April 20, 2018

If you were only to read one thing…

WP – Too Many Men – Simon Denyer and Annie Gowen 4/18

  • “Nothing like this has happened in human history. A combination of cultural preferences, government decree and modern medical technology in the world’s two largest countries has created a gender imbalance on a continental scale. Men outnumber women by 70 million in China and India.”
  • “The consequences of having too many men, now coming of age, are far-reaching: Beyond an epidemic of loneliness, the imbalance distorts labor markets, drives up savings rates in China and drives down consumption, artificially inflates certain property values, and parallels increases in violent crime, trafficking or prostitution in a growing number of locations.”
  • “Those consequences are not confined to China and India, but reach deep into their Asian neighbors and distort the economies of Europe and the Americas, as well. Barely recognized, the ramifications of too many men are only starting to come into sight.”
  • “’In the future, there will be millions of men who can’t marry, and that could pose a very big risk to society,’ warns Li Shuzhuo, a leading demographer at Xi’an Jiaotong University.”
  • “Out of China’s population of 1.4 billion, there are nearly 34 million more males than females — the equivalent of almost the entire population of California, or Poland, who will never find wives and only rarely have sex. China’s official one-child policy, in effect from 1979 to 2015, was a huge factor in creating this imbalance, as millions of couples were determined that their child should be a son.”
  • “India, a country that has a deeply held preference for sons and male heirs, has an excess of 37 million males, according to its most recent census. The number of newborn female babies compared with males has continued to plummet, even as the country grows more developed and prosperous. The imbalance creates a surplus of bachelors and exacerbates human trafficking, both for brides and, possibly, prostitution. Officials attribute this to the advent of sex-selective technology in the last 30 years, which is now banned but still in widespread practice.”
  • “In the two countries, 50 million excess males are under age 20.”

Perspective

WSJ – Daily Shot: howmuch.net – Home Insurance Cost in Every State 4/19

WSJ – Daily Shot: howmuch.net – Health Insurance Rates by State 4/19

Worthy Insights / Opinion Pieces / Advice

BuzzFeed News – This PSA About Fake News From Barack Obama Is Not What It Appears – David Mack 4/17

  • “Oscar-winning filmmaker Jordan Peele has a warning for viewers about trusting material they encounter online.”

Visual Capitalist – America: An Economic Snapshot of Every U.S. State – Jeff Desjardins 4/19

Wolf Street – Subprime Carmageddon: Specialized Lenders Begin to Collapse – Wolf Richter 4/8

  • “The subprime auto lending business is highly cyclical. For example, according to Bloomberg, citing Moody’s data, 41 subprime lenders filed for bankruptcy during the subprime auto loan bust between 1997 and 1999.”
  • “But unlike subprime home mortgages, subprime auto loans won’t take down the financial system. About 25% of the auto loans written are subprime. For new cars, it’s about 20%. Of the $1.11 trillion in total auto loans outstanding at the end of 2017, about $280 billion were subprime – less than a quarter of the $1.3 trillion subprime mortgages before the financial crisis. Even if the total subprime portfolio produced a net loss of 50%, the losses would amount to only about $140 billion.”
  • “And there are other differences: Vehicles are quickly repossessed, usually after three months of missed payments. Even in bad times, there is a liquid market for the collateral at auctions around the country, and vehicles can be shipped to auctions with the greatest demand. The results are that lenders don’t end up holding these vehicles and loans on their balance sheet for years, as mortgage lenders did with defaulted home mortgages and homes.”
  • “But subprime will take down many more of the specialized lenders. And the survivors will tighten lending standards. This will prevent more car buyers from buying a new vehicles. Many of them will be switched to older used vehicles. Or they hang on to what they have.”
  • “So automakers get to grapple with the loss of these customers. When you lose a significant portion of your customers due to credit problems, it hurts. And this is where it adds to ‘Carmageddon.’ Investors and creditors, including PE firms, get to grapple with losses and bankruptcies. But given the limited magnitude of subprime auto loans, and the limited impact on the banks, the Fed will brush it off and continue its monetary tightening, and no one will get bailed out.”

