12 April 2019 FT — Articles to Read

12 April 2019


Question: According to MSN: Money, what is the average Credit score for an American?


Republicans pivot towards easier money – Pg. 4

–          The Fed’s decisions to purchase $4.5tn of assets and slash rates to near-zero levels prompted countless warnings of an inflationary upsurge, yet the core measure of the Fed’s preferred inflation gauge has spent the over-whelming majority of the past decade hovering beneath the central bank’s 2% goal

–          The Fed’s recent decision to shelve planned rate rises and retain an outsized balance sheet compared with pre-crisis norms has accordingly sparked few objections in the Republican party


Corporate America is failing to invest – Pg. 9

–          ….long-awaited boom in capital expenditure has not materialized.  On the contrary, American executives seem determined to do almost anything and everything else with that tax bonanza except build new factories

–          …before 2017, the effective average tax rate for America’s S&P 500 companies was 30%; not it is just 15%.  The report also shows that company profits have jumped, due to rising revenues, as well as those tax cuts

–          …total cash flow for the S&P 500 was around 2% of all assets in the fourth quarter of last year (measured as a fourth-quarter moving average), up from 1.5% before Mr Trump’s arrival, and 1% in 2010

–          …the IMF calculates that American companies made shareholder payouts and buybacks that were worth 0.9% of assets last year, twice the level seen in 2010.  Little wonder that equity markets have soared (leaving aside the wobble of last year)

–          Companies have also used this arsenal for mergers and acquisitions boom: such deals gobbled up cash flows equivalent to 0.4% of assets in 2019, compared with virtually nothing in 2011

–          …amount of cash flow spent on capex, in contrast, has flatlined since 2012, running at around 0.7% of all assets – smaller than the cash flow spend on shareholder payouts


Defensive consumer stocks hit by wave of profit warnings – Pg. 19

–          Profits are being squeezed in part because input costs are rising and the industry has less scope than it once did to respond by raising prices.  Shoppers can more easily make comparisons online and competition from retailers’ own brands is also intensifying

–          Television and other traditional media are no longer so influential, empowering smaller upstarts that can market their produce on Instagram and sell it on Amazon


Answer: 704