Financial Times Blog

11 June 2018

Question: According to MSN:Lifestyle, what are 11 signs someone is lying to you?

Argentine businesses battle to survive 40% interest rates – Pg. 2

• …Argentina’s $50bn deal last week with the IMF has made clear that high interest rates are set to stay. The standby agreement demands greater independence for the central bank and makes fighting inflation a priority
• That makes day-to-day life intensely difficult for the businesses that the government and the IMF hope can bring the Argentine economy back to health
• Real estate companies will suffer from higher interest rates because of the impact on Argentina’s nascent mortgage sector

Big Bank profits beat pre-Lehman levels – Pg. 14

• Leading investment banks made more money in 2017 than in the year before the collapse of Lehman Brothers, highlighting the industry’s resilience to a crisis that threatened to overwhelm it
• The solid profitability shows investment banks have emerged from a decade of change in much better shape than many people would have predicted, despite the impact of tougher regulation and new competitors offering online sales and trading at wafer thin margins
• While net income is up, return on equity is still well below the high-teen and low-20s levels enjoyed before the crisis, after regulation forced the banks to increase their shareholders’ equity by 60% over the decade to 2017
• Revenues in some parts of the investment banks have shrunk significantly since 2007, particularly equities, where they fell 36% in the decade across the eight banks that disclosed the data
• Fixed-income revenues were more resilient but only because 2008 was a low point for some banks…
• Low volatility hampered trading revenues for much of 2017, before a spike in volatility in February delivered bumper results for the first quarter this year. Since then, markets have been calmer and banks have flagged poorer trading in the current quarter

Small US banks push for further deregulation – Pg. 16

• Shares in smaller banks have been boosted as a result, with the Russell 2000 banks index outperforming the S&P banks by about 10% since the turn of the year
• The Economic Growth, Regulatory Relief, and Consumer Protection Act contains a number of provisions related to capital, mortgage lending and data collection, mostly targeted at banks deemed too small to present a serious risk to the US financial system

Answer: (1) They change their head position quickly; (2) Their breathing changes; (3) They stand very still; (4) They repeat words or phrases; (5) They provide too much information; (6) They touch or cover their mouth; (7) They instinctively cover vulnerable body parts; (8) They shuffle their feet; (9) It becomes difficult for them to speak; (10) They stare at you without blinking much; (11) They tend to point a lot

9 June 2018

Question: According to MSN:BestLife, what are suicide warning signs hidden in plain sight?

‘Bitcoin whales’ control a third of market with holdings of $37.5bn – Pg. 1

• A mysterious cluster of 1,600 investors known as “bitcoin whales” collectively hold $37.5bn of the cryptocurrency, or close to a third of the available total, revealing the extent to which wealth is concentrated in the nascent market
• That the bitcoin market is so tightly held stands at odds with bitcoin’s mission to democratize finance by setting up an alternative monetary system free of central bank control and open to all. It also brings risks for smaller speculators
• Bitcoin, the most popular cryptocurrency, enjoyed a dramatic bull run last year as retail invfestors rushed to try to cash in on its rise. Its price rose more than 1,000% in 2017, peaking at about $20,000 in mid-December, but it has since fallen back to trade at around $7,500 as regulators begin to circle the freewheeling sector

Chef who built global media franchise found dead in Paris – Pg. 6

• The 61-year-old was found dead in his hotel room in Paris yesterday morning…Anthony Bourdain….cause of death was suicide
• Bourdain sometimes struggled with his success. In the Sardinia episode of Parts Unknown, he asked in a voiceover: “What do you do after your dreams come true?”
• (Prof Note: It seems we have had two high profile suicides, i.e. Kate Spade and Anthony Bourdain, in as many days. These have shaken me as they, at least from my external perspective, seem to have occurred to two individuals that had the world by the tail.  I do not understand mental health but wonder if we, as a society, should be doing more.  Why are people who are seemingly at the pinnacles of careers, offering the world so much, leaving us so early?  Are these losses symptoms of a much larger issue(s)?  Personally, I believe every person has much to offer.  I am saddened by all of these losses.)

