10 June 2019 FT — Articles to Read

Question: According to MSN: Money, what are seven (7) times you are smart to not pay off your mortgage early?

Hong Kong brought to standstill by mass protest against extradition bill – Pg. 1

  • Beijing’s tightening grip over Hong Kong has raised fears about the future of the territory, which was guaranteed civic freedoms, legal independence and “a high degree of autonomy” for 50 years when China took control in 1997
  • The bill, which allows China to extradite anyone living or passing through the territory suspected of a criminal offence, has been condemned by business groups and foreign governments

Eastern Germany in grip of population collapse – Pg. 3

  • After the fall of the Berlin Wall in 1989, eastern Germany saw a collapse in the birth rate and exodus of young workers to the west.  Most of the region now has so few women of childbearing age that recovery is all but impossible
  • Of 77 districts in eastern Germany, 41 are projected to lose at least 30% of their working-age population by 2035.  Much later western Germany has only two such districts

Stocks’ rocky month sees humans beat the machines – Pg. 6

  • More than half of all US mutual fund that invest in big American companies managed to beat the broader stock market in May for the second month in a row,…this indicates that many managed to navigate the trade war-related turbulence
  • Traditional, active asset managers have long argued that they would prove their worth in less buoyant markets.  Although the long-term evidence that stockpickers outperform in downturns is patchy, their recent run will be encouraging to investment groups that have battled torrential outflows year after year since the crisis

Fed considers July rate cut after sharp drop in jobs growth – Pg. 10

  • …Friday’s weak US jobs growth figures further darkened the outlook for the world’s biggest economy
  • After Friday’s sharp drop in jobs growth, the chance of a rate cut as soon as July stood at 65%,…
  • …benchmark 10-year US break-evens – a market measure of expectations for long-term price rises – remain subdued at just 1.74%, below the Fed’s long-term inflation target of 2%
  • Core CPI is expected to come in at 2.1% for May, year-on-year

Answer: (1) You lack emergency savings (Prof Note: Hello, ever heard of a HELOC?); (2) You want extra liquidity (Prof Note: Hello, if inflation is positive, cash savings actually cost one $$$ and a credit line is just as liquid); (3) You can earn a better rate by investing (Prof Note: Hello, is the risk equivalent?  Paying yourself is risk-free!); (4) You want to lower your taxes (Prof Note: Is this really how one supports this decision?!); (5) Your mortgage is a hedge against inflation (Prof Note: Really???); (6) Your job is uncertain (Prof Note: Pre-approved HELOC!); (7) You have high-interest debt (Prof Note: Agree….1 out of 7 I agree!)