15 December 2018 FT — Articles to Read

15 December 2018


Question: How many decades must one look back in U.S. history to find an unemployment rate near the current level?


China’s woes spook global markets – Pg. 1

–          A sharp slowdown in Chinese spending growth and manufacturing has added to the gathering gloom around the international economy, sending financial markets lower around the world at the prospect of global loss of momentum

–          The US has remained the bright spot, with robust growth, but the Federal Reserve has sent signals it is rethinking its pace of rate rises as the faltering global economy weights on US central bankers before next week’s year-end meeting

–          Markets were less optimistic, with an Asia-led global sell-off sending most big indices lower

–          Chinese equities finished down 1.7% while Hong Kong’s Hang Seng lost 1.6%

–          China’s exports have been resilient in the face of US tariffs but weak consumer spending and slowing construction are dragging on the economy


Investors in driving seat as banks flex muscles on leveraged loans – Pg. 11

–          Wall Street banks are offloading leveraged loans at discounted prices and demanding that borrowers accept less advantageous terms as they move to protect themselves from rapidly weakening demand in a previously hot corner of the credit market

–          The development reflects mounting concern from investors about the quality of loans used to finance private equity deals, following a series of warnings from central bankers this year

–          The terms ultimately agreed give the banks the ability to increase the interest rate on the loan and tighten covenants, if needed to attract investors

–          Banks can end up facing losses if they cannot sell the loans on the terms they have promised to borrowers

–          …$1.3tn leveraged loan market


Amazon disrupts explanatory powers of closely watched US economy index – Pg. 11

–          The Dow Jones Transportation Average, the less well-known sibling of the DJIA, includes railway operators, airlines and shipping companies whose fortunes are tied closely to economic activity

–          The Transports index has fallen more than 9% since the start of December compared with between 3 and 4% for other equity market benchmarks.  That is exactly the kind of divergence that gives support to bears, who worry about trade wars and see slowing global growth

–          Stock in FedEx, which has the biggest weighting in the index, has lost more than 17% since the start of the month, in part due to concerns about Amazon Air, the ecommerce group’s inhouse freight delivery service

–          Unlike the S&P 500, an index that reflects the market capitalization of its members, the Dow Jones Transportation and Industrials indices are calculated on the basis of each member’s share price, which means a company with a high share price exerts a big influence even if its market cap is small

–          FedEx accounts for about a quarter of the month-to-date loss in the Transports index…


Answer: Five decades, i.e. 50 year low