Investors risk missing out on US small-cap rally if they back wrong index – Pg. 14

• Small companies are setting a record pace on Wall Street this year, but many investors are missing out on the cream thanks to a divergence between the two main benchmarks that define the sector
• US small companies tend to be more domestically focused than their larger counterparts, bringing a host of benefits in the current economic and fiscal climate
• This year’s corporate tax cuts and strengthening US economic recovery are hefty tailwinds for smaller companies, in contrast to the outlook for multinationals…
• The result is that small-cap equity benchmarks have set fresh all-time highs and have left the S&P 500’s performance well behind so far this year: the S&P 500’s 3.5% rise pales when compared with 10.6% for the S&P 600 index and 8.6% for the Russell 2000, the two main indices tracking small-caps
• …more money tracks the Russell 2000 – $1.6tn versus the S&P 600’s $89bn, including money in index funds and mutual funds whose managers use the indices as a benchmark,…
• Proponents of the Russell index say it is indicative of the broad university of small companies, but critics argue that the quality of its constituents – it contains 1,966 companies, of which one-third are unprofitable – makes it easy for fund managers to beat
• In contrast, the smaller S&P 600 contains companies that need to meet certain performance requirements….its members must have turned a profit in the aggregate over the past four quarters and in the previous quarter,…
• The S&P 600 is more heavily weighted to areas benefiting from the brightening outlook, such as industrials and consumer discretionary secdtors…
• Other notable variations between the indices relate to biotech, which has been underperforming sector this year. Biotech companies have a 7.3% weight of the Russell 2000, but 2.4% of the S&P 600
• It trades [S&P 600] at 18.9 times forward earnings versus the Russell’s 24.3 times, …

Answer: (1) They talk more frequently about “The Meaning of Life”; (2) They are perfectionists to a fault; (3) They spend too much time with technology; (4) They complain of physical pain; (5) They’re partying more; (6) They obsess about their figure; (7) They are becoming increasingly hostile; (8) They suffer from a mental disorder; (9) They have nightmares; (10) They’ve stopped hanging out with friends; (11) They’ve slashed their calorie intake; (12) They suffer from insomnia (National Suicide Prevention Lifeline, (800) 273-8255)

7 June 2018

Question: According to USA Today, what are 5 tips to keep Alexa from peering into your life?

Investors shed Eurozone debt as bloc’s economy bolsters case for ending QE – Pg. 1

• European markets took a fresh hit after top policymakers delivered confident remarks on the Eurozone economy, bolstering expectations that the ECB will halt its bond-buying programme this year
• Many in the markets expect government debt yields to continue to gyrate in the coming weeks,…
• The ECB is likely to end quantitative easing as planned in December despite the increased uncertainly in Italy, but investors will be watching data on Italian business and consumer confidence, in particular, for many signs of weakness

India lifts interest rate to curb price pressures – Pg. 4

• The Reserve Bank of India raised its benchmark interest rate yesterday for the first time in four and a half years, citing growing inflationary pressures stemming from rising oil prices and global financial turmoil
• The central bank’s monetary policy committee voted unanimously to raise its benchmark repo rate by 25bps to 6.25%, saying “inflation has hardened sharply” and been persistently sticky in the last six months
• The rupee has depreciated by 3% in the same period, making it one of Asia’s worst performing currencies

Millennial moment – Pg. 7

• …millennials as the 73m Americans aged between 22 and 37, who will next year overtake boomers in number
• The coming of age of the world’s 2bn millennials is not only a generational shift: it is one of ethnicity and nationality. Forty three percent of US millennials are non-white, and millennials in Asia vastly outnumber those in Europe and the US.  Despite China’s former one-child policy, it has 400m millennials, more than five times the US figures (and more than the entire US population) while Morgan Stanley estimates that India’s 410m millennials will spend $330bn annually by 2020
• Millennials have reached what the bank calls “the most important age range for economic activity”, when households are formed, babies are born and money is spent not just on going out but on settling down
• …it is placing immense strain on institutions that once thrived on mass marketing through television advertising
• In the US and Europe, many millennials are disenchanted with their lot as they attain maturity
• They are highly educated: 39% of British 25 to 39-year-olds are graduates, compared with 23% of those between 55 and 64. But their sophistication and ambition is not matched by security
• This is largely an accident of history. Older millennials entered the workforce in the mid-2000s, and many lost jobs after the 2008 crisis.  They were also caught by rapid inflation in house prices as interest rates fell and remained low.  The milestones of leaving home, getting a job, marrying and having children have been delayed – 45% of 18 to 34-year-old Americans had done all four in 1975, but only 24% had in 2015
• …2014 study…only 19% of millennials believed that others could be trusted, compared with 40% of boomers and 31% of the generation Xers born between 1965 and 1980
• Millennial faith in institutions is also low (Prof Note: As is mine…hence, “Do the hustle!”)

Answer: (1) Change your wake word.  You’re not married to Alexa; (2) Say no to contacts; (3) Turn it off; (4) No voice purchases; (5) Don’t drop in