17 August 2019 FT — Articles to Read

17 August 2019


Question: According to MSN: Money, the Waltons are the world’s richest family.  What dollar amount do the Waltons add to their new worth every single day?


Fine print on WeWork founders’ $1bn charity pledge puts tax break at risk – Pg. 1

  • ….co-founder Adam Neumann and his wife Rebekah have promise to donate $1bn of their fortune to charity over the next decade – and will lose half their voting power over the company if they do not
  • The donations ma not count as “gifts” as defined by the US IRS because the Newmanns are required to make them to retain full voting rights…
  • US taxpayers are allowed to deduct charitable gifts from their income to cut their income tax bill. If the gifts consist of shares there is also a capital gains tax benefit


Global economy – Pg. 5

  • The yield curve is essentially a reflection of the distilled wisdom of millions of investors, from individual savers, financial advisers and small Midwest banks to Middle East sovereign wealth funds, Asian insurers, European pensions and Wall Street money managers
  • If the economic outlook dims they tend to look for safety and buy government debtg, pushing up their price and crimping their yields. But when long-term yields fall below short-term ones – which are more closely linked to interest rates set by central banks – it indicates that investors foresee a downturn and imminent interest rate cuts
  • The yield curve’s ability to forecast recessions is hotly debated, but the inversion indisputably reflects the bond market’s mounting fears over a global economic slowdown. The IMF last month trimmed its forecasts for global growth to 3.2% for 2019 – which would be the lowest in a decade
  • The most eye-catching manifestation of the anxiety is bonds trading with negative yields, with many countries – and even some companies – in practice not paid by creditors to borrow
  • Nearly $16tn of bonds are now trading with sub-zero yields, or about 27% of the global total…
  • There re many ways to measure the shape of the yield curve, such as comparing 30-year Treasuries to five-year ones, or 10-year yields to three-month Treasury bills – another popular measure that turned upside-down earlier this year. But the two-year, 10-year yield curve inversion that happened this week is particularly popular as an economic omen among many investors
  • Adding to the pessimism, on Thursday, the 30-year Treasury yield went below 2% for the first time ever, after China accused the US of “a severe violation” of their previous trade agreement, and said that it “will have to take the necessary countermeasures”


Answer: $100.0m ($70,000/minute)