Month: February 2018

February 28, 2018

Perspective

WSJ – Chinese Regulator Seizes Anbang Insurance, Owner of Waldorf Astoria – James T. Areddy 2/23

  • “China’s insurance regulatory agency Friday took control of hard-charging, acquisitive Anbang Insurance Group Co., saying the action is needed to avoid a collapse of the firm following suspected illegal activity and the downfall of its once-highflying chairman.”
  • “The China Insurance Regulatory Commission published a letter to Anbang management saying duties of the board and management will now be overseen by a working group of regulators from various agencies for one year. ‘All transactions of your company, asset trading, information dissemination, contract signing other than traditional insurance business are subject to the consent of the working group,’ said the statement dated Feb. 12.”
  • “Separately, ​Wu Xiaohui, who led Anbang until he was detained eight months ago, has been indicted on charges of fraudulent fundraising and abusing his position, according to a one-sentence notice by prosecutors in Shanghai on Friday. The insurance regulator’s statement refers to Mr. Wu as Anbang’s former chairman.”

NYT – Beijing Takes Over Anbang, Insurer That Owns Waldorf Astoria – Keith Bradsher and Alexandra Stevenson 2/22

  • “The Waldorf Astoria purchase ushered in the rise of a new breed of Chinese deal makers. The companies, which also included Dalian Wanda Group, HNA Group and Fosun International, bought up everything from hotels to banks to movie production companies. Though the companies are privately owned, their leaders often benefited from their political connections, and they were often backed by cheap debt provided by China’s state-run banks.”
  • “The deals made the companies truly global players. For example, in a financial disclosure last spring, shortly before the police detention of its chairman, Anbang said that nearly three-fifths of the assets of its main business, life insurance, were overseas.”
  • “Property was a big focus for Anbang. In 2016, it spent more than $6 billion for a group of hotels in the United States, buying it from Blackstone Group, a private equity giant. That gave it marquee properties including the Westin St. Francis hotel in San Francisco, the Loews Santa Monica hotel in California and the Fairmont Chicago hotel.”
  • “Anbang also offered more than $13 billion for Starwood Hotels and Resorts before abandoning its bid in 2016, without explanation. By then, the Chinese deal makers had hit a wall.”
  • “China was shaken three years ago by a surge of money out of the country and concerns that its economy had been layering on too much debt. Anbang and the other Chinese deal makers, which had borrowed heavily to fund their shopping sprees, soon drew attention from officials. State media labeled them ‘gray rhinoceroses‘ — big problems that are ignored until they start moving fast.”

FT – China conglomerates suffer different fates in Beijing crackdown – Tom Hancock and Lucy Hornby 2/23

  • “The Chinese government’s takeover of Anbang Insurance and criminal prosecution of founder Wu Xiaohui marks the biggest step yet in an official crackdown on risky financing by ambitious conglomerates that has prompted a severe decline in China’s overseas dealmaking.”
  • “But on the same day as the Anbang seizure was announced, Chinese company Fosun said it would buy a controlling stake in Lanvin, France’s oldest couturier. The move underlines the diverging fates of the four largest private conglomerates — the others are HNA and Dalian Wanda — that Beijing identified last year as borrowing too aggressively to fund offshore deals.”
  • “All have captured headlines over the past few years with a series of audacious foreign acquisitions. These include Anbang’s $2bn purchase of New York’s Waldorf Astoria, Dalian Wanda’s takeover of Hollywood studio Legendary Entertainment for $3.5bn, and HNA’s $40bn splurge on stakes in companies including Deutsche Bank and Hilton Worldwide.”
  • “Beijing stepped in last year to curb the spree, worried that companies were overpaying for foreign assets and draining China’s foreign currency reserves, while relying on risky financing methods to fund acquisitions.”
  • “Analysts say the government’s treatment of the groups differs depending on their sources of financing, and whether they have co-operated in the government’s campaign to slow capital outflows and cut leverage.“
  • “Wanda has co-operated with official directives by unloading more than $4bn in overseas assets over the past nine months and promising to “refocus” on the domestic economy. Last week it sold its 17% stake in Spanish football club Atlético Madrid.”
  • “HNA, meanwhile, has appeared to win back support as it regroups amid a liquidity crunch. Last week, the debt-laden company announced the HK$15.8bn ($2bn) sale of two plots of land in Hong Kong to local developer Henderson Land.”
  • “It was Anbang’s financing model that caused the Chinese authorities most concern. Unlike other groups that relied on bank loans or bond issuances to fund acquisitions, Anbang relied on sales of investment-like products it sold to wealthy Chinese retail investors labelled as life insurance, a part of China’s sprawling shadow-banking system.”
  • “Anbang’s finances were also in a more precarious state than other companies due to the mismatch between the short-term nature of its assets and the longer-term nature of its liabilities.”

WSJ – Who Will Be Called On to Clean Up the Anbang Mess? – Jacky Wong 2/26

WSJ – Anbang and the Financialization of China’s Economy – Nathaniel Taplin 2/23

  • “China’s Anbang Insurance went from zero to too-big-to-fail in the blink of an eye. It is a lesson in how quickly China’s financial problems grow—and how much is left to clean up.”
  • “A capital raising, including a possible government capital injection seems likely. The total cost of cleaning up the mess, including whatever losses sit on Anbang’s gargantuan balance sheet—put at close to 2 trillion yuan ($300 billion) in April by financial magazine Caixin—is an unknown.”
  • “This yearlong ‘management’ of Anbang announced by regulators could be misinterpreted as a positive for China: financial shares rose. But investors celebrating China’s apparent success at containing financial risks without damaging the broader economy shouldn’t be so sanguine.”
  • “Anbang fueled its international shopping spree, including a top-dollar price for the Waldorf Astoria Hotel in New York, on the back of high-yielding, often highly leveraged investment products sold to retail investors. Some of these, known as wealth-management products, or WMPs, became the target in 2017 of government efforts to clean up China’s highly leveraged financial system. That essentially cut off one the biggest sources of Anbang’s funding.”
  • “Anbang and WMPs are not, however, the end of China’s debt crackdown story. While WMPs and the bonds they invested in withered, companies have returned to previously popular forms of non-bank finance including trust loans, off-balance sheet company-to-company loans and bankers’ acceptances.”
  • “These grew 15% last year after just 4% growth in both 2015 and 2016. Overall debt and equity issuance stayed robust despite the crackdown.”
  • “Anbang may be wrapped up. But the cost of letting finance take such a big chunk of China’s economy is far from being resolved.”

