Tag: Cryptocurrencies

July 2, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Forget Banks and Worry About High Stock Prices – Nir Kaissar 6/29

  • “It’s time for investors to stop fighting the last war. The next downturn most likely won’t be triggered by another meltdown of the financial system.”
  • “Investors didn’t need the Fed to tell them that banks are in better shape than they were a decade ago. The signs are everywhere. Profits have fallen across the industry since the financial crisis, an  indication that banks are taking on less risk. Profit margins for the S&P 500 Financials Index averaged 9.3% from 2008 to 2017, down from an average of 13.8% from 2003 to 2007, the years leading up to the crisis. Return on equity is down to an average of 5.2% from 14.5% over the same periods.”
  • “The biggest of those risks is leverage — or piling on debt to boost profits — and banks have a lot less of it than they used to. The debt-to-equity ratio of the financials index has dropped to 159% as of the first quarter from 563% at the end of 2007. The debt-to-assets ratio has fallen to 19% from 43% over the same period.”
  • “But if the numbers don’t persuade investors that the next crisis won’t look like the last one, then maybe a look at previous bear markets would. In reverse chronological order: The bursting of the dot-com bubble was behind the downturn from 2000 to 2002. A mass panic or newly introduced computerized trading, depending on whom you ask, set off the 1987 crash. Stagflation brought down the market from 1980 to 1982. A global oil embargo hit stocks from 1973 to 1974. I could keep going, but you get the idea.”
  • “There is a common thread running through the scariest episodes: high stock prices. The average cyclically adjusted price-to-earnings, or CAPE, ratio for the S&P 500 has been 18 since 1928, according to numbers compiled by Yale professor Robert Shiller. The five worst bear markets during those nine decades, as measured by peak to trough declines, commenced in 1929, 1937, 1973, 2000 and 2007. The average CAPE ratio on the eve of those downturns was 29 and the median was 27.”
  • “The current CAPE ratio: 32. And it’s never just stocks. Other assets in the U.S. look frothy, too, such as private equity and real estate.”

Bloomberg – How to Avoid Going Broke After Making $650 Million – Barry Ritholtz 6/29

Economist – How oil transformed the Gulf – Special report 6/21

Economist – Why Gulf countries are feuding with Qatar – Special report 6/21

Economist – Saudi Arabia turns against political Islam – Special report 6/23

Pragmatic Capitalism – Let’s Talk About that “Rapidly” Falling Deficit – Cullen Roche 6/29

  • “Don’t be scared Larry (Kudlow), just tell it like it is – you guys are boosting spending, boosting the deficit and the USA can afford it!”

Real Estate

WEF: statista – The world’s most expensive prime property – Adam Jezard 4/12

Cryptocurrency / ICOs

Bloomberg – Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero – Adam Haigh and Eric Lam 6/28

howmuch.net – The ICO Explosion in the Past 5 Years – Raul 6/27

Environment / Science

Bloomberg – The Recycling Game Is Rigged Against You – Faye Flam 6/27

  • “Americans were not set up for success in recycling plastics. Even before China stopped accepting plastic refuse from abroad, 9% of potentially recyclable plastic in the U.S. ended up in landfills – or worse, in the oceans. Europe does a little better, with only 70% getting tossed.”
  • “Why such terrible rates? Partly because some changes that were supposed to make recycling simpler ended up making it almost impossible.”
  • “University of Georgia engineering professor Jenna Jambeck said that indeed, part of the reason China is now refusing to process American and European plastic is that so many people tossed waste into the wrong bin, resulting in a contaminated mix difficult or impossible to recycle.”
  • “In a paper published last week in Science Advances, she and her colleagues calculated that between now and 2030, 111 million metric tons of potentially recyclable plastic will be diverted from Chinese plants into landfills.”
  • “Plastic matters because it takes centuries to degrade, and there’s a lot of it. Jambeck has estimated that the world has produced more than 8 billion metric tons since the 1950s. To help grasp this quantity, paleontologist Jan Zalasiewicz has estimated that this is enough to wrap our entire planet in cling wrap. Others have calculated that it would make four mountains the size of Everest.”
  • “Given what scientists already know how to do, the future could bring a greener, more fool-proof system. Right now, she said, she and other scientists are starting to develop ways to recycle mixtures of plastics – a tough job because many plastics repel one another like oil and water. One of the reasons China imported recycling was that it was possible there to hire cheap labor to sort the different plastic types by hand.” 
  • “Curing the plastic problem is a lot like fighting cancer. Even if everyone stopped smoking, there would still be cancer. And even if we all figure out whether our municipalities accept yogurt containers, plastic waste will still pollute the environment. Compliance won’t be a cure until innovations from the lab set us up for success.”

