September 13, 2017

Perspective

WSJ – Irma Leaves 6.7 Million Florida Utility Customers in the Dark – Erin Ailworth 9/11

NYT – Houston’s Floodwaters Are Tainted With Toxins, Testing Shows – Sheila Kaplan and Jack Healy 9/11

  • “It is not clear how far the toxic waters have spread. But Fire Chief Samuel Peña of Houston said over the weekend that there had been breaches at numerous waste treatment plants. The Environmental Protection Agency said on Monday that 40 of 1,219 such plants in the area were not working.”
  • “The results of The Times’s testing were troubling. Water flowing down Briarhills Parkway in the Houston Energy Corridor contained Escherichia coli, a measure of fecal contamination, at a level more than four times that considered safe.”

NYT – In Houston After the Storm, a City Split in Two – Jack Healy 9/8

  • “Life in Houston now comes with a twinge of survivor’s guilt for those in dry neighborhoods, and envy among those still dealing with floodwater.”

Worthy Insights / Opinion Pieces / Advice

WSJ – Why the Markets Keeps Going Up and What Would Bring It Down – Justin Lahart 9/12

  • “Big, fast-growing companies have led the recent rally, and that should continue-but when it ends, get out fast.”

WEF & Business Insider – A neuroscientist who studies decision-making reveals the most important choice you can make – Chris Weller 8/4

  • Spoiler alert, it’s who you surround yourself with.

Markets / Economy

FT – US companies transformed into 800lb gorilla in bond market – Eric Platt, Nicole Bullock, and Alexandra Scaggs 9/12

  • “Thirty US companies together have more than $800bn of fixed-income investments, according to a Financial Times analysis of their most recent filings with the US Securities and Exchange Commission.”
  • “Their holdings of Treasuries, corporate, agency and municipal debt, as well as asset- and mortgage-backed securities, means they collectively have more firepower in debt and credit markets than high-profile asset managers including AllianceBernstein, Invesco and Franklin Templeton.”
  • “’They are asset managers in their own right,’ Ramaswamy Variankaval, head of JPMorgan’s corporate finance advisory group, said of the companies.”
  • “A reluctance by American multi-nationals to repatriate profits generated overseas has pushed the size of the US corporate cash piles to more than $2tn, a rise of 50% over the past decade and more than double the levels at the turn of the century, according to the Federal Reserve.”
  • “In total, the 30 companies, which include venerable household names like Ford, Coca-Cola and Boeing, have more than $1.2tn in cash, cash equivalents, marketable securities and investments, according to the FT analysis.”
  • “The 30 companies have amassed a portfolio of more than $400bn of US corporate bonds, representing nearly 5% of the outstanding market.”
  • “They compete for such debt alongside pension funds, sovereign wealth funds and other investors, helping to drive down borrowing costs for corporate America.”
  • Seems self-serving to an extent…

Finance

WSJ – China to Shut Bitcoin Exchanges – Chao Deng and Paul Vigna 9/11

  • “The policy shift in the world’s No. 2 economy shows how nations are wrestling with bitcoin and its place in the financial system. In China, specifically, the government’s attack on bitcoin comes amid a focus on preventing capital from fleeing to digital currencies.”
  • “After a Chinese news organization Friday reported on China’s commercial-trading ban, Bitcoin slid around 10% to $4,186, from levels above $4,600 on Thursday, according to research site CoinDesk. It has hovered around that level since, closing Monday at $4,211.”
  • “China has long been a major hub for bitcoin, which was created by an anonymous programmer during the depths of the 2008 financial crisis as an alternative to official currencies. Much of the world’s bitcoin is mined—created through powerful algorithms—in China. As recently as this past January, before new rules damped trading in the country, more than 80% of global bitcoin activity took place in yuan.”
  • “The stakes for Beijing grew as prices of virtual currencies like bitcoin soared, adding to the risk that Chinese investors would continue to speculate and expose themselves to big losses. Analysts and investors attribute the sharp rise in bitcoin last year to Chinese investors, who began buying it up while at the same time selling the yuan amid worries that the Chinese currency would weaken.”
  • “While China in the past accounted for the bulk of global bitcoin trading activity, the country’s share has dropped dramatically since the government started making moves to cool the market.”
  • “In April, Japan’s Financial Services Agency implemented rules that recognized bitcoin as a payment method. Since then, Japan has become the top market for bitcoin trading, accounting for almost half of global volumes. The U.S. share of trading has jumped to above 25% from 5% over the past year.”