Markets / Economy

FT – Sentiment sours for big brand consumer staples – Chloe Cornish 4/18

WSJ – Demand for Batteries Is Shrinking, Yet Prices Keep On Going and Going…Up – Sharon Terlep and Nicole Friedman 4/16

Tech

WSJ – Daily Shot: Bloomberg – IMF Says the Global Smartphone Boom Has Reached Its Peak – Andrew Mayeda 4/19

Britain

Bloomberg Businessweek – Britain Targets Russian Billionaires – Henry Meyer, Yuliya Fedorinova, and Irina Reznik 4/11

  • “As the U.S. goes after a handful of Russian oligarchs with its latest round of sanctions, the U.K. is under pressure domestically and from abroad to tighten controls and shed its reputation as a place to launder corrupt money. The U.K. National Crime Agency estimates that more than £90 billion ($127.5 billion) of such money enters the U.K. each year, feeding a vast industry of property companies, lawyers, bankers, and accountants. A lot of that comes from Russia, and ends up in high-end real estate. About a fifth of suspicious property purchases from 2008 to 2015, £729 million worth, were made by Russians, according to anticorruption watchdog Transparency International. ‘In terms of the levels of financial flows that go through London, it’s likely that it’s one of the biggest hubs of money laundering in the world,’ says Ben Cowdock, the group’s lead researcher on dirty money in the U.K.”

April 19, 2018

Markets / Economy

FT – IMF sounds alarm on excessive global borrowing – Chris Giles 4/18

  • “The world’s $164tn debt pile is bigger than at the height of the financial crisis a decade ago, the IMF has warned, sounding the alarm on excessive global borrowing.”
  • “The fund said the private and public sectors urgently needed to cut debt levels to improve the resilience of the global economy and provide greater firefighting capability if things went wrong.”
  • “Worldwide borrowing is more than twice the size of the value of goods and services produced every year and at 225%t of global gross domestic product, is 12 percentage points higher than during the peak of the previous financial crisis in 2009.”
  • “Half of the $164tn was accounted for by three countries: the US, Japan and China. The latter’s borrowing surged from $1.7tn in 2001 to $25.5tn in 2016, accounting for three-quarters of the increase in private sector debt in the past decade.”
  • “With the global economy expanding strongly, it recommended that countries such as the US stop using lower taxes or higher public spending to stimulate growth and instead try to reduce the burden of public sector debts so that countries have more leeway to act in the next recession.”
  • “The outliers were Germany and the Netherlands, which the IMF said had ‘ample fiscal space’ to boost public investment in infrastructure and enhance the long-term resilience of their economies.”

Real Estate

WSJ – South Korean Investors Pile Into U.S. Commercial Property Debt – Esther Fung and Kwanwoo Jun 4/17

  • “In all, investors based in South Korea accounted for 21% of foreign investment in U.S. real-estate debt as of mid-April, the largest proportion among foreign investors, according to data firm Preqin. Canada and Australia are second and third place, at 12% and 11%, respectively. Global fundraising for U.S.-focused real-estate debt reached $17.8 billion in 2017, up from $10.8 billion in 2016, Preqin said.”

Bloomberg – The Retail Real Estate Glut Is Getting Worse – Noah Buhayar and Lauren Coleman-Lochner 4/17

  • “At last count, U.S. store closures announced this year reached a staggering 77 million square feet, according to data on national and regional chains compiled by CoStar Group Inc. That means retailers are well on their way to surpassing the record 105 million square feet announced for closure in all of 2017.”

Finance

FT – Eurozone investors race up chart of US debt owners – Kate Allen 4/17

  • “Eurozone investors have been the biggest overseas net buyers of US debt securities in the past half-decade, a trend that could reverse as the European Central Bank continues to tighten monetary policy, according to new research.”
  • “Euro area holdings of US corporate and Treasury bonds reached $2.75tn at the end of last year, the report by investment bank Jefferies shows, an 80% increase since the start of 2012.”
  • “By contrast the volume of US debt held by investors in Japan and China remained flat over the period, while investors in the UK increased their holdings by 40% to $700bn.”

Construction

WSJ – Daily Shot: CME Lumber (May) 4/17

China

WSJ – Daily Shot: China Required Deposit Reserve Ratio 4/17

  • Effective April 25, 2018. More liquidity into the system.

Other Interesting Links

WSJ – The Trophy Homes Linked to Chinese Conglomerate HNA Group – Katherine Clarke 4/18

  • “Chen Guoqing, the brother of HNA chairman Chen Feng, and a company Chen Guoqing heads called Pacific American Corp., have purchased more than 20 homes in New York and New Jersey over the past two decades through various limited-liability companies, the Journal’s review shows.”
  • “Those deals include four pricey residences at the megatower One57, the Billionaire’s Row megalith where owners include titans of industry such as Michael Dell and Bill Ackman. The units were purchased for a combined $151.34 million in 2014 and 2015, the records show.”