Worthy Insights / Opinion Pieces / Advice

A Teachable Moment – Where Everybody Doesn’t Know Your Name – Anthony Isola 2/26

  • A comparison of financial markets and roads.

Economist – China’s leader, Xi Jinping, will be allowed to reign forever 2/26

Economist – Money stolen by Bernie Madoff is still being found – 2/26

  • “Almost a decade after the Ponzi scheme collapsed, trustees are still returning money to the victims.”

FT – Xi Jinping’s bid to stay in power more of a gamble than it seems – Tom Mitchell 2/27

  • “President’s move risks backlash from China’s urban elites if not the masses.”

FT – Why Donald Trump will never escape Russia – Edward Luce 2/21

FT – Three questions for Federal Reserve chairman Jay Powell – Rana Foroohar 2/25

WSJ – Stocks Are Probably Overpriced, but Don’t Be Too Sure – Jason Zweig 2/23

WSJ – A Reality Check for Wayfair – Elizabeth Winkler 2/26

  • “The game of growing revenue by burning cash can’t go on forever and investors don’t want to be there at the end.”

Finance

FT – Rush to buy frontier debt brings higher risks and yields – Kate Allen 2/26

  • “For three decades Tajikistan has wanted to build the world’s tallest hydroelectric dam but struggled to pay for it.”
  • “That changed last September when the mountainous central Asian country tapped international debt markets for the first time, was inundated with $4bn of orders and eventually sold $500m of debt at a yield of 7.125% — a landmark moment for an economy with an annual GDP of just $7bn.”
  • “Investors’ search for yield, brightening global economic conditions and structural reforms in many countries have resulted in benign conditions for what debt bankers refer to as ‘frontier’ economies.”
  • “The world’s riskiest countries are selling debt at a record rate, research published late last year found, with junk-rated borrowers comprising nearly half of all borrowing from emerging markets in 2017; one adviser called it a ‘gold rush’.”
  • “’The markets are so good at the moment that clients can literally ask for whatever they want,’ said an experienced deals banker. ‘People will buy anything so long as it offers them yield and diversification. They get bored of only being able to buy the same names and have also hit their limits for some of the more frequent names’.”
  • “’Ultimately this is people’s pensions we’re talking about,’ said one investor. ‘If you explained to the man on the street that their pension fund is being invested in Nigeria at 7%, they would be incredulous. If you threw that decision out to ordinary people, would they buy it? Probably not’.”

Cryptocurrency / ICOs

WSJ – What Bitcoin Rout? Sales of New Digital Tokens Are Still Soaring – Paul Vigna 2/22

  • “Bitcoin and many of its peers have crashed in recent months from all-time highs reached in December. But that hasn’t dented the popularity of one crypto-fundraising method: so-called initial coin offerings.”
  • “Sales of those digital tokens have already raised about $1.66 billion this year, according to research and data firm Token Report. About 480 have launched in 2018 and only 126 of those have closed to new funds. That puts the market on pace to top last year’s total of $6.5 billion raised in coin offerings, according to the firm.”
  • “Whatever their motive, coin-offering investors have created some of the best-capitalized startups in incredibly short periods. The $1.5 billion raised by block.one in less than a year is equal to the amount raised by Twitter Inc. between 2007 and 2011 across nine separate funding rounds. And only four initial public offerings in 2017 and 2018 raised more than the amount block.one has attracted, according to data from Dealogic.”
  • “The continued success of coin offerings is even more remarkable given heightened regulatory scrutiny globally of cryptocurrencies and on the sales of digital tokens.”
  • “In the U.S., the SEC and Commodity Futures Trading Commission have heightened their oversight of the coin-offering market. The CFTC recently issued a customer advisory in which it advised people to avoid ‘pump-and-dump’ schemes, and offered whistleblowers a monetary reward in the case of successful enforcement actions.”
  • “The SEC has brought enforcement actions against several ICOs, most recently a Texas-based outfit called AriseBank, which had claimed to have raised more than $600 million in an ICO.”
  • “That pressure may have led to something of a bifurcation in the market for coin offerings. While large, widely publicized projects like block.one and Telegram have no problem raising money, others have had trouble meeting their fundraising goals.”
  • “Researchers at Ernst & Young found that less than 25% of the ICOs in November 2017 hit their goals, down from 93% in June. Token Report said the median amount raised by ICOs this year is about $12 million.”

Africa

FT – Gupta empire crumbles in wake of Zuma’s departure – Joseph Cotterill and Simeon Kerr 2/26

  • “Indian-born brothers flee South Africa as businesses go into administration.”

China

WSJ – What Will Keep the Chinese Consumer Strong? – Jacky Wong 2/22

  • “Beijing’s nationwide anticorruption drive, which drove luxury spending to a halt just three years ago, has faded. That coincided with a rebound in property prices, Chinese consumers’ main source of wealth. According to Deutsche Bank, the housing boom has added 86 trillion yuan ($13.5 trillion) to the total value of residential properties in the past two years. And unlike previous cycles, the gains aren’t concentrated in the biggest cities such as Shanghai and Beijing but have spread to smaller cities. People in these so-called tier-two and tier-three cities have made more money from their houses on paper last year than from their wages, according to Deutsche.”

February 27, 2018

Perspective

Visual Capitalist – How Money is Spent by Different Income Groups – Jeff Desjardins 2/25

WSJ – Daily Shot: U.S. Racial / Ethnic Demographics 2/26

WEF – Business Insider: Gun control in four countries around the world – Chris Weller 2/21

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Now & Then – Ben Carlson 2/25

Bloomberg Businessweek – In Exile, Bannon Sounds the #MeToo Alarm – Joshua Green 2/13

  • “He sees female empowerment as the next great political backlash, which means trouble for Republicans.”

Economist – Why Cape Town is running out of water 2/15

  • “The politics of drought.”

