14 June 2018 FT — Articles to Read

14 June 2018

Question: What are 10 financial scams to look out for in retirement (according to US News)?

Hawkish Fed lifts rates as Trump tax cuts fuel economic expansion – Pg. 1

  • The Federal Reserve lifted interest rates by a quarter point and signaled that two more increases were likely in 2018 as policymakers gave bullish assessment of the US economy amid accelerating growth and rapid job creation
  • …raised the target range for the federal funds rate to 1.75% to 2%, in the seventh increase of the current cycle
  • ….interest-rate forecasts….pointed to a total of four rate rises in 2018, followed by another three in 2019
  • The US stock market dipped 0.2% on the news of the intention to raise rates another two times this year, on top of the two that came in March and yesterday
  • The 10-year Treasury yield jumped 3pbs to 2.97%
  • The republicans’ $1.5tn tax cutting package and $300bn federal spending increase have fueled a further pick-up in the US economy, overshadowing global hazards, including the risk of a Trump-induced trade war
  • The rate rise was widely predicted by financial markets given the recent fall in unemployment to just 3.8% and signs that inflation is moving closer to the Fed’s target

Gig workers need better employment protection – Pg. 10

  • …contractual arrangements can be employment contracts in the eye of the law even if they nominally set up a self-employment relationship
  • Who is responsible for the unavoidable risks relating to varying business conditions, accidents and health when work is structured in a flexible way? This is an increasingly pressing question as self-employment grows in importance
  • Since 2001, the share of self-employment in total work has grown from about 12 to more than 15%
  • The function of these three components of policy – clarifying, modernizing, and enforcing the law – is not just to strike the right balance between protecting the vulnerable and facilitating flexible work
  • The rising use of flexible work contracts – and the technology facilitating them – has not only put pressure on labour standards. It also undermines the government’s ability to collect the taxes normally imposed on both sides of more conventional contracts

Foreign lenders urge Fed to relax rules – Pg. 16

  • Foreign banks in the US are stepping up a flight for regulatory relief, complaining they have been unfairly hit by super-charged standards on capital developed under the Obama administration
  • At issue is the topic of “ringfencing”, or the requirement that non-US banks operating in America set up standalone subsidiaries with dedicated capital and liquidity inside them
  • The idea is that such structures would make a troubled bank easier to wind down without burdening taxpayers, while stopping contagion spilling into the rest of the financial system
  • The Basel-based Financial Stability Board has recommended banks have total loss-absorbing capital (TLAC) in their overseas holding companies of at least 75% of what is required in their home country

Answer: (1) Medical scams; (2) IRS phone calls; (3) The grandparent scheme; (4) Fake prescription drugs; (5) Rogue movers; (6) Lottery scams; (7) Investment schemes; (8) Deceptive family members; (9) Spontaneous repair offers; (10) Misuse of your funds