14 December 2018 FT — Articles to Read

14 December 2018


Question: According to MSN: Lifestyle, what are eight (8) things that happen when you stop drinking alcohol?


Draghi calls time on ECB’s 2.6tn (euro) Eurozone stimulus experiment – Pg. 1

–          Although the ECB has long signaled it would end new purchases this month, the move marked a milestone for the Eurozone, which will not be left to manage its economy with more traditional tools such as interest rate changes

–          The US Federal Reserve, which has been steadily raising interest rates for the past two years, has sent strong signals it may need to slow down after another rate rise this month.  The BoE remains in a holding pattern after raising rates twice in the past two year, amid fears that Britain’s exit from EU might dent growth


US snubs IMF push to lift permanent reserves – Pg. 3

–          The US has come out against an increase to the IMF’s permanent reserves, dealing a blow to efforts by Christine Lagarde, ….to put the institution on a more stable financial footing

–          While the US appears to have shut the door on an increase in the IMF’s permanent reserves, it appears to have left it open when it comes to US backing for alternative funding mechanisms, such as a renewal of the borrowing facility that pools temporary contributions to the IMF from members

–          The Trump administration’s decision to shy away from a permanent boost to IMF resources reflects its aversion to multilateral institutions.  While an increase for the IMF would have strengthened an institution that has for decades been synonymous with the US-led global economic order, it would have inevitably allowed emerging markets, including China, to wield greater influence within the organization, at a time of high tension between Washington and Beijing

–          The US backed this year’s IMF bailout of Argentina, the largest in its history, but has been more skeptical of interventions in countries that are big recipients of Chinse investment, like Pakistan


Warburg in China distressed property push – Pg. 15

–          Rating agencies have warned that smaller, highly indebted Chinese developers are at risk from the current property slump, with prices in major cities stagnant or falling.  Moody’s forecasts that nationwide property sales volume will contract by 5% next year

–          Foreign investors are cautiously returning to China’s distressed debt, after mostly sitting on the sidelines for roughly a decade after the end of the wave of bad debt disposal that began in the late 1990s.  Property is the collateral for a large share of distressed debt, meaning the success of such investments is closely tied to property prices


Leveraged loans lose their appeal as investors cut rate rise expectations – Pg. 19

–          Investors are pulling away from bonds backed by riskier corporate loans, raising pressure on highly indebted companies that have enjoyed easy access to the $1.3tn leveraged loan market

–          Leveraged loan investments have grown popular because they pay a floating interest rate, positioning buyers to receive higher returns as the Federal Reserve tightens policy


Answer: (1) You’ll sleep more soundly (Prof Note: More soundly than a blackout?); (2) You’ll eat less at dinner; (3) You might crave sugar; (4) You’ll start losing weight; (5) Your skin will clear up; (6) You’ll have more money; (7) Your mood might take a hit; (8) Your cancer risk falls, but your heart disease risk might rise