The Registry – Is the 1031 Exchange Panacea or Placebo? – John McNellis 2/26

Markets / Economy

WSJ – Have We Seen Peak Prices for Smartphones – Dan Gallagher 2/25

WSJ – Playing With $100 Billion, Warren Buffett Is Giant Trader of U.S. Treasury Bills – Nicole Friedman and Daniel Kruger 2/23

Real Estate

FT – JPMorgan plans to build massive HQ tower in New York’s Park Ave – Ben McLannahan 2/21

  • “JPMorgan Chase has given a big boost to the old business heart of midtown Manhattan, agreeing a deal to tear down its 60-year-old Park Avenue headquarters and replace it with one of the tallest towers in New York City.”
  • “The biggest US bank by assets had been considering a move from its 270 Park Avenue location to the west side of Manhattan, as an anchor tenant of a new development known as Hudson Yards. But on Wednesday the bank said that it had struck a deal with Mayor Bill de Blasio to stay put, moving staff from several buildings in the Park Avenue area into a new, 2.5m sq ft tower.” 
  • “At 70 to 75 floors, it should be the tallest bank building in the country upon completion in 2024, topping Bank of America’s 55-floor tower a few streets away, on the north-west corner of Bryant Park. It will also surpass BofA’s 60-floor headquarters in Charlotte, North Carolina, which looms over the 42-floor Wells Fargo Tower.” 
  • “Stuart Saft, head of the New York real estate practice at Holland & Knight, described the deal as a ‘fabulous’ one for midtown Manhattan, likening the threat from Hudson Yards to the development of Canary Wharf in London in the late 1980s. Already, white-shoe law firms such as Milbank, Tweed, Hadley & McCloy and Boies Schiller Flexner have agreed to move to the complex emerging by the Hudson River.” 
  • “JPMorgan will expand its floor area by buying unused development credits, known as ‘air rights’, from landmark properties in the area such as St Patrick’s Cathedral, St Bartholomew’s Church and Central Synagogue.”

SF Chronicle – Google’s Bay Area real estate empire equivalent to 14 Salesforce towers – Wendy Lee 2/23

WSJ – Tough Start for Housing – Justin Lahart 2/21

  • “Homes sales slowed in January, even before higher rates and the tax law hit the market.”

Finance

FT – Private equity ‘secondaries’ deals hit record $58bn – Chris Flood 2/25

FT – Blockchain ‘could save asset managers $2.7bn a year’ – Attracta Mooney 2/21

  • “Blockchain could save asset managers $2.7bn a year if the investment industry shunned the laborious manual practices involved in buying and selling funds in favor of using online ledger technology, according to research published on Thursday.”
  • “Technology company Calastone said blockchain, which is a giant online ledger, could revolutionize the processes involved in buying and selling funds, generating large savings for investors in the process.”
  • “It estimated that based on daily trade volumes of funds in the UK, Ireland, Luxembourg, Hong Kong, Singapore, Taiwan and Australia, £1.9bn — or $2.7bn — in savings was possible.”
  • “Earlier this year, BNP Paribas Asset Management said it had successfully completed a full end-to-end fund transaction test using blockchain technology. The project involved a tie-up between BNP Paribas Securities Services’ blockchain program, Fund Link, and FundsDLT, a blockchain-based decentralized platform for fund transaction processing.”

WSJ – Daily Shot: Goldman Sachs – ICOs outpacing Venture Capital 2/26

Asia – excluding China and Japan

FT – Top Indonesian bank eyes $50bn of assets stashed in Singapore – Wataru Suzuki 2/25

  • “Indonesians declared more than 750tn rupiah ($52.5bn) worth of assets in Singapore during Indonesia’s tax amnesty program — which gave immunity from prosecution to those who came clean about untaxed wealth and paid a small penalty — ended last March. That is more than the combined total they declared in the next four top destinations — British Virgin Islands, Hong Kong, Cayman Islands and Australia.”

China

Economist – China is trying new ways of skimming housing-market froth 2/15

  • “The party wants people to rent.”

FT – Chinese embrace digital red envelopes for lunar new year – Louise Lucas 2/21

  • “Tencent, a Chinese technology group with an equity value greater than Facebook’s, said 768m people sent and received hongbao, the red packets stuffed with cash, over Weixin Pay, its third-party payments business, during the six-day holiday period. Typically people will hand out scores or even hundreds of hongbao: according to Tencent, one person sent 2,723 while another received 3,429.”

South America

Economist – Fending off the flood from Venezuela 2/17

  • “The rise in migration has alarmed Latin American governments.”

February 26, 2018

Perspective

Economist – Daily Chart: Are alpha males worse investors? 2/20

WSJ – Household Debt Sees Quiet Boom Across the Globe – Josh Zumbrun 2/18

WSJ – Daily Shot: United Nations – Global Population Trends 2/23

  • “The global population pyramid is expected to invert by 2100 as the population gets closer to peak levels.”

Markets / Economy

WSJ – Daily Shot: Credit Suisse – Domestic Equity Flows 2/23

Real Estate

WSJ – Daily Shot: FRED – US mortgage rates 2/23

Finance

WSJ – Daily Shot: U.S. 3-Month LIBOR Exchange Rate 2/20

WSJ – Daily Shot: U.S. Borrowing Costs Among Highest in Developed World – Richard Barley 2/21

Cryptocurrency

WSJ – Daily Shot: Bitcoin 2/22

China

Economist – The rapid rise and fall of the Anbang empire 2/23

  • “China’s government takes control of its would-be financial colossus.”

WSJ – Daily Shot: BMI, Chinawealth – China Wealth Management Product Growth 2/22

WSJ – China’s Communist Party Proposal Sets Stage for Xi to Hold Onto Power – Chun Han Wong 2/25

  • “Proposal would eliminate the constitutional cap on presidential terms.” Currently set at two terms of five years each.

February 22, 2018

Markets / Economy

Bloomberg – Walmart’s Margins Hit Record Low as Fight With Amazon Takes Toll – Matthew Boyle 2/20

WSJ – Daily Shot: FAANG Basket vs S&P 500 – Relative Performance 2/20

WSJ – Daily Shot: Consumer Staples SPDR ETF vs S&P 500 – Relative Performance 2/20

WSJ – Daily Shot: Vanguard Real Estate ETF vs S&P 500 – Relative Performance 2/20

  • Rising bond yields…

WSJ – Daily Shot: Shifting Tastes – Coca-Cola 2/21

Insurance

WSJ – Reinsurers Hit by Catastrophe Losses, Rising Competition – William Wilkes 2/19

Construction

WSJ – Daily Shot: CME Lumber Futures 2/20

Education

WSJ – Daily Shot: The Rise of the Jumbo Student Loan – Josh Mitchell 2/16

February 21, 2018

Perspective

WP – Have your representatives in Congress received donations from the NRA? – Aaron Williams 2/15

Worthy Insights / Opinion Pieces / Advice

WSJ – The Big Shift Driving Tech Profits – Dan Gallagher 2/19

  • “Big tech companies learning to look past the initial sale as subscriptions build an important base of recurring revenue.”

