July 16, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Erdogan’s New Dynasty Makes Turkey Uninvestable – Marcus Ashworth 7/10

Bloomberg – Chinese Savers Won’t Save China – Christopher Balding 7/7

FT – China developers may cut prices in tight funding – Wang Zelei and Li Huizi 7/12

  • “Slowing sales and restrictive policy could mean firms will fight to avoid default.”

howmuch.net – How Much States Invest in Public Higher Education per Student FY 2017 – Raul 7/10

WSJ – Daily Shot: Pew Research – Changes in US income distribution by race 7/13

WSJ – China’s Land Grab Could End Badly – Nathaniel Taplin 7/13

Markets / Economy

CNBC: Reuters – Airbus withdraws jet deliveries to HNA Group after late payments – Regis Duvignau 7/11

WSJ – Business-Loan Drought Ends for Banks – Rachel Louise Ensign 7/8

Automotive

WSJ – Ford Sales Plummet in China, and New Tariff Hit Is Yet to Come – Trefor Moss 7/11

Politics

WP – In about 20 years, half the population will live in eight states – Philip Bump 7/12

China

WSJ – Daily Shot: Deutsche Bank – China stock of soybean 7/13

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July 13, 2018

Perspective

howmuch.net – How Much Americans Pay in Electricity Rates in Each State – Raul 6/25

Worthy Insights / Opinion Pieces / Advice

FT – Donald Trump creates chaos with his tariffs trade war – Martin Wolf 7/10

The Registry – Uber’s Johnny Cab Future – John McNellis 7/12

Markets / Economy

WSJ – Trade Conflict Ripples Through Emerging Markets – Julie Wernau and Ira Iosebashvili 7/10

Real Estate

Bloomberg – Hot Rents in Hot Shale Basin – Ryan Collins 7/11

WSJ – House Money: Wall Street is Raising More Cash Than Ever for its Rental-Home Gambit – Ryan Dezember and Laura Kusisto 7/9

  • “Wall Street is betting that more well-off Americans will want to be renters.”
  • “Financiers who loaded up on homes after the housing bust for pennies on the dollar are buying yet more—despite home prices in many markets being at all-time highs.”
  • “Their wager: High prices, higher mortgage rates and skimpy inventory are making homeownership harder. Well-to-do families who might have bought a single-family home in another era are willing to rent a house now, especially if it means access to a good school system.”
  • “The number of homes purchased by major investors in 2017 was at least 29,000, up 60% from the previous year, estimates Amherst Capital Management LLC, a real-estate investment firm with an affiliated business that made nearly 5,000 of those purchases.”
  • “Single-family homes have become far more attractive to investors than apartments, where a nationwide glut has driven down rental yields.”
  • “This year, investors have raised billions of dollars from bond buyers, pension funds and even wealthy Chinese individuals to purchase more homes. They have been particularly aggressive buyers in places like Atlanta, Phoenix, and other metro areas with good schools and faster-growing economies.”
  • “On Monday, the investment firm Pretium Partners LLC said it had raised more than $1 billion so that its Progress Residential could add to its 26,000 rental homes.”
  • “Cash to acquire and renovate homes has become so abundant lately that some rental investors can’t spend it fast enough. Without enough homes to buy, some investors are now building their own in popular residential markets like Miami and Nashville, Tenn.—upending a traditional pattern of Americans buying starter homes and moving up.”
  • “Managing far-flung clusters of homes—much harder than running an apartment building—has long been a hurdle for investors. But analysts and rental executives say investors are gaining confidence it can be done profitably. Also, wealthier tenants in the single-family-home market typically have children and need more bedrooms than most apartments offer. They’re also willing to accept rent increases to stay in good school districts.”
  • “These investors’ war chests have been swelled by rising home prices, which give them more valuable collateral to borrow against to buy more.”

Construction

WSJ – Daily Shot: John Burns RE Consulting – Construction Contractor Hourly Wages 7/11

China

WSJ – Daily Shot: BlackRock – Annual Growth in China Bank Claims 7/11

WSJ – Chinese Auto Sales Run Into a Lending Roadblock – Jacky Wong 7/10

  • “Beijing’s crackdown on shadow banking has made it harder for car buyers to get the loans they need. That could hit domestic auto-maker shares.”

July 11, 2018

Perspective

Economist – Why some countries are turning off the internet on exam days 7/5

  • “With so many students cheating electronically, governments are taking drastic steps.”

