Month: July 2017

July 10, 2017

If you were to read only one thing…

NYT – Rooftop Solar Dims Under Pressure From Utility Lobbyists – Hiroko Tabuchi 7/8

  • “Over the past six years, rooftop solar panel installations have seen explosive growth — as much as 900% by one estimate.”
  • “That growth has come to a shuddering stop this year, with a projected decline in new installations of 2%, according to projections from Bloomberg New Energy Finance.”
  • “A number of factors are driving the reversal, from saturation in markets like California to financial woes at several top solar panel makers.”
  • “But the decline has also coincided with a concerted and well-funded lobbying campaign by traditional utilities, which have been working in state capitals across the country to reverse incentives for homeowners to install solar panels.”
  • “Utilities argue that rules allowing private solar customers to sell excess power back to the grid at the retail price — a practice known as net metering — can be unfair to homeowners who do not want or cannot afford their own solar installations.”
  • “Their effort has met with considerable success, dimming the prospects for renewable energy across the United States.”
  • “Prodded in part by the utilities’ campaign, nearly every state in the country is engaged in a review of its solar energy policies. Since 2013, Hawaii, Nevada, Arizona, Maine and Indiana have decided to phase out net metering, crippling programs that spurred explosive growth in the rooftop solar market. (Nevada recently reversed its decision.)”
  • “Many more states are considering new or higher fees on solar customers.”
  • “’We believe it is important to balance the needs of all customers,’ Jeffrey Ostermayer of the Edison Electric Institute, the most prominent utility lobbying group, said in a statement.”
  • “The same group of investor-owned utilities is now poised to sway solar policy at the federal level. Brian McCormack, a former top executive at the Edison institute, is Energy Secretary Rick Perry’s chief of staff.”
  • “Four years ago, the Edison institute, an industry group made up of the country’s largest investor-owned electric companies, declared that the business of generating electricity was in danger of being sucked into what has since become known as a ‘utility death spiral.’”
  • “As more consumers switched to rooftop solar and bought less electricity from the grid, the trade group worried in a 2013 document, the costs of running conventional coal, oil, gas or nuclear power plants would be shared among an ever-smaller customer base. That could cause rates to spike, chasing even more customers away.”
  • “Since then, the utilities have targeted state solar power incentives, particularly net metering, which credits solar customers for the electricity they generate but do not use and send back to the grid. That offsets the cost of electricity they may still buy from their local utility during cloudy days and at night, reducing or even eliminating their electricity bills.”
  • “Utilities argue that net metering, in place in over 40 states, turns many homeowners into free riders on the grid, giving them an unfair advantage over customers who do not want or cannot afford solar panels. The utilities say that means fewer ratepayers cover the huge costs of traditional power generation.”
  • “Utilities found a receptive audience in many states.”
  • “Arizona legislators voted in December to move away from net metering, lowering the credit solar customers receive for the excess energy they generate and limiting how long customers keep their favorable rates.”
  • “In Florida last year, the utility industry contributed more than $21 million to an ultimately unsuccessful ballot initiative to ban third-party sales or leasing of rooftop solar panels. A leaked audio recording appeared to reveal that the utility campaign deliberately misled pro-solar voters into voting for an anti-solar policy, a tactic one consultant called ‘political jujitsu.’”

Worthy Insights / Opinion Pieces / Advice

Bloomberg View – Has Asia Learned From the 1997 Crisis? – Michael Schuman 6/15

Economist – 3D printers will change manufacturing 6/29

WSJ – So Long, Hamburger Helper: America’s Venerable Food Brands Are Struggling 7/6

Markets / Economy

WSJ – Daily Shot: Gold Eagle – Most Googled Car/Truck by State 7/7

Bloomberg – These U.S. States Still Haven’t Fully Recovered From Recession – Steve Matthews and Catarina Saraiva 7/5

Finance

WSJ – Daily Shot: UK 5yr Government Bond Yield 7/6

  • The world is turning hawkish.