Real Estate

Bloomberg – Is America in a Retail Apocalypse? Ask Yelp – Patrick Clark 2/13

WSJ – Daily Shot: John Burns RE Consulting – US National Housing Permits 2/19

WSJ – Daily Shot: John Burns RE Consulting – Burns Affordability Index 2/19

Energy

Bloomberg – ‘Made in the U.S.A.’ Turbines Complicate U.S. Offshore Wind Plan – Jim Efstathiou Jr. 2/14

Fishing

FT – China seeks bigger catch from far-sea fishing fleet – Tom Hancock 2/19

  • “China plans to increase the catch from its far-sea fishing fleet as it clamps down on fishing in its own heavily depleted waters, in a move likely to heighten maritime tension with other coastal nations.”
  • “The state-subsidized long-distance fleet is targeting an increase in its annual catch from 2m tons in 2016 to 2.3m tons in 2020, according to the agriculture ministry. Some 90m tons of wild fish were caught globally in 2016, according to the UN.”
  • “China’s far-ocean fleet increased its catch by nearly 50% over the five years to 2016, according to China’s agriculture ministry. The haul — often sold to Chinese fish processors that then export to Europe and the US — has fueled international concerns over dwindling fish stocks and illegal fishing in territorial waters.”

Europe

Bloomberg – ‘No Cash’ Signs Everywhere Has Sweden Worried It’s Gone Too Far – Amanda Billner 2/18

South America

NYT – In Colombia Border Town, Desperate Venezuelans Sell Hair to Survive – Joe Parkins Daniels 2/17

February 20, 2018

Perspective

Tax Foundation – State Corporate Income Tax Rates for 2018 – Morgan Scarboro 2/7

Visual Capitalist – Mapping the World’s Wealthiest Cities – Jeff Desjardins 2/16

WSJ – Daily Shot: Credit Suisse – Timeline of Relative Market Capitalizations Since 1900 2/16

WSJ – Daily Shot: TRACE – NRA Contributions to select political candidates 2/15

Worthy Insights / Opinion Pieces / Advice

University of Oxford – Stranded Property Assets in China’s Resource-based Cities: implications for financial stability? – Gerard Dericks, Robert Potts, & Ben Caldecott February 2018

The Atlantic – The Plot Against America – Franklin Foer – March 2018

  • In depth profile on Paul Manafort.

The Atlantic – How WeWork Has Perfectly Captured the Millennial Id – Laura Bliss – March 2018

  • “The company sells a somewhat uneasy combination of capitalist ambition and cooperative warmth.”

WSJ – Growth Is the Missing Ingredient for Kraft Heinz – Aaron Back 2/16

Markets / Economy

FT – Food industry giants struggle to keep up with changing tastes – Anna Nicolaou 2/16

  • “Sales woes at Kraft Heinz, Danone and others force groups to cut costs and eye deals.”

Real Estate

CoStar – Oaktree Becomes Latest Investment Manager to Launch Non-Traded REIT, Looking to Raise up to $2 Billion – Mark Heschmeyer 2/16

  • “Oaktree joins a growing list of major investment firms to expand into non-traded REIT fundraising. The Blackstone Group kicked off the trend in September 2016. So far, other big investors that have followed its lead into the non-traded REIT sector include Nuveen’s TH Real Estate, BGC Partners’ Cantor Fitzgerald, Starwood Capital Group, KKR & Co., and TPG Capital.”

WSJ – New York’s Commercial Property Slump Shows Signs of Slowing – Keiko Morris 2/11

Finance

Bloomberg – Hedge Fund Startups in Asia See Signs of Revival – Bei Hu and Klaus Wille 1/21

WSJ – The Rise of Private Assets Is Built on a Mountain of New Debt – Paul J. Davies 2/15

Cryptocurrency

WSJ – Daily Shot: Bitcoin 2/15

Tech

FT – SpaceX joins race to make web truly worldwide – Richard Waters 2/15

  • “SpaceX will on Saturday officially enter the race to bring internet access to all parts of the earth’s surface with the planned launch of its first test satellites for a globe-encompassing communications network.”
  • “The latest trial from Elon Musk’s private space company is a world away from last week’s spectacular first launch of Falcon Heavy, the world’s biggest rocket. Undertaken with none of the Tesla chief executive’s usual showman flair — he has not even mentioned it on Twitter — it is an early technical trial for a communications service that could be years from completion.”
  • “If successful, however, SpaceX has said it plans to start launching its first commercial satellites next year, with a constellation of more than 11,000 circling the earth in low-earth orbit by the time the network is complete in 2024.”
  • “SpaceX’s application for approval to test a satellite internet service from the Federal Communications Commission (FCC) is one of 12 made to the US regulators, highlighting the extent of the potential competition.”
  • “SpaceX plans to connect its constellation of satellites to form a so-called mesh network, passing information among them and blanketing the earth.”

Health / Medicine

FT – Good bacteria can help brain function better – Clive Cookson 2/15

  • “Researchers are discovering remarkable new links between gut bacteria and the brain. Problems from poor sleep to memory loss could be helped by manipulating the microbiome, the trillions of bacteria living inside healthy human bodies, the American Association for the Advancement of Science heard on Thursday.”

 

February 16, 2018

新年快乐

Xīnnián kuàilè

Perspective

WSJ – Daily Shot: Do You Live Among Millionaires? – Eric Morath 2/9

Worthy Insights / Opinion Pieces / Advice

FT – Five reasons why universal basic income is a bad idea – Ian Goldin 2/11

  • “As the scale of the potential job losses arising from the artificial intelligence and robotics revolution becomes clearer, a chorus of otherwise disconnected billionaires, trade unionists and others are calling for universal basic income. Recognizing the threat posed by these dislocations is welcome and timely, but seeking solace in UBI is a bad idea.”
  • “It is misleading to think of this as yet another industrial revolution and take comfort in the fact that all previous industrial revolutions have resulted in more and better-quality jobs. This time is different, both in the pace and the reach of change. The growth of new jobs is slower than the destruction of old jobs — and their quality in many cases is inferior, as full-time career employment gives way to gig work or contingency contracts.”
  • “The places most vulnerable are also geographically isolated from the dynamic cities experiencing record earnings growth and low unemployment. Moving to these cities is increasingly difficult, as soaring housing and commuting costs reduce employment mobility. The result is rising geographical concentration of poverty and inequality in places left behind by change. The political reverberations are already being felt. The legitimate concerns of vulnerable workers must be addressed. But UBI is a red herring for five reasons.”
  • Reasons 3 and 4:
  • “Third, UBI will undermine social cohesion. Individuals gain not only income, but meaning, status, skills, networks and friendships through work. Delinking income and work, while rewarding people for staying at home, is what lies behind social decay. Crime, drugs, broken families and other socially destructive outcomes are more likely in places with high unemployment, as is evident in the drug pandemic in the US.”
  • “Fourth, UBI undermines incentives to participate. Stronger safety nets are vital. No decent society should tolerate dire poverty or starvation. But for those who are able, help should be designed to get individuals and families to participate in society; to help people overcome unemployment and find work, retrain, move cities. Wherever possible, safety nets should be a lifeline towards meaningful work and participation in society, not a guarantee of a lifetime of dependence.”

