Tag: Corporate Cash

March 20, 2018

Perspective

NYT – Extensive Data Shows Punishing Reach of Racism for Black Boys – Emily Badger, Claire Cain Miller, Adam Pearce and Kevin Quealy 3/19

  • Check the link for some very insightful interactive graphics.
  • “Black boys raised in America, even in the wealthiest families and living in some of the most well-to-do neighborhoods, still earn less in adulthood than white boys with similar backgrounds, according to a sweeping new study that traced the lives of millions of children.”
  • “White boys who grow up rich are likely to remain that way. Black boys raised at the top, however, are more likely to become poor than to stay wealthy in their own adult households.”
  • “Most white boys raised in wealthy families will stay rich or upper middle class as adults, but black boys raised in similarly rich households will not.”

WSJ – Daily Shot: Pew – How Millennials today compare with their grandparents 50 years ago – Richard Fry, Ruth Igielnik and Eileen Patten 3/16

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Accidental Career Guidance – Ben Carlson 3/18

Fortune – Mapping The Best (100) Companies 3/1

  • Interactive map

FT – Italian election results expose eurozone inadequacy – Martin Wolf 3/13

  • “Until prosperity is better distributed, Europe will remain vulnerable to upheaval.”

WSJ – A Decade After Bear’s Collapse, the Seeds of Instability Are Germinating Again – Greg Ip 3/14

  • “…Hyun Song Shin, research chief at the Bank for International Settlements, warned in a 2014 speech against the tendency to ‘focus on known past weaknesses rather than asking where the new dangers are.’ Banks may be stronger than a decade ago, but the financial system hasn’t returned to its pre-1980 repressed state.”
  • “Mr. Shin pointed out that bond markets are growing at the expense of banks in supplying credit, enabling business and government debt loads in many countries to surpass their pre-crisis peaks. Emerging markets have borrowed heavily in dollars, which leaves them vulnerable should the dollar’s value rise sharply. Before the crisis, 80% of investment-grade corporate debt world-wide yielded more than 4%; as of last October, less than 5% did, according to the International Monetary Fund.“
  • “Total U.S. debt, at around 250% of GDP, still stands at crisis-era peaks while debt levels in China have caught up and passed the U.S., according to the BIS. U.S. companies’ debts had reached 34% of assets by the end of 2016, the highest at least since 2000. Debt-servicing burdens haven’t risen commensurately thanks to low inflation and low rates, but they have begun climbing. More than $1 trillion a year still flows into emerging markets each year, according to the Institute of International Finance.”
  • “This tells us little about when or where a crisis will happen or what may trigger it. Crises surprise because they usually start with an assumption so sensible that everyone acts on it, planting the seeds of its own undoing: in 1982 that countries like Mexico don’t default; in 1997 that Asia’s fixed exchange rates wouldn’t break; in 2007 that housing prices never declined nationwide; and in 2011 that euro members wouldn’t default. James Bianco, who runs his own financial research firm in Chicago, speculates that the equivalent today might be, ‘We will never see higher inflation or higher growth.’ If either in fact occurs, the low interest rates that have raised household stock and property wealth to an all-time high relative to disposable income won’t be sustainable.”
  • “Mr. Rogoff (Kenneth Rogoff, Harvard University economist) concurs: ‘It’s much harder to get a crisis when you can borrow for virtually nothing and keep rolling it over.’ A 1.5 to 2 percentage point increase in real interest rates, which he isn’t forecasting, would be small by historical standards but could potentially make the debts of Italy or Portugal unsustainable.”
  • “Central banks know this, of course, which is one reason they are wary of raising interest rates too quickly—while nervous that if they raise them too slowly, the problem will get worse.”

Markets / Economy

Fortune – These Are the Countries That Have Grown the Most in the Last Year – Nicolas Rapp and Anne Vandermey 2/23

Fortune – Here Are the 26 Big U.S. Companies With the Most Cash Stashed Overseas – Nicolas Rapp and Brian O’Keefe 2/22

Wolf Street – US Gross National Debt Spikes $1.2 Trillion in 6 Months, Hits $21 Trillion – Rolf Richter 3/16

Energy

FT – Saudi Arabia’s existential crisis returns as US shale booms anew – Anjli Raval 3/18

  • “Nearly 4m barrels a day of US crude is expected to hit export markets by the mid-2020s, up from just over 1m b/d in 2017, meaning it will ship similar levels to Iraq and Canada, according to consultancy Wood Mackenzie. The industry is debating whether the world will be able to absorb these volumes and how global crude flows will redirect.”
  • “China surpassed the UK and the Netherlands to become the second-largest destination for US crude oil exports in 2017, accounting for a fifth of the 527,000 b/d total year-over-year increase in foreign sales. Chinese refiners say the trend will continue as Beijing seeks to partially address US president Donald Trump’s complaints about the trade deficit between the two countries.”
  • “The International Energy Agency forecasts that the US will cover most of the world’s demand growth over the next three years. As US supply surges, the world’s need for Opec’s crude is forecast to fall below current production rates in 2019 and 2020.”