WSJ – Daily Shot: German 10yr Government Bond Yield 7/6

WSJ – Daily Shot: US 10yr Government Bond Yield 7/6

WSJ – Daily Shot: Canadian 5yr Government Bond Yield 7/6

WSJ – Daily Shot: Japan 10yr Government Bond Yield 7/6

Middle East

WSJ – Daily Shot: Saudi Arabia Bank Lending Growth 7/7

July 7, 2017

If you were to read only one thing…

FT – Japan suffers record decline in population – Robin Harding 7/5

  • “Japan’s native population fell by a record amount in 2016, but a jump in the number of foreign residents limited the overall annual decline.”
  • “According to the Internal Affairs Ministry, the number of Japanese fell 308,084 to 125.6m, reflecting decades of low birth rates and population ageing.”
  • “That was offset by a 7% increase in the foreign resident population to 2.3m — a rise of 148,959 people — as increasing labor shortages led to inflows of students and guest workers.”
  • “The figures reflect a fundamental question for Japan in the years ahead: whether it will allow immigration to sustain its overall population or accept a decline to preserve ethnic homogeneity.”
  • “For the first time since the survey began in 1979, the number of annual births fell below 1m, with 981,202 babies born in 2016. Deaths reached a high of 1.3m.”
  • “According to projections from the National Institute of Population and Social Security Research, the pace of decline will rise every year until 2045, by which time Japan will be losing about 900,000 residents a year — equivalent to a city the size of Austin, Texas.”
  • “Given many years of low birth rates, there is no quick way to reverse that decline, so the only alternative is immigration.”
  • “Japan’s population continued to shift towards big cities and Tokyo in particular. The population of the capital rose by 115,000 to 13.5m, an increase of 0.9%, while the surrounding prefectures of Saitama, Chiba and Kanagawa also gained residents.”
  • “But population decline accelerated in isolated rural areas, with Aomori, Akita and Kochi prefectures all losing more than 1% of their residents.”

Perspective

WSJ – Daily Shot: BAML – S&P 500 Market Ownership – Vanguard 7/6

FT – US raises spectre of military action to deal with North Korea – Bryan Harris, Demetri Sevastopulo, and Katrina Manson 7/5

  • “Self-restraint, which is a choice, is all that separates armistice and war. As this alliance missile live-fire shows, we are able to change our choice when so ordered by our alliance national leaders.”

Bloomberg – A Quarter of Euro Area’s Unemployed Resides in Spain – Jana Randow 7/4

Worthy Insights / Opinion Pieces / Advice

WSJ – CEO-Worker Pay Ratio Generates Outrage-And Some Insight – Stephen Wilmot 7/6

FT – Lex in-depth: Together in electric dreams – Tom Braithwaite 7/6

Markets / Economy

WSJ – Daily Shot: Haver Analytics & Renaissance Macro Research – American Auto Preference 7/6

Real Estate

WSJ – Daily Shot: Statistics Canada – Real Estate Transaction Costs as Percentage of GDP 7/6

WSJ – Condo Supply Swells in Manhattan – Josh Barbanel 7/6

China

WSJ – Reality Bytes: A Highflying Tech Entrepreneur Crashes Back to Earth – Li Yuan 7/6

  • “Rather than being a shining star of visionary entrepreneurship, LeEco is turning into a cautionary tale of the hype surrounding China tech. The lesson for investors: When it comes to Chinese tech companies, the rules of economics still apply.”

Europe

WSJ – Italy Formally Takes Control of Monte dei Paschi – Deborah Ball 7/5

  • “The Italian government took control of Banca Monte dei Paschi di Siena on Tuesday, injecting €5.4 billion ($6.1 billion) into the troubled lender as part of a broad plan to bring one of Europe’s weakest banks back to health.”
  • “The state recapitalization is the centerpiece of a deep overhaul of Monte dei Paschi, Italy’s fourth-largest lender, that will also include the transfer of the bank’s €28.6 billion in bad loans to a special vehicle, a cap on remuneration of its top executives and deep cuts in personnel.”
  • “The bank, which is the world’s oldest, gave details of its plan Wednesday in a presentation to analysts, which include the closure of 600 branches and 5,500 job cuts, bringing its total job count to about 20,000 by 2021.”
  • “Under pressure from the European Central Bank, which is pushing European banks to address the problem of bad loans, Italian banks have stepped up efforts to sell and liquidate sour debt, with tens of billions of such loans earmarked for disposal.”
  • “Nonetheless, the Italian banking system is among the weakest in Europe, with about €200 billion in bad loans. The banks have suffered from a combination of poor management, low interest rates, poor profitability and economic growth that has been the weakest in the region for years.”
  • “Italy’s banking woes remain a serious impediment to a stronger recovery in the country, which isn’t enjoying the rebound other European countries have seen. Italy’s economy is expected to grow about 1% this year, slightly more than half the rate for the eurozone as a whole.”

July 6, 2017

Perspective

FT – China changes tack on ‘social credit’ scheme plan – Lucy Hornby 7/4

  • “Beijing delays licenses for country’s tech champions amid conflict of interest fears.”