FT – Where is the Tea Party when you need it? – Edward Luce 2/14

Project Syndicate – The Social Media Threat to Society and Security – George Soros 2/14

  • “It takes significant effort to assert and defend what John Stuart Mill called the freedom of mind. And there is a real chance that, once lost, those who grow up in the digital age – in which the power to command and shape people’s attention is increasingly concentrated in the hands of a few companies – will have difficulty regaining it.”

Markets / Economy

FT – Why the 30-hour work week is almost here – Simon Kuper 2/14

  • “Qualified jobseekers are scarce. Finally, workers can make demands.”

Real Estate

WSJ – Mall Dividends Soar Above 15%, Tempting Big Investors – Esther Fung 2/13

  • “Some mall operators are paying high dividends to offset the lackluster outlook for the sector.”

Finance

WSJ – Harvard, Hawaii Gambled on Market Calm – Then Everything Changed – Gregory Zuckerman, Gunjan Banerji and Heather Gillers 2/14

  • “Harvard, Hawaii and others, pressed to improve returns, made risky bets that depended on low stock-market volatility.”

WSJ – Daily Shot: VIX index 2/14

  • “VIX has finally moved below 20 as the inflation/high-rates ‘bogeyman’ no longer looks as scary (for now).”

Insurance

FT – MetLife hires investigators in search for missing pensioners – Alistair Gray 2/14

  • “US insurer MetLife has hired investigators to track down thousands of pensioners as the company seeks to resolve a scandal over missing payouts that has wiped about $10bn off its market capitalization.”
  • “Executives on Wednesday said they were doing ‘everything humanly possible’ to locate almost 13,500 people — owed on average $20,000 each — after they acknowledged MetLife failed to make proper efforts find them over 25 years.”
  • “The failure arose because of practices dating back to the 1990s at MetLife’s pensions ‘risk transfer’ business, under which companies transfer their retirement liabilities to insurers.”
  • “MetLife sought to contact eligible pensioners only twice: when they turned 65, and again a few months after the age of 70. If these efforts were unsuccessful, the company presumed the individuals would never be found.”
  • “As a result, the insurer mistakenly released funds from reserves that support future annuity payouts.”

China

FT – Wanda’s hopes for global lifestyle empire fade as it beats retreat – Emily Feng 2/14

  • “Dalian Wanda, the company Mr. Wang (Wang Jianlin) founded and transformed from a small-town real estate company into the world’s largest owner of cinemas and one of China’s biggest private property developers, has been steadily offloading assets over the past nine months.”
  • “The latest divestment came on Wednesday, when Wanda announced it had agreed to sell its 17% stake in Spanish football club Atlético Madrid.”
  • “The group says it will ‘refocus’ on its core business, domestic commercial property, including a plan to build or license 1,000 malls in China.” 
  • “This is a reversal for a group that invested roughly $22bn in offshore trophy assets over the past five years, according to data from Dealogic, as part of a push to bring a western lifestyle to an ever more wealthy Chinese middle class.” 
  • “In June 2017, the China Banking Regulatory Commission asked banks to examine loans to four companies known for offshore trophy investments, including Wanda, as Beijing pushed back on investments it deemed frivolous, excessive and out of line with the government’s development goals.”
  • “Wanda has pivoted sharply since the June crackdown. The group has sold about $10.8bn of assets in the past nine months, according to data from Dealogic and an FT review of recent transactions.”
  • “Debt pressures on Wanda are prompting the group to review its foreign investments, as Beijing’s capital controls restrict groups’ abilities to service their overseas liabilities.”
  • “Wanda says it is in talks with the country’s foreign exchange regulator, which had approved offshore remittances to service its loans but suspended clearance after Beijing launched its probe into the companies’ liabilities.”
  • “’The company’s financial resources — including cash proceeds from sales and cash balance — should be able to fulfil its onshore obligations. But the key now is how they can remit any onshore cash to offshore,’ says Dennis Lee, an associate director at rating agency S&P Global.”
  • “Mr. Lee adds that the group’s need for offshore cash is prompting Wanda to consider its options, including the sale of overseas properties.”
  • “The group also needs to maintain the confidence of investors. Total liabilities for Wanda were $11.7bn at the end of 2016, according to the group.”
  • “The strategy may be less glamorous, but Wanda’s year-end numbers suggest that its asset-light strategy is paying off. Even as overall revenues for its main property subsidiary plummeted by more than a fifth to $17.8bn last year, its revenue from rental income grew by about a third to $4bn, according to its results in January.”
  • “Despite the recent divestments, the group still retains its biggest offshore assets and Mr. Wang remains extraordinarily rich — Hurun estimates the wealth of Mr. Wang and his family at $23bn. Wanda is preparing for a Shanghai relisting of DWCP once its offshore debt is cleared, and that promises to be a major funding event.”

India

FT – Punjab National Bank discovers $1.8bn fraud in Mumbai branch – Simon Mundy 2/14

  • “Scam resulted in money being advanced to a handful of accounts overseas.”

February 15, 2018

Perspective

WEF – Norway’s Central Bank has recommended oil and gas holdings are removed from its sovereign wealth fund – Thomas Colson 11/20/17

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Ten Years After the Crisis, Banks Win Big in Trump’s Washington – Robert Schmidt and Jesse Hamilton 2/9

Economist – As California’s fires died down, fraudsters arrived 2/8

  • “David Passey, a spokesperson for FEMA, says that more than 200,000 applications for relief related to the hurricanes and northern California wildfires are suspected to be fraudulent.”

Economist – China is in a muddle over population policy 2/8

Economist – The merits of revisiting Michael Young – Bagehot 2/8

  • “A book published 60 years ago predicted most of the tensions tearing contemporary Britain apart.”

Markets / Economy

Bloomberg – Teslas Are Finally Replacing Porsches on the Autobahn – Elisabeth Behrmann 2/12

WSJ – Daily Shot: NY Fed – US Consumer Debt Balance 2/14

WSJ – Daily Shot: NY Fed – US Consumer Delinquent Debt Percentage 2/14

WSJ – Brace Yourself for Higher Cellphone Bills This Year – Drew FitzGerald 2/8

Real Estate

Economist – How a brothel owner created the world’s biggest industrial park 2/10

  • “Google, eBay, Tesla and dozens of other tech firms have bought nearly all of the Tahoe Reno Industrial Center’s vast tract of land.”

