Month: June 2018

June 29, 2018

Perspective

WSJ – Where Residents Pay Buckets of Money – for Water – Adam Bonislawski 6/27

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Give China a Taste of Its Own Bad Trade Medicine – Michael Schuman 6/27

Economist – Most stockmarket returns come from a tiny fraction of shares – Buttonwood 6/23

Economist – How to stop the decline of public transport in rich countries – Leaders 6/23

WSJ – Facebook Investors May Be Too Quick to Forgive – Dan Gallagher 6/28

  • “Social network’s stock price has risen sharply since Cambridge Analytica scandal even though more questions have surfaced.”

WSJ – The Good Times Are Over for China’s Property Stocks – Jacky Wong 6/28

  • “A weaker Chinese yuan and a funding squeeze are taking their toll on developers.”

Markets / Economy

FT – Global dealmaking reaches $2.5tn as US megadeals lift volumes – James Fontanella-Khan and Arash Massoudi 6/27

WSJ – Daily Shot: PitchBook – Startup nation: The most valuable VC-backed company in each US state – Dana Olsen 2/27

Energy

WSJ – Daily Shot: Gross US Crude Oil Exports 6/27

WSJ – Daily Shot: Princeton Energy Advisors – Net Crude Oil Imports 6/28

China

Bloomberg – Xi Warns Mattis China Won’t Surrender ‘One Inch’ of Territory – Peter Martin 6/27

Economist – China has militarized the South China Sea and got away with it 6/21

Economist – China is trying to turn itself into a country of 19 super-regions 6/23

FT – China’s polluted skies – Steven Bernard and Lucy Hornby 6/28

Europe

Economist – Giddy property prices are a test for Swedish policymakers 6/21

 

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June 28, 2018

Perspective

FT – Migrant millennials are redrawing the map of America – Andrew Edgecliffe-Johnson 6/26

  • “As a recent analysis by Brookings Institution demographer William Frey found, the strongest growth in America’s millennial population between 2010 and 2015 was not in coastal cities such as New York and LA, but in smaller ones in the south and west. The double-digit increase in 10 large metro areas, from Colorado Springs and Denver to San Antonio and Austin, contrasts with Midwestern cities such as Chicago and St Louis, whose millennial populations rose less than 1%.”
  • “This millennial migration is largely being driven by affordability, says Karen Harris of the macro trends group at Bain & Company, the consultancy. ‘Tier one cities have become incredibly expensive; as a result they have become the province of rich people, single people and empty nesters.’” 
  • “Few places tell this story better than Denver, Colorado. Its middle-of-the-country location, affordable universities, plentiful jobs and easy access to a snowboarder’s paradise in the Rocky Mountains have drawn tens of thousands of millennials in recent years, transforming its population and economy.” 
  • But…
  • “Denver’s residential property prices are 50% above their pre-crisis peak, dividing the city into those who bought and have watched their assets appreciate and those wondering if they will ever get on the housing ladder. Since Colorado legalized recreational marijuana in 2014, Denver has been rife with stories of dispensary owners driving the market up by putting their unbankable cash into property.” 
  • “For now, disillusioned leavers are outnumbered by new arrivals to Denver, but there are signs that its millennial-fueled population boom is slowing. Its growth rate peaked in 2015 and it has dropped down the Census Bureau’s list of fastest-growing cities, which is now topped by San Antonio and Phoenix.” 
  • “Mike Newlands moved to Denver after college in 2006 to work in the sporting goods industry, and is living with a friend while saving for a down payment on a property. He worries that anyone who did not buy by 2010 is effectively priced out of Denver. ‘People are asking now where the next Colorado is,’ he says, listing more affordable alternatives like Jackson, Wyoming, and Boise, Idaho. ‘People like me who make $75,000 a year are going to be gone.’”

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Playing in Traffic – Ben Carlson 5/27

  • “Our brains find it easier to process situations where there’s a clear explanation. Not knowing what’s happening or, more importantly, why it’s happening, makes people extremely uncomfortable.”
  • “Being uncomfortable with uncertainty is one of the reasons a long commute can make people unhappy:”
    • “As Harvard University psychologist Daniel Gilbert argues, ‘You can’t adapt to commuting, because it’s entirely unpredictable. Driving in traffic is a different kind of hell every day.’”

Markets / Economy

WSJ – Harley-Davidson Is Fighting the Trade Wars on Two Fronts – John D. Stoll 6/25

Real Estate

Bloomberg – Investors Are Piling In to NYC Condos at a Record Pace – Oshrat Carmiel 6/27

WSJ – Looking for an Apartment? It Is a Great Time to Rent – Laura Kusisto 6/27

  • “It is a great time for anyone looking to rent an apartment: vacancy rates are rising and there are little or no rent increases in many major cities.”
  • “For landlords, though, the U.S. apartment market suffered its worst spring since 2010, near the depths of the housing crisis. Driving this dynamic is a flood of new apartments and weakening demand.”
  • “Rents rose 2.3% in the second quarter compared with a year earlier, the smallest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply.”
  • “Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership. But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords.”
  • “The cause of the slowdown is primarily new supply. Developers responded to escalating rents by building the most new apartments in 30 years, sending a flood of new high-end units to downtown areas across the country. Developers are expected to add 300,000 new units over the next year across the U.S., Mr. Willett (Greg Willett, chief economist at RealPage) said.”
  • “At the same time as there are signs renter demand is starting to wane because millennials are marrying, having children and buying homes or moving into single-family rentals. The U.S. added 1.3 million owner households in the first quarter over the same period last year and lost 286,000 renter households, according to U.S. Census data released in April.”
  • “Despite the recent slowdown, apartment owners note that the market is far from crashing and rent growth remains just below historic norms.”
  • “Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system. Compared with the last real-estate crash, owners say there are unlikely to be many foreclosures because they are carrying much less debt.”
  • “Jay Hiemenz, president and chief operating officer of Phoenix-based Alliance Residential, an apartment company, said banks are only giving loans to developers for about 65% of the cost to build a project, compared to 80% or more previously.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Ripple 6/27

  • “Ripple is down 87% since early January.”

Entertainment

WSJ – The Pop Diva Identity Crisis – Neil Shah 10/18/17

Asia – excluding China and Japan

Bloomberg – Hermes Bags, Diamonds Worth $273 Million Taken in 1MDB Raids – Anisah Shukry 6/26

  • “Malaysia’s police seized about 1.1 billion ringgit ($273 million) of items that included Hermes International handbags, Rolex watches and cash in raids linked to former Prime Minister Najib Razak amid investigations into troubled state fund 1MDB.”
  • “Luxury goods such as a 6.4 million ringgit diamond necklace, 51.3 million ringgit worth of Hermes bags and more than 200 sunglasses valued at 374,000 ringgit were taken from five residences and an office linked to Najib, Amar Singh, commercial crime investigation department director at the police, told reporters on Wednesday.”
  • “The police had to form eight teams consisting of more than 150 officers to analyze the items for weeks, even working through the Eid al-Fitr Muslim holiday, Singh said. Valuations may increase as not all items seized have been analyzed.”