Worthy Insights / Opinion Pieces / Advice

Bloomberg – The Children of the Rich Will Always Be With Us – Stephen Mihm 7/10

  • “The wealthy can stop worrying: Their heirs won’t burn through their inheritances for many generations.”

Bloomberg – Tesla Was Already Priced for Long-Term Perfection – Liam Denning 7/10

Markets / Economy

Visual Capitalist – Walmart Nation: Mapping the Largest Employers in the U.S. – Jeff Desjardins 11/17/17

Real Estate

The Big Picture – Mortgage Rates in the 21st Century – Barry Ritholtz 7/10

Finance

Bloomberg Businessweek – How a Tiny Bank From the Ozarks Got Big and Outpaced Wall Street’s Real Estate Machine – Peter Robison 7/10

  • “An Arkansas bank has become one of America’s top construction lenders. Does it know something the giants don’t?”

WSJ – How Regulators Averted a Debacle in Credit-Default Swaps – Gabriel T. Rubin and Andrew Scurria 7/8

  • “The CFTC waged an unusual campaign to get Blackstone to unwind its bet on the default of home builder Hovnanian.”

South America

Economist – Argentina’s currency crisis is far from over 7/5

July 10, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Amazon as a Value Stock? Believe It – Matthew A. Winkler 7/9

FT – Japan is nervous about its energy security – Nick Butler 7/8

  • “The country’s new national plan puts nuclear power back in the picture.”

NYT – Inside China’s Dystopian Dreams: A.I., Shame and Lots of Cameras – Paul Mozur 7/8

  • Spooky. By the way, one of the data aggregator/policing systems is aptly named: Skynet.

WSJ – A Stock Market Crash With Chinese Characteristics – Nathaniel Taplin 7/9

Markets / Economy

FT – The retreat from easy money that markets cannot escape – Michael Mackenzie 7/4

Environment / Science

NYT – Record Heat in Southern California, and an Ominous Start to Wildfire Season – Tim Arango 7/7

  • “After a temperate early summer and a balmy Fourth of July, Southern California residents abruptly found themselves in a caldron of triple-digit temperatures and wildfires this weekend.”
  • “The temperature spike broke with historical weather patterns. While much of the Northern Hemisphere suffers through its hottest days in the summer months — June, July, August — Southern California’s hottest days are often in September or October.”
  • “Records were shattered in some places on Friday. The temperature at the University of California, Los Angeles, reached 111 on Friday, the hottest it has ever been there. Other record highs, according to the National Weather Service, were 114 at the Hollywood Burbank Airport, 117 at the Van Nuys Airport, 117 in Ramona and 114 in Santa Ana. In Riverside, a high temperature of 118 matched a record set in 1925.”

China

FT – China scales back property subsidies, adding to growth concerns – Gabriel Wildau and Yizhen Jia 7/8

  • “China is retreating from a policy that has channeled about $1tn in subsidies to homebuyers since 2016, a reversal that has sent tremors through the country’s residential property market amid broader concerns about a housing bubble.”
  • “Property investment and home sales have remained strong in recent months despite a broader growth slowdown, but analysts say the withdrawal of subsidies will damp property demand, leading to reduced construction activity.” 
  • “Premier Li Keqiang pioneered the slum redevelopment policy as top party official in north-east China’s Liaoning province in 2005. The policy, which was later rolled out nationwide, financed demolition and reconstruction of dilapidated residential neighborhoods.” 
  • “The program received a boost in 2014, when the People’s Bank of China created a new monetary policy instrument known as Pledged Supplementary Lending, which consisted of loans directly from the central bank to CDB earmarked for slum redevelopment.” 
  • “The turning point came in 2015. Amid a sharp downturn in the housing market that led to a glut of unsold housing, China’s cabinet allowed local governments to provide cash subsidies to residents of slum districts, rather than physical resettlement in newly built flats in the former slum.” 
  • “’Physical resettlement didn’t affect the supply-demand balance. It was self-regulating,’ said Zhao Quanhou, director of the financial research center at the Chinese Academy of Fiscal Sciences, a think-tank under China’s finance ministry.”
  • “’But monetary resettlement meant you were demolishing old buildings and not replacing them, so there was a net demand increase, and the market impact was large,’ he said.”
  • “’The policy was basically giving money directly from the central bank to CDB. It spurred a lot of real estate demand, and it also expanded the base money supply,’ said Xu Gao, chief economist at Everbright Securities. ‘Going forward it needs to be adjusted.’”