Finance

WSJ – Daily Shot: US 3-Month LIBOR 3/18

  • “The US 3-month LIBOR reached 2.2% for the first time in nine years.”

Cryptocurrency / ICOs

ars Technica – Ether plunges after SEC says “dozens” of ICO investigations underway – Timothy B. Lee 3/18

  • “The price of ether, the cryptocurrency of the Ethereum network, has fallen below $500 for the first time this year. The decline comes days after a senior official from the Securities and Exchange Commission acknowledged that the agency had ‘dozens’ of open investigations into initial coin offerings. The price of ether has fallen 19 percent in the last 24 hours, from $580 to $470.”

WSJ – Daily Shot: Bitcoin 3/18

Automotive

FT – Carmakers take electric fight to the factory floor – Patrick McGee 3/18

China

FT – Africa eats up lion’s share of Chinese lending – James Kynge 3/10

  • “Africa attracted more Chinese state lending for energy infrastructure than any other region last year, highlighting Beijing’s view of the continent’s growing economic and strategic importance.”
  • “A study by Boston University academics shows that nearly one-third, or $6.8bn, of the $25.6bn that China’s state-owned development banks lent last year to energy projects worldwide went to African countries. This was ahead of south Asia, with $5.84bn.”
  • “The loans bring total Chinese energy finance in Africa since 2000 to $34.8bn. While this is well behind the $69bn lent in Europe and Central Asia, the $62bn in Latin America and the $60bn in Asia over the same period, the 2017 data illustrate Africa’s growing importance.” 

New Zealand

FT – Fonterra’s second China foray comes under scrutiny – Jamie Smyth and Tom Hancock 3/7

  • “New Zealand dairy co-operative’s farmers seek answers after Beingmate tie-up sours.”

September 18, 2017

If you were to read only one thing…

NYT – How Big Business Go Brazil Hooked on Junk Food – Andrew Jacobs and Matt Richtel 9/16

  • “A New York Times examination of corporate records, epidemiological studies and government reports — as well as interviews with scores of nutritionists and health experts around the world — reveals a sea change in the way food is produced, distributed and advertised across much of the globe. The shift, many public health experts say, is contributing to a new epidemic of diabetes and heart disease, chronic illnesses that are fed by soaring rates of obesity in places that struggled with hunger and malnutrition just a generation ago.”
  • “The new reality is captured by a single, stark fact: Across the world, more people are now obese than underweight. At the same time, scientists say, the growing availability of high-calorie, nutrient-poor foods is generating a new type of malnutrition, one in which a growing number of people are both overweight and undernourished.”
  • “Even critics of processed food acknowledge that there are multiple factors in the rise of obesity, including genetics, urbanization, growing incomes and more sedentary lives. Nestlé executives say their products have helped alleviate hunger, provided crucial nutrients, and that the company has squeezed salt, fat and sugar from thousands of items to make them healthier. But Sean Westcott, head of food research and development at Nestlé, conceded obesity has been an unexpected side effect of making inexpensive processed food more widely available.”
  • “Part of the problem, he added, is a natural tendency for people to overeat as they can afford more food. Nestlé, he said, strives to educate consumers about proper portion size and to make and market foods that balance ‘pleasure and nutrition.’”
  • “The story is as much about economics as it is nutrition. As multinational companies push deeper into the developing world, they are transforming local agriculture, spurring farmers to abandon subsistence crops in favor of cash commodities like sugar cane, corn and soybeans — the building blocks for many industrial food products. It is this economic ecosystem that pulls in mom-and-pop stores, big box retailers, food manufacturers and distributors, and small vendors like Mrs. da Silva.”
  • “In places as distant as China, South Africa and Colombia, the rising clout of big food companies also translates into political influence, stymieing public health officials seeking soda taxes or legislation aimed at curbing the health impacts of processed food.”
  • “For a growing number of nutritionists, the obesity epidemic is inextricably linked to the sales of packaged foods, which grew 25% worldwide from 2011 to 2016, compared with 10% in the United States, according to Euromonitor, a market research firm. An even starker shift took place with carbonated soft drinks; sales in Latin America have doubled since 2000, overtaking sales in North America in 2013, the World Health Organization reported.”
  • “The same trends are mirrored with fast food, which grew 30% worldwide from 2011 to 2016, compared with 21% in the United States, according to Euromonitor. Take, for example, Domino’s Pizza, which in 2016 added 1,281 stores — one ‘every seven hours,’ noted its annual report — all but 171 of them overseas.”
  • “Industry defenders say that processed foods are essential to feed a growing, urbanizing world of people, many of them with rising incomes, demanding convenience.”
  • “’We’re not going to get rid of all factories and go back to growing all grain. It’s nonsense. It’s not going to work,’ said Mike Gibney, a professor emeritus of food and health at University College Dublin and a consultant to Nestlé. ‘If I ask 100 Brazilian families to stop eating processed food, I have to ask myself: What will they eat? Who will feed them? How much will it cost?’”
  • “In many ways, Brazil is a microcosm of how growing incomes and government policies have led to longer, better lives and largely eradicated hunger. But now the country faces a stark new nutrition challenge: over the last decade, the country’s obesity rate has nearly doubled to 20%, and the portion of people who are overweight has nearly tripled to 58%. Each year, 300,000 people are diagnosed with Type II diabetes, a condition with strong links to obesity.”
  • “’What we have is a war between two food systems, a traditional diet of real food once produced by the farmers around you and the producers of ultra-processed food designed to be over-consumed and which in some cases are addictive,’ said Carlos A. Monteiro, a professor of nutrition and public health at the University of São Paulo.”
  • “’It’s a war,’ he said, ‘but one food system has disproportionately more power than the other.’”
  • “Nearly 9% of Brazilian children were obese in 2015, more than a 270% increase since 1980, according to a recent study by the Institute for Health Metrics and Evaluation at the University of Washington. That puts it in striking distance of the United States, where 12.7% of children were obese in 2015.”

