10 April 2019 FT — Articles to Read

10 April 2019


Question: According to MSN: Money, what is the average spending on nonessentials?


Saudi bond bonanza as investors draw line under Khashoggi killing – Pg. 1

–          Saudi Aramco increased the amount it will raise it ins first international bond sale to $12bn after drawing a record-breaking $100bn in orders, a clear sign that financial markets are willing to draw a line under last year’s killing of journalist Jamal Khashoggi

–          The $100bn in orders far exceeds previous highs for emerging market borrowers, outstripping even the $67bn of demand Saudi Arabia itself saw in its 2016 government bond market debut

–          One investors following the deal said the flood of demand reflected the bonds’ scarcity.  Saudi Aramco’s treasurer has told investors the company does not need to raise the money because of its “fortress-like corporate position”, and is focused solely on opening up the secretive group to public investors


IMF cuts global growth forecast as trade tensions take toll – Pg. 3

–          The global economy has slowed sharply since last summer and will rely on a “precarious” boost from a few emerging markets to reverse the loss of momentum, …

–          Cutting its outlook for 2019 and 2020, the fund judged advanced economies would “continue to slow gradually” into next year while emerging economies would play a more positive role, led by an end to crisis conditions in Turkey and Argentina and stabilization in the all-important Chinese growth rate

–          Global growth slowed sharply in the second half of 2018 from 3.8% in the first half to only 3.2%, the IMF said with industrial production and world trade hit hard.

–          Growth rates would have fallen further without consumer sentiment holding up strongly

–          The forecasts for advanced economies suggested there would be some recovery from specific woes last year in Germany, France and Italy, but there would be no return to the rapid expansion of 2017 and instead “a return to tepid potential growth” by 2020

–          For the US, the IMF forecast that the annual growth rate would continue to slow and, by the next presidential election in 2020, it would be only 1.7% – barely over half the rate in the final quarter of 2018, when it was 3%

–          The slowdown stemmed from an end to the temporary boost that came from Donald Trump’s tax cuts in late 2017


Artificial intelligence raises ethical questions we struggle to answer – Pg. 9

–          Ethics is fundamentally about our responsibility to examine the impact of our decisions on others.  Ethics committees, therefore, are accountable to the powerful, but responsible for protecting the powerless

–          A ethics committee should contain a representative group of disinterested individuals who are capable of crafting a consensus around what is socially acceptable, not just technically feasible

–          Their job is to assess the ethical implications of new applications of AI and to protect and defend the interests of those using or on the receiving end of emerging technologies


Non-bank lenders under scrutiny after taking big share in US mortgage market – Pg. 14

–          US mortgage companies operating outside the banking system face intensified oversight by the federal government after their role in US housing finance ballooned, raising concern about gaps in the regulatory system

–          Ginnie Mae, a US government agency that guarantees payments on $2tn of US mortgage-backed securities, is advancing proposals that would require non-bank mortgage lenders to compile “living wills” …

–          In the 12 months to February 2019, nonbank mortgage firms were responsible for $729bn of the loans that run through government guarantee programmes, over 60% of the total

–          In early 2013 non-banks were just 30% of the total…

–          Among big players are Quicken Loans, with 5% of the total US mortgage market, PennyMac Financial, with 4%, and United Wholesale Mortgage, with 3%….

–          These companies offer mortgages and collect payments but almost always package the loans into securities and sell them on, rather than hold them on their balance sheets

–          Ginnie Mae’s own activities are expanding.  It guarantees payments on securities backed by mortgages for lower-income Americans and Veterans – in contrast to the less risky home loans backed by Fannie Mae and Freddie Mac, …


Answer: More than $5,000/yr