Turkey

FT – Erdogan fires thousands more state employees in Turkey – Ayla Jean Yackley 7/8

  • “Thousands of Turkish teachers, police officers and members of the armed forces have been fired one day before President Recep Tayyip Erdogan is due to be sworn in for a second term after being re-elected with vastly enhanced powers last month.”
  • “Mr. Erdogan issued a decree dismissing the employees on Sunday. During his election campaign he promised to end a state of emergency imposed in the wake of an abortive military coup two years ago, under which 160,000 public servants have been dismissed and more than 50,000 people have been jailed.”
  • “The order, published in the Official Gazette on Sunday, fired 18,632 people — nearly half of them from the police force — for allegedly threatening national security. More than 6,000 military personnel and about 200 teachers were also named. Their passports have all been cancelled, the announcement said.”
  • “The decree also banned 12 civil-society groups, three newspapers and a television broadcaster.”

 

July 9, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – The Billionaire Space Race Is Making Life Difficult for Airlines – Justin Bachman 6/27

  • “More launches mean more closed airspace, and more delays.”

FT – Dollar repatriation: stealth tapering – Lex 7/4

NYT – Americans Are Having Fewer Babies. They Told Us Why. – Claire Cain Miller 7/5

  • “Women have more options, for one. But a new poll also shows that financial insecurity is altering a generation’s choices.”

Real Estate

FT – Hong Kong’s Repulse Bay attracts China’s tech billionaires – Hugo Cox 7/5

  • “While The Peak may still be the area’s most prestigious location, Island South offers practical benefits.”
  • “China’s new oligarchs will pay handsomely for their seaside spots. Last year, local agents claimed a world record for the priciest home per square foot, when a four-bedroom beachside townhouse hit the market for USD$87.3m, or $21,200 per sq ft. This is about nine times the current average price for prime central London, according to estate agents Savills. Put another way, the same budget in London would buy six Grade II-listed Queen Anne terraced houses in Kensington, providing a total of 36 rooms.”

Environment / Science

WP – Red-hot planet: All-time heat records have been set all over the world during the past week – Jason Samenow 7/5

Asia – excluding China and Japan

FT – Malaysia suspends $22bn China-backed projects – Stefania Palma 7/4

Australia

Bloomberg – Australia Property Prices Fall for Ninth Month on Tighter Credit – Emily Cadman 7/1

Other Interesting Links

howmuch.net – The World’s Highest-Paid Athletes in Top Sports 2018 – Raul 6/28

statista – Roger Federer Is the King of Athlete Endorsements – Felix Richter 7/5

July 5, 2018

Hope that you all had a nice 4th of July.

Worthy Insights / Opinion Pieces / Advice

Economist – At any given time in their lives, people have two dozen regular haunts 6/28

Economist – America Inc and the rage against Beijing – Schumpeter 6/28

FT – Lex in depth: Why WeWork does not deserve a $20bn price tag – Elaine Moore and Eric Platt 7/2

  • “WeWork’s steep valuation depends on a blinkered faith in its originality despite a crowded market of competitors. If the company’s equity value was based on the same multiple of sales as flexible workspace peer IWG (formerly Regus) it would be worth less than $3bn.”
  • “The company’s pitch is scale. WeWork envisions a world in which offices are so attractive that workers will choose to spend more time in them. Eventually, it pictures global cities of We-flats and We-offices, where members work out at We-gyms, learn at We-schools and network at We-events — all the while tracked by the We-operating system.”
  • “WeWork’s valuation comes courtesy of the deep pockets of Japan’s SoftBank and the Saudi-backed $100bn Vision Fund , which led a $3bn investment last year. That came with an additional $1.4bn raised for WeWork’s Asian subsidiaries. The fundraising round transformed WeWork into one of the world’s top 10 most valuable start-ups. Further financing from the Vision Fund, valuing WeWork at $35bn, has been mooted. This would exceed the value of SpaceX, Elon Musk’s space technology company.”
  • “In the meantime, WeWork needs financing. It is likely to require at least $2bn from investors in the next two years. To plug future outflows, it may seek far more. A successful initial public offering will require WeWork to convince investors that its value is based on more than giddy markets and a millennial-friendly aesthetic.”
  • “Unfortunately for WeWork, costs are growing just as steeply. Some look extravagant. Last year the group spent an additional $6.5m on events that included a weekend summer camp. The company justifies this as the price of growth.”
  • “However, WeWork’s valuation is based on its growth potential. Airbnb might therefore be a better comparison. It is valued at a higher $31bn. Yet even this is a more sober reflection of business than WeWork’s. The value is equal to 12 times trailing sales versus 20 for WeWork.”
  • “For now, WeWork is far from self-sustaining. The company lost nearly $1bn last year. Office occupancy at 82% is higher than IWG’s 75%. However, average membership fees are falling. There is little reason to think the decline will reverse while expansion is driven by Asia, where rates are lower.”
  • “Funding rounds were the only reason the company ended 2017 with cash of $2bn on the balance sheet. On FT estimates it is likely to need about $2bn more by the end of 2019.”