WIRED – Data Shows Rising Seas Threaten Over 300,000 Homes – Oliver Milman 6/19

  • “Sea level rise driven by climate change is set to pose an existential crisis to many US coastal communities, with new research finding that as many as 311,000 homes face being flooded every two weeks within the next 30 years.”
  • “The UCS used federal data from a high sea level rise scenario projected by the National Oceanic and Atmospheric Administration, and combined it with property data from the online real estate company Zillow to quantify the level of risk across the lower 48 states.”
  • “Under this scenario, where planet-warming emissions are barely constrained and the seas rise by about 6.5 feet globally by the end of the century, 311,000 homes along the US coastline would face flooding on average 26 times a year within the next 30 years—a typical lifespan for a new mortgage.”
  • “The losses would multiply by the end of the century, with the research warning that as many as 2.4 million homes, worth around a trillion dollars, could be put at risk. Low-lying states would be particularly prone, with a million homes in Florida, 250,000 homes in New Jersey and 143,000 homes in New York at risk of chronic flooding by 2100.”
  • “The oceans are rising by about 3 mm a year due to the thermal expansion of seawater that’s warming because of the burning of fossil fuels by humans. The melting of massive glaciers in Greenland and Antarctica is also pushing up the seas—NASA announced last week that the amount of ice lost annually from Antartica has tripled since 2012 to an enormous 241 billion tons a year.”
  • “This slowly unfolding scenario is set to pose wrenching choices for many in the US. Previous research has suggested that about 13 million Americans may have to move due to sea level rise by the end of the century, with landlocked states such as Arizona and Wyoming set for a population surge.”

Agriculture

FT – US farmers plant more soya than corn for first time since 1983 – Gregory Meyer 6/29

  • “Farmers planted 89.6m acres with soya beans this spring, the government reported Friday, surpassing the 89.1m acres planted with corn. The only other year soya topped corn was in 1983, because of a one-off quirk of agricultural policy.”

Britain

NYT – In Britain, Austerity Is Changing Everything – Peter S. Goodman 5/28

  • “After eight years of budget cutting, Britain is looking less like the rest of Europe and more like the United States, with a shrinking welfare state and spreading poverty.”

Japan

FT – Japan’s elderly care bill soaks up worker pay rises – Robin Harding 5/27

  • “Monthly premiums for care insurance have doubled from ¥3,000 to almost ¥6,000 ($55) since the system began in 2000. Meanwhile, the average annual cost of employer-based health insurance is up from ¥386,038 in 2008 to ¥486,042 this year, equivalent to a two percentage point rise in income tax.”
  • “The rise in health and care costs helps to explain why moderate wage growth, after five years of economic stimulus under prime minister Shinzo Abe, is doing so little to boost consumption. It poses a conundrum for the Bank of Japan, which is relying on spending pressure to push inflation towards its 2% objective.”
  • “Japan’s future holds more of the same, especially after 2020, when the baby boom generation starts to reach the age of 75 and needs more care. Recent government figures suggest that by 2040 social insurance costs will rise another 2.5 percentage points to 24% of gross domestic product.”

South America

Axios – It’s nearly impossible to afford a cup of coffee in Venezuela – Stef W. Kight 6/28

  • “Less than two years ago, a cup of coffee cost 450 bolivars in Venezuela. Today, as the nation’s hyperinflation continues to skyrocket, a cafe con leche costs 1 million bolivars — or a mere 29 U.S. cents, according to Bloomberg.”

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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 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 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 15, 2018

Worthy Insights / Opinion Pieces / Advice

Economist – In investing, as in poker, following rules works best – Buttonwood 5/31

Markets / Economy

Economist – Central banks holdings of domestic government debt 5/31

WSJ – ECB to End Bond-Buying Program in December as Crisis-Era Policies Wind Down – Tom Fairless and Brian Blackstone 6/14

  • “The European Central Bank is closing a chapter on one controversial policy, government bond purchases, while extending the life of another: negative interest rates.”
  • “The central bank Thursday laid out plans to wind down its giant bond-buying program by the end of this year, but said it likely would wait ‘at least through the summer of 2019’ before raising its deposit rate, now at minus 0.4%.”

WSJ – Daily Shot: Deutsche Bank – US Budget Deficit Funding and % Holdings 6/14

Real Estate

WSJ – Daily Shot: Bloomberg – World’s Most Expensive Housing Markets Relative to Salary 6/12

WSJ – Daily Shot: Mary Meeker Internet Trends 2018 – Airbnb vs Hotel ADR 5/31

Wolf Street – Toronoto’s House Price Bubble Not Fun Anymore – Wolf Richter 6/4

Energy

WSJ – Daily Shot: US Total Crude Oil Production 6/14

Finance

FT – US fundraising for ‘blank cheque’ buyout vehicles hits record – Nicole Bullock 6/13

  • “Funds have been raised at a record rate in the US this year for shell companies that offer a ‘blank cheque’ to sponsors to pursue takeovers, providing further evidence of the rehabilitation of a controversial tool that waned in the wake of the financial crisis.”
  • “The so-called special purpose acquisition companies, or spacs, have raised $4.5bn so far in 2018 — the largest amount for this type of fundraising in the period, according to Dealogic, which began recording the deals in 1995. That followed a brisk 2017, the second strongest year on record with nearly $10bn sold.”
  • “The funds are placed in an interest-bearing account until a target is identified — and spac investors can get their money back if they do not approve of the acquisition. They are basically a bet that the sponsors can find a good company at a reasonable price.”
  • “Spacs offer investors, often hedge funds, a cash proxy with the option of the acquisition. Sponsors get a 20% stake in the acquired company, if investors approve it, for a nominal amount of money.”