Worthy Insights / Opinion Pieces / Advice

FT – Tech companies in the city: the backlash – Leslie Hook 9/14

  • “Cities and big tech companies usually do not get along very well. Just look at San Francisco or Seattle — many locals love nothing more than a good gripe against Google or Uber or Amazon.”
  • “It’s been curious, then, to watch cities rush forward after Amazon said it was looking for a site to build a second headquarters in North America. Mayors from Pittsburgh to Chicago to Memphis have jumped on Twitter and on the phone to woo Amazon, promising their constituents they will work hard to win the company’s favor.”

Markets / Economy

FT – How Apple and co became some of America’s largest debt collectors – Eric Platt, Alexandra Scaggs and Nicole Bullock 9/15

Finance

NYT – China Bitcoin Exchange to Stop Trading Virtual Currencies Amid Crackdown – Cao Li 9/14

  • “A major Chinese exchange specializing in the trading of Bitcoin announced on Thursday that it would stop trading by the end of the month, amid a broader crackdown against virtual currencies by the authorities in Beijing.”
  • “The announcement by BTC China, the country’s first and largest digital currency exchange, came days after the Chinese authorities banned fund-raising for new digital currencies, and amid worries that regulators would tighten rules surrounding currencies like Bitcoin.”
  • “The exchange’s decision is the first of its kind in China, and it raises the specter of other exchanges shutting down Bitcoin trading in the future.”
  • “The price of Bitcoin dropped more than 10% on Thursday, to around $3,500, in the hours after the announcement.”

Bloomberg – The Summer of Bitcoin Ends Badly – Ogla Kharif and Belinda Cao 9/15

Australia

WSJ – Australian Banks Could Finally Head Down Under – Jacky Wong 9/15

  • “Investors have been calling the Australian housing market a “bubble” for years, yet prices keep charting higher. The market, though, could finally be about to turn south. That won’t be pretty for the country’s banks.”
  • “The property market has been skyrocketing Down Under—prices in Sydney have gone up 80% since 2012 while in Melbourne they have gained 54%. In turn, houses have become unaffordable for many Australians as prices keep outpacing income growth. An average home in Sydney now costs more than 12 times the median income there, according to research firm Demographia.”
  • “To keep houses within the reach of buyers, banks seem to have loosened their lending standards. Home lending is big business for Australian banks—more than half of their loan books consist of residential mortgages, amounting to $1.2 trillion, a figure that has risen 47% in the past five years. Analysts say much of this new lending has been dubious: Around a third of Australian mortgage applications contain inaccurate information, resulting in around $400 billion of so-called Liar Loans, according to UBS.“
  • “Nearly 40% of outstanding home loans are interest-only. The risk is that borrowers will be unable to repay these loans once their interest-only period expires.”
  • “This is fine as long as the property market keeps going up, as homeowners can sell their houses to cover loan repayments. Once the market stops rising, though, it will become much harder for stretched households to avoid problems.”
  • “Australian regulators are trying to cool the property market, by reining in the use of interest-only loans. But they face another difficulty. Tightened capital controls in China have dampened property demand in Australia, previously a popular venue for Chinese buyers. Direct overseas property investment from China plunged 82% in the first half globally, according to Morgan Stanley , with investors there finding it harder to get their money out of the country.”

South America

WSJ – Daily Shot: Venezuela Econ – Black Market Bolivares to USD exchange rate 9/15