8 April 2019 FT — Articles to Read

8 April 2019


Question: According to MSN: Money, what percentage of Americans tap into retirement savings to pay off debts/bills?


Buffett urges Wells Fargo to look beyond Wall Street for next chief – Pg. 1

–          Tim Sloan stepped down as chief executive last week after coming under pressure from Congress and regulators

–          Mr Buffett, who has held shares in Wells since 1989, wants the new leader to be an outsider and someone who has not worked in investment banking, judging that either would be a red rag to critics in Washington

–          Mr Buffett owns almost 10% of Wells’ shares, worth about $22bn


Global growth impetus hit by slowdown – Pg. 4

–          The global economy has entered a “synchronized slowdown” which may be different to reverse in 2019, ….

–          Sentiment indicators and economic data across advanced and emerging economies have been deteriorating since last autumn, suggesting fading momentum in global growth and the need to resort to new economic stimulus

–          The Brookings-FT Tracking Index for the Global Economic Recovery (Tiger) compares indicators of real activity, financial markets and investor confidence with historical averages for the global economy and for individual countries.  The headline readings slipped back significantly at the end of last year and are at their lowest levels for advanced and emerging economies since 2016, the year of the weakest global performance since the financial crisis

–          Although sentiment remains high in advanced economies, it has fallen from its peaks and it has plummeted to well below normal levels in emerging economies, led by fears that China’s years of rapid growth are coming to an end


Trump demand adds to pressure on Fed – Pg. 4

–          Following fears of a recession in the bond market, optimism about the US economy revived late last week, with March jobs growth approaching 200,000 and unemployment hanging at just 3.8%.  The number were easily strong enough to reinforce the Fed’s central case for 2019, namely for respectable economic growth and unchanged interest rates

–          But the case for a rate cut could yet materialize this year.  If the US sees signs of a serious downturn, there is little doubt that its chairman, Jay Powell, and his colleagues would cut aggressively.

–          The rate adjustments under former Fed chairman Alan Greenspan during the record-breaking expansion of the 1990s serve as one set of precedents

–          The danger for the Fed is any hint it had started to consider a rate reduction could panic financial markets, as traders ask whether the central bank sees a dire prognosis they have overlooked

–          The Fed would also need to confront one of the main critiques of Mr Greenspan’s 1990s policy – namely that it was so loose that it stoked up hazardous bubbles in financial markets


US budget deficit expected to reach $1tn mark this year – Pg. 6

–          The Trump administration will notch up a federal budget deficit of $950bn this year, or 4.5% of GDP…

–          This is an unprecedented shortfall outside of a recession or war, and comes at a time when the Federal Reserve is slowly shedding the US government debt it acquired in the wake of the financial crisis, and foreign investors – who long financed the deficit – are pulling back

–          Foreign investors held 35.3% of the Treasury market at the end of last year, the lowest share since 2004, …

–          …heavier buying by domestic investors lifted their ownership of US government debt to 52%, the highest since 2009

–          …the cost of servicing its debt versus the size of the US economy is near its lowest in four decades…


Answer: 44%