April 18, 2018

If you were only to read one thing…

FT – Venezuela’s imploding economy sparks refugee crisis – Gideon Long and Andres Schipani 4/15

  • “While the eyes of the world have been on the Syrian refugee crisis and the exodus of Rohingya Muslims from Myanmar, Venezuela’s humanitarian disaster has gone relatively unnoticed.”
  • “But the sheer number of people now fleeing the country is changing that. The UNHCR says 5,000 migrants are leaving every day: at that rate, 1.8m people, more than 5% of Venezuela’s population, will depart this year.
  • “It was not always like this. For decades, Venezuela was a net importer of people, luring Europeans with lucrative oil jobs. A generation ago, it was the wealthiest country in Latin America.”
  • “’We are potentially facing the biggest refugee crisis in our hemisphere in modern history’ says Shannon O’Neil, senior fellow for Latin America at the Council on Foreign Relations in New York.”
  • “Many are heading west to Colombia which, emerging from a long civil conflict of its own, is ill-equipped to receive them. There are now more than 600,000 Venezuelans in Colombia, twice as many as a year ago. Thousands have poured over the footbridge that separates the Venezuelan town of San Antonio from the Colombian city of Cúcuta. Walk the streets of Cúcuta and you find Venezuelans everywhere, selling cigarettes at the traffic lights, working as prostitutes, sleeping rough.”
  • “The collapse of the Venezuelan health system has prompted a resurgence of long-vanquished diseases. The government no longer provides reliable medical data and when the health minister revealed last year that the number of malaria cases had jumped 76% in a year, pregnancy-related deaths had risen 66% and infant mortality had climbed 30%, she was promptly sacked. A recent opposition-led survey suggested 79% of Venezuelan hospitals have little or no running water. The days when the Chávez government prided itself on decent medical care for the poor are long gone.”
  • Measles, eradicated in much of Latin America, has returned. Of the 730 confirmed cases in the region last year, all but three were in Venezuela. As people flee, they are taking the disease with them. In the first months of this year, there were 14 confirmed cases in Brazil and one in Colombia. All 15 victims were Venezuelan migrants.”
  • “’The infant mortality rate is on a par with Pakistan and the poverty rate of 85% in on a par with Haiti and sub-Saharan Africa,’ says Dany Bahar of the Brookings Institution in Washington. ‘People are fleeing because if they stay, they die. They die because they don’t get enough food to eat, they die because they get malaria and can’t get treatment, they die because they need dialysis and can’t get it’.”

Worthy Insights / Opinion Pieces / Advice

A Teachable Moment – Three Ways to Fail Slow – Anthony Isola 4/16

Civil Beat – What Honolulu Rail Officials Know They Don’t Know – Randall Roth and Cliff Slater 4/17

FT – Norway snub turns up heat on private equity fee model – Javier Espinoza 4/16

  • “Industry costs for investors are high and hard to track.”

Real Estate

WSJ – Homebuilding Isn’t Keeping Up With Growth, Development Group Says – Laura Kusisto 4/16

  • “Some 22 states and the District of Columbia have built too little housing to keep up with economic growth in the 15 years since 2000, resulting in a total shortage of 7.3 million units, according to research to be released Monday by an advocacy group for loosening building regulations.”
  • “California bears half of the blame for the shortage: The state built 3.4 million too few units to keep up with job, population and income growth.”
  • “There is growing awareness that the housing shortage is widespread and it affects states not often thought of as being especially anti-development. Home prices nationally rose 6.2% in the year that ended in January, roughly twice the rate of incomes and three times the rate of inflation, according to the S&P CoreLogic Case-Shiller National Home Price Index.”
  • “Arizona and Utah are among the states that have built too little housing in the 15-year period, according to the report. The shortage in these places likely reflects strong demand as they become top destinations for retirees and people priced out of the Northeast and California.”
  • “At the same time, it is becoming more difficult to build all across America due to shortages of land, labor and materials.”
  • “Economists who have reviewed the report caution that measuring the present need for housing by extrapolating from past production is imperfect. Western states that were sparsely populated 60 years ago and experienced huge building booms in the latter half of the 20th century may not need to build at such a rapid clip today.”
  • “Housing shortages also are difficult to measure because most people will find somewhere to live by doubling up with family or roommates or moving to areas where homes are abundant but jobs may be scarce.”
  • “Nonetheless, the data underscore what economists say is a clear trend. ‘We have a housing deficit,’ said Chris Herbert, managing director at Harvard University’s Joint Center for Housing Studies. ‘I think we can all agree we should be building more.’”

