August 24, 2017

Markets / Economy

WSJ – Mutual Funds Mark Down Uber Investments by Up to 15% – Rolfe Winkler and Greg Bensinger 8/22

  • “Vanguard Group, Principal and Hartford Funds all marked down their shares by 15% to $41.46 a share for the quarter ended June 30, according to the fund companies’ latest disclosure documents. T. Rowe Price Group Inc. cut the estimated price of its Uber shares by about 12% to $42.70 for the same period.”
  • “Uber’s shares don’t trade publicly, so the mutual-fund companies that hold them must estimate the shares’ worth each quarter. Seven mutual-fund companies had mostly maintained a $48.77 share price since the fourth quarter of 2015, when Uber first sold its shares to investors at that price.”
  • “Fidelity Investments held its estimate of $48.77 as of June 30. The one outlier is BlackRock Inc., which wrote up the shares slightly each of the past two quarters, settling at $53.88 as of June 30.”
  • “At least seven mutual-fund companies own shares in Uber, several of them first buying in during a 2014 funding around at $15.51 a share. The price has roughly tripled since then through a series of funding rounds, but Uber hasn’t raised new capital since last year at the $48.77 price.”

Finance

WSJ – Think Rates Are Going Up? Banks Don’t – Rachel Louise Ensign 8/22

  • “After years of waiting for interest rates to rise, some banks are lending as if that day will never come, loading up on a record amount of loans and securities that carry low rates for long periods.”
  • “The percentage of bank assets that won’t mature or change rates for more than five years reached a new high in the second quarter, according to Federal Deposit Insurance Corp data released Tuesday. That means banks are allowing more borrowers to lock in low rates for long periods, a potential risk should rates move sharply higher.”
  • “Across all banks, the percentage of total assets that are at a fixed rate for more than five years was 27.5% in the second quarter of 2017, its highest since the FDIC started tracking it in 1984. The metric reached 33.7% in the second quarter at banks with $1 billion to $10 billion in assets.”
  • “Commercial real-estate loans made up 31.5% of assets at those midsize and smaller banks in the quarter, up from 25.7% in the second quarter of 2012. The figure is far lower at bigger banks, at 6.4%, and has remained steady in recent years.”
  • “The growth rate for commercial real-estate loans, now around 9%, has helped banks compensate for a slowdown in general business lending, much of which is floating rate, meaning the interest rates on the loans rise and fall with market rates.”

Environment / Science

NYT – Alaska’s Permafrost is Thawing – Henry Fountain 8/23

  • “Once this ancient organic material thaws, microbes convert some of it to carbon dioxide and methane, which can flow into the atmosphere and cause even more warming. Scientists have estimated that the process of permafrost thawing could contribute as much as 1.7 degrees Fahrenheit to global warming over the next several centuries, independent of what society does to reduce emissions from burning fossil fuels and other activities.”

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