WSJ – Daily Shot: BlackRock – Four big trends to drive ETF growth 5/31

Cryptocurrency / ICOs

WSJ – Daily Shot: Bianco Research – Cryptocurrency Market Caps as of June 11, 2018 6/14

Environment / Science

FT – Nikkei Asian Review: Thailand falls behind in global battle with plastic waste – George Styllis 6/13

  • “’Beating plastic pollution’ was the theme of World Environment Day on June 5, but Thailand is falling behind Asian and European countries in the fight against plastic waste.”
  • “The issue has been brought into focus after a dead whale was found last month to have swallowed 80 plastic bags.”
  • “The whale, found in Songkhla province, served as a reminder of Thailand’s problem with plastic, and the abject failures of the government and retail industry to bring the nation’s environmental consciousness in line with the rest of the world’s.”
  • “Thailand is the world’s sixth biggest contributor to ocean waste, while China is the largest. Thailand generates 1.03m tons of plastic waste per year, with over 3% of that finding its way into the ocean, Tara Buakamsri, Thailand country director for Greenpeace, told the Nikkei Asian Review.”
  • “Of the country’s total waste, plastic accounts for 12% — higher than China’s at 11%. A survey by the government in 2017 found that, on average, Thais each use eight plastic bags per day, which equates to about 198bn per year.”

China

WSJ – Daily Shot: PIMCO – China’s Contribution to Global Credit Creation 6/12

WSJ – Daily Shot: Trading Economics – Hong Kong Home Ownership Rate 6/12

June 14, 2018

I’m back. Sorry for the leave of absence.

Perspective

Visual Capitalist: Mary Meeker 2018 Internet Trends Report – How American Household Finances are Changing – Jeff Desjardins 6/1

Worthy Insights / Opinion Pieces / Advice

Axios – Millennials are moving to the exurbs in droves – Steve LeVine 6/10

FT – China’s Achilles heel lies with property companies – Henny Sender 6/12

  • “Heavy issuance of dollar debt could be exposed if currency rises further.”

NYT – A Rescue Plan for a Jobs Crisis in the Heartland – Edward L. Glaeser, Lawrence H. Summers, and Ben Austin 5/24

WSJ – Daily Shot: John Burns RE – US Economic Recovery Projection 6/13

Real Estate

WSJ – Blackstone Triples REIT’s Fundraising Goal – Peter Grant 6/12

Energy

WSJ – The New Tech That Terrifies OPEC – Spencer Jakab 6/1

  • “U.S. shale oil drillers are boosting efficiency with giant pads and walking rigs, lowering prices to a point that could hurt exporters like Saudi Arabia.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bianco Research – Bitcoin Trading Activity by Currency 6/13

Tech

Bloomberg – Native Programmable Microcomputer Shipments – Barry Ritholtz 5/11

Entertainment

WSJ – Why Empty Seats at Taylor Swift’s Concerts Are Good for Business – Anne Steele 5/15

Environment / Science

how much.net – The Most Expensive Weather and Climate Disasters in the US – Raul 5/29

Automotive

WSJ – A Worrying Turn Ahead for Auto Loans – Aaron Back 5/29

  • “Auto loan delinquencies are too high considering the strong economy.”

May 24, 2018

If you were only to read one thing…

FT – Era of ‘lower for longer’ oil prices is dead – Amrita Sen and Yasser Elguindi (Energy Aspects) 5/22