Energy

Bloomberg Gadfly – OPEC’s Oil Price Nightmare Is Coming True – Julian Lee 2/11

Tech

NYT – The Autonomous Selfie Drone Is Here. Is Society Ready for it? – Farhad Manjoo 2/13

  • “Autonomous drones have long been hyped, but until recently they’ve been little more than that. The technology in Skydio’s machine suggests a new turn. Drones that fly themselves — whether following people for outdoor self-photography, which is Skydio’s intended use, or for longer-range applications like delivery, monitoring and surveillance — are coming faster than you think.”

Environment / Science

Economist – Antidepressants are finding their way into fish brains 2/8

China

Bloomberg Businessweek – China Takes a Hard Look at Corporate Borrowers – Enda Curran 2/6

  • “China’s total debt equaled 162% of gross domestic product in 2008. By 2016 it had climbed to 259%, an increase of more than $22 trillion, in large part because of massive corporate borrowing. And even with the current push to deleverage, it could reach 327% by 2022, according to Bloomberg Economics.”

  • “China’s banking regulator last summer ordered lenders to examine their exposure to private conglomerates, which was a way to slow borrowing by corporations without raising benchmark interest rates. In China, the amount of lending, rather than official interest rates, is the best indicator of how tight or loose government monetary policy is. And the picture is pretty clear: Broad-based money supply growth slowed to 8.2% in December, the weakest since data became available in 1998. ‘They are tightening,’ says Chetan Ahya, chief Asia economist at Morgan Stanley. ‘China has always relied more on actually controlling the flow of credit through direct measures’.”

Bloomberg – China’s War on Risk Has Banks Fleeing Shadowy Wealth Products – Jun Luo 2/7

  • “Chinese regulators appear to be winning their war against risk in one of the more dangerous corners of the country’s shadow banking industry — the so-called wealth management products that banks buy from each other in a search for easy profits.”
  • “Interbank holdings of WMPs more than halved last year, to 3.25 trillion yuan ($514 billion) in December from 6.65 trillion yuan a year earlier, according to the annual report of China Central Depository & Clearing Co., an industry body. That suggests higher interest rates and increased scrutiny by regulators are deterring Chinese banks from their previous practice of using cheap interbank borrowing to invest in each others’ higher-yielding WMPs.”
  • “The interbank WMP market will continue to contract this year, as China keeps interest rates high as part of its campaign against financial-sector risk, according to analysts from Shenwan Hongyuan Group Co. and Macquarie Group Ltd. Higher rates make it less profitable to use interbank borrowings to invest in WMPs. And many were deterred after the China Banking Regulatory Commission (CBRC) ordered banks to ‘self-review’ their interbank and shadow banking exposures in April, widely seen as a move to rein in the lenders.”
  • “The CBRC and other regulators are working closely in an unprecedented campaign to curb the $16 trillion shadow banking industry, of which WMPs issued by banks are the largest component. Another risky area that is contracting rapidly is some $3.8 trillion of so-called trust products, which have been a popular way for debt-ridden property developers and local governments to raise funds. That market has been hit by delayed payments as wealthy Chinese savers turn sour on the products.”
  • “Despite the retreat in the interbank sector, the wider WMP market continued to grow last year, albeit at a slower pace, according to the industry body. Strong appetite among individual investors helped the outstanding balance of WMPs rise 1.7% to 29.5 trillion yuan in December from a year earlier. Still, the escalating clampdown on all types of asset management products slowed the growth rate markedly from an average compound rate of about 50% between 2013 and 2015.”

Economist – Creditors call time on China’s HNA 2/8

  • “Analysts had foreseen an unravelling for some time, before even the regulatory wrist-slapping. A Chinese business expert calls HNA’s empire-building ‘a classic case of overextending’. For five years it has only been able to service its debts by taking on new ones. Returns on its investments have not exceeded 2% in almost a decade, according to calculations by Bloomberg, a data provider. As a result, HNA’s ratio of debt to earnings before interest, depreciation and amortization is around a lofty ten, estimates Standard & Poor’s, a ratings agency. Bond investors have grown nervous, and the firm’s financing costs have soared.”

South America

WSJ – Daily Shot: Venezuela Official Exchange Rate VEF/USD 2/13

  • “Venezuela has devalued its official exchange rate to be closer to the levels seen in the black market. This chart shows how many (bags of) bolivares are needed to buy one dollar – the official rate.”

  • “This move eliminated a major source of corruption.”
    • “BMI Research: – The move to … devalue the … official exchange rate is a positive step, as it will help to correct some of the extreme distortions in the market for foreign exchange. The massive discrepancy between the official and black market exchange rates has been a major source of corruption and arbitrage over recent years. Those with access to the subsidized exchange rate typically re-sell dollars on the black market at a substantial profit, rather than using the currency to import goods that must be sold at artificially low prices due to the country’s system of price controls. The market has reacted positively to the news of the devalued exchange rate, with the black market value of the bolivar rising to VEF233,531.1/USD as of February 6, up from a low of VEF266,630.7/USD on January 28.”

WSJ – Daily Shot: BMI Research – Venezuela Black Market Exchange Rate VEF/USD 2/14

 

February 14, 2018

Happy Valentine’s Day!

 

Worthy Insights / Opinion Pieces / Advice

The Atlantic – How Humans Sank New Orleans – Richard Campanella 2/6

Economist – The roots of hyperinflation – J.O’s 2/12

  • “Fifty-seven cases of runaway inflation have been documented. They have common patterns.”
  • “In a country where the annual inflation rate is in four figures, the previous month can seem like a golden age. Venezuela’s currency, the bolívar, has lost 99.9% of its value in a short time. It is hard to fathom how a government can get its economic policy so wrong when the effects of hyperinflation are so severe.”
  • “Hyperinflations do not last long. They end in one of two ways. With the first, the paper currency becomes so utterly worthless that it is supplanted by a hard currency. This is what happened in Zimbabwe at the end of 2008, when the American dollar took over, in effect. Prices will stabilize, but other problems emerge. The country loses control of its banking system and its industry may lose competitiveness. With the second, hyperinflation ends through a reform program. This typically involves a commitment to control the budget, a new issue of banknotes and a stabilization of the exchange rate—ideally all backed with confidence-inspiring foreign loans. Without such reform, Venezuela’s leaders, though scornful of America, may find that its people are forced eventually to adopt its dollar anyway.”