FT – Malaysia police value assets seized in 1MDB-linked raids at $275m – Stefania Palma 6/27

China

Bloomberg – Chinese Stocks Enter Bear Market as Trade, Growth Risks Increase – Richard Frost and Jeanny Yu 6/25

June 27, 2018

Perspective

WSJ – Marriage Is Out of Fashion. So Why Is Tiffany Selling More Engagement Rings? – Suzanne Kapner 6/20

  • Please note that the Y-axis base is 45% (still meaningful).

Tax Foundation – To What Extent Does Your State Rely on Property Taxes? – Ben Strachman and Katherine Loughead 6/20

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – The Best Free Investing Tools on the Web – Ben Carlson 6/25

Bloomberg – U.S. Housing Will Get Even Less Affordable – A. Gary Shilling 6/26

  • “More investor-owned properties and rising construction costs are just two reasons homes are out of reach for many.”

Bloomberg – The ‘Deep Fake’ Threat – The Editors 6/13

  • “High-tech forged videos could wreak havoc on politics. Policy makers must be ready.”

FT – Issues beyond Opec will drive oil prices in coming years – Nick Butler 6/24

  • “US shale oil production is set to have a dramatic effect on the global market.”

WSJ – Has the Big Yuan Short Finally Arrived? – Nathaniel Taplin 6/26

  • “As long as Chinese investors can make money gambling on housing – and companies can make money building or selling them – weakness in the stock and bond markets may not be enough to trigger a full-scale stampede out of the yuan.”
  • “Panic or no panic, a weaker Chinese currency in the months ahead still seems likely.”

Real Estate

Bloomberg Businessweek – The Modular-Home Maker That Could Make Housing Cheaper – Dina Bass 6/21

  • “Katerra saves money by buying everything from wood to toilets in bulk and using software and sensors to closely track materials, factory output, and construction speed. Its architects use software to build a catalog of standard buildings, rather than starting from scratch on each project, and to ensure contractors aren’t making impulsive structural decisions. Each generation of buildings has become steadily more prefab, requiring less work on-site and speeding construction.”
  • “…but Katerra has a lot of serious worries. While there are only a few standard models of iMac or Xbox, apartments are beholden to 110,000 U.S. municipalities’ building codes, each with its own idiosyncrasies. Regional seismic and weather needs can vary widely. And Katerra’s aim to steadily cut labor costs, meaning jobs, won’t exactly endear it to the industry.”

WSJ – Luxury Real Estate Comes to Urban Chinatowns – Katy McLaughlin 5/31

  • “High-end developments are appearing, attracting new residents as well as concerns about the displacement of the existing working-class.”

Energy

Bloomberg – Oil-Sands Outage Upends Global Oil Market, Overshadowing OPEC – Robert Tuttle and Kevin Orland 6/25

  • “The shutdown of a key oil-sands facility in Canada is flipping the global oil market on its head and slamming shares of producers that depend on the plant.”
  • “Just as OPEC and allied producers agreed to pour more oil into global markets, a transformer blast first reported by Bloomberg News last week cut power to Alberta’s giant Syncrude plant, which turns heavy crude into synthetic light oil for U.S. markets.”
  • “As less oil flows from up north, traders are paying a record premium for crude at America’s biggest distribution hub in Cushing, Oklahoma. Globally, the gap between Brent crude and West Texas Intermediate is narrowing rapidly after widening for months. Goldman Sachs Group Inc. called the shutdown the most dramatic event in the oil market last week, as opposed to OPEC’s meeting in Vienna. Shares of Suncor Energy Inc., which controls the plant, plunged the most in more than two years.”
  • “The 350,000-barrel-a-day facility, one of the biggest of its kind in the world, is going to be out of commission until the end of July, the company said.”
  • “While Saudi Arabia’s push to make sure OPEC boosts supplies by close to 1 million barrels a day is strongly weighing down on Brent crude futures in London, the shortage in Canada is supporting U.S. prices. That’s helping narrow the gap between the two benchmarks, reversing months of widening when the focus was on record production from shale fields. It has global implications because the premium helps buyers around the world decide whether to ship crude from the U.S. or elsewhere.”

Tech

CNN – It’s true: Teens are ditching Facebook – Jordan Valinsky 5/31

  • “A new study has confirmed what we’ve long expected: Facebook is no longer the most popular social media site among teens ages 13 to 17.”
  • “The Pew Research Center revealed on Thursday that only 51% of US teens use Facebook. That’s a 20% drop since 2015, the last time the firm surveyed teens’ social media habits.”
  • “Now, YouTube is the most popular platform among teens — about 85% say they use it. Not surprisingly, teens are also active on Instagram (72%) and Snapchat (69%). Meanwhile, Twitter (TWTR) followed at 32%, and Tumblr’s popularity (14%) remained the same since the 2015 survey.”
  • “When it comes to the platform they access most frequently throughout the day, Snapchat is king.”
  • “Although the study was only conducted among nearly 750 teens in a one month period starting this spring, the new numbers might be worrying for Facebook. The company recently rebounded from its first-ever decline in users in the US and Canada. But overall, its global growth has slowed. The two countries account for 185 million daily users.”
  • “But Daniel Ives, chief strategy officer and head of technology research at GBH Insights, argues Facebook-owned Instagram-owned is more important to the parent company than Facebook itself when it comes to younger users.”
  • “‘Instagram has captured that demographic better than anyone could have expected,’ Ives said. The numbers highlight ‘why Instagram is one of the best tech acquisitions done in the past 15 years.'”

Entertainment

WSJ – Comedies’ Misfortunes Are No Laughing Matter for Hollywood – Ben Fritz 6/25

  • “Last year’s most successful adult comedy, Girls Trip, took in $117 million in the U.S. and Canada. The last time the year’s highest-grossing comedy grossed so little was 1995, when tickets cost 52% less on average.”
  • “It wasn’t an anomaly. The five most successful adult comedies grossed an average of $141 million in 2013, $109 million in 2015 and just $85 million last year.”
  • “So far in 2018, the biggest live-action comedy has been Game Night, which took in just $69 million. Melissa McCarthy’s Life of the Party, has grossed $52 million, her lowest-grossing comedy ever. Amy Schumer’s I Feel Pretty is finishing its box office run with $49 million, less than half of her debut hit Trainwreck. Action Point, from the producer and star of Jackass, has grossed just $5 million, compared with $117 million for Jackass 3-D in 2010.”
  • “Just five years ago, things were quite different. In 2013, Ms. McCarthy and Sandra Bullock’s The Heat and the raucous R-rated We’re the Millers each grossed more than $150 million domestically. Another movie with Ms. McCarthy, Identity Thief, was close behind with $135 million. Grown Ups 2, Anchorman 2, Bad Grandpa, This is the End and even the widely maligned Hangover Part III all exceeded $100 million in domestic ticket sales.”
  • “Now, the only major comedy hits are those made for children. Peter Rabbit, featuring computer-generated critters that outsmart real-life adults, grossed a healthy $115 million in February, and animated comedies like Despicable Me 3 and The Boss Baby were top grossers last year.”
  • The Incredibles 2, which mixes family-friendly action, comedy and drama, scored a massive $182.7 million in its opening weekend.”
  • “Though certain subgenres like romantic comedy have nearly disappeared, most studios aren’t yet abandoning adult comedy. They have, however, slashed spending on them so that they can potentially become profitable on lower grosses than were needed in the past. No comedy stars earn the $20 million per picture that Messrs. Carrey and Sandler and Ms. Roberts sometimes did in the past.”
  • Tag is a recent example of the new approach. Made for just $28 million, it features no major comedy stars and was sold primarily on its concept, a real-life story about grown friends in a decades long game of tag that was based on a Wall Street Journal article.”
  • “’There was a time when comedies were being made for $70 million. Then $45 million. Now the sweet spot is in the 20s,’ said Todd Garner, a producer of Tag who previously produced comedies starring Mr. Sandler.”

