. It projects future benefits based upon your earnings from the two most recent years. Therefore, the benefits you eventually receive may be more or less than the projections depending on your actual future earnings.

Placing too much faith
in your projected earnings probably isn’t wise. This is particularly true the
further out you are from claiming benefits. Still, I’ve realized being ignorant
and ignoring benefits you’ve earned isn’t a valid strategy either. 

Adjusting Social Security benefits for future rarnings

On the “my Social Security” website, you can use the Retirement Calculator to experiment with the impact of different levels of ongoing income on your Social Security retirement benefits.

My estimated benefit at full retirement age is $1,869 a month based on my 25 years of earnings between 1995 and 2019. Over the last two years, I’ve had very little income taxable by Social Security, totaling less than $6,000.

I first changed the
calculator to assume future earnings to be $0. This had almost no effect on my
estimated benefit, lowering it to $1,852 a month. 

Entering $90,000 for
future earnings raised my estimated benefit by almost $1,000 a month at full
retirement age to $2,737. At first glance, this seems like a fair amount of
money to leave on the table by retiring early. 

However, obtaining this
level of benefit would require working full-time 19 more years. That would give
me 10 more years to complete 35 years of earnings, plus replace the eight years
on my earnings record when in college and early retirement when income was less
than $10,000 a year, plus my first year of work as a physical therapist when I
made only $22,500 working half a year. 

Next, I looked at the impact of working part-time in
semi-retirement. I’ve recently written about how friendly
the tax code is for semi-retirees who earn small amounts of income after
leaving their careers
. What is the impact of part-time work on
Social Security benefits?

If
I made just $1,000 a month ($12,000 a year) in semi-retirement, my benefit at
full retirement age would jump by over $100 a month from $1,869 to $1,981 a
month. Making $2,000 per month ($24,000 a year) would increase my benefit to
$2,144 a month.

Determining your inflation-adjusted benefits

One piece of information
that is not clear from the Social Security site is where your PIA is relative
to the bend points. This information is important to determine how impactful
working longer would be on your future Social Security benefits.

You can determine the relationship between your AIME and the bend
points by multiplying your Taxed Social Security Earnings found in your
Earnings Record by the inflation
adjustment multiplier for each year

An easier way to do this is to enter your earnings record for each
year into the Physician
on FIRE Social Security calculator
. It provides information that
is hard to decipher directly from the “my Social Security” website, including
the sum of your top 35 years of indexed earnings, your AIME, and whether you’ve
reached the first and second bend points.

The value of Social Security benefits

Previously, we underestimated how valuable Social Security
benefits could be. We have no way of knowing how the program will
change in the future. So we just threw up our hands and ignored what Social
Security benefits will mean for us.

My wife Kim and I currently have similar earnings records. If we each get our benefits as projected, we would receive nearly $4,000 a month at our full retirement age. That would more or less cover our current living expenses. 

Our Social Security
benefit is valuable, even if future benefits are substantially reduced. The
program is popular enough that it’s unlikely to ever completely go away. We won’t
ignore it in retirement calculations going forward.

However, it is also widely known that Social
Security is underfunded
.

Moving forward, we’ll pay a bit more attention to our benefits,
checking them annually. When running
retirement simulations
, we’ll run multiple scenarios with
25%, 50%, 75% and 100% of our currently projected benefits. 

The 25% and 100% scenarios will represent our best guess at absolute worst and best-case scenarios. The 50% and 75% scenarios represent our best guess on the likely range of values of our future Social Security benefits based on our knowledge of it today.

More on Social Security: Should we rethink how we tax Social Security benefits?

Also: Brett Arends: The assault on Social Security is under way

Chris Mamula retired from a career as a physical therapist at age 41. This is abridged from “How Does Retiring Early Impact Social Security Benefits?” You can read the full version on the blog “Can I Retire Yet?

Also from Chris Mamula: I followed the path to FIRE — and learned that early retirement is the wrong goal



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