  • “When oil collapsed in 2014 under the weight of US shale production, it ushered in a new-found belief that prices would remain ‘lower for longer’.”
  • “The rampant new source of crude supplies was seen to be capable of meeting rising world demand almost single-handedly, obviating the need for extra Opec barrels ever again.”
  • “As such, the concept of a ‘shale price band’ emerged of roughly $40 to $55 per barrel, reflecting the range within which the majority of US shale producers could turn a profit without the risk of the industry growing so fast that it would again flood the market. And for the better part of three years, from 2015 to 2017, oil prices traded in this range.”
  • “But in 2018, this narrative has been slowly picked apart and is now in the process of disintegrating.”
  • “While there has been breathless attention paid to prompt Brent prices climbing to $80 a barrel for the first time since 2014, what has received less attention is that the entire Brent forward curve is now trading above $60, including contracts for delivery as far out as December 2024.”
  • “This development is an important psychological milestone for the oil market. The market is, in effect, saying that ‘lower for longer’ is dead.”
  • “The reality is that US shale has been unable to meet rising global oil demand, which has averaged 1.7m b/d per year since 2014 — double the level at the start of this decade — and inventories have drawn down as a consequence, eliminating the buffer that had been built up.”
  • “This inventory fall has been helped by strong demand growth and the Opec/non-Opec deal to curtail output since January 2017, which has since been superseded by rapid declines in Venezuelan and Angolan production and, more recently, non-Opec production outside of the US.”
  • “The inevitable supply deficit is very worrying, with very limited spare production capacity available globally.”
  • “Two main themes are now starting to impact investor thinking and drive the new-found interest in exposure to energy.”
  • “First, recent supply data are finally reflecting the ill effects from under-investment due to the collapse in capital expenditure since 2015. The data are now showing accelerating decline rates across important suppliers such as Brazil, Norway and Angola.”
  • “Second, the impressive strength in demand has been overshadowed in the past two years by the narrative dominated by electric cars.”
  • “But slowly this has given way to a recognition that while electric cars will undoubtedly alter the trajectory for global oil demand in the long term, this trend will not reach critical mass in the medium term (the next five years) to sufficiently make up for the expected fall in oil supplies due to the lack of investment.”
  • “So, even though expectations are for oil demand growth to slow from current levels, consumption will still be robust enough that — barring a major recession — the market will need new supplies to meet that growth.”
  • “The physical oil market is only going to face greater strain ahead of the marine fuel specification change in 2020, which is set to boost demand for products such as diesel and ultra-low sulphur fuel oil by 2m to 3m b/d.”
  • “As a result, we believe that oil prices may spike to above $100 per barrel, a price forecast we have held for the latter half of 2019 for three years now.”
  • “The shale price band has been decisively broken and 2018 will be a watershed year: the market will realize that US shale alone cannot meet the world’s incremental demand growth and future prices must rise to re-incentivize long-cycle investments (or curtail demand).”
  • “Nothing ever moves in a straight line, but the broader oil market is perhaps not prepared for what will happen to oil prices over the next couple of years.”

Perspective

Economist – Weather and violence displace millions inside borders every year – The Data Team 5/22

Worthy Insights / Opinion Pieces / Advice

Boston Globe – Gas and mortgages are getting expensive again. Welcome to a normal economy – Evan Horowitz 5/22

CNBC – Silicon Valley tech bubble is larger than it was in 2000, and the end is coming – Keith Wright 5/22

  • “The age of the unicorn likely peaked a few years ago. In 2014 there were 42 new unicorns in the United States; in 2015 there were 43. The unicorn market hasn’t reached that number again. In 2017, 33 new U.S. companies achieved unicorn status from a total of 53 globally. This year there have been 11 new unicorns, according to PitchBook data as of May 15, but these numbers tend to move around, and I believe the 279 unicorns recorded globally in late February by TechCrunch was the peak, where the start-up bubble was stretched to its limit.”
  • “A recent study by the National Bureau of Economic Research concludes that, on average, unicorns are roughly 50% overvalued. The research, conducted by Will Gornall at the University of British Columbia and Ilya Strebulaev of Stanford, examined 135 unicorns. Of those 135, the researchers estimate that nearly half, or 65, should be more fairly valued at less than $1 billion.”
  • “Don’t let the few recent successes in the 2017 IPO market fool you. After two years of stagnation in terms of the number of IPOs being filed in the United States — 275 IPOs (2014), 170 IPOs (2015) and 105 IPOs (2016) — deal counts have dropped to their lowest figure since 2012.”
  • “Seventy-six percent of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings, according to data compiled by Jay Ritter, a professor at the University of Florida’s Warrington College of Business, and recently featured in The New York Times. This is the largest number since the peak of the dot-com boom in 2000, when 81% of newly public companies were unprofitable.”
  • “The current volatility and correction evolving in the private market will be amplified for companies that have yet to make money and are burning cash faster than they’re bringing it in. Growth at all costs will not weather an economic storm.”
  • “Since the Snap IPO in March 2017 at $17 a share, when its shares surged 44% during its first day of trading, they have now declined to $11. Dropbox also went public. It had a first-day pop of 36%; however, with only 200,000 paying customers compared to its 500 million users, I would be hesitant to rush in to buy, even as it comes off that year-to-date high considerably. Another highly valued start-up, Blue Apron, went public at $10 a share in June and is now trading at $3. Remember Fitbit was a $45 stock in 2015 — it’s currently trading at just over $5.”

Economist – Markets may be underpricing climate-related risk 5/23

FT – Tanking currencies are bad news all round – Jonathan Wheatley 5/22

  • “Currency wars give no edge to exporters but do cause economic harm.”

