April 16, 2018

After speaking with some readers, it appears that my little experiment wasn’t working out as I intended. It was not clear that the majority of the content was being hosted on the website, while the direct email was only showing one article.

So, back to the old format.

Thanks for reading – and if you like this blog, please be sure to tell your peers about it.

Sincerely,

Duff Janus

If you were only to read one thing…

Bloomberg – What It Was Like to Get Caught in Toronto’s Housing Slump – Natalie Wong 4/11

  • “Toronto’s housing market has seen a stunning slowdown in the past year. Now one brokerage has cataloged the damage for 988 homeowners who got caught in the eye of the hurricane.”
  • In the space of four months last year, the homeowners lost a collective C$135 million ($107 million) as the median house price slid 18%, a faster decline than any major market during the U.S. market crash, according to Realosophy Reality Inc.”
  • “The story goes like this: The median house price surged 30% from January to peak at C$765,000 in March, largely driven by investors who were pouring money into the market for quick returns, Realosophy said in a report. To tame the beast, the government instituted a series of regulations, including a foreign buyers tax, starting in April.”
  • “Some 866 homeowners had clinched a sale but were not able to close, eventually selling to another buyer later in the year for C$140,200 less on average. Some buyers had to walk away as they weren’t able to sell their own homes or the banks appraised the house for less than what they agreed to. Another 122 sellers sold their houses for an average $107,325 lower than what they bought it for earlier. By the time the dust had settled in July, the median price had dropped to C$626,000 from C$765,000 in March.”
  • “To put that 18% four-month decline in perspective, it took major U.S. cities 20 months on average for prices to fall 18% from their peaks between 2005 and 2006, with Miami the shortest at 12 months, according to the report.”
  • “This February, Toronto led the drop in Canadian home prices falling for the first time since 2010, a consequence of the housing downturn which saw additional mortgage lending rules put in place this year amid higher interest rates. For now, prices have largely stabilized for detached-homes. But there’s a new hot spot to watch out for: Toronto’s condominium market has seen prices soaring about 20% since last February and is a target for speculative investment.”

Worthy Insights / Opinion Pieces / Advice

Pragmatic Capitalism – Yeah, That Debt Article Was Kinda Bad… – Cullen Roche 4/12

NYT – China’s Communists Rewrite the Rules for Foreign Businesses – Alexandra Stevenson 4/13

  • “The party is strengthening its influence – often gaining direct decision-making power – over the international firms doing business in China.”

WSJ – A Dollar Peg That Will Stay on the Line – Jacky Wong 4/12

Markets / Economy

WSJ – Daily Shot: Scotiabank – Combined Central Bank QE Projections 4/13

WSJ – Daily Shot: Scotiabank – Forecast Central Bank Rates 4/13

WSJ – Amid Trade Feud, Recycling Is in Danger of Landing on Trash Pile – Bob Tita 4/12

  • “Chinese trade barriers are compounding the problems faced by companies that recycle scrap paper, plastic and metal.”
  • “The U.S. generates more recyclable waste than any other country. China is the top customer for that scrap. China bought two-thirds of the used paper and half the scrap aluminum that the U.S. sold overseas last year, according to the Institute of Scrap Recycling Industries Inc., part of an overall haul of 13 million metric tons of cast-off American packaging, periodicals and shredded car bodies.”
  • “China’s 25% tariff on U.S. scrap aluminum would make reusable metal from other countries more appealing. China also recently imposed tougher quality standards on other imported recyclables, sending the U.S. recycling industry into a tailspin.”
  • “Prices for discarded newspaper, office paper and magazines have fallen to zero in the U.S. Inventories of paper, crushed milk jugs and old cardboard are swelling. No other country wants to buy as much U.S. junk as China had during the past several years.”

Real Estate

WSJ – Boise, Idaho, Feels the Growing Pains of a Surging Population – Jim Carlton 4/15

Finance

Reuters – Spotify puts bank IPO paydays under fund manager scrutiny – Sinead Cruise 4/12

  • “After shaking up the music industry, Spotify is now prompting investors to question the value they get from investment banks underwriting new listings with its low-cost IPO.”
  • “The music streaming firm effectively deprived banks of hundreds of millions of dollars in fees by shunning them in its $26.5 billion New York Stock Exchange float on April 3.”
  • “Banks can charge companies as much as 7% of the amount raised in a U.S. listing and fund managers in London, another of the main centers for initial public offerings (IPOs), say Spotify’s success means underwriters will now have to show more clearly what value they bring to companies and their backers.”
  • “Banks have been richly rewarded for co-ordinating IPOs and ensuring companies raise the money, pocketing annual fees of $33.6 billion in the U.S. and $14.4 billion in Europe over the last decade, Thomson Reuters data shows.”
  • “But while critics claim that high costs have discouraged some firms from joining the stock market, crimping their prospects and hindering the growth of the economy, bankers say few are likely to be able to replicate Spotify’s direct listing.”
  • “This was only possible because a large number of founding shareholders wanted to sell and it was not raising a large sum of capital, meaning that for now, the route may only be open to well-known, highly valued internet firms like Spotify.”
  • “Banks help to make trading in newly listed shares less volatile by hand-picking institutional investors who are likely to hold them over the medium to long term, and by limiting the volume of stock sold to day traders keen to make a quick buck.”

WSJ – Daily Shot: Reuters – US & European Annual IPO Fees 4/13

WSJ – Daily Shot: Credit Suisse – Fund Flows and Domestic Equity Flows 4/13

China

FT – HK currency intervention boosts property market risk – Emma Dunkley 4/12

  • “Hong Kong has been forced to intervene twice in the past two days to support its currency after the Hong Kong dollar slumped to its weakest level since 2005, in a move that risks putting pressure on mortgage borrowers and Hong Kong’s high-priced property market.”
  • “The Hong Kong Monetary Authority took the rare action of stepping in to prop up the currency on Thursday night in Asia, after it dropped to HK$7.85 against the US dollar, the lower end of its permitted trading band.”
  • “The Hong Kong dollar is one of the few currencies to trade within a band pegged to the US currency, ranging from HK$7.75-HK$7.85 against the US dollar.”
  • “Mr. Lee (Howard Lee, deputy chief executive of the Hong Kong Monetary Authority) said this will ‘provide a more conducive environment for the normalization of the interest rate in Hong Kong following more closely the interest rate level in the US . . . so we will expect that interest rates will rise incrementally . . . so I hope that people with debt burden will be watchful about this rise in interest rates.’”

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