17 July 2019 FT — Articles to Read

17 July 2019


Question: According to MSN: Money, what % of student loan borrowers owe more on student loans than their annual salary?


China recruits consumers to help win US trade war – Pg. 3

  • In the US, importers that rely on cheap Chinese materials and goods have faced price rises of up to 25% on everything from aeroplane parts to frozen Pollack
  • …Chinese manufacturers have suffered a fall in export orders, which declined 1.3% in June compared with the same month a year earlier, a clear sign tariffs have started to bite
  • China….reported robust domestic consumption in June, with retail sales up 9.8%…
  • Total social finance, a broad measure of credit growth in China, picked up in June, a sign that leaders in Beijing will resort to more debt-fuelled growth through to the end of 2019


OECD calls for Europe to spend to boost growth – Pg. 3

  • Slower Chinese growth and “the amount of debt that is piling up in the economy” risked giving rise to financial instability…”


French central bank urges ECB to resist pressures on rates – Pg. 3

  • France’s central bank chief has said monetary policy must remain independent of market inflation expectations as well as political pressure, and pushed back at suggestions the ECB should cut rates at its July meeting
  • Markets’ falling inflation expectations are fueling pressure on the ECB to launch more monetary stimulus. The so-called five-year/five-year inflation swap rate, a measure of expectations of future Eurozone inflation, has fallen to around 1.2%, the lowest level since records began in 2003 and well below the central bank’s target of 2%


Global economy – Pg. 7

  • The dead-of-night sacking last week by legally-dubious presidential decree of Murat Cetinkaya, governor of Turkey’s central bank, was followed by the shock resignation of Carlos Urzua, Mexico’s finance minister, who slammed the door on his way out with complaints of cack-handed meddling by unqualified apparatchiks
  • The Turkish Lira and Mexican peso fell more than 2% against the US dollar and analysts warned of disarray ahead,…
  • Starting in the 1990s, globalization, in the form of increased cross-border trade, the commodities supercycle and the rise of global supply chains, drove the emerging world inexorably – or so it seemed – along a part of convergence with the developed world
  • The threat of globalization is one of three big changes simultaneously hitting emerging markets. The second is a slowdown in the rate of growth in China.  The third is a change in global financial conditions after a decade of easy money
  • But companies are not simply reallocating resources around the developed world. Foreign direct investment into emerging markets as a whole fell last year to its lowest level since the 1990s, …
  • When it was driven by investment in infrastructure, China’s hunger for iron ore, copper and other inputs was a godsend for commodities exporters – from Brazil and Chile to Nigeria and the Democratic Republic of Congo. But Chinese investment has fallen, from the equivalent of 48% of GDP in 2011 to less than 45% since 2015.  Meanwhile, investment is moving towards services and other less commodity-intense activities


Answer: 1/6