16 June 2018 FT — Articles to Read

16 June 2018

Question: According to MSN, what is the most expensive hotel in Maryland?

Ex-Trump campaign chief Manafort jailed for alleged witness tampering – Pg. 1

  • The judge noted that her earlier instruction not to commit crimes while on bail was “printed in bold, all caps” (Prof Note: There is much to be said for a quiet, anonymous life)

Central banks correctly go their separate ways – Pg. 8

  • The Fed raised rates and signaled future increases, as expected; the ECB gave details of its impending exit from quantitative easing, while emphasizing that monetary policy would remain loose; the BoJ did nothing
  • Of the three, the BoJ had the easiest task, though not for pleasant reasons. Inflation in Japan continues heavily to undershoot its target; shoing that the tightening in the labour market is a long way from feeding through adequately into pricing power
  • The Fed, having clearly signaled a quarter-point rise in rates, duly delivered
  • ….Jay Powell….was wise to try to dispel notions that he would take a more hawkish approach than Janet Yellen, his predecessor
  • The Fed needs to be alert to the possibility that its tightening will cause significant financial disruption, notably in emerging economies. But the wildest card is the possibility of an escalation of trade conflict among the big economies, driven by Donald Trump, the US president
  • …the most difficult decision was that the ECB, which faced the delicate task of preparing financial markets for its exit from quantitative easing
  • It seems quite likely that equilibrium long-term interest rates have fallen. Moreover, this already very old recovery could run out of steam, or be subject to adverse shocks, at any time.  Still, consumers, investors and businesses should take some comfort that the central banks of the world’s biggest market economies have roughly the right analysis of where they are and how they might react in a downturn

Law firm’s near $200,000 offer kicks off US pay war – Pg. 10

  • US law firms have launched an expensive bidding war for young legal talent after New York-based Millbank Tweed Hadley & McCloy raised the salary it was offering first-year lawyers to $190,000, forcing their competitors to follow suit
  • …raised salaries for those just below partner level to $330,000, took effect this month
  • (Prof Note: Students are always surprised when I state that attorneys rates are negotiable. You can and should negotiate their fees.  Also, track their time and negotiate the bills when they are received.  I often use two law firms on my bigger issues and have each check the other’s invoices.  REFUSE to pay for the $25 copy!  REFUSE to pay for the 2 minute phone call confirming the meeting.  Note the firm most likely rounded the 2 minute call to 6 minutes and then billed you.)

Halcyon days recede as ECB and Fed step back – Pg. 13

  • The withdrawal from fixed income was broad based as investors adapted to a world in which two key central banks were providing less support. European bond funds were particularly hit, losing $2.4bn, the biggest outflow in over a year.  Emerging market bond funds suffered their eighth straight week of outflows, the longest negative streak since 2014
  • Pressure on emerging markets has been exacerbated by investors shifting cash from EM into the US, where rates are becoming more attractive. The returns on short-term 12-month Treasury bills – essentially the equivalent of cash – have climbed to a 10-year high of 2.3% thanks to the Fed’s tightening and a big increase in US government borrowing following tax reform

Answer: Four Seasons, Baltimore