29 January 2019 FT — Articles to Read

29 January 2019


Question: According to MSN: Money, what are six expensive purchases that are worth it?


Caterpillar feels strain as China slowdown sets back US business – Pg. 1

–        The warnings follow fears raised by succession of companies in the US, Europe and Asia about the widening ramifications of the Chinese slowdown.  Beijing last week revealed its economy had grown at 6.6% – its slowest annual rate in almost three decades

–        Apple shocked the market with a new year warning that its revenues would be lower than expected, in part due to China weakness


US shutdown cuts billions from economy – Pg. 2

–        The Federal Government shutdown probably shaved $8bn off US economic activity in the first quarter, after a $3bn reduction in the final quarter of 2018, and the side effects would have been increasingly damaging if the impasse had continued more than five weeks, …

–        …trim the level of real GDP by 0.2% in the first quarter, after being lowered by 0.1% in the final quarter of last year

–        Problems experienced by businesses obtaining federal permits and loans during the shutdown were likely to lead companies to postpone investment and hiring decisions…

–        …US is on course for a $900bn federal budget deficit this year, or 4.2% of GDP, and more than $1tn in year from 2022 (Prof Note: Put simply, this is approximately $2,800/citizen)

–        The yawning gap is partly a result of a $1.5tn tax cut coupled with public spending increases…

–        …growth will slow to 2.3% this year from 3.1% in 2018, as the effects of the tax cuts on business investment wane.  From 2024 to 2029, growth will average 1.8% a year, less than its long-term historical average, primarily because the labour force is set to grow more slowly

–        Federal debt held by the public will reach 78% of GDP by the end of this year, twice its average over the past 50 years.  It is set to hit 93% by 2029, a higher level than at any time since the second world war, and a record 150% by 2049

–        Federal spending on interest payemnts will surpass the entire amount of US defence spending by 2025…


S&P Global becomes first foreign agency allowed to rate domestic bonds in China – Pg. 19

–        S&P Global has won approval from Beijing to start scoring domestic bonds, becoming the first foreign credit-ratings agency to gain entry into fast-developing Chinese market

–        Under the terms of its license, S&P is authorized to rate issuers and issuances from financial institutions and corporates, structured finance bonds from foreign issuers, sometimes known as Panda bonds

–        The deregulation comes as China’s economic growth is decelerating to levels not seen in nearly 20 years, spurring concerns over capital flight

–        One barrier to foreign investment is the lack of foreign ratings on domestic bonds.


Answer: (1) Education (Prof Note: I have become a bit disenchanted with education as of late.  Quality matters.  ROI on purchase matters (unless independently wealthy).  Quality of professors matter (Ph.D. does NOT determine quality.  For a finance professor, size of balance sheet should be published, i.e. if they cannot make wealth for themselves, how can they possibly demonstrate to students how to build wealth?!)); (2) Travel (Prof Note: My experiences have demonstrated that travel opens one’s mind and heart.  One reason I have not been authoring “Nevis News” is because I have been staying at local establishments on Nevis as Cat Ghaut is renovated.  These have proved so special to the guests that I did not feel right telling their stories.  However, the local establishments have a beauty and friendliness I never known as I rarely leave Cat Ghaut.  It is amazing the people that stay on the island.  One establishment has, literally, a music legend staying for a month (Think “Billy Joel” level but NOT ‘Billy Joel’).  Each night he appears and dines with everyone.  This is a person that can afford to be anywhere and chooses a local Nevisian establishment); (3) A mattress (Prof Note: 1/3 of your life is spent on your back.  Make it a good “1/3”); (4) Clothes that fit well (Prof Note: Being comfortable is more important as I have aged); (5) Services that save you time (Prof Note: It depends on the value of your time and the cost of the service); (6) Health items (Prof Note: You cannot take it with you!)