Financial Times Blog

23 July 2019

 

Question: According to MSN: Money, what are ten (1) money flubs you need to fix in your 40s?

 

Fed case: Powell’s evidence for listless price growth seems incomplete – Pg. 11

• …the Fed’s preferred measure of inflation, which excludes volatile food and energy, has been flashing a worrisome signal since the turn of the year. The core personal consumption expenditure index (PCE) has slowed considerably, having breached the central bank’s 2% target in July last year and hovered near those levels through to December

 

Shares on new China tech exchange surge up to 520% – Pg. 19

• Shares rocketed by as much as 520% on the first day of trading for Shanghai’s science and technology-focused equities market in what the Chinese government will hope is a further sign of tis resilience in the face of its trade war with the US
• Beijing hopes it will encourage investment in domestic tech companies and lead to more Chinese businesses listing at home rather than overseas as China tries to counter pressure on its tech industry from Washington, which this year blacklisted China’s sector champion, telecoms equipment maker Huawei
• More than 140 tech and science companies have signed up to list their stocks on the new facility run by the Shanghai Stock Exchange,…
• The Shanghai and Shenzhen exchanges permit main board stock prices to move 44% on their first day of trading after which they are limited to moves of up to 10%
• The new board is unique in China in the enticements it offers to attract tech companies to list, including allowing dual-class shares that preserve founders’ control. Investors are also permitted to short sell individual stocks, a practice forbidden elsewhere in the country’s markets

 

Answer: (1) Not saving enough; (2) Raiding retirement funds to pay for your children’s education; (3) Not having enough insurance; (4) Putting off estate planning; (5) Not talking with your parents about their finances; (6) Refinancing into another 30-year mortgage; (7) Having mortgage tunnel vision; (8) Letting credit card balances run amok; (9) Having a puny emergency fund; (10) Spending too much to remodel your home

22 July 2019

 

Question: According to MSN: Money, what are five (5) money milestones to hit by age 40?

 

Fed poised to lower rates for first time in a decade with cut of 25bp – Pg. 1

• The Federal Reserve is set to cut interest rates by 25bps at its policy meeting this month, as the US central bank settles on a cautious approach to monetary easing despite political pressure for deeper stimulus
• Markets are pricing in fresh easing measures from the ECB – including possible rate cuts – as soon as this week, while the BoE has recently taken a move dovish tone

 

Powell seeks a cure for the ‘disease’ of low inflation – Pg. 3

• Mr Powell and other Fed officials have justified the need for looser monetary policy by citing “uncertainties” in the outlook due to trade tensions and a weaker global economy. But the persistence of low inflation in the US economy, despite high growth and plentiful jobs, is dominating factor behind the probable decision to cut rates by 25bps
• The Fed’s preferred measure of inflation – the core PCE price index, which excludes food and energy – is running at 1.7% year-on-year compared with its target of 2%. Inflation expectations have also weakened
• One danger for the Fed is that an interest-rate cut fails to have the desired effect of stoking inflation, leading it to burn through monetary policy space without any real results to show for it
• …some basic economic mantras have fallen by the wayside, including the notion embedded in the so-called “Phillips Curve” that plentiful employment would lead to higher prices

 

US banks lifted by rise in credit card spending – Pg. 8

• US shoppers increased their credit card spending in the second quarter, giving a welcome boost to card issuers and adding to the debate about the financial health of consumers
• Amex is the second-largest card issuer by purchase volume, ….which reported an acceleration in spending growth from 10% in the first quarter to 11% in the second
• The number of accounts overdue by more than 30 days rose slightly in the second quarter at both Amex and Capital One

 

Answer: (1) Have a solid emergency fund; (2) Pay off your credit card debt; (3) Start building retirement savings; (4) Buy life insurance; (5) Make out a Will

20 July 2019

 

Question: According to MSN: Money, What percentage (%) of US homes have no mortgage?