Markets / Economy

WSJ – Daily Shot: Deutsche Bank – US-Europe monetary policy divergence 7/3

WSJ – Where is Joblessness the Lowest? Hint: Cities With College Students and Tourists – Sharon Nunn 6/28

Real Estate

Bloomberg Businessweek – Startups Front Cash to Homebuyers in Bidding Wars – Noah Buhayar and Patrick Clark 6/28

  • “FlyHomes’ ability to turn clients into cash buyers exploits a quirk in the capital markets that’s arisen since the housing meltdown: Consumers are being put through more rigorous standards when they apply for a mortgage. Meanwhile, it’s comparatively easy for companies—even those with new, barely tested ideas—to get buckets of money from banks, venture capitalists, and other institutional investors.”
  • “Redfin CEO Glenn Kelman says these new ventures are part of a shift in how homes will be bought and sold. ‘There is just money coming out of every possible part of the world, and it isn’t going toward the consumer,’ he says. ‘It’s going toward real estate businesses who charge the consumer for access to that money.’”

Bloomberg – U.S. Retail Vacancy Rate Jumps on Toys ‘R’ Us Store Closings – Jordan Yadoo 7/2

  • Considering the headwinds of retail over the last few years, I’d say things are doing not too shabby considering it took the closure of Toys ‘R’ Us to push the absorption rate negative (granted local situations vary).

Bloomberg – Manhattan Homebuyers Demand Bargains, Walk Away-Anything But Overpay – Oshrat Carmiel 7/2

Environment / Science

Bloomberg – Stemming the Tide of Plastic Pollution – The Editors 7/2

Asia – excluding China and Japan

FT – Samsung finds unlikely ally in stance on worker safety – Song Jung-a 7/2

  • “S Korea commerce ministry backs view that transparency may compromise tech secrets.”

FT – South Korea to cap working week at 52 hours – Song Jung-a 7/2

  • “Cut from 68-hour maximum aims to improve life balance for country of workaholics.”
  • “The country is home to the longest working hours and highest suicide rate in the developed world. South Koreans put in an average of 2,024 hours in 2017, the second-most after Mexico among members of the Organization for Economic Cooperation and Development (OECD). But the long hours have not translated into better productivity, with the country’s per-hour productivity ranking near the bottom.”

WSJ – Go Home Already! South Korea Pulls the Plug on Overworked Desk Warriors – Timothy W. Martin and Yun-Hwan Chae 7/1

China

WSJ – Daily Shot: Shanghai Shenzhen CSI 300 Index 7/3

India

Bloomberg Businessweek – India’s Push to Fast-Track Bankruptcies – Iain Marlow 6/26

WSJ – Bankrupt Indian Companies Are Clogging the Economy-but Now the Clock Is Ticking – Corinne Abrams and Debiprasad Nayak 7/1

 

July 3, 2018

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Sustaining Wealth is Harder Than Getting Rich – Ben Carlson 7/1

FT – US and China must find ways to control their elites – Rana Foroohar 7/1

  • “Success rests on heading off popular unrest, rather than winning trade fights.”

Market Watch – Yes, corporations have brought home cash after the tax cut, but they haven’t put it to work – Rex Nutting 6/29

NYT – What’s the Yield Curve? ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention – Matt Phillips 6/25

WSJ – Tariffs Aren’t China’s Strongest Weapon Against the U.S. – Nathaniel Taplin 7/2

  • “Mr. Trump’s trade agenda may have certain U.S. industries-like steel-flashing smiles. American companies operating in China, though, can expect to lost a few teeth.”

