May 4, 2017

Worthy Insights / Opinion Pieces / Advice

FT – The era of ‘deflationary progress’ means betting on automation – David Eiswert 5/3

  • “Investors need to come to reconcile themselves to the contradiction of progress and slower growth.”

A Wealth of Common Sense – Experts on an Earlier Version of the World – Ben Carlson 5/2

Markets / Economy

FT – US car sales drop faster than expected – Peter Campbell 5/2

WSJ – Daily Shot: BMI Research – Peak Auto Demand 5/2

Real Estate

WSJ – Japan’s Pension Fund Plows Into Real-Estate Investing – Peter Grant 5/2

China

WSJ – The China Debt Crisis Is Still Ripening – Nathaniel Taplin 5/2

  • “Chinese firms are still borrowing heavily and the Chinese banks backing them continue to rely heavily on risky interbank funding-eventually both firms and banks will need to pay the piper, or Beijing will need to absorb much more debt itself.”
  • “But as in the U.S., the breaking point is more likely to come when borrowers start feeling the pinch from slowing incomes and higher real borrowing costs. If the Chinese real-estate sector and inflation surprise on the downside later in 2017, or the dollar and rapid capital outflows bounce back, the piper could come knocking quicker than expected.”

WSJ – The Hot-Air Model of Chinses Asset Markets – Nathaniel Taplin 5/2

  • “Total financing to the real economy (including local government debt) was up more than 15% on the year in March, just marginally below the 17% peak in 2016.”
  • “All than money needs somewhere to go. And with stocks and bonds under pressure, and sending money abroad to buy Italian soccer clubs and dollar bonds getting tougher, cash is instead heading back into Chinese investors’ old standby: real estate.”

Puerto Rico

WSJ – Puerto Rico Placed Under Bankruptcy Protection – Andrew Scurria 5/3

  • “Federal officials placed Puerto Rico under bankruptcy protection, setting up a showdown with Wall Street firms owed billions of dollars in the largest-ever U.S. municipal debt restructuring and further complicating the U.S. territory’s efforts to pull itself out of a financial mess.”
  • “Puerto Rico and its agencies owe $73 billion to creditors, dwarfing the roughly $18 billion owed by the City of Detroit when it entered what was previously the largest municipal bankruptcy in 2013. The territory racked up its tremendous debt load during a decade long recession, beginning when tax credits that had built up its manufacturing based expired.”

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