17 May 2019 FT — Articles to Read

17 May 2019


Question: According to MSN: Money, what are the mean/median net worth of U.S. families based on the age of the head of household (35 or younger), 35-44, 45-54, 55-64, 65-74, 75+?


Global banks handed 1bn (euro) in fines for rigging foreign exchange rates – Pg. 1

–          Barclays, Citigroup, Royal Bank of Scotland, JPMorgan and Japan’s MUFG have been fine more than 1bn (euro) by the EU’s competition watchdog for rigging the multitrillion-dollar foreign exchange market after the last financial crash

–          …most of the traders knew each other personally….(Prof Note: When I was in energy trading, personal relationships were key!  If there was a mispricing in the market, “word” went out quickly and the shark frenzy was quick)

–          The market rigging activity took place between 2007 and 2013 and involved 11 currencies, including the euro, pound and dollar.  The information shared by traders “enabled them to make informed market decisions on whether to sell or buy the currencies they had in their portfolios and when.  Occasionally, these information exchanges also allowed the traders to identify opportunities for co-ordination”…


Macron buoyed by fall in joblessness to 10-year low – Pg. 2

–          Unemployment in France has fallen to a 10-year low in a boost to President…

–          Joblessness in the eurozone’s second-largest economy fell 0.1% in the first quarter of this year to 8.7%, its lowest since 2009,…

–          Year-on-year growth has outpaced that of Germany and Italy almost continuously for two years


US drug pricing is in need of an overhaul – Pg. 8

–          …the most frequently administered treatments now cost 1.8X more in the US than in other countries – and is growing (Prof Note: I recently asked a doctor for a prescription and he provided but said, “it is expensive.”  Then he asked if I had an ability to get it filled in another country.  I said, “Yes”.  The pills are significantly less in the Caribbean!)

–          Drugmakers are just part of the problem.  Regulations on Medicare, the government health insurance for the elderly, incentivize doctors to prescribe expensive products by paying them a percentage of drugs’ costs.  These rules also prohibit Medicare from bargaining with drugmakers

–          …companies known as pharmacy benefit managers act as middlemen between drugmakers and insurers.  PBMs negotiate rebates, discounts form the list prices set by drugmakers.  In theory, this means lower prices for customers.  However, PBMs are accused of suing rebates to bolster their own profits while drugmakers push up list prices to compensate.  A lack of competition in the PBM market – dominated by just three companies – worsens the issues

–          One solution put forward last year by the administration is to link the prices of drugs administered under Medicare to those paid abroad.  Another option is wider reform of Medicare regulation.  Given its vast purchasing power, it could negotiate with drugmakers, as is the case in the British health system.


China’s Treasuries sell-off stokes US concerns of retaliation for trade tariffs – Pg. 19

–          China sold the most Treasuries in more than two years in March, magnifying concerns that it could weaponise its positon as the US government’s largest foreign creditor in the trade dispute between the two countries

–          China is the largest foreign holder of Treasuries, owning a total of $1.12tn, meaning any increase in yields it could engineer would also mean losses on its own portfolio


Answer: 35 or younger: $76,200, $11,100; 35-44: ($288,700, $59,800); 45-54: ($727,500, $24,200); 55-64: ($1.17m, $187,300); 65-74: ($1.07m (not a typo, it went down), $224,100); 75+: ($1.07m, $264,800)