Environment / Science

Economist – Climate change is making the Arab world more miserable 5/31

  • “Apathy towards climate change is common across the Middle East and north Africa, even as the problems associated with it get worse. Longer droughts, hotter heatwaves and more frequent dust storms will occur from Rabat to Tehran, according to Germany’s Max Planck Institute for Chemistry. Already-long dry seasons are growing longer and drier, withering crops. Heat spikes are a growing problem too, with countries regularly notching lethal summer temperatures. Stretch such trends out a few years and they seem frightening—a few decades and they seem apocalyptic.”
  • “The institute forecasts that summer temperatures in the Middle East and north Africa will rise over twice as fast as the global average. Extreme temperatures of 46°C (115°F) or more will be about five times more likely by 2050 than they were at the beginning of the century, when similar peaks were reached, on average, 16 days per year. By 2100 ‘wet-bulb temperatures’—a measure of humidity and heat—could rise so high in the Gulf as to make it all but uninhabitable, according to a study in Nature (though its most catastrophic predictions are based on the assumption that emissions are not abated). Last year Iran came close to breaking the highest reliably recorded temperature of 54°C (129°F), which Kuwait reached the year before.”
  • “Water presents another problem. The Middle East and north Africa have little of it to begin with, and rainfall is expected to decline because of climate change. In some areas, such as the Moroccan highlands, it could drop by up to 40%. (Climate change might bring extra rain to coastal countries, such as Yemen, but that will probably be offset by higher evaporation.) Farmers struggling to nourish thirsty crops are digging more wells, draining centuries-old aquifers. A study using NASA satellites found that the Tigris and Euphrates basins lost 144 cubic kilometers (about the volume of the Dead Sea) of fresh water from 2003 to 2010. Most of this reduction was caused by the pumping of groundwater to make up for reduced rainfall.”
  • “Climate change is making the region even more volatile politically. When eastern Syria was ravaged by drought from 2007 to 2010, 1.5m people fled to cities, where many struggled. In Iran, a cycle of extreme droughts since the 1990s caused thousands of frustrated farmers to abandon the countryside. Exactly how much these events fueled the war that broke out in Syria in 2011 and recent unrest in Iran is a topic of considerable debate. They have certainly added to the grievances that many in both countries feel.”
  • “The mere prospect of shortages can lead to conflicts, as states race to secure water supplies at the expense of downstream neighbors. When Ethiopia started building an enormous dam on the Nile, potentially limiting the flow, Egypt, which relies on the river for nearly all of its water, threatened war. Turkish and Iranian dams along the Tigris, Euphrates and other rivers have raised similar ire in Iraq, which is beset by droughts.”
  • “Politics often gets in the way of problem-solving. Countries are rarely able to agree on how to share rivers and aquifers. In Gaza, where the seepage of saltwater and sewage into an overused aquifer raises the risk of disease, a blockade by Israel and Egypt has made it harder to build and run desalination plants. In Lebanon there is little hope that the government, divided along sectarian lines, will do anything to forestall the decline in the water supply predicted by the environment ministry. Countries such as Iraq and Syria, where war has devastated infrastructure, will struggle to prepare for a hotter, drier future.”

FT – China’s carbon emissions set for fastest growth in 7 years – Lucy Hornby and Leslie Hook 5/29

  • “China’s carbon emissions are on track to rise at their fastest pace in more than seven years during 2018, casting further doubt on the ability of the Paris climate change agreement to curb dangerous greenhouse gas increases, according to a Greenpeace analysis based on Beijing’s own data.”
  • “The latest finding comes as climate researchers express concern over rising emissions in China, which accounts for more than a quarter of global carbon dioxide output.”
  • “Global emissions were flat from 2014-16 but began rising again in 2017 as the Chinese economy recovered and as emission grew in the EU and the rest of Asia. Scientists are concerned the trend in China will continue this year.”
  • “Although China has invested heavily in renewable energy such as wind and solar, a key reason for its emissions growth is rising demand for oil and gas due to increased car ownership and electricity demand.”

Agriculture

WSJ – Daily Shot: CBOT Corn (Dec) Futures 6/25

WSJ – Daily Shot: CBOT Soybean Futures (Nov) 6/25

Asia – excluding China and Japan

FT – 1MDB says audits labelled unreliable by KPMG – Stefania Palma, Edward White and Michael Peel 6/25

  • “KPMG has said its annual audits of 1Malaysia Development Berhad from 2010 to 2012 were unreliable after information was withheld by former 1MDB managers, the scandal-hit fund said.”
  • “’If the documents had been disclosed to the auditors, KPMG believed the information would have materially impacted the financial statements and the relevant audit reports,’ the fund said in a statement on Tuesday.”
  • “The wealth fund, which was established in 2009 under then-prime minister Najib Razak, is the focus of a global corruption investigation, with authorities alleging that $4.5bn has gone missing.”
  • “The allegedly omitted audit details came to light after the new government of Mahathir Mohamad — which won power in a stunning election victory in May — released an auditor-general’s report into 1MDB that had been classified under the previous administration.”
  • “KPMG was sacked as 1MDB auditor at the end of 2013 after raising concerns about more than $2.3bn said to have been held in the Cayman Islands on behalf of the fund, according to an auditor-general draft report seen by the Financial Times in 2015.”
  • “The accounting firm was unhappy because 1MDB would not share documents KPMG wanted to help it assess the fund’s financial activities linked to the Caribbean islands.”

Russia

Economist – Russia’s role in shooting down an airliner becomes official 5/30

  • “It was an important demand, if one with little hope of success. On May 29th the Netherlands’ foreign minister, Stef Blok, insisted at the UN Security Council in New York that Russia ‘accept its responsibility’ in the downing of Malaysian Airlines flight MH17. The airliner was shot down by an anti-aircraft missile over Ukraine in 2014, killing 196 Dutch nationals, 38 Australians and 64 others. Last week a UN-mandated Joint Investigation Team (JIT), led by Dutch prosecutors, announced it had determined that the missile belonged to a unit deployed to the area by the Russian Army’s 53rd anti-aircraft brigade, presumably to help Russian-backed secessionists fighting the Ukrainian army.”
  • “The Kremlin has always denied any involvement in the downing of MH17 or the war in Ukraine. (Asked about the JIT’s findings, Mr Putin responded, ‘Which plane are you talking about?’) Instead it has spread conflicting alternative theories blaming the Ukrainians, often backed up with demonstrably fake evidence. But the investigators’ dossier is voluminous. It includes photos and video taken by passers-by that track the convoy carrying the missile from its base near Kursk, in Russia, to the Ukraine border. The JIT also has the fuselage of what appears to be the missile itself, recovered near the crash site. The Netherlands and Australia now say they will hold Russia accountable for its role, and want negotiations on a settlement.”

