1 November 2018
Question: What is the first test for a potential Social Security recipient?
Global stocks brighten after late rally takes edge off grim October – Pg. 1
– European and Asian stocks ended a grim October on a brighter note, as corporate earnings on both sides of the Atlantic tempted investors back into a market beset by worries over rising interest rates, trade tensions and slowing global economy
– …All-World index had recovered about 1.6% on the last day of what was the worst month for equities in more than six years
– …continued health of corporate profits in Europe and Asia went some way to assuage investor nervousness, with many major markets enjoying their first consecutive daily advances in more than a month
– Treasury yields, which move inversely to prices, rose, with benchmark 10-year note up 4bps to 3.16%. Gold fell 0.5%
China factory index signals worst slowdown in 2 years – Pg. 4
– A gauge of Chinese factory output weakened to its lowest level in more than two years in October, a fresh sign that the economy is under pressure even though the impact of US tariffs has yet to appear in trade data
– China has already adopted a series of economic stimulus measures, including accelerated spending on infrastructure and multiple cuts to bank reserve requirements
– China’s economy grew at 6.5% in the third quarter, the weakest quarterly expansion since 2009, though still in line with the government’s official target of “around 6.5%” for 2018
– The weakening economy has also pressed China’s currency, with the renminbi closing at a fresh 10-year low against the dollar yesterday after the greenback hit a 16-month high against a basket of global currencies
– The lack of impact of US tariffs on the economy was reflected in Chinese goods exports growing by a healthy 12.2% through the first three quarters of this year
Private Equity – Pg. 7
– Americans hand over $200bn a year in annuity premiums every years, usually opting for an insurer that will invest the money in safe bonds and then keep a modest portion of the investment returns
– Apollo has created both a listed $10bn life insurance company as well as a perpetual stream of fees that account for several billion dollars of its own $13bn equity value
– Apollo, founded by three former Drexel Burnham Lambert bankers in 1990, made a fortune in insurance investing in its early years
– While annuity contracts promise customers a return of perhaps 2 to 3% a year, a resourceful credit investor such as Apollo could earn perhaps as much as 4% on top of that
Fed set to ease US regional lenders’ stress test burden – Pg. 12
– Some of the largest regional banks in the US will no longer have to perform annual stress tests, under plans by regulators to reduce the industry’s red tape but which critics say would make another crisis more likely
– Companies such as BB&T and SunTrust will have their balance sheets tested only every two years under proposals by the Federal Reserve
– The Fed’s action comes after Congress instructed it earlier this year to lift some of the strictest Dodd-Frank regulations for smaller banks, under the so-called Crapo Act, named after the Republican banking committee chairman Mike Crapo
– Under the new proposals, US banks will be split into four risk categories. Those in the highest two categories, including systemically important global banks such as JPMorgan Chase, Citigroup and Goldman Sachs, will continue to face the same level of regulation
– Smaller regional banks however will face different levels of oversight
– Those in the lowest band, which have assets totaling $100bn to $250bn, will face stress tests every two years rather than annually and will avoid altogether a rule which states that banks should have enough liquid assets to operate for 30 days
CBRE takes on WeWork in flexible office space – Pg. 12
– CBRE, the world’s largest real estate services company, is launching a flexible office serve that will vie with groups such as WeWork and IWG for corporate tenants
Heavy liabilities put GE Capital under growing strain – Pg. 15
– General Electric has warned that it might have to put more capital into its financial services arm than it had previously suggested, reminding investors that what was once a growth engine has become a drag on performance
– GE Capital is facing immediate strains, including its regular assessment of the expected cost of its legacy insurance liabilities from businesses that it offloaded in the mid-2000s
– Jack Welsh, chief executive in the 1980s and 1990s, led GE deeper into financial services beyond the original functions of supporting the sales of its products. Under Jeff Immelt, chief executive from 2001 to last year, financial services including consumer credit and mortgage lending at times generated more than half the group’s profits
– But while pulling back from financial services may have reduced the risks in GE’s portfolio, it has added to pressure on cash flows at a time when its core industrial operations are being dragged down by the crisis in its power equipment division
Answer: Immigration status