Markets / Economy

Bloomberg – Where Have America’s Truck Drivers Gone? – Virginia Postrel 6/24

  • “The U.S. trucking industry is short about 50,000 drivers, estimates Bob Costello, chief economist for the American Trucking Associations. The driver shortage ranked first among industry concerns in the American Transportation Research Institute’s annual survey, released last October.”
  • “The strong economy means more stuff to haul, even as increasing numbers of truckers retire. The average age of over-the-road truckers…is 49, compared with 42 for the U.S. workforce as a whole. Forecasts of massive job losses from autonomous trucks don’t help. Few people want to join a dying profession. With unemployment low, there are other options.”
  • “In response, pay is up. The median salary for drivers who haul a variety of goods nationally is about $53,000, according to an ATA survey published in March. That’s a $7,000 increase since the previous survey five years ago, or about $4,000 when corrected for inflation. For drivers who work for private fleets serving individual companies, such as PepsiCo Inc. or Walmart Inc., median pay is $86,000, up from $73,000.”
  • “But a shortfall remains. Recent regulatory changes exacerbate the problem. So does an increasing shortage of places to park.”

Tech

FT – China backs $15bn tech fund to compete with Japan’s SoftBank – Arash Massoudi and Don Weinland 7/1

  • “China Merchants Group has teamed up with a London-based firm to launch a new Rmb100bn ($15bn) technology investment fund with aim of becoming China’s answer to the near-$100bn Vision Fund created by Japan’s SoftBank.”
  • “The state-owned conglomerate, along with other unnamed Chinese groups, has pledged to invest up to Rmb40bn of the fund, in what would be a huge pool of capital primarily designed to target investments in Chinese technology companies.” 
  • “CMG is set to announce the plans with the UK’s Centricus, the investment firm that helped structure SoftBank’s record-setting technology fund, and SPF Group, a small Beijing-based fund manager that counts Joshua Fink, the son of BlackRock founder Larry Fink, as one of its partners.”

Health / Medicine

Bloomberg – Sky-High Deductibles Broke the U.S. Health Insurance System – John Tozzi and Zachary Tracer 6/26

  • “Employers are questioning a system they say costs patients too much.”

FT – US drug maker Pfizer lifts price of Viagra and 100 other products – David Crow 7/2

China

FT – China tightens party control of foreign university ventures – Emily Feng 7/1

  • “British academic ejected from board after writing essay critical of Communist party.”

Russia

FT – Older Russians fear pension reform will hit income – Kathrin Hille 7/1

July 2, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Forget Banks and Worry About High Stock Prices – Nir Kaissar 6/29

  • “It’s time for investors to stop fighting the last war. The next downturn most likely won’t be triggered by another meltdown of the financial system.”
  • “Investors didn’t need the Fed to tell them that banks are in better shape than they were a decade ago. The signs are everywhere. Profits have fallen across the industry since the financial crisis, an  indication that banks are taking on less risk. Profit margins for the S&P 500 Financials Index averaged 9.3% from 2008 to 2017, down from an average of 13.8% from 2003 to 2007, the years leading up to the crisis. Return on equity is down to an average of 5.2% from 14.5% over the same periods.”
  • “The biggest of those risks is leverage — or piling on debt to boost profits — and banks have a lot less of it than they used to. The debt-to-equity ratio of the financials index has dropped to 159% as of the first quarter from 563% at the end of 2007. The debt-to-assets ratio has fallen to 19% from 43% over the same period.”
  • “But if the numbers don’t persuade investors that the next crisis won’t look like the last one, then maybe a look at previous bear markets would. In reverse chronological order: The bursting of the dot-com bubble was behind the downturn from 2000 to 2002. A mass panic or newly introduced computerized trading, depending on whom you ask, set off the 1987 crash. Stagflation brought down the market from 1980 to 1982. A global oil embargo hit stocks from 1973 to 1974. I could keep going, but you get the idea.”
  • “There is a common thread running through the scariest episodes: high stock prices. The average cyclically adjusted price-to-earnings, or CAPE, ratio for the S&P 500 has been 18 since 1928, according to numbers compiled by Yale professor Robert Shiller. The five worst bear markets during those nine decades, as measured by peak to trough declines, commenced in 1929, 1937, 1973, 2000 and 2007. The average CAPE ratio on the eve of those downturns was 29 and the median was 27.”
  • “The current CAPE ratio: 32. And it’s never just stocks. Other assets in the U.S. look frothy, too, such as private equity and real estate.”