June 26, 2018

Worthy Insights / Opinion Pieces / Advice

NYT – The Profound Social Cost of American Exceptionalism – Eduardo Porter 5/29

Markets / Economy

FT – Lumber producers profit from record prices – Ben Foldy 6/25

  • “What do forest fires, wood-eating beetles and US President Donald Trump have in common? They have all helped push the price of lumber to historic heights, leading to record share prices for lumber producers and higher prices for US homebuyers.”
  • “The price of lumber has increased 57% since the start of 2017, according to the Random Lengths framing lumber composite price index, going from $356 to $571 per thousand board feet.”
  • “Analysts attribute the price spike to steadily increasing demand and a coincidence of supply shocks in British Columbia, one of the world’s largest producers of softwood lumber.”
  • “’When you have a tight supply chain, as soon as one thing goes wrong, prices skyrocket,’ said Brendan Lowney, principal and macroeconomist at Forest Economic Advisors. ‘You almost have a vertical supply curve.’”
  • “But of the factors driving current prices, duties are only ‘number three on the list,’ said Mr Lowney. More important was a historic 2017 wildfire season that was so severe the Canadian government’s senior climatologist called it the ‘summer of fire’.”
  • Between April and November, more than 1,300 fires consumed more than 1.2m hectares of British Columbia. The fires and dry conditions forced many sawmill owners to halt operations and restricted much of the province’s logging activity.”
  • “The slowdown came at a most inopportune time thanks to another, slower moving shock to the industry: throughout the late 1990s and early 2000s, British Columbia’s forests saw the largest infestation of mountain pine beetles on record, and the consequences are being felt now.”
  • “It only takes a few hundred of the hard-shell black bugs, each roughly the size of a grain of rice, to overwhelm the defenses of a healthy, towering pine. As they burrow through the tree’s bark to lay their eggs, they also introduce a fungus that changes the color of its wood.”
  • “’The tree is as good as dead within 48 hours,’ said Katherine Bleiker, a bark beetle ecologist with Natural Resources Canada.”
  • The epidemic hit hardest in the heart of British Columbia’s logging country, affecting more than 18m hectares and killing about 54% of the province’s merchantable pine.”
  • “But despite their changed color, standing trees killed by pine beetles can still be harvested for lumber. Many are usable for up to eight years, and some last up to 12.”
  • “By the last quarter of 2017, it had looked as if prices had settled around $435 per thousand board feet. But when a harsh winter slowed down Canadian rail traffic, other commodities were prioritized and lumber orders piled up at mills, giving a new leg-up to prices.”
  • “’What’s unprecedented about this run compared to other record runs is the length of it,’ said Shawn Church, who has covered the industry for 28 years at trade publication Random Lengths.”
  • “With the spring and summer building season now under way, prices are still climbing. The US residential sector is the country’s biggest lumber consumer, and new housing starts hit a post-2007 high in May.”
  • “High prices and high demand meant massive first-quarter profits for lumber companies. Share prices for the two largest Canadian lumber corporations, Canfor Corporation and West Fraser Timber Co Ltd, and Weyerhaeuser Co, the largest US producer, have all hit record highs this month.”
  • “As lumber companies rake in profits, the costs are shifted to builders and eventually on to homebuyers.”
  • “Analysts differ in their estimates, but the increase in lumber costs alone has probably added between $3,000 and $9,000 to the cost of the median new home.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 6/22

WSJ – Daily Shot: DigiCor – Major Cryptocurrencies Market Performance 6/24

Tech

Bloomberg – Instagram Is Estimated to Be Worth More than $100 Billion – Emily McCormick 6/25

  • “Facebook Inc.’s Instagram is estimated to be worth more than $100 billion, if it were a stand-alone company, marking a 100-fold return for the app was purchased in 2012, according to data compiled by Bloomberg Intelligence.”
  • “The photo-sharing platform, which reached 1 billion monthly active users earlier this month, will likely help nudge Instagram revenue past $10 billion over the next 12 months, Bloomberg Intelligence analyst Jitendra Waral wrote in a report Monday. Instagram is attracting new users faster than Facebook’s main site and is on track to exceed 2 billion users within the next five years, Waral said. While the social network already has surpassed that milestone, Instagram’s audience is younger than its parent, making it more attractive to advertisers. And unlike Facebook, Instagram is still growing in the U.S.”

China

WSJ – China Eases Credit Policy as U.S. Tariffs Near – Lingling Wei and Chao Deng 6/24

  • “China’s central bank is freeing up more than $100 billion for commercial banks to boost lending and restructure debt, as the Chinese leadership tries to shore up growth amid slowing momentum for economic expansion and an intensifying trade brawl with the U.S.”
  • “In a statement Sunday, the People’s Bank of China announced that it is reducing the amount of reserves banks are required to keep with the central bank by half a percentage point starting July 5. That is the day before a U.S. deadline to slap punitive tariffs on tens of billions of dollars in Chinese goods.”
  • “Under the reserve cut, some 500 billion yuan ($76.86 billion) will be released for 17 large banks, including the Big Five state-owned banks, the central bank said. It said the banks are to use the freed-up funds by converting bad loans into equity in companies that default on their debts.”
  • “Another 200 billion yuan is being unleashed for the country’s city-level commercial banks and other smaller lenders, and those funds are to be used to expand lending to small businesses, the central bank said in the statement.”
  • “Following the reduction in banks’ reserve-requirement ratio, analysts expect more loosening, including increasing lending quotas for banks, relaxing mortgage restrictions for home buyers in some cities and easing limits on local governments to borrow.”
  • “’China is on the way toward monetary easing,’ said Zhu Chaoping, a Shanghai-based global market strategist at J.P. Morgan Asset Management.”

June 25, 2018

Worthy Insights / Opinion Pieces / Advice

WSJ – Anger Over Tourists Swarming Vacation Hot Spots Sparks Global Backlash – Rachel Pannett 5/22

  • “In Venice, Barcelona, Thailand and New Zealand, ‘overtouristing’ is straining local infrastructure and prompting restrictions; the ‘Lord of the Rings’ effect.”

Markets / Economy

NYT – Your Recycling Gets Recycled, Right? Maybe, or Maybe Not – Livia Albeck-Ripka 5/29

  • “Plastics and papers from dozens of American cities and towns are being dumped in landfills after China stopped recycling most ‘foreign garbage.'”

Real Estate

FT – How WeWork’s revenue-sharing leases could affect property investors – Aime Williams 6/21

  • WeWork is starting to work percentage rent deals with some of its landlords/co-investors.