Fortune – Retail Reckoning: How Private Equity Is Boosting Some Brands and Crushing Others – Phil Wahba 4/24

WSJ – Daily Shot: Bianco Research – Google Search Trends – Consumer Spending 5/23

WSJ – Daily Shot: Bianco Research – Google Search Trends – Consumer Difficulties 5/23

Markets / Economy

CNBC – Inflation is coming to the US economy on an 18-wheel flatbed – Jeff Cox 5/22

  • “Multiple signs of inflation in freight-related industries are at or near historical highs, in what could be an early sign that price pressures are building and ready to reverberate around the economy.”
  • “Freight marketplace DAT keeps track of supply and demand in the freight industry through a bulletin board that matches companies with loads to be delivered to the vehicles that will take the goods to the marketplace. The measures are in the spot market, where vendors that don’t contract their deliveries find drivers for their products.”
  • “Recent readings show demand for vehicles skyrocketing, a sign that generally points to inflationary pressures building up in the supply chain.”
  • “Loads on the spot market in general are up 100% from the same period a year ago. Another measure, the flatbed load-to-truck comparison, which tracks the amount of vendors looking for flatbeds and is generally the highest of all truck types, is up 142%.”
  • “The numbers by themselves, though, don’t indicate that inflation is ready to strike soon. Indeed, the most recent readings, such as the consumer and producer price indexes, show inflation pressures rising though relatively benign.”
  • “But they do jibe with some other indicators showing inflation is rising beneath the surface.”

FT – US has more than 5,600 banks. Consolidation is coming – Ben McLannahan 5/22

  • “The US’s banks have largely sat out the mergers and acquisitions wave of recent years. While deal records have fallen in almost every other sector, big banks have done almost nothing, shrinking rather than expanding. And merger activity among small and mid-sized banks — some 5,607 of them, at last count — has been subdued.”
  • “But when Fifth Third Bancorp of Cincinnati revealed its $4.7bn swoop for Chicago’s MB Financial on Monday morning, shares in other Chicago-area banks began to move, too. Wintrust, a similar-sized bank based in Rosemont, Illinois, ended the day up almost 4%, while First Midwest of Itasca closed up 3%.”
  • “The implications were obvious: after years of thin activity in bank M&A, this deal could mark a turn.” 
  • “The conditions for dealmaking look better than at any time since the financial crisis. Higher interest rates and lower taxes have pumped up bank profits, giving management teams stronger platforms from which to contemplate doing something radical.”

WSJ – Rising Dollar Sparks Tumult in Emerging Markets – Ira Iosebashvili, Josh Zumbrun, and Julie Wernau 5/21

  • “U.S. currency’s rally puts spotlight on weaknesses in a broad range of emerging-market assets.”

Real Estate

WSJ – Who Needs a Down Payment? Trade In Your Old Home Instead – Laura Kusisto 5/22

  • “Opendoor offers to take the hassle out of selling an old home to buy a new one.”

WSJ – Daily Shot: John Burns RE – Home Builder Land Acquisitions 5/23

Energy

FT – The geopolitics of electric cars will be messy – Henry Sanderson 5/22

  • “Oil has had a leading role in geopolitics over the past 100 years, sucking western powers into an often disastrous dependence on the Middle East.”
  • “While black gold, as oil is sometimes known, is not always the overt cause of conflict, it is linked to between one quarter and a half of all interstate conflicts globally between 1973 and 2012, according to a 2013 study by Jeff Colgan of Brown University.”
  • “But it would be a mistake to assume that geopolitical tensions will miraculously ease in a future in which renewable energy sources dominate. Building wind turbines and creating lithium-ion batteries requires metals and raw materials from those countries which are blessed, or potentially cursed, with them.”
  • “And for some of these commodities, their high concentration in particular parts of the world sharpens the risks.”
  • “A clean energy economy will require a staggering volume of metals to be prized from the ground.”
  • “For example, Olivier Vidal of the University Grenoble Alpes estimates that to build the infrastructure for clean energy the amount of copper needed amounts to almost half the total mined since 1900.”
  • “There is also the real risk that the age of the electric car will generate corporate monopolies, echoing those of Standard Oil whose founder John D Rockefeller cornered the oil market more than a century ago as the combustion engine took off.”
  • “Glencore, the Switzerland-based and London-listed miner, is expanding its production of cobalt which is set to give it a 40% share of global supply by 2020.”
  • “The production of lithium, a key ingredient for batteries in electric cars as well as smartphones, is controlled by just five companies.”
  • “However, rather than tensions with the Middle East, the advent of the electric car will usher in greater friction with China. Beijing’s ambitions in clean energy are enormous.”
  • “As part of the ‘Made in China 2025’ plan to advance high-end manufacturing, the government wants to establish a grip on the production of electric cars and clean energy technology.”
  • “The rest of the year will provide further signs of the capital and scale that China is bringing to this competition.”
  • “No one is giving China a free run at the metals that have emerged as central to electric cars.”
  • “Trade tensions with US President Donald Trump are already brewing. This month his administration released a list of 35 minerals, including lithium and cobalt, that are ‘considered critical to the economic and national security of the United States.’”
  • “Chile, which has the world’s largest lithium reserves, is looking to build battery components, while South Africa, a producer of vanadium, wants to produce electrolytes for vanadium batteries, which are used to store energy for the electric grid.”
  • “Europe, too, is beginning to build its own giant battery factories to supply Germany’s car companies and the UK’s innovation agency has backed a study that uses satellites to look for lithium in Cornwall.”
  • “The geopolitics of the era of the electric car are in their infancy. While it is unlikely to lead to military conflict, the tensions, especially with China, over who will control the resources and technologies that will underpin electric cars will be heightened.”
  • “Over the long term, the winners are likely to be those countries and companies that can develop battery technology that relies on materials that are abundant rather than scarce. It might even help make the geopolitics a little less fraught.”