Energy

FT – China to miss shale production target by ‘considerable margin’: report – Edward White 4/16

Finance

Bloomberg – How Hedge Funds Are Winning Back Investors – Katia Porzecanski 3/6

China

WSJ – Daily Shot: China Government Bond Yields 4/17

  • “Bond yields are falling, especially on the shorter end of the curve. Sensing a slowdown, Beijing is pulling back from its “deleveraging” campaign.”

April 17, 2018

Perspective

WSJ – Daily Shot: FRED – The state of education…or, rather, the education of states – Ana Maria Santacreu and Heting Zhu 4/12

Axios – Embry-Riddle: The best (and worst) airlines this year – Haley Britzky 4/14

Markets / Economy

WSJ – Daily Shot: BoAML – S&P 500 Sectoral Dominance 4/16

Energy

eia – U.S. production of crude oil grew 5% in 2017, likely leading to record 2018 production – Jeff  Barron and Emily Geary 4/4

China

WSJ – Daily Shot: Estimate of China’s Total Debt to GDP 4/16

Japan

WSJ – Japan to Expand Program to Bring in Foreign Workers – Peter Landers 4/12

Other Interesting Links

Economist – Great news for the dead: the funeral industry is being disrupted – Leaders 4/14

  • “Changing social norms, competition and technology are shaking up a stodgy and exploitative business.”

 

April 16, 2018

After speaking with some readers, it appears that my little experiment wasn’t working out as I intended. It was not clear that the majority of the content was being hosted on the website, while the direct email was only showing one article.

So, back to the old format.

Thanks for reading – and if you like this blog, please be sure to tell your peers about it.

Sincerely,

Duff Janus

If you were only to read one thing…

Bloomberg – What It Was Like to Get Caught in Toronto’s Housing Slump – Natalie Wong 4/11

  • “Toronto’s housing market has seen a stunning slowdown in the past year. Now one brokerage has cataloged the damage for 988 homeowners who got caught in the eye of the hurricane.”
  • In the space of four months last year, the homeowners lost a collective C$135 million ($107 million) as the median house price slid 18%, a faster decline than any major market during the U.S. market crash, according to Realosophy Reality Inc.”
  • “The story goes like this: The median house price surged 30% from January to peak at C$765,000 in March, largely driven by investors who were pouring money into the market for quick returns, Realosophy said in a report. To tame the beast, the government instituted a series of regulations, including a foreign buyers tax, starting in April.”
  • “Some 866 homeowners had clinched a sale but were not able to close, eventually selling to another buyer later in the year for C$140,200 less on average. Some buyers had to walk away as they weren’t able to sell their own homes or the banks appraised the house for less than what they agreed to. Another 122 sellers sold their houses for an average $107,325 lower than what they bought it for earlier. By the time the dust had settled in July, the median price had dropped to C$626,000 from C$765,000 in March.”
  • “To put that 18% four-month decline in perspective, it took major U.S. cities 20 months on average for prices to fall 18% from their peaks between 2005 and 2006, with Miami the shortest at 12 months, according to the report.”
  • “This February, Toronto led the drop in Canadian home prices falling for the first time since 2010, a consequence of the housing downturn which saw additional mortgage lending rules put in place this year amid higher interest rates. For now, prices have largely stabilized for detached-homes. But there’s a new hot spot to watch out for: Toronto’s condominium market has seen prices soaring about 20% since last February and is a target for speculative investment.”

Worthy Insights / Opinion Pieces / Advice

Pragmatic Capitalism – Yeah, That Debt Article Was Kinda Bad… – Cullen Roche 4/12

NYT – China’s Communists Rewrite the Rules for Foreign Businesses – Alexandra Stevenson 4/13

  • “The party is strengthening its influence – often gaining direct decision-making power – over the international firms doing business in China.”