Bloomberg – How to Avoid Going Broke After Making $650 Million – Barry Ritholtz 6/29

Economist – How oil transformed the Gulf – Special report 6/21

Economist – Why Gulf countries are feuding with Qatar – Special report 6/21

Economist – Saudi Arabia turns against political Islam – Special report 6/23

Pragmatic Capitalism – Let’s Talk About that “Rapidly” Falling Deficit – Cullen Roche 6/29

  • “Don’t be scared Larry (Kudlow), just tell it like it is – you guys are boosting spending, boosting the deficit and the USA can afford it!”

Real Estate

WEF: statista – The world’s most expensive prime property – Adam Jezard 4/12

Cryptocurrency / ICOs

Bloomberg – Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero – Adam Haigh and Eric Lam 6/28

howmuch.net – The ICO Explosion in the Past 5 Years – Raul 6/27

Environment / Science

Bloomberg – The Recycling Game Is Rigged Against You – Faye Flam 6/27

  • “Americans were not set up for success in recycling plastics. Even before China stopped accepting plastic refuse from abroad, 9% of potentially recyclable plastic in the U.S. ended up in landfills – or worse, in the oceans. Europe does a little better, with only 70% getting tossed.”
  • “Why such terrible rates? Partly because some changes that were supposed to make recycling simpler ended up making it almost impossible.”
  • “University of Georgia engineering professor Jenna Jambeck said that indeed, part of the reason China is now refusing to process American and European plastic is that so many people tossed waste into the wrong bin, resulting in a contaminated mix difficult or impossible to recycle.”
  • “In a paper published last week in Science Advances, she and her colleagues calculated that between now and 2030, 111 million metric tons of potentially recyclable plastic will be diverted from Chinese plants into landfills.”
  • “Plastic matters because it takes centuries to degrade, and there’s a lot of it. Jambeck has estimated that the world has produced more than 8 billion metric tons since the 1950s. To help grasp this quantity, paleontologist Jan Zalasiewicz has estimated that this is enough to wrap our entire planet in cling wrap. Others have calculated that it would make four mountains the size of Everest.”
  • “Given what scientists already know how to do, the future could bring a greener, more fool-proof system. Right now, she said, she and other scientists are starting to develop ways to recycle mixtures of plastics – a tough job because many plastics repel one another like oil and water. One of the reasons China imported recycling was that it was possible there to hire cheap labor to sort the different plastic types by hand.” 
  • “Curing the plastic problem is a lot like fighting cancer. Even if everyone stopped smoking, there would still be cancer. And even if we all figure out whether our municipalities accept yogurt containers, plastic waste will still pollute the environment. Compliance won’t be a cure until innovations from the lab set us up for success.”

WIRED – Data Shows Rising Seas Threaten Over 300,000 Homes – Oliver Milman 6/19

  • “Sea level rise driven by climate change is set to pose an existential crisis to many US coastal communities, with new research finding that as many as 311,000 homes face being flooded every two weeks within the next 30 years.”
  • “The UCS used federal data from a high sea level rise scenario projected by the National Oceanic and Atmospheric Administration, and combined it with property data from the online real estate company Zillow to quantify the level of risk across the lower 48 states.”
  • “Under this scenario, where planet-warming emissions are barely constrained and the seas rise by about 6.5 feet globally by the end of the century, 311,000 homes along the US coastline would face flooding on average 26 times a year within the next 30 years—a typical lifespan for a new mortgage.”
  • “The losses would multiply by the end of the century, with the research warning that as many as 2.4 million homes, worth around a trillion dollars, could be put at risk. Low-lying states would be particularly prone, with a million homes in Florida, 250,000 homes in New Jersey and 143,000 homes in New York at risk of chronic flooding by 2100.”
  • “The oceans are rising by about 3 mm a year due to the thermal expansion of seawater that’s warming because of the burning of fossil fuels by humans. The melting of massive glaciers in Greenland and Antarctica is also pushing up the seas—NASA announced last week that the amount of ice lost annually from Antartica has tripled since 2012 to an enormous 241 billion tons a year.”
  • “This slowly unfolding scenario is set to pose wrenching choices for many in the US. Previous research has suggested that about 13 million Americans may have to move due to sea level rise by the end of the century, with landlocked states such as Arizona and Wyoming set for a population surge.”

Agriculture

FT – US farmers plant more soya than corn for first time since 1983 – Gregory Meyer 6/29

  • “Farmers planted 89.6m acres with soya beans this spring, the government reported Friday, surpassing the 89.1m acres planted with corn. The only other year soya topped corn was in 1983, because of a one-off quirk of agricultural policy.”