Finance

FT Alphaville – ‘Some of the worst covenants that we’ve ever seen’ – Alexandra Scaggs 5/21

Cryptocurrency / ICOs

WSJ – Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud – Shane Shifflett and Coulter Jones 5/17

Environment / Science

Axios – Next climate challenge: A/C demand expected to triple – Ben Geman 5/15

Construction

WSJ – Daily Shot: CME Lumber (Jul) Futures 5/22

Asia – excluding China and Japan

FT – Malaysia says it has been ‘bailing out’ 1MDB – Alice Woodhouse and Harry Jacques 5/22

  • “Malaysia has paid almost RM7bn ($1.8bn) to service debt owed by 1MDB, the south-east Asian nation’s finance ministry said on Tuesday, as investigators ratcheted up their probe into the state investment fund from which $4.5bn is alleged to have gone missing.”
  • “Two weeks after voters ousted the government of Najib Razak, the finance ministry said it had been ‘bailing out’ the 1Malaysia Development Berhad fund since April 2017, adding that another RM144m interest payment was due on May 30.”
  • “The revelation ‘confirms the public suspicion that 1MDB had essentially deceived Malaysians by claiming that [the payments] have been paid via a ‘successful rationalization exercise’,’ the ministry said in a statement. ‘All the while it has been the MoF [ministry of finance] who has bailed out 1MDB.'”
  • “Earlier on Tuesday, Malaysia’s new anti-corruption chief said he had been harassed and received a death threat after he pursued a 2015 investigation into 1MDB.”

India

FT – Oil price rise puts heat on Narendra Modi’s government – Amy Kazmin 5/22

  • “In 2016 — as global crude oil prices fell to about $40 per barrel — India, which imports nearly 80% of its petroleum, levied new excise duties on petrol and diesel to stabilize prices and prevent a surge in demand.” 
  • “Since then, New Delhi has come to depend heavily on those revenues to shore up its fragile public finances, especially as receipts from the goods and services tax introduced last year have failed to stabilize at expected levels.” 
  • “But after global crude oil prices hit a four-year high of more than $80 per barrel last week, India’s fuel pump prices — for decades subsidized by the government and held artificially low — have jumped to among the highest in south Asia.”
  • “Industry groups are pressing New Delhi to pare back excise duties on fuel, warning that the high prices will undermine an economy only now recovering from the successive disruption of a dramatic cash ban and the introduction of the goods and services tax.”
  • “But any meaningful rollback to ease pressure on consumers will raise doubts over the ability of Mr Modi’s administration to meet its target of cutting the fiscal deficit to just 3.3% of gross domestic product.”
  • “’India’s reliance on oil revenue has now surpassed the Malaysian government’s reliance on oil revenues — and Malaysia is an oil exporter,’ said Vikas Halan, senior vice-president at Moody’s Investors Service, the rating agency. ‘The government can always roll back excise duty — there is no one stopping them — but the issue is, how will they compensate for the loss of revenue?’”
  • “Last year, excise duties on petroleum products, which are about a quarter of the retail price of petrol and diesel, accounted for 17% of New Delhi’s total revenue collection. For every R1 that the government pares back these excise duties, it will lose an estimated $1.8bn in revenues, or about 0.1% of annual GDP.” 
  • “Adding to the overall pressure is the recent weakening of the Indian rupee, which has fallen 6% this year to a 16-month low of Rs68.1 per dollar. Further depreciation will mean even higher local fuel prices. Bond markets are also jittery, with yields rising.”

South America

WSJ – Daily Shot: Black Market Exchange Rate – USD / Venezuelan Bolivar 5/23

WSJ – After Venezuela Strongman’s Victory, Isolated Nation Faces Growing Chaos – Kejal Vyas, Ryan Dube, and Juan Forero 5/21

Other Interesting Links

CNBC – The richest person in every state, according to Forbes – Emmie Martin 5/22

May 15, 2018

Worthy Insights / Opinion Pieces / Advice

Economist – Faced with a housing crisis, California could further restrict supply 5/10

  • “Rent control sounds appealing but is counter-productive.”

Economist – The meaning of the Vision Fund – Leaders 5/12

  • “Succeed or fail, Masayoshi Son is changing the world of technology investing.”
  • “The fund is the result of a peculiar alliance forged in 2016 between Mr Son and Muhammad bin Salman. Saudi Arabia’s thrusting crown prince handed Mr Son $45bn as part of his attempt to diversify the kingdom’s economy. That great dollop of capital attracted more investors—from Abu Dhabi, Apple and others. Add in SoftBank’s own $28bn of equity, and Mr Son has a war chest of $100bn. That far exceeds the $64bn that all venture capital (VC) funds raised globally in 2016; it is four times the size of the biggest private-equity fund ever raised.”
  • “The fund has already spent $30bn, nearly as much as the $33bn raised by the entire American VC industry in 2017. And because about half of its capital is in the form of debt, it is under pressure to make interest payments. This combination of gargantuanism, grandiosity and guaranteed payouts may end up in financial disaster. Indeed, the Vision Fund could mark the giddy top of the tech boom.”