Health / Medicine

NYT – New Gene-Therapy Treatments Will Carry Whopping Price Tags – Gina Kolata 9/11

  • “The first gene therapy treatment in the United States was approved recently by the Food and Drug Administration, heralding a new era in medicine that is coming faster than most realize — and that perhaps few can afford.”
  • “The treatment, Kymriah, made by Novartis, is spectacularly effective against a rare form of leukemia, bringing remissions when all conventional options have failed. It will cost $475,000.”
  • “With gene therapy, scientists seek to treat or prevent disease by modifying cellular DNA. Many such treatments are in the wings: There are 34 in the final stages of testing necessary for F.D.A. approval, and another 470 in initial clinical trials, according to the Alliance for Regenerative Medicine, an advocacy group.”
  • “The therapies are aimed at extremely rare diseases with few patients; most are meant to cure with a single injection or procedure. But the costs, like that of Kymriah, are expected to be astronomical, alarming medical researchers and economists.”
  • “One drug, to prevent blindness in those with a rare genetic disease, for example, is expected to cost between $700,000 and $900,000 per patient on average, noted Dr. Aaron Kesselheim, director of the program on regulation, therapeutics and law at Brigham and Women’s Hospital.”
  • “Drug makers argue that the prices ought to reflect the value of a curative treatment to the patient. Dr. Kesselheim and other experts are far from convinced.”
  • “Elizabeth Pingpank, a spokeswoman for Bluebird Bio, which is developing several gene therapies, said the company realizes its prices will be a challenge.”
  • “Bluebird and several other companies have set up a consortium with academics to try to figure out novel ways to enable insurers to pay the expected high prices.”
  • “’We recognize that most payers in the U.S. are not currently set up to support one-time therapies that generate long-term transformative benefits,’ Ms. Pingpank said.”
  • “Indeed, health care executives already are rushing to develop new payment models.”
  • “’It’s amazing how many think this is in the future,’ said Dr. Steve Miller, chief medical officer at Express Scripts, said of the looming payment problem. ‘This is right now.’”
  • “The idea favored by Dr. Miller and others is to pay for these novel drugs as you might a mortgage on a house.”
  • “An insurer would pay a large fraction up front, when the patient is treated, and then make regular payments until the entire bill is paid — or the disease returns.”
  • “That would require an unprecedented type of cooperation among insurers. Patients often change insurers, and there is no benefit to a new insurer in continuing payments for an injection that a patient had long ago — even if it was curative.”

China

WSJ – Daily Shot: Natixis – Cross Border M&A Deals by Chinese Corporates 9-12

FT – China’s biggest banks ban new North Korean accounts – Yuan Yang and Xinning Liu 9/11

  • “China’s biggest banks have banned North Koreans from opening new accounts in an unprecedented move to clamp down on financial flows with the country’s unruly neighbor.”
  • “Multiple bank branches, including those of the country’s top four lenders, told the Financial Times they had imposed a freeze on new accounts for North Korean people and companies. Some are going even further, saying they are ‘cleaning out’ existing accounts held by North Koreans by forbidding new deposits.”
  • “The moves give weight to the theory that since Pyongyang’s sixth and most powerful nuclear test this month, policy hawks in Beijing have gained the upper hand in an internal debate over whether to toughen sanctions against the Kim Jong Un regime.”
  • “The measures go further even than what has been agreed internationally.”

Europe

WSJ – Daily Shot: Europace German House Price Index 9-11

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