WSJ – A Dollar Peg That Will Stay on the Line – Jacky Wong 4/12

Markets / Economy

WSJ – Daily Shot: Scotiabank – Combined Central Bank QE Projections 4/13

WSJ – Daily Shot: Scotiabank – Forecast Central Bank Rates 4/13

WSJ – Amid Trade Feud, Recycling Is in Danger of Landing on Trash Pile – Bob Tita 4/12

  • “Chinese trade barriers are compounding the problems faced by companies that recycle scrap paper, plastic and metal.”
  • “The U.S. generates more recyclable waste than any other country. China is the top customer for that scrap. China bought two-thirds of the used paper and half the scrap aluminum that the U.S. sold overseas last year, according to the Institute of Scrap Recycling Industries Inc., part of an overall haul of 13 million metric tons of cast-off American packaging, periodicals and shredded car bodies.”
  • “China’s 25% tariff on U.S. scrap aluminum would make reusable metal from other countries more appealing. China also recently imposed tougher quality standards on other imported recyclables, sending the U.S. recycling industry into a tailspin.”
  • “Prices for discarded newspaper, office paper and magazines have fallen to zero in the U.S. Inventories of paper, crushed milk jugs and old cardboard are swelling. No other country wants to buy as much U.S. junk as China had during the past several years.”

Real Estate

WSJ – Boise, Idaho, Feels the Growing Pains of a Surging Population – Jim Carlton 4/15

Finance

Reuters – Spotify puts bank IPO paydays under fund manager scrutiny – Sinead Cruise 4/12

  • “After shaking up the music industry, Spotify is now prompting investors to question the value they get from investment banks underwriting new listings with its low-cost IPO.”
  • “The music streaming firm effectively deprived banks of hundreds of millions of dollars in fees by shunning them in its $26.5 billion New York Stock Exchange float on April 3.”
  • “Banks can charge companies as much as 7% of the amount raised in a U.S. listing and fund managers in London, another of the main centers for initial public offerings (IPOs), say Spotify’s success means underwriters will now have to show more clearly what value they bring to companies and their backers.”
  • “Banks have been richly rewarded for co-ordinating IPOs and ensuring companies raise the money, pocketing annual fees of $33.6 billion in the U.S. and $14.4 billion in Europe over the last decade, Thomson Reuters data shows.”
  • “But while critics claim that high costs have discouraged some firms from joining the stock market, crimping their prospects and hindering the growth of the economy, bankers say few are likely to be able to replicate Spotify’s direct listing.”
  • “This was only possible because a large number of founding shareholders wanted to sell and it was not raising a large sum of capital, meaning that for now, the route may only be open to well-known, highly valued internet firms like Spotify.”
  • “Banks help to make trading in newly listed shares less volatile by hand-picking institutional investors who are likely to hold them over the medium to long term, and by limiting the volume of stock sold to day traders keen to make a quick buck.”

WSJ – Daily Shot: Reuters – US & European Annual IPO Fees 4/13

WSJ – Daily Shot: Credit Suisse – Fund Flows and Domestic Equity Flows 4/13

China

FT – HK currency intervention boosts property market risk – Emma Dunkley 4/12

  • “Hong Kong has been forced to intervene twice in the past two days to support its currency after the Hong Kong dollar slumped to its weakest level since 2005, in a move that risks putting pressure on mortgage borrowers and Hong Kong’s high-priced property market.”
  • “The Hong Kong Monetary Authority took the rare action of stepping in to prop up the currency on Thursday night in Asia, after it dropped to HK$7.85 against the US dollar, the lower end of its permitted trading band.”
  • “The Hong Kong dollar is one of the few currencies to trade within a band pegged to the US currency, ranging from HK$7.75-HK$7.85 against the US dollar.”
  • “Mr. Lee (Howard Lee, deputy chief executive of the Hong Kong Monetary Authority) said this will ‘provide a more conducive environment for the normalization of the interest rate in Hong Kong following more closely the interest rate level in the US . . . so we will expect that interest rates will rise incrementally . . . so I hope that people with debt burden will be watchful about this rise in interest rates.’”