WSJ – Ill-Funded Police Pensions Put Cities in a Bind – Heather Gillers and Zusha Elinson 7/4

  • “Police pensions are among the worst-funded in the nation. Retirement systems for police and firefighters have just a median 71 cents for every dollar needed to cover future liabilities, according to a Wall Street Journal analysis of data provided by Merritt Research Services for cities of 30,000 or more.”
  • “The combined shortfall in the plans, which are the responsibility of municipal governments, is more than $80 billion, nearly equal to New York City’s annual budget.”
  • “Broader municipal pension plans have a median 78 cents of every dollar needed to cover future liabilities, according to data from Merritt. The 100 largest U.S. corporate pension plans have 85% of assets needed on hand, according to Milliman Inc. data as of March 31.”
  • “And yet any attempt to bring police pensions into line with today’s municipal budgets and stock-market performance runs into the reality that many officers won’t stand for it—and they often have the public behind them.”

Worthy Insights / Opinion Pieces / Advice

FT – Apple has built an office for grown-ups – Lucy Kellaway 7/2

Markets / Economy

FT – Fed ready to begin unwinding stimulus ‘within months’ 7/5

Africa

Economist – South African mining is in crisis – 7/4

  • “The industry faces tough times, made worse by foolish policies.”

China

FT – Hyundai’s China sales plunge 60% amid ‘anti-Korea sentiment’ – Song Jung-a 7/4

  • “Hyundai Motor’s problems in China are worsening as China’s backlash over the deployment of a controversial US missile shield continues to dent sales in one of its key overseas markets amid heightened competition with fast-growing local automakers.”
  • “Hyundai said on Tuesday its China sales dropped 64% to 35,000 in June from a year earlier while Kia’s fell 58% to about 19,000 units. ‘Because of the anti-Korea sentiment, fewer Chinese are visiting our showrooms these days,’ said a company spokeswoman.”

July 5, 2017

Perspective

WSJ – Daily Shot: Credit Suisse – USA Aggregate Net cash and Debt % of Sales 7/3

WSJ – Daily Shot: WEF – World’s most crowded cities 7/3

FT – SF Express uses first China drone license to deliver the goods – Yuan Yang 6/30

  • “SF Express has completed commercial drone deliveries after receiving China’s first drone airspace license, state media reported on Friday.”
  • “China’s logistics and technology companies have announced such delivery services before but little commercial use has followed. However, there are some signs that the SF Express launch was different.”
  • “The granting of the license indicates that national regulators are now more willing to open airspace to drone delivery companies, say analysts.”
  • “SF Express, one of China’s biggest logistics services, flew a fleet of drone models, some of which can carry up to 25kg and have a range of up to 100km, in the southern area of Ganzhou in Jiangxi province.”

Worthy Insights / Opinion Pieces / Advice

INET – Jim Chanos: U.S. Economy is Worse Than You Think – Lynn Parramore 6/30

  • “Since the election of Donald Trump, the stock market has soared and many pundits have noted positive economic trends in the US. Jim Chanos of Kynikos Associates, known for his financial prescience, is less sanguine.”

NYT – After Killing Currency, Modi Takes a Leap With India’s Biggest-Ever Tax Overhaul – Geeta Anand 6/30

Economist – How fracking leads to babies 7/2

  • “The typical family in America is changing. Couples are increasingly reluctant to seal their relationships with the stamp of marriage, or to tie the knot before having children. In 1960 fewer than a tenth of births were to unmarried women, whereas these days around two fifths of children are born out of wedlock. Economists wonder whether the changing economic fortunes of men might be driving these decisions, but struggle to disentangle the different factors at work. Recently, though, new evidence has emerged on the topic. Did, for example, the fracking boom affect family formation?”
  • “A new study by Melissa Kearney and Riley Wilson, two economists at the University of Maryland, looks at the impact of the recent fracking boom in America, which boosted job opportunities for less-educated men. The economists wanted to see how this affected birth rates, both in and outside of marriage. They compared marriage and birth rates in areas where fracking had boosted the local economy with those where it had not had any effect. The researchers found no effect on marriage rates, though fertility rates did rise. On average, they find that $1,000 of extra fracking production per person was associated with an extra six births per 1,000 women.” 
  • “The result confirms the hypothesis that better economic prospects lead to higher fertility. But it also sheds light on changing social mores in America: good times used to mean more wedding bells and babies, whereas now they just mean the latter. The policy prescriptions are not obvious. Whether or not people get married is their own business. But the finding does offer some comfort to those who worry that declining marriage rates are purely the product of worsening economic prospects for men. Clearly, some other factor is at play.”