Economist – Will Argentina’s woes spread? – Leaders 5/12

  • “Argentina has much in common with yesterday’s emerging markets, but little in common with today’s.”

FT – Apple sows seeds of next market swing – Rana Foroohar 5/13

  • “Rapid growth in debt levels is historically the best predictor of a crisis. And this year the corporate bond market has been on a tear, with companies issuing a record $1.7tn last year, and over half a trillion already this year. Even mediocre companies have benefited from easy money. But as the rate environment changes, perhaps more quickly than is imagined, many could be vulnerable.” 

WSJ – In a Dollarized World, a Rising Dollar Spells Pain – Greg Ip 5/9

  • “Even as U.S. economic influence shrinks, the dollar’s clout in global trade and borrowing is growing, magnifying impact of its rise in value.”

Markets / Economy

Bloomberg – U.S. Tariffs Lead to Record Increase in Washing Machine Prices – Alexandre Tanzi 5/10

Bloomberg Businessweek – No, the U.S Economy Isn’t Overheating – Peter Coy 5/11

  • “Some indicators are flashing red, but there’s still a little slack in the system.”

WSJ – Company Costs Are Rising, but Getting Shoppers to Pay More Is Hard – Eric Morath, Heather Haddon, and Jacob Bunge 5/9

WSJ – Daily Shot: Bloomberg – Relative Hard Currency Reserves 5/14

Real Estate

WSJ – WeWork, the Workspace Giant, Wants to Be Its Own Landlord, Using Other Investors’ Money – Eliot Brown 5/13

  • “WeWork’s new investment fund aims to buy buildings where the company would become a tenant, raising conflict-of-interest questions.”

Energy

WSJ – Daily Shot: AAA Daily National Average Gasoline Prices 5/13

Finance

FT – Landmark bond sales hit by emerging markets downturn – Kate Allen 5/14

  • “Investors who bought some of the riskiest emerging market sovereign bond sales in the past year have been left nursing paper losses as a strengthening dollar has rattled sentiment for emerging markets.”
  • “JPMorgan’s emerging markets bond index has lost 5.1% since the start of this year.”

WSJ – Daily Shot: FRED – BOJ Assets YoY Change 5/13

Cryptocurrency / ICOs

howmuch.net – The Biggest Cryptocurrency Hacks and Scams – Raul 5/9

Agriculture

Bloomberg Businessweek – These Shipping Containers Have Farms Inside – Adam Popescu 5/9

Construction

WSJ – Daily Shot: CME Lumber (JuL) 5/11

  • “Lumber futures blasted past $600 per 1,000 board feet (mbf).”

Education

NYT – Education Department Unwinds Unit Investigating Fraud at For-Profits – Danielle Ivory, Erica L. Green, and Steve Eder 5/13

South America

Economist – How chavismo makes the taps run dry in Venezuela 5/10

  • “Plentiful rains plus Bolivarian socialism equals water shortages.”

WSJ – Venezuela’s Oil Meltdown Is Getting Worse – Spencer Jakab 5/13

  • “A rush of creditors trying to seize assets has disrupted Venezuela’s oil exports at a time when they already are plunging.”

Other Interesting Links

Cannabis Benchmarks – Weekly Report 5-11-18

April 24, 2018

Perspective

Business Insider – The most disproportionately popular college major in every US state – Mark Abadi and Jenny Cheng 4/16

Tax Foundation – How High are Spirits Taxes in Your State – Morgan Scarboro 3/22

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Trading One Risk For Another – Ben Carlson 4/22

  • “In other words, investing is hard. If it was easy it would just be called earning money, not investing.
  • “You cannot eradicate risk in a portfolio. You can only choose when and how to accept risk in different variations. Doing so will always involve balance and trade-offs.”

FT – US companies count costs and benefits of Trump tax law – Rochelle Toplensky, Patrick Mathurin, and Andrew Edgecliffe-Johnson 4/22

  • “A Financial Times analysis of how the Tax Cuts and Jobs Act (TCJA) has affected the accounts of the US’s 100 largest listed companies shows the truth of that sentiment, for Citigroup and most of its big business peers.” 
  • “In all, the FT analysis shows, 61 of the top 100 quoted companies have reported an initial net income tax expense, amounting to a combined $168bn. The remaining 39 have reported one-off net tax benefits worth a total of $150bn, meaning that the biggest overhaul of the tax code for a generation has cut $18bn from the current book value of its leading public companies.”
  • “The charges differ widely from company to company, depending on the tax provisions they had made before the reforms. The most significant adjustments reflect a revaluation of deferred tax balances under the new, lower headline rate. A company that had deferred taxes on past profits would record a gain because it will now pay the new lower rate; conversely, a group carrying forward previous losses to offset against future tax bills would book a hit to its value.” 
  • “The biggest one-off benefit of $28bn was to Berkshire Hathaway, Warren Buffett’s holding company, which will pay the lower tax rate on decades of unrealized capital gains — if he ever sells his investments. While the accounting gains ‘did not come from anything we accomplished at Berkshire’, they were nonetheless real, Mr Buffett assured shareholders.” 