April 12, 2018

If you were only to read one thing…

Bloomberg Gadfly – Mark Zuckerberg Refuses to Admit How Facebook Works – Shira Ovide  4/12

  • “The most troubling takeaway from two days of congressional hearings on Facebook Inc. was this: Mark Zuckerberg didn’t want to explain how the social network operates.” 
  • “Zuckerberg found it hard to plainly acknowledge that Facebook tracks users from device to device, collects information on websites people visit and apps they use, gathers information on people’s physical locations, collects phone call logs from Android smartphones and pulls in some online activity from people who don’t even have Facebook accounts.”
  • “Zuckerberg declined to acknowledge that Facebook’s ad system and products are informed by all of this information gathering on and off the social network. If Facebook were a true bargain with users — they get a useful, free service in exchange for seeing advertising based on their interests and activity — then Zuckerberg should be comfortable explaining how it all works.”
  • “Instead, given the option to articulate Facebook’s relationship with users (and non-users), he dodged. A lot.”
  • “He said he couldn’t answer queries from Senator Roy Blunt, who asked on Tuesday whether Facebook tracks users across their computing devices or tracks offline activity. The answer to both is yes. During the House committee hearing on Wednesday, Zuckerberg claimed not to know what ‘shadow profiles’ are, even though this term has been used for years to describe Facebook’s collection of data about people who don’t use its services by harvesting the inboxes and smartphone contacts of active Facebook users. (Zuckerberg reluctantly acknowledged that Facebook gathers information on people who aren’t signed up for Facebook for what he said were ‘security purposes.’)”
  • “Most people do not understand the scope of Facebook’s data collection. Lawmakers tried more than once to get Zuckerberg to say this, but he never did. Here’s a piece of evidence lawmakers could have showed the CEO: In a survey conducted recently by Digital Content Next, a trade group of news organizations that is frequently critical of Facebook, a majority of respondents said they didn’t expect the social network to track use of non-Facebook apps to target ads, collect their physical location when they’re not using Facebook or harvest information from non-Facebook websites that people visit. Spoiler alert: Facebook does all of those things.”  
  • “It’s not people’s fault if they don’t know how Facebook works. If Zuckerberg and Facebook were comfortable with the data-based bedrock of their business, he should be able and willing to explain all the ways Facebook collects data on everyone and how it uses it.”
  • “It felt as though the company made a calculated decision to deflect rather than talk openly about the scope of Facebook data collection and its data-based ad system. And to me, that was a sign that Facebook is embarrassed about what it does for a living.”

Continue reading “April 12, 2018”

April 12, 2018

If you were only to read one thing…

NYT – British Banks Will Have to Cut Ties to Sanctioned Oligarchs, U.S. Says – Ellen Barry 4/10

  • “The United States on Tuesday ratcheted up its efforts to block Kremlin-linked industrialists from doing business in the West, warning that British banks will have to sever their relationships with the tycoons if they want continued access to American financial institutions.”
  • “Sigal P. Mandelker, a top American Treasury official in London to meet with her counterparts, said British banks could face ‘consequences’ if they continued to carry out significant transactions on behalf of the 24 influential Russians sanctioned by Washington on Friday. The list includes the industrialists Oleg Deripaska and Viktor Vekselberg, along with Kirill Shamalov, who American officials have identified as President Vladimir V. Putin’s son-in-law.”
  • “The warning has resonated in London, which for decades has served as a haven for Russia’s wealthiest families. Russian investors own iconic British assets like the Chelsea Football Club and swaths of high-end London real estate, and they support thriving networks of lawyers, financial advisers and estate agents.”
  • “The new American sanctions expose financial institutions outside the United States to penalties if they ‘knowingly facilitate significant financial transactions’ on behalf of the listed Russian oligarchs.”
  • “The wording is similar to secondary sanctions imposed against Iran. These ‘essentially prohibit the individuals involved from taking part in the dollar economy,’ said Daragh McDowell, an analyst for Europe and Central Asia at Verisk Maplecroft, a consulting firm based in Bath.”
  • “It is likely to compel risk-averse British banks to cancel the Russians’ accounts altogether, said Brian O’Toole, a former senior official at the Treasury Department’s Office of Foreign Assets Control, which administers and enforces American sanctions.”

Continue reading “April 12, 2018”

April 11, 2018

If you were only to read one thing…

WSJ – Americans Face Highest Pump Prices in Years – Stephanie Yang 4/8

  • “Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations.”
  • “Crude prices have jumped thanks to continuing production cuts by major exporters. As a result, gasoline is also becoming more expensive. According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week—the highest level since 2015.”
  • “While higher fuel prices could herald an end to the glut that has plagued the energy market since 2014, they also threaten to dampen demand and hit consumers in their pocketbooks.”
  • “Since the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, agreed to collectively limit output two years ago, U.S. oil futures have risen about 40%, closing at $62.06 a barrel on Friday. Gasoline futures are up 8.6% this year.”
  • And of course, Venezuela’s drop off in production…
  • “In recent months, the U.S. has also exported record amounts of gasoline, mostly to Latin and South America. In January, exports totaled more than 33 million barrels, near an all-time monthly high set in November.”
  • “’That’s a big difference from a decade ago, or even a few years ago,’ said Tom Kloza, global head of energy analysis at the Oil Price Information Service. ‘We’re kind of refiners to the entire Western Hemisphere right now.’”

