Financial Times Blog

30 April 2019

 

Question: According to MSN: Money, what are sixteen tips from people who’ve taken the big leap, i.e. quit a job without having another?

 

Iranian economy collapses under weight of White House sanctions – Pg. 1

–          …pushing the Islamic republic into a deep recession and lifting inflation towards 40%,…

–          …liked its forecast of a 6% contraction in Iran this year with Mr Trump’s efforts to tighten an economic squeeze on the country

–          The US reimposed restrictions on Iran’s oil industry and banks last year after Mr Trump abandoned a nuclear pact that western powers signed with Tehran in 2015, which had granted sanctions relief in return for Iran’s limiting its nuclear activities

–          The IMF highlighted the US sanctions as a drag on regional growth along with a Saudi slowdown and conflict in Iraq, Syria and Yemen

–          A 6% fall in GDP would mark the economy’s worst performance since 2012, when the IMF said GDP dropped 7.7% as sanctions imposed by Barack Obama’s administration tied to nuclear activities began to bite

–          The US measures have already caused Iran’s oil exports – the economy’s lifeline – to plummet from a peak of 2.8m barrels a day last May to about 1.3m b/d.  Output is likely to fall further after the US decision to end sanction waivers

 

Home rentals Marriott moves into Airbnb’s space – Pg. 12

–          The world’s largest hotel company will offer more than 2,000 homes in 100 destinations on its new Homes & Villas platform – and the move comes as Airbnb pushes further into the hotel industry ahead of an expected initial public offering

–          Homes & Villas will come under Marriott’s recently relaunched Bonvoy loyalty scheme, which aims to cement a more direct relationship with customers

–          US consumers spent more on Airbnb last year than they did on either Hilton or InterContinental Hotels

–          …the percentage of consumers who booked a year after their first stay at Marriott, Hilton and IHG has fallen between 24 and 29% in six years

–          The stakes are high for the $539bn hotel industry because loyal customers are typically more valuable ones

 

Fears grow over China developers’ dollar debt – Pg. 14

–          Evergrande’s US dollar debt of about $18bn puts the country’s second-largest developer by sales in the top tier of the world’s most indebted private companies,…

–          Rivals Country Garden and Dalian Wanda, among China’s top five developers, are nto far behind with $14.7bn and $13.9bn dollar debt, respectively

–          Chinese developers face a wall of $326bn in maturing debts by the end of 2021, most renminbi-denominated.  US dollar maturities are set to peak at about $39bn in 2021

 

Answer: (1) Do not be afraid to quit (Prof Note: Always believe in yourself); (2) Do not quit on impulse (Prof Note: I do agree…make it your decision, not the “moments” decision.); (3) Ignore conventional advice (Prof Note: Blaze your own trail); (4) Do not burn your bridges (Prof Note: One of my favourite quotations remains, “Let the light from the burning bridges guide my way!”.  Personally, jerk companies and jerk people deserve the consequences of lack of notice.  Ask yourself, “If the company/boss were to terminate me, would I be afforded respect and notice?”  Work will always find skills, this I have learned.  If you understand how to make $$$ (insert specific skillset) there will always be work); (5) Get your finances in order (Prof Note: Your finances should ALWAYS be in order.  Most of us live in “at will” states, i.e. employers could terminate immediately.  Be prepared.); (6) Do not hesitate too long (Prof Note: A position that is mentally taxing and causes one to kick the dog upon home arrival each day is NOT worth it (general statement, if you have a special-needs child, the child takes priority over your mental health!)); (7) Build a budget to make quitting affordable (Prof Note: Banks have living wills and complete stress tests, one must do this for the home budget); (8) Automate savings to create a freedom fund (Prof Note: I am typically not a fan of automation in finances); (9) Take steps to ensure you can return to work (Prof Note: ensure skills do to atrophy); (10) Address concerns with your boss before deciding to quit (Prof Note: Only if the person is not a “jerk” and is deserving of the chance to self-improve.  When I left Columbia Gas (I left on good terms) in my exit interview the head of HR asked in the interview why all my responses were so positive as she knew I was unhappy.  I said, “I think so little of management and the treatment of employees that I will NOT help improve the company.  The company does not deserve the consideration until management is wholly terminated.”  The head of HR ended my exit interview and thanked me for my time.); (11) Think twice before taking the easy way out (Prof Note: Always be mindful of mental health and the health of your dog upon arrival home.); (12) Question why you want to leave; (13) Build your network before quitting (Prof Note: I think there is to much focus on network and not enough focus on skills.  Build skills!); (14) Stop making excuses if it is time to move on (Prof Note: Unlike the cat who has nine lives, the dog only has one!); (15) Let the lack of a safety net encourage you (Prof Note: If one is unable to build a safety net at one’s current employer, maybe one needs to change employers!); (16) Have faith in your ability to find a new job (Prof Note: Believe in yourselves…I do!)

29 April 2019

 

Question: According to MSN: Money, what are twelve (12) budgeting myths you need to stop believing?