Britain

NYT – In Britain, Austerity Is Changing Everything – Peter S. Goodman 5/28

  • “After eight years of budget cutting, Britain is looking less like the rest of Europe and more like the United States, with a shrinking welfare state and spreading poverty.”

Japan

FT – Japan’s elderly care bill soaks up worker pay rises – Robin Harding 5/27

  • “Monthly premiums for care insurance have doubled from ¥3,000 to almost ¥6,000 ($55) since the system began in 2000. Meanwhile, the average annual cost of employer-based health insurance is up from ¥386,038 in 2008 to ¥486,042 this year, equivalent to a two percentage point rise in income tax.”
  • “The rise in health and care costs helps to explain why moderate wage growth, after five years of economic stimulus under prime minister Shinzo Abe, is doing so little to boost consumption. It poses a conundrum for the Bank of Japan, which is relying on spending pressure to push inflation towards its 2% objective.”
  • “Japan’s future holds more of the same, especially after 2020, when the baby boom generation starts to reach the age of 75 and needs more care. Recent government figures suggest that by 2040 social insurance costs will rise another 2.5 percentage points to 24% of gross domestic product.”

South America

Axios – It’s nearly impossible to afford a cup of coffee in Venezuela – Stef W. Kight 6/28

  • “Less than two years ago, a cup of coffee cost 450 bolivars in Venezuela. Today, as the nation’s hyperinflation continues to skyrocket, a cafe con leche costs 1 million bolivars — or a mere 29 U.S. cents, according to Bloomberg.”

June 29, 2018

Perspective

WSJ – Where Residents Pay Buckets of Money – for Water – Adam Bonislawski 6/27

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Give China a Taste of Its Own Bad Trade Medicine – Michael Schuman 6/27

Economist – Most stockmarket returns come from a tiny fraction of shares – Buttonwood 6/23

Economist – How to stop the decline of public transport in rich countries – Leaders 6/23

WSJ – Facebook Investors May Be Too Quick to Forgive – Dan Gallagher 6/28

  • “Social network’s stock price has risen sharply since Cambridge Analytica scandal even though more questions have surfaced.”

WSJ – The Good Times Are Over for China’s Property Stocks – Jacky Wong 6/28

  • “A weaker Chinese yuan and a funding squeeze are taking their toll on developers.”

Markets / Economy

FT – Global dealmaking reaches $2.5tn as US megadeals lift volumes – James Fontanella-Khan and Arash Massoudi 6/27

WSJ – Daily Shot: PitchBook – Startup nation: The most valuable VC-backed company in each US state – Dana Olsen 2/27

Energy

WSJ – Daily Shot: Gross US Crude Oil Exports 6/27

WSJ – Daily Shot: Princeton Energy Advisors – Net Crude Oil Imports 6/28

China

Bloomberg – Xi Warns Mattis China Won’t Surrender ‘One Inch’ of Territory – Peter Martin 6/27

Economist – China has militarized the South China Sea and got away with it 6/21

Economist – China is trying to turn itself into a country of 19 super-regions 6/23

FT – China’s polluted skies – Steven Bernard and Lucy Hornby 6/28

Europe

Economist – Giddy property prices are a test for Swedish policymakers 6/21

 

June 28, 2018

Perspective

FT – Migrant millennials are redrawing the map of America – Andrew Edgecliffe-Johnson 6/26

  • “As a recent analysis by Brookings Institution demographer William Frey found, the strongest growth in America’s millennial population between 2010 and 2015 was not in coastal cities such as New York and LA, but in smaller ones in the south and west. The double-digit increase in 10 large metro areas, from Colorado Springs and Denver to San Antonio and Austin, contrasts with Midwestern cities such as Chicago and St Louis, whose millennial populations rose less than 1%.”
  • “This millennial migration is largely being driven by affordability, says Karen Harris of the macro trends group at Bain & Company, the consultancy. ‘Tier one cities have become incredibly expensive; as a result they have become the province of rich people, single people and empty nesters.’” 
  • “Few places tell this story better than Denver, Colorado. Its middle-of-the-country location, affordable universities, plentiful jobs and easy access to a snowboarder’s paradise in the Rocky Mountains have drawn tens of thousands of millennials in recent years, transforming its population and economy.” 
  • But…
  • “Denver’s residential property prices are 50% above their pre-crisis peak, dividing the city into those who bought and have watched their assets appreciate and those wondering if they will ever get on the housing ladder. Since Colorado legalized recreational marijuana in 2014, Denver has been rife with stories of dispensary owners driving the market up by putting their unbankable cash into property.” 
  • “For now, disillusioned leavers are outnumbered by new arrivals to Denver, but there are signs that its millennial-fueled population boom is slowing. Its growth rate peaked in 2015 and it has dropped down the Census Bureau’s list of fastest-growing cities, which is now topped by San Antonio and Phoenix.” 
  • “Mike Newlands moved to Denver after college in 2006 to work in the sporting goods industry, and is living with a friend while saving for a down payment on a property. He worries that anyone who did not buy by 2010 is effectively priced out of Denver. ‘People are asking now where the next Colorado is,’ he says, listing more affordable alternatives like Jackson, Wyoming, and Boise, Idaho. ‘People like me who make $75,000 a year are going to be gone.’”

