15 August 2018 FT — Articles to Read

15 August 2018


Question: According to MSN:Money, what are three (3) times you should not use your credit card?


German shoppers spur Eurozone growth but trade war fears linger – Pg. 1

–          A jump in spending in Germany boosted Eurozone growth in higher levels than initially indicated in the second quarter, easing concerns over an export-led slowdown

–          Estimated growth in GDP in the second quarter was 0.4%, in line with the previous three months…

–          …eurzone growth remains much lower than last year – when the economy expanded 0.7% in each quarter – with the trade war denting business-confidence and foreign sales

–          Record-low unemployment and better pay rises are expected to keep German shoppers spending

–          The eurozone’s fifth-biggest economy, the Netherlands, saw GDP growth expand 0.7% because of better figures for trade and investment.  Consumer spending was also strong


Bridge collapse leaves dozens dead in Genoa – Pg. 2

–          The 80-metre section of the viaduct that collapsed stood about 45 metres above the Polcevera river, railway tracks and an industrial and retail estate, which includes an Ikea store and other outlets, which would normally have been packed with shoppers on a rainy day

–          (Prof Note The most coveted professional designation to me personally, the Professional Engineer designation (PE), I never pursued due to advice from my father, a PE.  He said, “Do not get the PE designation as you could be pressed to stamping drawings you do not understand at an early stage in your career.”  He was right.  Also, there are criminal implications for bad workmanship by engineers and architects.  Are both professions compensated enough for the risk accepted?  Compare both professions to finance careers, and re-ask the question.  Something to consider…)


Student loan woes ease amid US jobs growth – Pg. 3

–          Student loans are going soar at the slowest rate since before the financial crisis as America’s steadily strengthening economy offers more job opportunities to graduates, …

–          About 8.8% of up-to-date student loan balances went overdue by 30 days or more in the second quarter, the lowest share since early 2006, …

–          Student debt remains a big US policy concern as individuals struggle to keep up with their commitments, and the legacy of indebtedness impairs their ability to buy a home or start a business.  Student loans surpassed credit cards in 2012 as having the worst delinquency rates in consumer credit

–          …$1.41tn at the end of June, well over twice the level 10 years ago

–          …mortgage debt stood at just under $9tn

–          A flashpoint in the student loan debate is the high prevalence of repayment problems at corporate-owned, for-profit colleges – run as businesses to make money for owners and shareholders – which have aggressively courted lower-income students

–          (Prof Note: There needs to be more understanding on the front-end by students of what debt means.  I literally wrote the book on real estate financial modelling (I say this proudly), but my point is, I am still learning about debt and my thoughts are maturing on the subject.  How can an 18 year old, with no perspective, possibly grasp the HUGE financial implications of a large debt load and/or the complex debt structures provided?!)


Planning rules are driving the housing crisis – Pg. 9

–          …the cause of those high costs has become more widely understood: restrictive planning and zoning rules lead to a chronic lack of supply in the places where people want to live

–          In Britain, where house prices have soared to nearly eight times average earnings, …economics argue that there is no shortage even in London

–          The number of dwellings is not supply: it ignores location, quality, size, age, tenure, transportation links, amenities and everything else that matters to a house

–          …number of households is not demand

–          Imagine a house that had become very expensive.  Now you either have to find a rich buyer or get planning permission to convert it to flats.  Both take time, so the house sits empty


Majority of fund managers say profit outlook in US is brightest of all regions – Pg. 17

–          Investors’ growing preference for the US at the expense of the rest of the world has spurred them to take the biggest overweight positions in US equities since the start of 2015, with record high sentiment about the outlook for US profits, …

–          The most crowded trade, for the seventh straight month, was in the Fanng (Facebook, Amazon, Apple, Netflix and Alphabet) and Bat (Baidu, Alibaba and Tencent) stocks.  Shorting US Treasuries was the third most crowded trade, offering further evidence of the widespread anticipation in the markets of a positive US growth narrative

–          In addition to shorting bonds, investors are moving into bank stocks, and believe the US Federal Reserve’s monetary policy tightening will continue

–          …investors are holding 5% of their portfolios in cash, p from 4.7% in July – above the 10-year average of 4.5%


Answer: (1) If there is a fee; (2) If you are approaching your credit limit; (3) If you cannot afford your purchase