Tech

FT – Mary Meeker warns tech giants that growth will be harder to find – Tim Bradshaw 5/30

  • “Veteran Silicon Valley analyst sees competition intensifying now half the world is online.”

Health / Medicine

FT – Spread of western lifestyle hampers battle against cancer – Darren Dodd 5/31

  • “The good news is that about 40% of cancer cases are preventable and that smoking, the biggest single cause, is in decline across much of the world. The bad news is that overall rates are shooting up as more countries adopt western lifestyles.”
  • “By 2035, the number of new cases is set to rise by 58% to 24m, according to a report from the World Cancer Research Fund.”
  • “’Over the next 20 or 30 years, unless anything is done to stop it, [obesity or being overweight] is going to overtake smoking as the number one risk factor for cancer,’ says Dr Kate Allen, executive director of science and public affairs at the WCRF.”
  • “The report is a synthesis of a decade of research on cancer risks with a new set of recommendations (see graphic) to minimize a person’s chances of developing the disease. It says 12 cancers are now linked to being overweight or obese.”
  • “’It has taken 40 or 50 years to make a big dent in tobacco consumption,’ Dr Allen says. In dealing with the problems of obesity, ‘it’s going to take at least that to get some traction,’ she adds.”

Canada

NYT – In Vancouver, a Housing Frenzy That Even Owners Want to End – Conor Dougherty 6/2

  • “Vancouver is so expensive that politicians want to tax its real estate market into submission, and many homeowners — who will lose money if home prices fall — think it’s the best idea they’ve heard in years.”
  • “Like many cities around the world, Vancouver is grappling with punishing housing costs that have pushed out large swaths of residents — and are causing distress among young adults who can’t afford rent today and take it for granted that they will never own a home.”
  • “Vancouver, surrounded by snow-capped mountains and wide maritime views, has never been especially cheap. But home and condominium prices are up by close to 16% over the past year, and about 60% over the past three, according to the Real Estate Board of Greater Vancouver.”
  • “What makes these gains so remarkable is that unlike Silicon Valley, London or New York — where the presence of high-paying tech and finance jobs helps explain housing costs — Vancouver has relatively low salaries. As part of their bid for Amazon’s second headquarters, Vancouver officials boasted about having ‘the lowest wages of all North American tech hubs’.”

June 22, 2018

Perspective

WSJ – Growth in Retiring Baby Boomers Strains U.S. Entitlement Programs – Janet Adamy and Paul Overberg 6/21

Worthy Insights / Opinion Pieces / Advice

FT – The world’s progress brings new challenges – Martin Wolf 5/29

  • “Preserving peaceful relations in an era of rapid shifts in relative power is tough.”

Project Syndicate – Are We in a Corporate Debt Bubble? – Susan Lund 6/19

WSJ – Japan’s Yen: A Currency for All Seasons? – Richard Barley 6/21

WSJ – Why Home Prices Have Nowhere to Go But Up – Justin Lahart 6/20

  • “Low supply is keeping sales down despite higher rates and builders are in no rush to boost production.”

Markets / Economy

WSJ – Behemoths Have Dominated the Market Before, but Tech Is Different – James Mackintosh 6/14

Real Estate

FT – Blackstone remains global king of property funds – Chris Flood 6/2

WSJ – Daily Shot: Black Knight – US Foreclosure Starts 6/21

Finance

FT – The mystery trader who roiled Wall Street – Miles Johnson and Robert Smith 6/3

  • “Former Blackstone executive used complex credit derivatives to become a feared hedge fund manager but left behind a trail of recriminations.”

Education

NYT – The Numbers That Explain Why Teachers Are in Revolt – Robert Gebeloff 6/4

NYT – Top Colleges Are Cheaper Than You Think (Unless You’re Rich) – David Leonhardt 6/5

India

FT – Payments crunch pushes Indian power producers to brink of default – Simon Mundy and Kiran Stacey 6/20

  • “Possibility of writedowns hangs over banks still struggling from bad-loan crisis.”

June 21, 2018

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Too Big To Be Simple? – Ben Carlson 6/19

  • “…There is no such thing as too big to be simple.”
  • “Problems arise when ultra-wealthy people assume the normal rules don’t apply to them.”

A Wealth of Common Sense – Is The Handmaid’s Tale Fast Approaching – Ben Carlson 6/5

Economist – In praise of ranked-choice voting 6/14

  • “A simple reform might fix America’s dysfunctional politics.”

Economist – China has made progress in tackling financial risks – Leaders 6/16

FT – Beauty contest to host new Amazon base reveals ugly truths – Edward Luce 6/5

  • “Competition for ‘HQ2’ shows how hard it is to ensure city development benefits the poor.”

FT – How millennials became the world’s most powerful consumers – John Gapper 6/5

  • “They are the biggest global generation – and their choices are upending business from the US to China.”

Markets / Economy

WSJ – Food Companies Can’t Figure Out What Americans Want to Eat – Aaron Back 6/5

WSJ – The Other Yield Curve Investors Should Watch as Trouble Mounts – Richard Barley 6/19

Real Estate

Financial Advisor – Nuveen, Starwood, Griffin Follow Blackstone Into NAV REIT Market – Evan Simonoff 6/4

Energy

Economist – Global Coal Consumption 6/14

Health / Medicine

FT – Gaming disorder joins the WHO panoply of diseases – Anjana Ahuja 6/19

  • “Official recognition of social media addiction could well be next in line.”

Britain

FT – ‘Hellish’: UK motorists hit by biggest petrol price rise in 18 years – Camilla Hodgson 6/5

  • “Petrol prices jumped at the fastest pace in 18 years in May, with an average increase of 6p per liter from the previous month, according to roadside assistance and insurance company RAC.”
  • “Unleaded petrol rose from 123.43p to 129.41p ($6.46 per gallon) over the month, taking the cost of filling up a 55-litre (14.53 gallon) family car to £71.18 ($93.79), an increase of £3.29 in just one month, according to RAC Fuel Watch data.”
  • “Price rises were driven by a jump in oil prices combined with the weakening of the pound against the dollar, said RAC.”

China

FT – China’s debt collectors focus in on $200bn P2P debt pile – Don Weinland 6/4

  • “Debt collectors in China are harnessing new technologies such as artificial intelligence in a bid to collect on an estimated Rmb1.3tn ($200bn) debt bubble that has formed in the country’s peer-to-peer lending industry.”
  • “An estimated Rmb1.3tn in outstanding P2P debt as of May, according to online lending intelligence firm Wdzj.com, and a rising number of defaults have opened the door to a wave of start-ups using new technologies to try to recover tardy loans.”
  • “’People’s usage of P2P debt is very high but the government only monitors the banking system closely,’ said Cherry Sheng, chief executive of Shanghai-based debt collection group Ziyitong and a former manager at Citigroup and ANZ Bank. ‘This has become an opportunity for start-ups with advanced technology to move into this market.’”
  • “Ziyitong, which has sought to recover Rmb150bn since it was set up in 2016, recently launched an AI platform to help recover delinquent loans for some 600 debt collection agencies, and more than 200 lenders including Alibaba Group and Postal Savings Bank of China, Ms. Sheng said.”
  • The system scrapes the internet for information on borrowers and their friends, then contacts the borrower via phone using a dialogue robot. The conversations are recorded and analyzed by an algorithm that then determines the phrasing with the highest likelihood of pressuring the person to pay back the loan. The system also calls friends of the borrower and asks them to relay the urgency of making payments.”
  • “In May the AI system had a recovery rate of 41% for large clients on loans delinquent for up to one week, according to Ms. Sheng, compared with a rate of as low as 20% via traditional debt collection methods for similar loans. Ziyitong plans to expand the system to loans that have been unpaid for longer periods of time.”
  • “Yigou, another debt collection start-up, has launched a mobile phone application that allows collection agents to search thousands of individual debt records and choose cases, streamlining connections between lenders and collectors. The company can also provide geo-locational data on some borrowers to help the agents track them down.”