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Playing in Traffic – Ben Carlson 5/27

  • “Our brains find it easier to process situations where there’s a clear explanation. Not knowing what’s happening or, more importantly, why it’s happening, makes people extremely uncomfortable.”
  • “Being uncomfortable with uncertainty is one of the reasons a long commute can make people unhappy:”
    • “As Harvard University psychologist Daniel Gilbert argues, ‘You can’t adapt to commuting, because it’s entirely unpredictable. Driving in traffic is a different kind of hell every day.’”

Markets / Economy

WSJ – Harley-Davidson Is Fighting the Trade Wars on Two Fronts – John D. Stoll 6/25

Real Estate

Bloomberg – Investors Are Piling In to NYC Condos at a Record Pace – Oshrat Carmiel 6/27

WSJ – Looking for an Apartment? It Is a Great Time to Rent – Laura Kusisto 6/27

  • “It is a great time for anyone looking to rent an apartment: vacancy rates are rising and there are little or no rent increases in many major cities.”
  • “For landlords, though, the U.S. apartment market suffered its worst spring since 2010, near the depths of the housing crisis. Driving this dynamic is a flood of new apartments and weakening demand.”
  • “Rents rose 2.3% in the second quarter compared with a year earlier, the smallest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply.”
  • “Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership. But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords.”
  • “The cause of the slowdown is primarily new supply. Developers responded to escalating rents by building the most new apartments in 30 years, sending a flood of new high-end units to downtown areas across the country. Developers are expected to add 300,000 new units over the next year across the U.S., Mr. Willett (Greg Willett, chief economist at RealPage) said.”
  • “At the same time as there are signs renter demand is starting to wane because millennials are marrying, having children and buying homes or moving into single-family rentals. The U.S. added 1.3 million owner households in the first quarter over the same period last year and lost 286,000 renter households, according to U.S. Census data released in April.”
  • “Despite the recent slowdown, apartment owners note that the market is far from crashing and rent growth remains just below historic norms.”
  • “Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system. Compared with the last real-estate crash, owners say there are unlikely to be many foreclosures because they are carrying much less debt.”
  • “Jay Hiemenz, president and chief operating officer of Phoenix-based Alliance Residential, an apartment company, said banks are only giving loans to developers for about 65% of the cost to build a project, compared to 80% or more previously.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Ripple 6/27

  • “Ripple is down 87% since early January.”

Entertainment

WSJ – The Pop Diva Identity Crisis – Neil Shah 10/18/17

Asia – excluding China and Japan

Bloomberg – Hermes Bags, Diamonds Worth $273 Million Taken in 1MDB Raids – Anisah Shukry 6/26

  • “Malaysia’s police seized about 1.1 billion ringgit ($273 million) of items that included Hermes International handbags, Rolex watches and cash in raids linked to former Prime Minister Najib Razak amid investigations into troubled state fund 1MDB.”
  • “Luxury goods such as a 6.4 million ringgit diamond necklace, 51.3 million ringgit worth of Hermes bags and more than 200 sunglasses valued at 374,000 ringgit were taken from five residences and an office linked to Najib, Amar Singh, commercial crime investigation department director at the police, told reporters on Wednesday.”
  • “The police had to form eight teams consisting of more than 150 officers to analyze the items for weeks, even working through the Eid al-Fitr Muslim holiday, Singh said. Valuations may increase as not all items seized have been analyzed.”

FT – Malaysia police value assets seized in 1MDB-linked raids at $275m – Stefania Palma 6/27

China

Bloomberg – Chinese Stocks Enter Bear Market as Trade, Growth Risks Increase – Richard Frost and Jeanny Yu 6/25