March 22, 2018

Perspective

NYT – The Population Slowdown in the Outer Suburbs of the East and Midwest – Robert Gebeloff 3/21

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Headline Risk – Ben Carlson 3/21

Bloomberg Gadfly – The Saudi Aramco IPO Math Problem: Cash > Barrels – Liam Denning 3/15

  • “Getting to a $2 trillion valuation requires some heroic assumptions.”

Bloomberg View – Before You #DeleteFacebook, Try Taking Control – Barry Ritholtz 3/21

  • “A precept from the 1970s, said originally about television (back when TV was free), is applicable to technology and media: If you are not paying for a product, then you are the product.”

FT – Hard-headed deterrence is the antidote to Putin’s poison – Philip Stephens 3/14

FT – The low-paid workers cleaning up the worst horrors of the internet – Gillian Tett 3/16

  • “A new film (The Cleaners) tracks outsourced workers in grim little cubicles watching the depravity that exists online.”

NYT – Trump Hacked the Media Right Before Our Eyes – Ross Douthat 3/21

  • “…the business model of our news channels both assumes and heightens polarization, and that it was ripe for exploitation by a demagogue who was also a celebrity.”

NYT – Fox News Analyst Quits, Calling Network a ‘Propaganda Machine’ – Michael M. Grynbaum 3/20

NYT – Toys ‘R’ Us Case Is Test of Private Equity in Age of Amazon – Michael Corkery 3/15

Pragmatic Capitalism – Why are Money Managers Paid so Much? – Cullen Roche 3/20

  • “Salesmanship. The answer is salesmanship. I’ve been in this business long enough to know that asset management is mostly about selling the hope of superior returns in exchange for the guarantee of high fees.  The problem for the average person is that they don’t actually know enough about the asset management business to quantify whether their investment manager is worth the fees they pay. And in fairness, a big part of that is due to the fact that you have to compare yourself to a counterfactual that doesn’t exist since paying 1.6% per year to invest in a crappy active mutual fund is probably a better result than sitting in cash all the time because you’re too scared to get fully invested. Investment managers, as expensive as they are, at least keep you in the game and you need to be in the game to score any goals.”

Rational Radical – Royal commission shatters housing bubble façade – Matt Ellis 3/21

  • Commentary on the Australian Housing market (read bubble)

The Verge – China will ban people with poor ‘social credit’ from planes and trains – Sean O’Kane 3/16

  • “Starting in May, Chinese citizens who rank low on the country’s burgeoning ‘social credit’ system will be in danger of being banned from buying plane or train tickets for up to a year, according to statements recently released by the country’s National Development and Reform Commission.”
  • “With the social credit system, the Chinese government rates citizens based on things like criminal behavior and financial misdeeds, but also on what they buy, say, and do. Those with low ‘scores’ have to deal with penalties and restrictions. China has been working towards rolling out a full version of the system by 2020, but some early versions of it are already in place.”
  • “The new travel restrictions are the latest addition to this growing patchwork of social engineering, which has already imposed punishments on more than seven million citizens. And there’s a broad range when it comes to who can be flagged. Citizens who have spread ‘false information about terrorism,’ caused ‘trouble’ on flights, used expired tickets, or were caught smoking on trains could all be banned, according to Reuters.”

Wolf Street – Then Why Is Anyone STILL on Facebook? – Wolf Richter 3/20

Markets / Economy

WSJ – Daily Shot: Nomura – Valuations of FANG-type stocks 3/20

WSJ – Daily Shot: Bianco Research – Breaking Down US Household Retirement Assets 3/21

Energy

WSJ – Daily Shot: Venezuelan Crude Oil Output 2/28

Finance

FT – John Paulson takes an axe to his struggling hedge fund – Robin Wigglesworth 3/16

  • “Struggling hedge fund magnate John Paulson has taken an axe to his once-imperious firm, with several top executives departing in a ‘rightsizing’ this week after a string of heavy losses.”
  • “Mr Paulson rose to fame after the crisis, when Paulson & Co made billions of dollars from predicting the US housing crisis and astute bets on complex credit derivatives. The hedge fund firm’s assets under management hit a peak of $38bn in 2011.”
  • “But since then Paulson & Co has suffered a string of losses across most of its hedge funds, with its flagship merger arbitrage fund — Mr Paulson’s specialty — losing 18.1% and 23% in 2016 and 2017, respectively, according to the performance update of a mirror fund offered by Schroders.”
  • “Paulson & Co’s assets have now shrunk to about $9bn, of which two-thirds is Mr Paulson’s own money, and this week the hedge fund manager let a string of employees go.”
  • “Since making one of the biggest financial hauls in the industry’s history — Mr Paulson personally made almost $4bn from the financial crisis — the firm has made a series of ill-fated investments, such as on healthcare stocks, banks and gold and by betting against German bonds.”
  • “The most high-profile recent mis-step was a big bet on drug maker Valeant Pharmaceuticals. Paulson & Co is the drug maker’s single biggest shareholder, but the stock has tumbled from a high of $262.50 in 2015 to just $16.80 this week — a loss of more than 93% over the period.”
  • “Paulson & Co’s biggest public holdings, according to regulatory filings, are pharma companies Mylan, Shire, Valeant and Allergan, as well as an exchange-traded fund that tracks the price of gold. The gold ETF has lost about 32% of its value since the hedge fund’s investment peaked at $4.6bn in 2011.”

Health / Medicine

WSJ – Daily Shot: AEI – Geographic Variation in the Cost of the Opioid Crisis – Alex Brill 3/20

Other Interesting Links

FT – Wine’s Wild West: a tasting tour of Arizona – Horatia Harrod 3/16

  • “In Scottsdale’s bars and out on the state’s grassy uplands, an industry wiped out by Prohibition is being revived.”
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