 

Colombia hopes to benefit from growing global need for week – Pg. 2

• Colombia is notorious as the world’s biggest supplier of cocaine. Now it is positioning itself as a producer and exporter of another drug, one that is increasingly becoming legal around the world: cannabis
• Columbia, with its equatorial climate and 12 hours of daylight all year, fits the bill. Land and labour is relatively cheap, and a skilled rural workforce has experience in the cut flower industry
• It is far cheaper for Colombian farmers to produce cannabis than their counterparts in North American and Europe, where growers have to spend money on climate-controlled greenhouses to combat harsh winters
• The Colombians can produce a gramme of dry flower for $0.50-$0.80 while in Canada it costs around $2

 

Wall Street raps Fed over rate ‘confusion’ – Pg. 4

• Until Thursday, the consensus had been for a 25bp rate cut by the Fed, as a limited insurance policy against a weakening global economy and trade tensions. But the odds of a 50bps cut soared after Mr Williams laid out the case for “preventive” action in low interest rate and low inflation environments

 

Answer: 37%

19 July 2019

 

Question: According to MSN: Money, what is the most educated county in Virginia?

 

WHO ebola alert aims to provoke global reaction – Pg. 3

• The decision by the World Health Organization to declare the Ebola epidemic in the Democratic Republic of Congo an international emergency is intended to boost the world’s response tot the outbreak, which continues to spread almost a year after the first victims were identified
• This was only the fifth time the WHO has declared a public health emergency of international concern, the most severe level of health crisis
• The WHO said the new category of alarm was merited because of the identify cation this week of the first confirmed Ebola case in the crowded city of Goma on the Rwandan border
• Currently, low stock levels of the vaccine mean a strategy has been adopted where only the contacts of a victim, and each contact’s contact, are vaccinated, rather larger groups of the population

 

Mnuchin says ‘work to be done’ on tech tax – Pg. 4

• G7 countries have agreed a compromise on how to change the international tax regime to ensure fair taxation of multi-nationals, including technology groups such as Google and Facebook….
• Tech businesses in particular are accused by many European governments of not paying fair levels of company tax in the countries where they operate because they can book profits in low-tax jurisdictions, unlike traditional companies with national headquarters and large numbers of local staff
• The US and France have been at loggerheads over France’s attempt to target big tech groups, most of them American, and the US administration is retaliating against a new French law that imposes a 3% turnover tax on tech groups

 

British Politics – Pg. 7

• For nearly 170 years, Britain’s civil servants have operated on the principles set out in 1854 by two Victorian statesmen – Stafford Northcote and CE Trevelyan. Under their system, the officials working across Whitehall are non-partisan, politically neutral and speak truth to power behind closed doors
• In the US and some other nations, civil servants come and go with each new administration under a so-called “spoils system”. By contrast, the Northcote-Trevelyan principles created a professional civil serve that is admitted throughout the world
• Brexit has generated an extraordinary workload across Whitehall, which needs to create new regulatory bodies, agree new trade treaties and help; pass reams of domestic legislation as well as prepare for no deal

 

Australia builder in $15bn Google housing deal – Pg. 14

• Lendlease, one of Australia’s biggest construction companies, has extended its relationship with Google after it signed a deal that would see tracks of land in California redeveloped into housing and office space
• …Google last month vowed to contribute $1bn over the next decade to help alleviate housing shortages, including redeveloping land it owns, amid complaints from activists that tech companies have made the area unaffordable and pushed out lower-paid workers
• The projects with Google in the Bay Area will include 15m sf of new “mixed-use” neighbourhoods featuring 15,000 homes, as well as office, retail and hospitality developments in San Jose, Sunnyvale and Mountain view

 

US casinos gamble on unlocking the value in real estate – Pg. 15

• Casino operators are increasingly splitting off the land on which their giant entertainment complexes sit, taking advantage of investors’ desperate hunt for income in a world of ultra-low interest rates to juice their share prices and pursue swashbuckling dealmaking
• Reits have been popular with investors because they pay out the bulk of their income in the form of dividends. They have long been a future of the financial landscape in the real estate sector – some of the largest publicly traded Reits own fast portfolios of shopping malls or office buildings – and their emergence in the gaming sector has wrought a revolution
• As investors demand has driven Reit valuations higher, and the vehicles have been hungry to buy more property, they have become a cheap source of M&A financing and fueled a dealmaking wave

 

Answer: Falls Church (42.5% Graduate or Professional degree)