 

Hong Kong rallies to resist extradition law – Pg. 1

–          Tens of thousands of people march to Hong Kong’s parliament yesterday, demanding that the government abandon its proposed extradition law that allows people from the former British colony to be sent to mainland China to stand trial

–          The proposed law has spooked a cross-section of Hong Kong, including business leaders, lawyers, professional groups, journalists and human right agencies, who fear it might be used as a weapon against anyone passing through the international transport hub

 

Poor inflation data cloud Fed’s next rates move – Pg. 2

–          Sluggish inflation numbers are over-shadowing firmer US economic growth and igniting a debate in the Federal Reserve over whether the next move in interest rates will need to be down rather than up

–          …likely to keep policy unchanged at 2.25 to 2.5% when it meets tomorrow and Wednesday

–          The US on Friday posted strong growth, with the economy expanding at 3.2% annualized pace, adding to signs that a slow growth scare earlier this year was overstated

–          …US headline growth figures vastly overstated the economy’s underlying strength…

–          A key measure of underlying private demand expanded only 1.3% in Friday’s Bureau of Economic Analysis report, down from 2.6% in the fourth quarter

–          The core personal consumption expenditures price index rose at a 1.3% annualized pace in the first quarter…

–          Inflation’s persistent weakness is troubling the Fed, given it has failed since the recession to keep price growth at its 2% target

 

EU students face fees rise in UK after Brexit – Pg. 3

–          The proposal would see tens of thousands of EU students, who are currently charged the same tuition fees as home students, facing a big increase in fees from 2021 after Brexit

–          The proposal to end the preferential treatment for EU students has been made by Damian Hinds, education secretary, a May loyalist,….

 

Brexit casts doubt on use of sterling as global reserve currency – Pg. 4

–          Brexit is likely to threaten the pound’s status as a global reserve currency ….

–          The pound’s history as one of the most important global currencies has meant central banks have long held assets denominated in pounds that can be sold quickly to curb swings in their own currency’s exchange rates

–          Such a exodus from sterling would weaken the currency and raise borrowing costs for the UK government, which has long benefited from the pound’s popularity as a reserve currency

–          The pound was the global reserve currency of choice until the middle of the 20^th century, when it was superseded by the dollar

–          Central banks choose reserve currencies from sovereign issuers that boast economic clout, stability and open financial markets.  Today, sterling is the fourth most popular reserve currency after the dollar, the euro and the yen.  Since the UK voted to leave the EU in June 2016, the pound has fallen from above $1.45 to below $1.30

–          Assets denominated in the pound still make up about 4.5% of official reserves….

 

Fed patience faces test as US stocks rebound and dollar continues to rise against euro – Pg. 8

–          The worst December for US stocks sicne 1931 caused the central bank to confirm a dovish turn in March, suspending interest rate increases and ending its programme to reduce assets held on its balance sheet

–          The euro has already fallen below $1.12 against the US currency, a two-year low

 

The Arctic Ocean – Pg. 15

–          One-tenth of all Russia’s economic investments are currently in the Arctic region…

–          The message is clear.  If you want to sail through the Arctic and travel to and from Asia faster, or have designs on the oil and gas assets beneath the sea, you will be under Russian oversight

–          …during ice-free months, eastward shipment from Europe to China through the NSR is estimated to be around 40% faster than the same journey via the Suez Canal, lopping hundreds of thousands of dollars off fuel costs and potentially cutting carbon dioxide emissions by 52%

–          With a fifth of its land inside the Arctic Circle, Russia has gone in search of more territory, claiming that underwater ridges mean it should be granted another 1.2m square kilometres of the Arctic Ocean

–          This week the US announced it had ordered its first icebreaker for more than two decades, spending $746m on a ship to be ready in 2024

–          Russia built the world’s first icebreaker, the Yermak, 120 years ago.  In 1957, it build the first nuclear-powered version, the Lenin

–          Arctic ice has shrunk by 12.8% a decade on average since 1979, …

–          Russia has the world’s only fleet of nuclear icebreakers

 

Answer: (1) You absolutely cannot go overbudget (Prof Note: You must understand why you are overbudget and ALWAYS have a revenue offset); (2) Budgeting is a snooze (Prof Note: It is an active exercise and must be understood as dynamic); (3) Budgeting is another word for depriving yourself (Prof Note: You want more, get a side hustle, a higher paying job, work more hours…do not overspend); (4) Budgeting is a hassle.  Who has time?  (Prof Note: Make the time!); (5) You can just keep a budget in your head (Prof Note: Write it down and work the budget!); (6) I have math.  There’s no way I can budget. (Prof Note: Really?  First great math?!  Revenue less expenses must be positive….”To Done”); (7) I have a good job, so I don’t need to budget (Prof Note: If you have a job you are working for someone else.  You need a budget to ensure your investment passive income grows negating the need for a job!); (8) Budgeting’s not necessary if you’re debt-free (Prof Note: See #7); (9) Budgeting matters only if you’re saving for a big purchase (Prof Note: You never know when the financial catastrophe will occur….); (10) I have way too much debt, so what’s the use?  (Prof Note: That is a defeatist perspective.  Work the debt.  Do you have the right type of debt?); (11) Budgeting can wait until I’m older (Prof Note: The longer you wait the more “free” money given up through compounding years); (12) I’ve never made a budget.  Why start now? (Prof Note: If you are aged 65 or older, there is a point to this question.  Younger: “Really???”)