WSJ – China Tech Giants’ Costly Wars to Go Cashless – Stella Yifan Xie 6/14

Europe

WSJ – The Force Behind Europe’s Populist Tide: Frustrated Young Adults – Eric Sylvers 6/17

 

June 20, 2018

Perspective

OECD – A Broken Social Elevator? How to Promote Social Mobility 6/15

Worthy Insights / Opinion Pieces / Advice

Foreign Affairs – Beijing’s Building Boom: How the West Surrendered Global Infrastructure Development to China – Bushra Bataineh, Michael Bennon, and Francis Fukuyama 5/21

FT – Facebook’s data sharing shows it is not a US champion – Rana Foroohar 6/6

  • “The social network gave China’s Huawei access to user information despite concerns.”

Pragmatic Capitalism – The Vollgeld Proposal is Bad. Very Bad. – Cullen Roche 6/6

  • A thoughtful point on the benefits of private banks vs. a nationalized banking system.

Wolf Street – Next Mortgage Default Tsunami Isn’t Going to Drown Big Banks but “Shadow Banks” – Wolf Richter 6/17

  • “This is the trend: Banks are pulling back from mortgage lending in a big way, likely cherry-picking their customers to curtail the risks amid inflated prices and irrational exuberance in an environment of rising mortgage rates; and non-bank lenders aggressively chase everyone else. And since these ‘shadow banks’ not regulated by bank regulators, they’re free to do as they please.”
  • “ATTOM obtained this data from publicly recorded mortgages and deeds of trust in more than 1,700 counties accounting for more than 87% of the US population.”
  • “It also pointed at the curious dynamics of co-buyers – defined as multiple, non-married buyers listed on the sales deed – in the most expensive markets. Nationwide in Q1, 17.4% of all single family homes were purchased by co-buyers, up from 16.3% a year ago, and up from 14.9% two years ago. But the national averages paper over the vast differences in individual markets.”

Markets / Economy

FT – How millennials’ taste for ‘authenticity’ is disrupting powerful food brands – Scheherazade Daneshkhu 6/18

  • “Business struggles to respond to young consumer demand for more natural products.”

FT – The millennial moment – in charts – Cale Tilford 6/5

WSJ – Daily Shot: BofAML – Updated Asset Price Bubble Chart 6/19

Real Estate

WSJ – Daily Shot: Black Knight – Tappable Equity of US Mortgage Holders 6/19

Bloomberg Businessweek – Brexit Pain Hits London Housing – Jill Ward 6/18

Energy

FT – Oil producers face their ‘life or death’ question – David Sheppard and Anjli Raval 6/18

  • “Fear of an imminent peak in demand means companies are less likely to invest. So does that make shortages and a price rise inevitable?”
  • “In the second half of this decade total capital expenditure by the large oil and gas groups is projected to fall by almost 50% to $443.5bn from $875.1bn between 2010-15, according to Norwegian consultancy Rystad Energy. Although partly offset by a fall in oilfield development costs, the drop also coincides with the big groups ploughing more capital into shorter-term projects, which pay off quickly, as well as renewable energy. The moves come amid fears that electric vehicles pose a huge threat to oil’s dominance.”
  • “’It’s not wise to be cavalier about a lack of investment,’ says Stewart Glickman, an energy equity analyst at CFRA. ‘The drop over the past four years eventually will have an impact on crude prices.’”
  • “He adds that while investment in US shale has grown as companies look to short-cycle projects, bottlenecks and the declining quality of reserves mean it alone might not be able to fill the gap. ‘To blithely assume that because [the US shale industry] has been able to generate enough production so far that we’ll be able to continue doing so is a risky expectation,’ he says.”
  • “Estimates for when oil demand will peak vary wildly. Some experts say it could happen as soon as 2023, others put it off to 2070. That lack of consensus presents a danger, critics say, that the oil groups are being pushed — against their instincts — into shelving complex long-term investments just as demand for oil nears 100m barrels a day for the first time as emerging economies in Asia and Africa expand.”
  • “’There is so much uncertainty,’ says Andrew Gould, former chairman and chief executive of oilfield services company Schlumberger. ‘It’s increasingly difficult now to get boards to sign off on projects that have a 20-25 year life.’”

Shipping

WSJ – Business Is Booming at the Panama Canal – Costas Paris 6/17

  • “Widened waterway opened canal to bigger ships moving U.S. natural gas and petroleum, sending toll revenue soaring.”