FT – HNA/HK property: throttling back – Lex 2/13

  • “On Tuesday it (HNA Group) sold two parcels of land near the old airport to Hong Kong developer Henderson Land for HK$15.8bn ($2bn). The pull back of a formerly acquisitive group is a warning sign for the territory’s property market.”
  • “True, Henderson is paying 11.2% more than the sum HNA paid for the plots less than a year and a half ago. Back then, a report by real estate services group JLL estimated that the initial price was 13% above the higher end of the market.”
  • Bottom line, the recent run up has been juiced by mainland developers and expect them to be pulling back.

FT – ‘Self-inspection’ campaign looms for China’s online lenders – Henny Sender 2/12

  • “Regulators tighten their grip on fears that borrowers are overstretched.”

Markets / Economy

Bloomberg Businessweek – This Bond Market Could Get Uglier – Brian Chappatta, John Gittelsohn, and Liz McCormick 2/6

FT – US craft beer slowdown sends hops market from boom to bust – Emiko Terazono 2/12

  • “A sharp slowdown in US craft beer sales growth has sent the specialty hop market from boom to bust with its effects starting to be felt by growers beyond its shores.”
  • “Many of the hop varieties popular among craft beer makers have plunged from their peaks between 2015 and 2016. For example, Citra, known for its smooth floral and citrus aroma and flavor, has almost halved from $23 a pound, according to Lupulin Exchange, a US online hop exchange.”
  • “Another variety, Cascade, was trading at $6-$7 a pound in 2015-16, but is now on the market for $1.20, said Mr MacKinnon (Douglas MacKinnon, chief executive of trader 47hops).”
  • “The main issue has been the sudden slowing of growth in the craft beer market, which until a few years ago had been rising annually by double digits. However, market saturation, as well as competition from other alcoholic beverages, have affected growth, which peaked in 2014 at 18%, slowing to about 5% last year.”
  • “The oversupply situation has been made worse by the jump in hop production and acreage which almost doubled in the past five years. Brewers fearing a shortage rushed to sign three- to five-year contracts with farmers, who increased plantings on the back of those contracts and high prices.”
  • “The rising output amid falling demand has resulted in a hop glut, with inventories in pre-harvest September rising 15% to a record 98m pounds, according to the US Department of Agriculture. Of the total, growers and merchants held an all-time-high share of 65%.”
  • “But despite the supply overhang, hop farmers — who on the back of demand invested in expanding operations, need to repay bank loans — are still expected to plant about 1,500 new acres.”

Investment News – SEC offers advisers amnesty to move clients out of high-fee mutual fund share classes – Jeff Benjamin 2/12

  • “Enforcement division giving advisers until June 12 to declare intentions to self-report fiduciary violations and make financial restitution.”

Real Estate

Bloomberg – This Mall Is Only for the Rich, and It’s Doing Fine – Kim Bhasin 2/8

Visual Capitalist – UBS: Real Estate Bubbles: The 8 Global Cities at Risk – Jeff Desjardins 2/13

WSJ – Daily Shot: Lawler Economic & Housing Consulting – Home Builder Net Orders 2/12

Finance

WSJ – Daily Shot: Bloomberg – Broadcom Lines Up Biggest Debt Financing Ever for Qualcomm – Molly Smith and Jacqueline Poh 2/12

WSJ – Daily Shot: FRED – LIBOR and Bank Rate Spread 2/12

  • It’s good to be a banker again.

Cryptocurrency

BBC – Bitcoin energy use in Iceland set to overtake homes, says local firm – Chris Baraniuk 2/12

Bloomberg – Bitcoin Risks Crashing to $900 If Dot-Com Mania Is Any Guide – Eddie Van Der Walt 2/12

  • “Already slashed by more than half since hitting a record near $20,000 in December, the cryptocurrency could plunge a further 90% in an environment of unsustainably growing supply, according to Bloomberg Intelligence commodity strategist Mike McGlone.” 
  • “While the creators of Bitcoin intended to limit supply to 21 million coins, forks mean that there are already more than 50 million outstanding coins based on the original blockchain. There’s also nothing preventing rivals from spawning an infinite amount of clones, he said. The number of tradable cryptocurrencies jumped 120% in the past year.”
  • “’Parabolically increasing supply is the primary limitation to cryptocurrency market-price appreciation,’ McGlone said. ‘There’s strong gravitational pull toward $900, the average price since inception and the start of 2017’.”

Environment / Science

NYT – Here Are the Places That Struggle to Meet the Rules on Safe Drinking Water – Brad Plumer and Nadja Popovich 2/12

 

February 13, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – A Driverless Future Threatens the Laws of Real Estate – Jack Sidders and Jess Shankleman 2/5

FT – Trump’s warnings about unfair trade with China ring true – Nick Butler 2/11

  • “There is no sign that Beijing accepts the responsibilities needed to build stronger links.”

FT – Tech companies are the new investment banks – Rana Foroohar 2/11

  • “Economist Zoltan Pozsar has forensically analyzed the $1tn in corporate offshore savings parked in liquid assets, a fortune that he likens to China’s foreign exchange reserves, not only because of its market-moving size, but the idea that both fortunes were created by a macroeconomic ‘crime’ — mercantilism in the case of China, and tax arbitrage for the corporate hoard.”
  • “The largest and most intellectual-property-rich 10 per cent of companies — Apple, Microsoft, Cisco, Oracle, Alphabet — control 80 per cent of this hoard. Their earnings come mainly from IP that can be easily moved across borders. Their offshore savings went from around $100bn in 2008 to $700bn by 2016. And according to Mr Pozsar’s calculations, most of that money is held not in cash but in bonds. Indeed, half of it is in corporate bonds.”
  • “What does this mean? Many significant things. But let us start with the obvious, which is that bonds are not cash. If companies are to bring back those overseas earnings and invest them in growth-enhancing projects in the US, as Donald Trump keeps promising us they will, they would have to sell their bond stash.”
  • “This has serious implications for interest rates. Consider that the Federal Reserve is starting to deleverage its own balance sheet. Now, add in the corporate ‘echo-taper’, as the Credit Suisse report puts it, and you have got a heck of a lot of bonds on the market, which is bound to move the interest rate needle up, perhaps more quickly than is currently expected.”

