Financial Times Blog

6 June 2019

 

Question: What are prisoners paid in prison?

 

US-China tariff war will knock 0.5% off global growth, says IMF – Pg. 1

–          …the IMF sees a 0.5% hit to growth – or about $455bn…

–          …private sector in the US had added the fewest jobs in more than nine years, with employers outside the agricultural sector adding just 27,000 positions last month, badly missing expectations

–          …Wall Street rallied for a second day on expectations that the bad news would force the Federal Reserve to cut rates two or three times this year to keep the economy on track

–          Federal funds futures data suggest the odds of at least three quarter-point reductions in the Fed’s benchmark rate this year were at about 63% yesterday, from 53% a day earlier.  Just a month ago, the implied probability of such a scenario was, in effect, nil

 

Activity in the Eurozone holds up but retail sales fall – Pg. 2

–          …the measure of overall economic activity has remained below 52 throughout this year, compared with its average of 54.6 average last yeaer

–          Oxford Economics forecasts a 0.3% expansion in the second quarter, for the region…

 

Australian growth hit as shoppers hold back – Pg. 3

–          Australia’s economy is growing at its slowest pace in almost a decade as consumers rein in spending, raising concerns over how long the country can sustain its record run of almost 28 years without recession

–          …growth in household consumption – which makes up almost 60% of the economy – dropped to 1.8% in the year to March, down from 2% three months earlier

–          The economy grew 1.8% over the same period, down from 2.3% – a very weak performance for a country with one of the developed world’s highest rates of population growth

–          “Falling house prices are also having a ‘wealth effect’, whereby households are reluctant to spend on big-ticket items as the value of their main asset falls

–          House prices in Sydney and Melbourne have fallen 12% in the year to the end of May.  This marks the end of a five-year expansion in which prices in Sydney rose 70% and the household debt-to-income ratio increased to above 200% – the fourth highest in the OECD group of mostly wealth nations

–          The need to boost wages – growing at historically low levels of 2.3% – and household disposable income to address stubbornly low inflation prompted the Reserve Bank of Australia to cut interest rates to a record low of 1.25% this week, …said further rate cuts were likely but insisted the outlook had not deteriorated and economic growth would pick up this year

 

Fears rise of China banks collapse – Pg. 11

–          A $647bn blind spot in financial reporting by Chinese regional banks has fueled investor concerns that more of the country’s lenders face collapse or government bailouts such as the state takeover of Baoshang Bank

 

BoE calls ‘last orders’ for Libor and urges banks to adopt alternatives – Pg. 19

–          …sticking to the plan that the rate will be retired at the end of 2021

–          …it was now “last orders” for the interest rate and that banks must stop adding to their post-2021 Libor exposures

–          Regulators have demanded that banks stop using the Libor benchmark enmeshed in bonds, loans, mortgages and derivatives by 2022 as they seek to put the rate-rigging scandals behind them

–          Alternative interest rate benchmarks, such as Sonia in the UK, are calculated based on actual transactions rather than banks’ submissions and se are trickier to meddle with

 

Answer: $0.86 to $3.45/hour

5 June 2019

 

Question: What percentage of U.S. prisoners are held in privately owned prisons?

 

Powell puts Fed on standby for rate cuts with vow to fuel growth – Pg. 1

–          …signaled that the central bank stands ready to cut interest rates, saying it would “act as appropriate to sustain the expansion” amid the economic impact of escalating trade wars

–          Referring to tariffs, which have been raised on imports from China and Threatened on those from Mexico, he said the Fed would “act as appropriate to sustain the expansion, with a strong labour market and inflation near our symmetric 2% objective”

–          The US economy grew at an annualized rate of more than 3% in the first quarter, but is expected to have slowed in the second three months

–          Financial markets indicate it will be almost impossible for the Fed to resist cutting rates this year, with the most likely outcome being two quarter-point reductions by the end of December

 

Beijing warns citizens of harassment and gun crime in US – Pg. 2

–          China has warned its citizens of the risks of travelling to the US, where they face being “repeatedly harassed” by law enforcement agencies, in an escalation of tension between the two powers

–          The US and China are in the midst of an intensifying trade conflict that has spilled over into broader political problems.  Last month, the US in effect banned American suppliers from exporting to Huawei, the Chinese telecoms equipment company, and Beijing responded by announcing it would draw up a blacklist of US companies

–          The travel warnings came in the wake of a shooting in Virginia Beach in Friday in which 12 people were killed,…

–          On Monday, Beijing warned Chinese students and scholars that they face ever-higher obstacles in getting US visas, while also telling parents to carefully assess the risks of vising the US

–          Last year 3m Chinese nationals visited the US and spent $36.4bn, making China the US’s biggest source of travel exports and the fifth-biggest source of tourists,…

 