China

FT – China eyes role as world’s power supplier – James Kynge and Lucy Hornby 6/6

  • “In Laos, in Brazil, in central Africa and most of all in China itself, ultra high-voltage (UHV) cable technology that allows power to be commercially transported over vast distances with lower costs and increased load is justifying the construction of massive power projects. It is dubbed the ‘intercontinental ballistic missile’ of the power industry by Liu Zhenya, its biggest backer and for a decade the president of State Grid, China’s powerful transmission utility.”
  • “UHV allowed China to binge on dam building in its mountainous hinterland, then transport the power thousands of kilometers to its wealthy, industrial east coast. But by enabling this, and other projects, UHV has left western China with such a glut of power that Mr Liu in 2016 proposed using the technology to export power as far away as Germany.”
  • “Now Mr Liu is promoting UHV internationally through his Global Energy Interconnection (GEI) initiative. Designated a ‘national strategy’ and championed by Xi Jinping, China’s president, the initiative feeds into one of China’s most ambitious international plans — to create the world’s first global electricity grid.”
  • “Advocates stress that this does not mean China would control the resulting grid but networks would be linked to allow better cross-regional allocation of power surpluses. It is no coincidence that this would resolve the problem of ‘trapped’ power resulting from some of China’s mega construction projects in countries like Laos that lack a big enough domestic market.”
  • “Chinese companies have announced investments of $102bn in building or acquiring power transmission infrastructure across 83 projects in Latin America, Africa, Europe and beyond over the past five years, according to RWR. Adding in loans from Chinese institutions for overseas power grid investments brings the total to $123bn.”
  • “Throw in all power-related Chinese deals overseas, including investments and loans to power plants as well as grids, and the number almost quadruples. Between 2013 and the end of February 2018, total overseas power transactions announced reached $452bn, up 92% from 2013 levels, according to RWR, which strips out of its calculations deals that are announced only to be subsequently cancelled.”
  • “Officials and power industry analysts in China insist that it would be too simple to assume that such investments are all slated to be rolled up into a single international grid to achieve the GEI goal, which Mr Liu recently described as similar to the internet: global but not controlled by a single country.”
  • “Although Chinese companies would not necessarily own or control the regional grids, their influence, via the assets they do control, would ultimately lead to regional interconnection.”
  • “The biggest boon for China’s global grid ambitions is UHV cable technology. While other companies such as Germany’s Siemens and the Swedish-Swiss conglomerate ABB also have the technology, Chinese companies have been the first to deploy it on a grand scale, developing global industry standards.”
  • “China has already demonstrated the technology’s performance at home. The 37,000km of UHV cable that is laid or under construction in China can carry a load of 150GW, equivalent to 2.5 times the maximum electricity load in the UK. And despite some pushback from the country’s entrenched power generators, Mr Liu claims that the cables are particularly applicable to renewable energy.”
  • “Steven Chu, a former US secretary of energy, has called China’s strides in UHV technology a ‘Sputnik moment’ for the US, alluding to the Soviet Union’s 1957 launch of the first earth-orbiting space satellite, which marked a technological leap ahead of the US.”
  • “’China has the best transmission lines in terms of the highest voltage and lowest loss,’ Mr Chu has said. ‘They can transmit electricity over 2,000km and lose only 7% of the energy. If we [the US] transmitted over 200km we would lose more than that.’”
  • “The technology promises to reshape the way in which the world consumes power, Mr Liu told his London audience. He used the hypothetical scenario of hydropower generated in the Democratic Republic of Congo for $0.03 per kWh being transmitted to Europe through Chinese UHV cables at a cost on delivery of just $0.07-0.08 per kWh. This compares with an average cost of €0.20 ($0.23) per kWh to households in the EU, according to Eurostat, the data agency.”

 

June 19, 2018

Worthy Insights / Opinion Pieces / Advice

FT – Watch the Fed’s balance sheet, not interest rates – Gillian Tett 6/7

  • “The US central bank’s unwinding has contributed to turmoil in emerging markets.”

FT – China is winning the global tech race – Michael Moritz 6/17

FT – Donald Trump’s trade tirade shows his mastery of the message – Rana Foroohar 6/17

Polygon – What if Star Wars never happened? – Kevin Lincoln 6/7

  • “Imagining a world where George Lucas’ space fantasy didn’t revolutionize Hollywood.”

Markets / Economy

WSJ – Daily Shot: indeed – Older workers are the gig economy 6/18

Energy

FT Energy Source: BP – World Fuel Sources by proportionate share – Ed Crooks 6/17

LA Times – Shale country is out of workers. That means $140,000 for a truck driver and 100% pay hikes – David Wethe 6/8

Finance

WSJ – The Finance Industry’s Incredible Ability to Keep the Money Rolling In – Paul J. Davies 6/15

  • “Banks, brokers and money managers have kept their revenue steady for 130 years.”

Cryptocurrency / ICOs

FT – Who really owns bitcoin now? – Hannah Murphy 6/7

  • “Initially in the crypto space, you had people who really understood the technology. Then there was a typical bandwagon investor situation and you know how it ends — and it did.” – Campbell Harvey, finance professor at Duke University and an investment strategy adviser for Man Group.
  • “But how many have gained — and lost — from the bitcoin bubble? Exclusive data from blockchain research company Chainalysis seen by the FT provides some tantalizing answers.”
  • “The Chainalysis data quantifies this distinct shift in the make-up of bitcoin owners from longer-term investors — those who held the asset for more than a year — to short-term investors who have traded more recently, by analyzing how regularly coins have changed hands.”
  • “Last November — before December’s pricing peak — the amount of bitcoin held for investment was roughly three times that held by traders.”
  • “However, by April 2018, the data show the amount held by investors — about 6m bitcoin — was much closer to the amount held by short-term speculators, with 5.1m bitcoin.”
  • Indeed, Chainalysis estimates that longer-term holders sold at least $30bn worth of bitcoin to new speculators over the December to April period, with half of this movement taking place in December alone.
  • “’This was an exceptional transfer of wealth,’ says Philip Gradwell, Chainalysis’ chief economist, who dubs the past six months as bitcoin’s ‘liquidity event’.”
  • “Mr Gradwell argues that this sudden injection of liquidity — the amount of bitcoin available for trading rose by close to 60% over that period — has been a ‘fundamental driver’ behind the recent price decline. At the same time, bitcoin trading volumes have now fallen in tandem with the prices, from close to $4bn daily in December to $1bn today.”
  • “So will the price of bitcoin ever surpass December’s peak? Part of the answer lies in who holds bitcoin now that the hype has died down.”
  • “Born in 2009 in the wake of the financial crisis, bitcoin is rooted in a libertarian quest for a means of exchange that is unshackled from the central banking system. Proponents — among them, computer experts and political activists — heralded the arrival of an alternative monetary system that could replace fiat currency.”
  • “But despite the recent crypto boom, there are few signs that this is happening. According to research published this month by Morgan Stanley, only four of the top 500 US e-commerce merchants accepted cryptocurrencies in the first quarter of 2018, compared with three at the beginning of 2017.”
  • “Chainalysis notes that the ‘vast majority’ of transactions it analyzed showed bitcoin being received from exchanges and rarely sent to merchant services to pay for goods or services.”
  • “Only a finite number of coin — 21m — can be created. Of this, about 4m are yet to be mined. Just as physical coins can be lost down the back of a sofa, so can bitcoins if users lose or forget the passwords needed to access their online wallets. The Chainalysis data separates out coins it deems to be lost or unused for years — which total 3.7m bitcoin, worth about $28bn.”
  • “’Speculation remains the primary use case for these digital assets; merchant or institutional adoption does not appear to be a primary driver of price,’ says Preston Byrne, an English structured finance lawyer and cryptocurrency observer.”
  • “Given this breakdown in bitcoin owners, most market watchers do not rule out another rapid price run-up. However, they say this would likely be the random movement of pure speculation or market manipulation rather than anything else.”
  • “’It’s very important to stress, this is not in any sense a rational market,’ says David Gerard, the author of Attack of the 50 Foot Blockchain.”
  • “’It’s very thinly traded, very badly structured . . . and it’s stupendously manipulated,’ he adds. ‘Anyone who goes in not realizing just how manipulated the crypto markets are will get skinned.’”
  • “The Chainalysis data also show that the bitcoin marketplace is skewed in terms of wealth distribution. A small cluster of investors — known colloquially as ‘whales’ — capture a hefty proportion of the market, which stands at odds with bitcoin’s mission to democratize finance. This brings its own risks.”
  • “Overall, some 1,600 bitcoin wallets — managed by both speculators and investors — contained at least 1,000 bitcoin each in April, according to Chainalysis, collectively holding nearly 5m bitcoin, or close to a third of the available total.”
  • “Of those, just under 100 wallets owned by longer-term investors contained between 10,000 and 100,000 bitcoin — so between $75m and $750m at today’s prices.”
  • “Nevertheless, some point out that the excitement and influx of fresh funds into the market has allowed its infrastructure to mature — albeit gradually — which could be a boon for those looking to trade bitcoin more safely in future.”
  • “Much of the future of bitcoin trading will depend on the approach that regulators take, experts say. There are stirrings across the world, though to date, little coherence. Asian financial centers such as Tokyo are now regulating crypto exchanges, while China has banned them outright. Meanwhile, the US Securities and Exchange Commission last month announced a criminal probe into potential bitcoin price manipulation.”
  • “Banks in particular have been reticent to engage with cryptocurrencies and the companies that handle them, partly due to the difficulty of conducting anti-money laundering checks on transactions.”
  • “’Bank compliance officers really, really hate cryptos . . . be prepared to demonstrate the provenance of every penny from every crypto,’ says Mr Gerard.”
  • “Any more widespread adoption of bitcoin would need regulators, central banks and tax regulators to allow the transfer of wealth movement from the current financial system into the new one, says Gavin Brown, senior lecturer in financial economics at Manchester Metropolitan University and director of cryptocurrency hedge fund Blockchain Capital.”

