5th September 2016

Aberdeen Asset Management: Week in review: taxing times

It’s been another interesting week with Apple the latest multinational company to be accused of tax dodging. In market news, European inflation failed to accelerate in August, adding to concerns about the economic outlook ahead of the European Central Bank meeting next week. The US labour market continued to experience steady growth while Japanese stocks finished the week positively.

Over and Out

Brazil’s first female president, Dilma Rousseff, has finally been impeached. It was a crushing and ultimately humiliating end to her tenure which officially draws the curtains on nearly 14 years of Workers’ Party rule. The former Marxist guerilla has vowed to appeal the decision saying it’s a parliamentary coup against her, but there’s little chance of reprieve.

Michel Temer, vice-president to Rousseff, has now been sworn in to office and takes over for the remainder of Rousseff’s term. He may not be the most popular man in Brazilian politics but he’s promised a ‘new era’ for the South American nation.

Having pulled together a credible economic team already, the incipient signs are positive. Financial markets have reacted well to the news, with the Brazilian real also rebounding strongly.

Oh, Donald.

There’s not a week that goes by without Donald Trump hitting the headlines. Love him or hate him, the New York business tycoon made a fleeting visit to Mexico earlier this week. He told reporters that he had an “excellent, tremendous” meeting with his new friend Enrique Pena Nieto, Mexico’s president.

Would this be the start of a softening in Trump’s stance towards immigration policy? With the presidential elections just two months away, many thought it would be as he looks to close the gap on Hillary Clinton. That idea was arguably quashed just hours after his visit to Mexico.

Addressing a large Phoenix audience, the Republican candidate laid out his plans to deport millions of criminal ‘illegal aliens’ in his first hour in office. There was no budge on his plan to build a 2000-mile wall on the US southern border either.

Bad Apple

Apple has always been one to push the boundaries. Steve Jobs liked it that way. But it appears the company may finally have met its match in Margrethe Vestager. In a bold move, the European Union competition commissioner has ruled that the world’s largest company must pay US$13bn in unpaid taxes back to Ireland.

However, the Irish government said they didn’t want the money. The ruling potentially threatens Ireland’s position as a low-cost tax base for global corporations.

Apple’s chief executive Tim Cook has hit back calling the ruling ‘maddening’ and ‘political’.The ruling follows accusations against Starbucks, Google and Amazon in recent years.

And Finally…

A 16-year old school leaver from West Yorkshire has put himself up for ‘sale’ on Facebook. With GCSEs under his belt, Mr. Scott has decided to offer his undivided attention for experience in the big wide world. With an asking price of just £3.30 per hour, he’s convinced that he’ll be the best £120 any company spends in a week.

Investments, Investment Commentary