NYT – America’s Real Digital Divide – Naomi Schaefer Riley 2/11

  • “In 2004, Dimitri Christakis of Seattle Children’s Hospital wrote in the medical journal Pediatrics that ‘early exposure to television was associated with subsequent attentional problems.’ Even when controlling for socioeconomic status, gestational age and other factors, he discovered that an increase of one standard deviation in the number of hours of television watched at age 1 ‘is associated with a 28% increase in the probability of having attentional problems at age 7’.”
  • “Every additional hour of TV increased a child’s odds of attention problems by about 10%. Kids who watched three hours a day were 30% more likely to have attention trouble than those who watched none. A 2010 article in Pediatrics confirmed that exposure to TV and video games was associated with greater attention problems in children.”
  • “Unfortunately, too often the message we send low-income and less-educated parents is that screen time is going to help their children.”
  • “Make no mistake: The real digital divide in this country is not between children who have access to the internet and those who don’t. It’s between children whose parents know that they have to restrict screen time and those whose parents have been sold a bill of goods by schools and politicians that more screens are a key to success. It’s time to let everyone in on the secret.”

Markets / Economy

FT – Bridgewater investment chief sees new era of volatility – Robin Wigglesworth 2/11

  • “Bob Prince, co-chief investment officer at Bridgewater, said last week’s market turbulence, which helped trigger record outflows from global stock funds, was set to continue.”
  • “‘There had been a lot of complacency built up in markets over a long time, so we don’t think this shakeout will be over in a matter of days,’ Mr Prince, who runs Bridgewater’s $160bn of investments alongside the fund’s founder Ray Dalio, said in an interview. ‘We’ll probably have a much bigger shakeout coming’.”
  • “Brian Levine, co-head of global equities trading at Goldman Sachs, on Friday sent out an email to the investment bank’s bigger clients that also warned that the market probably still has not hit its bottom.”
  • “’Historically shocks of this magnitude find their troughs in panicky selling,’ he said in the email, seen by the FT. ‘I’ve been amazed at how little ‘capitulation selling’ we’ve seen on the desk . . . The ‘buy on the dip’ mentality needs to be thoroughly punished before we find the bottom’.”
  • “The improving health of the global economy has sparked concerns that long-dormant inflationary pressures will finally emerge, forcing central banks to reduce bond-buying programs and raise interest rates more aggressively than expected.”
  • “While Mr Prince doubted inflation would become a real problem, he expected central banks to start draining the global economy of some of the trillions of dollars they have pumped into the financial system in recent years — further challenging the post-crisis bull market.”
  • “That meshes with the view of Mr Levine at Goldman Sachs, who said that ‘longer term, I do believe this is a genuine regime change, one where you sell-the-rallies rather than buy-the-dips’.”
  • “However, Mr Prince expects global growth will stay on track despite tighter monetary policy and more turbulent markets. ‘The real economy will outperform financial economy this year, the opposite of what we’ve seen in recent years,’ he said.”

Real Estate

Bloomberg – Blackstone Weighs Bidding for Assets It Sold to Anbang – Jun Luo, Dingmin Zhang, Cathy Chan, and Ben Scent – 2/12

  • “Blackstone Group LP, which scored big four years ago when a company it owned sold New York’s Waldorf Astoria hotel for a record-setting price to a little-known Chinese insurer, may soon get a chance to own the iconic landmark again.”
  • “The U.S. private equity firm has held initial discussions about bidding for Anbang Insurance Group Co. assets in a sale overseen by the Chinese government, people with knowledge of the matter said. The assets include the Waldorf as well as Strategic Hotels & Resorts Inc., which Blackstone sold to Anbang in 2016, said the people.”
  • “Anbang is among a crop of Chinese serial acquirers that spent tens of billions of dollars snapping up trophy assets over the past few years, only to lurch into turmoil once their strategies backfired. Blackstone was one of the biggest beneficiaries of Anbang’s largesse, selling at least a combined $9.5 billion of assets to the insurer, data compiled by Bloomberg show.”

Finance

Bloomberg Businessweek – What Big Hedge Fund Fees Pay For – Neil Weinberg 2/9

  • “One corner of the investing world that’s been more resistant to these trends is ‘alternative’ investments, including private equity and hedge funds, which are sold to institutions and affluent individuals. The fees charged—traditionally 2% of assets plus 20% of any profits—can be hundreds of times higher than those of the lowest-cost mutual funds. The industry frames the fees as the price investors must pay to tap into top money managers.”
  • “A close look at where the money flows suggests a more complicated story. Alt funds regularly share major chunks of their fees with the bankers, brokers, and other salesmen who steer clients their way. The payments come in a number of forms and go by different names: placement fees, payment for shelf space, and retrocessions, among them.”
  • “Placement agents, who get paid by fund managers for lining up investors, have been such a big source of corruption that New York and Pennsylvania have banned their public pension funds from using them. The European Union in January banned many advisers from receiving inducements to sell investments to individuals.”
  • “’Contrary to what the clients generally believe, half the fees they’re paying are going not to investment geniuses but to marketing,’ says Edward Siedle, an attorney who represented a whistleblower in the JPMorgan settlement. ‘The marketing payments explain why hedge funds have persisted, despite ample evidence that they underperform.’ Hedge funds that invest in stocks returned 7.2% annually from 2009 to 2017, which was less than half the S&P 500’s return, according to data from Hedge Fund Research.”

Cryptocurrency

How Much.net – Cryptocurrency Transaction Speed per second – Raul 1/10

China

Bloomberg – Wall Street Bank That Fed on HNA’s Rise Now Get to Dismantle It – Ben Scent 2/11

  • “Wall Street bankers gorged on fees from HNA Group Co. as they helped the debt-laden Chinese conglomerate clinch $55 billion of acquisitions around the world. They’re set for another bonanza as the company offloads some of those same purchases to stave off a liquidity crisis.”
  • “HNA doled out as much as $200 million in advisory fees during a three-year investment spree, according to Freeman & Co. Now strapped for cash and facing pressure from creditors, the Chinese company is planning to sell about $16 billion of assets in the first half, people familiar with the matter said last month.”

FT – Xi takes aim at military in anti-graft drive – Charles Clover 2/11

India

Bloomberg Quint – $3.6 Billion in Hidden Bad Loans Spotlight India Bank Stress – Anto Antony 2/12

  • “India’s regulator unearthed about $3.6 billion of bad loans in the books of the country’s biggest bank, amplifying questions about distress in the financial sector given underreporting by some rivals as well.”
  • “State Bank of India on Friday said an audit by the central bank showed soured debt was about 232 billion rupees ($3.6 billion) higher than what the state-run lender reported for the end of March 2017.”
  • “State Bank of India’s admission is particularly striking because the lender is often seen as a proxy for the nation’s economy, where the ratio of bad loans has surged to be among the highest in the world.”

Japan

WSJ – Daily Shot: Nikkei 225 2/9

  • US markets were not the only ones with a sell off last week.