World Bank chief complains of deepening slowdown – Pg. 4

–          …downgraded its global growth forecasts to 2.6% for 2019, from a projection of 2.9% in January – the latest in a series of gloomy projections by international economic institutions

–          Mr Trump has also threatened to slap tariffs of 5% on Mexican goods starting next week, rising to 25% by October unless Mexico  did ore to contain illegal migration to the US

–          The biggest downgrades to the forecasts were for Europe and central Asia, which is expected to grow 1.6% this year, a 0.7% point drop in January.  It also cut its forecast for Sub-Saharan Africa to 2.9%, a 0.5% drop

 

French central banker seeks global role for euro – Pg. 4

–          A leading contender to head the European Central Bank has called for more action to increase the use of the euro in global transactions and challenge the dominance of the US dollar

–          After the euro was introduced in 1999, it became the world’s second most important currency

–          …since the 2008 financial crisis and the 2012 eurozone crisis its global use has declined and “remains limited in comparison with the dollar”

–          …vowed to turn the euro into a global reserve currency and said it was an “aberration” that the EU paid for more than 80% of its energy imports in US dollars, despite 2% of them coming from the US

 

Australia opts to cut interest rate to record low – Pg. 4

–          Australia’s central bank has cut its main interest rate for the first time in three years to a record low of 1.25% to stimulate a slowing economy affected by falling house prices and a slowdown in China, the country’s biggest trading partner

–          The Reserve Bank of Australia said it expected the 0.25% cut would help to reduce unemployment and boost subdued inflation

–          The RBA also warned about what it said were increasing risks to the global economy stemming from trade disputed, which were affecting investment decisions

 

Governments should offer new parents incentives to stay at home – Pg. 9

–          Paternity leave has benefits for individual families, companies and society at large.  Not only are fathers who take it more involved with their children, but paid paternal leave is associated with higher female employment, improved retention, lower gender pay gaps and less gender stereotyping at work

–          Several Nordic countries and Germany have enacted laws that provide extra paid leave when both partners take a turn at home

–          Now some big companies are starting to see equal leave as a recruit and retention tool

–          Until both sexes are given – and take – substantial parental leave, women will face discrimination from employers who see child rearing as a burden

 

Grenada pioneers bond payment relief for when disaster strikes – Pg. 19

–          In its largest debt restructuring, in 2015, Grenada inserted a clause that stipulated an immediate if temporary debt moratorium if the country was struck by another natural disaster

–          The move, endorsed by the influential “Paris Club” of governmental creditors, held out the promise of vital financial relief at times of stress

–          The idea is an intriguing gone for the Caribbean, which is populated by tiny statelets that are regularly buffeted by severe tropical storms and occasionally hit by hurricanes

–          The IMF said the average annual cost of weather-related damage was equal to 2.4% of the region’s GDP a year, about six times that of bigger countries

–          Barbados inserted a hurricane clause into its restructured domestic debt this year and was negotiating with creditors over an insertion of the clause into its external debt

–          Nearly one in 10 such disasters that hit small countries causes damage equivalent to more than 30% of GDP…

–          Hurricane clauses are less dramatic and some investors might be willing to accept them but probably only at the cost of higher interest payments, which countries may blanch at

–          This has become apparent in Barbados as international investors that hold its external bonds appear to have cooled on the idea of introducing hurricane clauses

 

Answer: 10%

3 June 2019

 

Question: What percentage of all jail deaths occur within a week of being jailed?

 

China blames US ‘coercion’ as FedEx probe raises trade tensions – Pg. 1

–          China has accused the US of “resorting to intimidation and coercion” as it stepped up its trade war counter-offensive with increased tariffs on $60bn of American goods and a probe into US delivery group FedEx

–          Last week Huawei accused the Memphis-based delivery company of diverting packages destined for its offices in China to the US.  FedEx said it will co-operate fully with the investigation, and has reportedly apologized for what it said was an error

 

Brazil Congress ready to enact pension reform – Pg. 3

–          The reform, unpopular with Brazilians because it raises retirement ages, is widely seen as key to restoring the health of Latin America’s biggest economy by saving the public finances $225bn over the next decade

–          With public debt forecast by the IMF to reach 90% of GDP this year, the pensions overhaul would go some way to restoring confidence in Brazil’s fiscal position and wooing foreign investors

 

Blunders take US clothing stores down a peg – Pg. 7

–          Profit warnings and disappointing sales from US retailers have left Wall Street questioning the financial health of the American Consumer, yet executives in many cases blame their companies’ own errors, from botched promotions to misjudged fashion offerings

 

Younger finance workers wat to back sustainable development – Pg. 17

–          Part of the problem is that senior managers are disconnected from younger generations within their organizations who want to have a positive impact on the world

–          If sustainable finance becomes mainstream finance, it will provide a greater sense of purpose to an increasingly disillusioned workforce and create an industry that is truly committed to building a better future

 

Answer: 40.0%