NYT – Confidence Boomed After the Election. The Economy Hasn’t. – Neil Irwin 7/4

FT – China was the real victor of Asia’s financial crisis – James Kynge 7/2

Energy

WSJ – Behind Oil’s Ups and Downs, Little Has Changed – Nathaniel Taplin 7/4

  • “If oil heads higher, it will elicit a quick supply response – same on the downside. Nothing in the past six weeks has done much to change that equation.”

Finance

FT – SEC accuses British executive of bitcoin fraud – David Lynch 6/30

  • The fraudster: Renwick Haddow
  • The companies: Bitcoin Store and InCrowd Equity Inc.
  • Caveat emptor

Tech

WSJ – Daily Shot: Credit Suisse – Data Storage Costs 7/3

Health / Medicine

FT – Our digital addiction is making us miserable – Izabella Kaminska 7/4

Religion

NYT – Israel Faces Uproar Abroad as Netanyahu Yields to Ultra-Orthodox Jews – Isabel Kershner 7/3

  • “Jews around the world have been in an uproar in the week since Mr. Netanyahu yielded to pressure from his ultra-Orthodox coalition partners and suspended a plan to provide a better space for non-Orthodox men and women to worship together at the Western Wall in Jerusalem.”
  • “That new prayer space had long been a goal of the Reform and Conservative movements, popular in the West. And in another blow to those more liberal wings of Judaism, the government also approved a contentious bill enshrining the strictly Orthodox Chief Rabbinate’s monopoly over conversions to Judaism in Israel.”
  • “Together, those moves have reawakened a decades-old dispute over who is a Jew. And they have prompted an emotional debate over the nature of the relationship between the world’s Jews and the Jewish homeland — at a time when a right-wing Israeli government, under increased international criticism, has relied on support among the generally more liberal Jewish diaspora in the West.”
  • “The furor over the Western Wall agreement boils down to a refusal by Israel’s Orthodox religious authorities to grant any recognition to Reform and Conservative Judaism. The main prayer space at the Western Wall, known in Hebrew as the Kotel, has separate men’s and women’s sections, in the Orthodox tradition, and is run like an Orthodox synagogue.”

China

FT – China bans homosexuality, luxurious lifestyles from online videos – Yuan Yang 7/1

  • “Sexual freedom, luxurious lifestyles and portrayals of Chinese imperialism are the latest targets of China’s crackdown on internet video content.”
  • “’Abnormal sexual lifestyles’, including homosexuality, are included among the 84 categories of topics that were banned from online video programs by Chinese censors last week. ‘Unhealthy’ views of the family, relationships, and money are also banned.”
  • “The detailed list is the first issued by government censors to cover the rapidly growing field of internet video, and comes after dozens of the country’s most popular entertainment channels were shut down in an online crackdown that started three weeks ago.”
  • “Beijing has heightened its scrutiny of online content in the run-up to the politically sensitive national congress of the Communist party later this year, analysts say.”
  • “Under the new guidelines, mocking revolutionary heroes is forbidden, as well as portraying ethnic discord or lack of national unity.” 
  • “In particular, programs should not portray ‘the use of military force to conquer others during China’s historic feudal period’.” 
  • “The clause is a veiled reference to Tibet and Xinjiang — two large border regions of China where separatist movements have emerged in opposition to the government’s policies against Buddhist and Muslim citizens.” 

WP – China vows to step up air and sea patrols after U.S. warship sails near disputed island – Simon Denyer and Thomas Gibbons-Neff 7/3

  • “China’s military vowed Monday to step up air and sea patrols after an American warship sailed near a disputed island in the South China Sea in what Beijing called a ‘serious political and military provocation.’”
  • “The past few days have seen a dramatic downturn in relations between the two sides, after the United States announced its intention to sell arms to Taiwan and sanction a Chinese bank doing business with North Korea.” 
  • “Then, on Sunday, the USS Stethem, an American guided-missile destroyer, sailed within 12 nautical miles of Triton Island, a small isle in the Paracel Islands chain claimed and controlled by China, a U.S. defense official said.”
  • “The Stethem’s patrol marked the second such operation near Chinese-controlled islands in six weeks, after a few months’ hiatus in the wake of Trump’s inauguration.”
  • “China’s Defense Ministry said its armed forces had dispatched two frigates, a minesweeper and two fighter jets to warn the Stethem away.”
  • “The Paracels are among a group of islands and atolls in the South China Sea at the heart of ongoing tensions in Southeast Asia. China claims full sovereignty over the sea and has built fully functional military facilities complete with airfields and antiaircraft defenses on some islands.”
  • Expect the movie WarGames to start trending.