NYT – Public Servants Are Losing Their Foothold in the Middle Class – Patricia Cohen and Robert Gebeloff 4/22

Markets / Economy

Visual Capitalist – BoAML – Top Asset Class of 2018 So Far – Jeff Desjardins 4/23

Real Estate

WSJ – Daily Shot: FRED – US Home Equity Loans 4/23

WEF – Berlin has the world’s fastest rising city property prices – Rob Smith 4/16

Energy

eia – Technically Recoverable Shale Oil and Shale Gas Resources – June 2013

Forbes – Who Is Buying U.S. Liquefied Natural Gas? – Jude Clemente 4/17

Cryptocurrency / ICOs

WSJ – Daily Shot: Barchart – Bitcoin 4/23

  • “With last week’s breakout sustained, Bitcoin is approaching $9k (the blue line is the 200d moving average).”

Britain

Bloomberg – U.K. Consumers Stay Under Pressure Even as Pay Squeeze Nears End – David Goodman 4/17

Europe

NYT – Smothered by Smog, Polish Cities Rank Among Europe’s Dirtiest – Maciek Nabrdalik and Marc Santora 4/22

  • “Poland has some the most polluted air in all of the European Union, and 33 of its 50 dirtiest cities. Not even mountain retreats are immune.” 
  • “The problem is largely a result of the country’s love affair with coal… Some 19 million people rely on coal for heat in winter. In all of the European Union, 80% of private homes using coal are in Poland.” 
  • “Coal, commonly referred to as “black gold,” is seen as a patriotic alternative to Russian gas in this country, which broke away from Soviet control three decades ago and remains deeply suspicious of its neighbor to the east. Burning coal is part of daily life.” 
  • “Some 48,000 Poles are estimated to die annually from illnesses related to poor air quality. Greenpeace estimated that 62% of Poland’s kindergartens are in heavily polluted areas.” 

South America

Reuters – Under military rule, Venezuela oil workers quit in a stampede – Deisy Buitrago and Alexandra Ulmer 4/16

Other Interesting Links

Civil Beat – Hawaii Businesses Are Making Billions Off The Military – Nick Grube 4/23

April 12, 2018

If you were only to read one thing…

Bloomberg Gadfly – Mark Zuckerberg Refuses to Admit How Facebook Works – Shira Ovide  4/12

  • “The most troubling takeaway from two days of congressional hearings on Facebook Inc. was this: Mark Zuckerberg didn’t want to explain how the social network operates.” 
  • “Zuckerberg found it hard to plainly acknowledge that Facebook tracks users from device to device, collects information on websites people visit and apps they use, gathers information on people’s physical locations, collects phone call logs from Android smartphones and pulls in some online activity from people who don’t even have Facebook accounts.”
  • “Zuckerberg declined to acknowledge that Facebook’s ad system and products are informed by all of this information gathering on and off the social network. If Facebook were a true bargain with users — they get a useful, free service in exchange for seeing advertising based on their interests and activity — then Zuckerberg should be comfortable explaining how it all works.”
  • “Instead, given the option to articulate Facebook’s relationship with users (and non-users), he dodged. A lot.”
  • “He said he couldn’t answer queries from Senator Roy Blunt, who asked on Tuesday whether Facebook tracks users across their computing devices or tracks offline activity. The answer to both is yes. During the House committee hearing on Wednesday, Zuckerberg claimed not to know what ‘shadow profiles’ are, even though this term has been used for years to describe Facebook’s collection of data about people who don’t use its services by harvesting the inboxes and smartphone contacts of active Facebook users. (Zuckerberg reluctantly acknowledged that Facebook gathers information on people who aren’t signed up for Facebook for what he said were ‘security purposes.’)”
  • “Most people do not understand the scope of Facebook’s data collection. Lawmakers tried more than once to get Zuckerberg to say this, but he never did. Here’s a piece of evidence lawmakers could have showed the CEO: In a survey conducted recently by Digital Content Next, a trade group of news organizations that is frequently critical of Facebook, a majority of respondents said they didn’t expect the social network to track use of non-Facebook apps to target ads, collect their physical location when they’re not using Facebook or harvest information from non-Facebook websites that people visit. Spoiler alert: Facebook does all of those things.”  
  • “It’s not people’s fault if they don’t know how Facebook works. If Zuckerberg and Facebook were comfortable with the data-based bedrock of their business, he should be able and willing to explain all the ways Facebook collects data on everyone and how it uses it.”
  • “It felt as though the company made a calculated decision to deflect rather than talk openly about the scope of Facebook data collection and its data-based ad system. And to me, that was a sign that Facebook is embarrassed about what it does for a living.”

Continue reading “April 12, 2018”