Continue reading “April 11, 2018”

April 10, 2018

Worthy Insights / Opinion Pieces / Advice

NYT – Federal Budget Deficit Projected to Top $1 Trillion in 2020 – Thomas Kaplan 4/9

  • “The federal government’s annual budget deficit is set to widen significantly in the next few years, topping $1 trillion in 2020 despite healthy economic growth, according to new projections from the nonpartisan Congressional Budget Office released Monday.”
  • “The national debt, which has topped $21 trillion, is expected to soar to more than $33 trillion in 2028. By then, debt held by the public will almost match the size of the nation’s economy, reaching 96% of gross domestic product, a higher level than any point since just after World War II and well past the level that economists say could court a crisis.”

Markets / Economy

WSJ – Daily Shot: Garth Friesen – 10-year Government Yield Comparison 4/9

Real Estate

WSJ – Daily Shot: MBA – Top 10 Commercial & Multifamily Mortgage Originators in 2017 4/9

Cryptocurrency / ICOs

FT – Celebrities warned over risk of cryptocurrency endorsements – Joshua Oliver and Hannah Murphy 4/8

  • “Celebrity endorsers of cryptocurrency fundraisers are at risk of legal action from regulators and investors, legal experts have warned, following a US case that highlighted the involvement of famous promoters in a so-called initial coin offering that collapsed.”
  • “The Securities and Exchange Commission last week charged two men with taking $32m from thousands of investors via an ICO, a crowdfunding mechanism used to raise money for digital currency ventures. The co-founders allegedly raised the funds for a ‘fraudulent’ start-up called Centra Tech, with the scheme touted on social media by champion boxer Floyd Mayweather and musician DJ Khaled.”
  • “While the SEC stopped short of naming the celebrity promoters in their statement, it noted their involvement — an unusual move because they are not defendants in the case. Experts said celebrities who have endorsed ICOs could now face legal action from regulators, as well as investors who believe they have been scammed.”
  • “Charles Whitehead, a professor at Cornell Law School, warned that even if an ICO was not a scam, promoters could face legal action. In most cases, someone who promoted an ICO that was not registered with the regulator could have violated market rules, he said, noting that US laws tightly regulate publicity around the sale of new securities.”

Asia – excluding China and Japan

Economist – Cases against two ex-presidents of South Korea fit an alarming pattern 4/7

  • “The past seven heads of state have all been embroiled in corruption scandals.”

China

FT – China’s fund industry predicted to grow fivefold by 2025 – Chris Flood 4/8

  • “China will provide the ‘single largest growth opportunity’ for global investment managers, with the country’s mutual fund assets forecast to multiply fivefold to reach $7.5tn (Rmb47tn) by 2025.”
  • “This expansion could create a fee pool for running mutual funds worth $42bn a year, a lucrative new stream of profits for international managers with an established Asian presence, according to UBS, the Swiss bank.”
  • “China is on course to become the world’s second biggest fund market, behind the US.”
  • “Beijing unveiled far-reaching reforms in November intended to accelerate the growth of China’s under-developed investment industry with less than 5% of Chinese household assets held in mutual funds.”
  • “It plans to relax or eliminate foreign ownership limits on Chinese financial services groups, including asset managers, a change that is designed to attract greater involvement by large international players.”
  • “Stewart Aldcroft, Asia chief executive of CitiTrust, the securities and fund services arm of US bank Citigroup, said Beijing’s decision to allow foreigners to own 100% of mainland fund management companies as early as 2020 had provided a ‘huge opportunity’ for international players.”
  • “He noted that about $17tn in assets is held in unregulated wealth management products.”
  • “’Chinese regulators want a large proportion of those assets to move to the regulated areas so they are making it easier for fund management companies to operate,’ said Mr Aldcroft.”

April 9, 2018

Trying a new approach. Thoughts?

 

Trade War. Chinese Aviation. Japan Sex Industry. Facebook. Investment Management. Interest Rates. Solar Installations. US Treasuries. Shipping. Ireland. Britain. Former presidents Park and Lula.

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