NYT – China’s Vision for a Straddling Bus Dissolves in Scandal and Arrests – Austin Ramzy and Carolyn Zhang 7/4

July 3, 2017

Have a great Independence Day!

Perspective

WP – The U.S. fertility rate just hit a historic low. Why some demographers are freaking out – Ariana Eunjung Cha 6/30

  • “According to provisional 2016 population data released by the Centers for Disease Control and Prevention on Friday, the number of births fell 1% from a year earlier, bringing the general fertility rate to 62.0 births per 1,000 women ages 15 to 44. The trend is being driven by a decline in birthrates for teens and 20-somethings. The birthrate for women in their 30s and 40s increased — but not enough to make up for the lower numbers in their younger peers.”
  • “A country’s birthrate is among the most important measures of demographic health. The number needs to be within a certain range, called the “replacement level,” to keep a population stable so that it neither grows nor shrinks. If too low, there’s a danger that we wouldn’t be able to replace the aging workforce and have enough tax revenue to keep the economy stable.”
  • The article attributes the trend to characteristics of the millennial generation; however, I would place more of the cause at the rising cost of housing, rising cost of primary education & extracurriculars, lingering student debt, and the replacement of stable work with ‘gigs’. It’s hard to want to procreate when you don’t feel stable or supported.

Worthy Insights / Opinion Pieces / Advice

NYT – Once a Model City, Hong Kong Is in Trouble – Keith Bradsher 6/29

Energy

FT – Canada oil output threatens to derail Opec plan – Gregory Meyer 6/29

  • “As Opec glares at the surge in US shale production that is threatening to derail its attempt to balance the oil market, it may also want to cast an eye north.”
  • “Canada, home of the world’s third-largest oil reserves, might have seen producers slash capital spending during the three-year-old oil decline, but earlier investments in the country are set to keep pushing output higher for at least the next 18 months.”
  • “A forecast released this month by the Canadian Association of Petroleum Producers sees the country’s output increasing by 270,000 barrels a day in 2017 and another 320,000 b/d next year.”
  • “That combined two-year Canadian increase is equal to almost a third of Opec’s production cuts that it made with allies like Russia at the beginning of this year in an effort to raise prices.”
  • “Much of that Canadian oil is already pouring into storage tanks in the US, rattling traders who last week pushed prices to a half-year low.”

FT – US oil rig count drops for first time since January – Gregory Meyer 6/30

  • “The number of rigs drilling for oil in the US has clocked its first weekly decline since January… The tally had risen for 23 consecutive weeks beforehand.”

Agriculture 

Bloomberg – Spring Wheat Surges the Most Since 2010 – Megan Durisin Jen Skerritt and Brian K Sullivan 6/29

  • “Prices for spring wheat, the high-protein variety favored for bagels and pizza crusts, are starting to defy gravity.”
  • “Futures soared as much as 8.5% on Thursday, the most intraday since 2010, after Canada cut its planting outlook and drought conditions expand in U.S. growing states. Prices are up 31% in June, beating the gains for 80 other commodities tracked by Bloomberg.”
  • “The northern U.S. has been plagued by dryness this year, and conditions for the domestic spring-wheat crop are their worst for this time since 1988. Now, traders are eyeing a smaller crop in Canada, too. The country’s government on Thursday cut its outlook for the total wheat acreage more than analysts expected and said canola plantings will top the grain for the first time ever.”

China

Reuters – Macau casinos post 11th month of gains on VIP resurgence – Farah Master 7/1

  • “Revenues in the world’s biggest casino hub of Macau jumped nearly 30% in June, posting an 11-month winning streak, as demand from high-roller VIPs accelerated despite a corruption crackdown.”

FT – Xi warns Hong Kong not to threaten ‘red line’ of Chinese rule – Ben Bland and Jamil Anderlini 7/1

  • “Chinese President Xi Jinping has warned Hong Kongers not to cross the ‘red line’ of China’s sovereignty and called for a renewed campaign of “patriotic education” for young people in a hardline speech that comes amid growing opposition to Beijing’s rule and its creeping interventions in the semi-autonomous territory.”
  • “’Any attempt to endanger national sovereignty and security, challenge the power of the central government . . . or use Hong Kong to carry out infiltration and sabotage activities against the mainland is an act that crosses the red line, and is absolutely impermissible,’ he said on Saturday.”