8 February 2019 FT — Articles to Read

8 February 2019


Question: According to MSN: Money, what is the fastest-growing segment of renters?


BB&T-SunTrust’s $66bn merger set to reshape US bank landscape – Pg. 1

–        …BB&T to buy SunTrust Banks for roughly $28bn will create a new national player with $442bn in assets and $324bn in deposits, which will be able to rival US majors such as PNC, US Bankcorp and Capital One

–        Although the combined bank will be smaller than the six dominant players – its $301bn loan book will be about a third of the size of JPMorgan Chase and Wells Fargo – it would leapfrog the equity value of international banks such as France’s BNP Paribas and Japan’s Mizuho and will be worth more than Barclays and Deutsche Bank combined

–        The number of commercial banks insured by the FDIC has been in decline for decades, dropping more than 40% since 200 to just 4,774, but mergers have been concentrated among small banks


UK central bank joins global retreat from interest rate increases – Pg. 3

–        …signaling that UK interest rates would remain on hold following concerns that the economy was stumbling ahead of Britain leaving the EU

–        …the bank cut its forecast for UK growth this year from 1.7% to 1.2%


American faces a battle to find buyers for its bonds – Pg. 9

–        …American will need to sell an eye-popping $12tn of bonds in the coming decade, sharply more than it did in the past 10 years

–        …between May and November last year, China’s holdings of US Treasuries quietly shrank from $1.18tn to $1.12tn, well below the levels seen just three years ago, when China’s holdings topped $1.25tn

–        …the proportion of debt held by non-American entities slid to 36% last year, well below the level of nearly 45% a decade ago…

–        …by November last year, American households held nearly $2.3tn in Treasuries, up from $1.9tn in January.  That has helped to keep bond prices high, and yields remarkably low

–        …in five years’ time the Treasury will need to sell bonds equivalent to 25% of GDP, up from 15% now.  This level of debt has occurred just twice in the past 120 years, first during the second world war and then again during the 2008 financial crisis

–        The first time, the US government forced private domestic savers to buy its debt via a patriotic propaganda campaign and financial controls.  The second time it relieve on its central bank’s balance sheet via quantitative easing

–        …the US Federal Reserve is now trying to unwind QE and those 1940s financial controls are no longer in place


Mideast investors shun commercial property – Pg. 15

–        Middle Eastern investment into western commercial property fell more than a third last year as lower oil prices and concerns over Brexit stifled demand

–        Europe attracted 68% of outbound commercial real estate investment, with the US at 31% and Asia less than 1%


Answer: “Rich people”; those earning $150,000 or greater (Prof Note: Keeping powder dry for a down-turn?)