10 August 2018 FT — Articles to Read

10 August 2018


Question: According to MSN:Money, the article How my husband’s layoff changed the way we spend money, references what methods?


ECB fears rise of protectionist measures hitting eurozone growth – Pg. 2

–        The ECB has warned that US tariffs are in danger of reaching their highest levels for half a century as its fears mount over the impact of President Donald Trump’s trade policy on Eurozone growth

–        The US introduced its first tariffs on imports from china on July 6.  Since then, the world’s two largest economies have unveiled tit-for-tat measures that cover $100bn in bilateral trade.

–        The central bank indicated it was especially worried that a US investigation into whether it should impose tariffs on imports of cars and car parts would lead to new barriers to trade


Argentine senators throw out bill to legalize abortion in strongly Catholic country – Pg. 4

–        Argentina’s Senate rejected a bill to legalize abortion yesterday, the biggest nation in largely Catholic Latin America to take on the issue

–        The bill, which narrowly passed the lower house in June, called for legalizing the termination of a pregnancy in the first 14 weeks.  Under current law, abortion is allowed only in cases of rape or if the woman’s health is in peril

–        In Latin America, elective abortions are allowed only in Cuba, Guyana, Mexico City and Uruguay, while they are banned in the Domincan Republic

–        (Prof Note: I await the stance of the US Supreme Court on abortion in the U.S. with the new pick.)


End of pension fund tax break looms over Treasuries market and long-dated buying – Pg. 17

–        US Treasury traders are bracing for the end of a tax break that they say has encouraged companies to funnel billions of dollars into their pension funds and helped keep a lid on long-term interest rates

–        Companies have raced to top up their pensions ahead of the expiry of the tax break on September 15 and their pension funds have in turn been significant buyers of long-dated Treasuries

–        Demand for long-term Treasuries has kept yields low, even as short-term rates have risen, leading to a flat yield curve and intense debate over what that signals for the economy

–        Under reforms introduced at the end of last year, the US cut the corporate tax rate from 35$ to 21% but companies have been allowed to deduct pension contributions at the old, higher rate for most of this year.  The grace period was designed to encourage companies to deal with pension fund deficits

–        The longest maturity Treasury bond lasting 30 years has seen its yield rise by less than shorter dated yields this year, flattening the yield curve and raising fears of a slowdown in the economy.  Short-dated yields have risen above longer dated yields before every US recession of the past 50 years


Answer: (1) You don’t need nearly as much as you think you do; (2) ‘Thrifty’ became our new slogan; (3) Coupons became our best friend