Environment / Science

Quartz – To hit climate goals, Bill Gates and his billionaire friends are betting on energy storage – Akshat Rathi 6/12

China

FT – Beijing leans on lenders to back debt-hit HNA’s bond sale – Lucy Hornby and Sherry Fei Ju 6/15

  • “Chinese banks have been urged by government officials to ‘support’ bonds issued by HNA as the troubled finance-to-aviation conglomerate tries to extricate itself from a massive debt burden racked up during an acquisition binge.”
  • “HNA plans to issue Rmb4bn ($620m) in domestic bonds, paying interest of 6.5-7.5%.”

Other Interesting Links

Bloomberg – It’s Billionaires at the Gate as Ultra-Rich Muscle In on Private Equity – Simone Foxman and Sonali Basak 6/11

WSJ – Daily Shot: Plastic Surgery Portal – Most Searched Plastic Surgery Procedures by State 6/18

June 18, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Could Ocean’s 8 Actually Work? – James Tarmy 6/5

  • “Why stealing giant diamonds is a terrible, no good, very bad idea.”

Bloomberg Businessweek – Tears ‘R’ Us: The World’s Biggest Toy Store Didn’t Have to Die – Susan Berfield, Eliza Ronalds-Hannon, Matthew Townsend, and Lauren Coleman-Lochner 6/6

FT – Trump is trading on the protectionist mood – Rana Foroohar 6/10

  • “When even centrists are circling the wagons, we know we have entered a different world.”

FT – Forecasters have an awful record in predicting energy markets – Nick Butler 6/14

  • “Wider uncertainty increases appeal of large, low-cost power projects.”

WSJ – The Stock-Market Price Can Be Wrong. Very Wrong. – Jason Zweig 6/15

  • “Researchers have caught investors in the act of wildly – and unnecessarily – overpaying for a stock.”

WSJ – Venezuela’s Long Road to Ruin – Mary Anastasia O’Grady 6/10

  • “Few countries have provided such a perfect example of socialist policies in practice.”

Markets / Economy

NYT – Power Companies’ Mistakes Can Cost Billions. Who Should Pay? – Ivan Penn 6/14

  • “Utilities say they must be shielded from liability or the electric grid will suffer. Critics say that puts the burden on ratepayers, not investors.”

Real Estate

WSJ – Daily Shot: Bianco Research – Value of US Real Estate relative to GDP 6/15

WSJ – Daily Shot: John Burns RE Consulting – Burns Home Value Index 6/15

WSJ – Daily Shot: John Burns RE Consulting – Burns Intrinsic Home Value Index 6/15

Energy

WSJ – Global Investment in Wind and Solar Energy Is Outshining Fossil Fuels – Russell Gold 6/11

Finance

WSJ – Daily Shot: MagnifyMoney – Auto Loan Rates vs. Fed Funds Rate 6/15

WSJ – Daily Shot: MagnifyMoney – Student Loan Rates vs. Fed Funds Rate 6/15

Fishing

NYT – In the Philippines, Dynamite Fishing Decimates Entire Ocean Food Chains – Aurora Almendral 6/15

Construction

NYT – Piece by Piece, a Factory-Made Answer for a Housing Squeeze – Conor Dougherty 6/7

  • “The global construction industry is a $10 trillion behemoth whose structures determine where people live, how they get to work and what cities look like. It is also one of the world’s least efficient businesses. The construction productivity rate — how much building workers do for each hour of labor they put in — has been flat since 1945, according to the McKinsey Global Institute. Over that period, sectors like agriculture, manufacturing and retail saw their productivity rates surge by as much as 1,500%. In other words, while the rest of the economy has been supercharged by machines, computers and robots, construction companies are about as efficient as they were in World War II.”

WSJ – Historic Rise in Lumber Costs Ripples Through Economy – Ryan Dezember 6/5

Education

WSJ – Judges Wouldn’t Consider Forgiving Crippling Student Loans – Until Now – Katy Stech Ferek 6/14

  • “For decades, college debt was immune from the bankruptcy process. Judges are actively seeking ways to help debtors.”

Africa

NYT – Corruption Gutted South Africa’s Tax Agency. Now the Nation Is Paying the Price. – Selam Gebrekidan and Norimitsu Onishi 6/10

Britain

FT – Average-sized English homes too pricey for average earners – Judith Evans 6/15

China

FT – Tycoon abducted by China works with authorities to sell assets – Don Weinland and Lucy Hornby 6/10

  • “Xiao Jianhua (Tomorrow Group company) said to be detained in Shanghai a year after being seized in Hong Kong.”

Nikkei Asian Review – How Beijing is winning control of the South China Sea – Simon Roughneen 6/13

  • “Erratic US policy and fraying alliances give China a free hand.”
  • “What China is winning is de facto control of nearly the entire South China Sea, including all activities and resources in it, despite the other surrounding Southeast Asian states’ respective legal rights and entitlements under international law.” – Jay Batongbacal, director of the University of the Philippines Institute for Maritime Affairs and Law of the Sea
  • “At stake is the huge commercial and military leverage that comes with controlling one of the world’s most important shipping lanes, through which up to $5 trillion worth of trade passes each year.”

Europe

Bloomberg Businessweek – Italy’s Young Populists Are Coddling the Old – and Holding the Country Back – Peter Coy 6/6

  • “The country’s economic output is smaller now than it was in 2004, and employment policies are skewed to protecting jobs, not creating them. The number of Italians registered as living abroad rose 60% from 2006 to 2017, to almost 5 million. Among those who stay, it’s common for unemployed young people to live with their parents instead of starting their own families, which is one reason the country has one of the world’s lowest birthrates.”

South America

NYT – Workers Flee and Thieves Loot Venezuela’s Reeling Oil Giant – William Neuman and Clifford Krauss 6/14

Other Interesting Links

Tax Foundation – How High Are Beer Taxes in Your State? – Katherine Loughead 5/24