Tag: Cryptocurrencies

March 21, 2018

Perspective

AEIdeas – Creative Destruction, the Uber effect, and the slow death of the NYC taxi cartel – Mark J. Perry 3/17

WP – Toys R Us’s baby problem is everybody’s baby problem – Andrew Van Dam 3/15

  • “There are endless reasons a big-box toy store would collapse during a retail apocalypse — and Toys R Us acknowledged a number of them in its most recent annual filing: the teetering tower of debt incurred by its private-equity owners, competition from Amazon, Walmart and Target.”
  • “They even wrung their hands about app stores, labor costs and potential tariffs raising the costs of the imported goods they sell.”
  • “But one risk stood out. Toys R Us said there just weren’t enough babies…”
  • “It may not have been the biggest existential threat confronting Geoffrey the Giraffe (the store’s mascot), but it’s the one with the broadest implications outside of the worlds of toys and malls.”
  • “Measured as a share of overall population, U.S. births have fallen steadily since the Great Recession. They hit their lowest point on record in 2016 — the most recent year for which the Centers for Disease Control and Prevention has comparable data.”
  • “Even adjusted for the aging population and declining share of women of childbearing age, U.S. fertility rates are at all-time lows.”
  • “That’s problematic for Toys R Us, which also operates the Babies R Us stores. The company claims in its annual report that its income is linked to birthrates, and it appears to be right.”
  • “There are, to be sure, numerous other factors at play. The same economic forces that encourage people to have children may also encourage them to splurge on toys, for example.”
  • “But it’s nonetheless apparent that Toys R Us’s fortunes rise and fall with the population of its target market.”
  • “And that’s why the company’s demise should worry the rest of us. Toys R Us focuses on kids, so it’s feeling the crunch from declining birthrates long before the rest of the economy. But it’s just a matter of time before the trends that toppled the troubled toy maker put the squeeze on businesses that cater to consumers of all ages.”
  • “Eventually, unless the country does something significant to encourage larger families or immigration, that narrowing base of the population pyramid will crawl upward.”
  • “In the end, Toys R Us will just have been the first of many businesses of all descriptions facing the same hard demographic truth: Economic growth is extremely difficult without population growth.“

Worthy Insights / Opinion Pieces / Advice

Bloomberg – How Amazon’s Bottomless Appetite Became Corporate America’s Nightmare – Shira Ovide 3/14

Bloomberg Quint – The World Economy Risks Turning Too Hot to Handle as G-20 Meets – Enda Curran and Rich Miller 3/15

CNN Money – Amazon didn’t kill Toys ‘R’ Us. Here’s what did – Chris Isidore 3/15

Economist – Malaysia’s PM is about to steal an election – Leaders 3/10

  • Impunity…

FactsMaps – US News – U.S. Best States Overall Ranking – 2018

FT – Fresh blood: why everyone fell for Theranos – Andrew Hill 3/18

FT – Saudi Aramco: sand trap – Lex 3/12

  • “Justifying a $2tn valuation for the state oil company requires hard persuasion.”

Maps on the Web – Average ACT score by US State – Reddit 3/19

NYT – Big Sugar Versus Your Body – David Leonhardt 3/11

Markets / Economy

Economist – America’s companies have binged on debt; a reckoning looms 3/8

  • “The total debt of American non-financial corporations as a percentage of GDP has reached a record high of 73.3%”

WalletHub – Credit Card Debt Study: Trends & Insights – Alina Comoreanu 3/8

Real Estate

Business Insider – American homes are more affordable than they’ve been in 40 years – but that could change sooner than you think – Tanza Loudenback 3/19

  • “‘Thanks to low mortgage rates, buying a home is actually more affordable now than in the past 40 years,’ Alexandra Lee, a housing data analyst at Trulia, told Business Insider.”
  • “Mortgage interest rates hit 16.6% in 1981 in response to massive inflation in the US. In 2016, interest rates fell to about 3.5%, and they’re about 4.5% right now.”
  • “Trulia found that the typical household in 1980 could afford only about three-fourths of the median home price, compared with the median household in 2016, which could afford a home 1 1/2 times the median home price.”
  • “Twenty-two US metros crossed the threshold from unaffordable to affordable over the past four decades, according to the data. The markets that are too expensive for the average buyer now, including San Francisco, Seattle, and San Jose, California, were always too expensive.”
  • “Trulia ultimately found that Americans’ homebuying power has strengthened in the past 40 years.”
  • “Take Salt Lake City, for example. From 1990 to 2016, home prices increased 53%, but the affordability index jumped to 131 from 122. That is because interest rates dropped to 3.4% from 10% during that time. Homeownership in Salt Lake City became even more affordable over the 26-year period — and the case appears the same for many of the largest US metros.”
  • “Only the Denver, Miami, and Portland, Oregon, metro areas dropped in affordability during that time, Lee said.”
  • “By the end of 2017, a monthly mortgage payment on the median home in the US required just 15.7% of the typical household income, according to a report by Trulia’s parent company Zillow. Back in the late 1980s and 1990s, a mortgage payment took up 21% of the typical American’s income.”
  • Granted, coming up with a down payment on a house these days is no easy task.

Effect of interest rate rises are starting to bite.

CNBC – Mortgage refinances fall to decade low – Diana Olick 3/14

  • “Interest rates for home loans have risen each week this year, so each week homeowners have had less incentive refinance their mortgages.”
  • “Higher interest rates caused applications to refinance a home loan to fall 2% for the week and 18% from a year ago, when rates were lower. The refinance share of all mortgage applications fell to 40%, the lowest since 2008.”
  • “Housing is more expensive today than it has been in a decade, and a decade ago credit was a lot easier to get. The average monthly mortgage payment is now up nearly 13% from a year ago, according to Realtor.com — a combination of higher home prices and higher interest rates.”

Economist – Asian and European cities compete for the title of most expensive city – The Data Team 3/15

  • “Singapore remains the most expensive city in the world for the fifth year running, according to the latest findings of the Worldwide Cost of Living Survey from The Economist Intelligence Unit.”

FT – WeWork is ‘victim of own success’ as office rivals gather – Aime Williams 3/12

  • “A wave of lease purchases by flexible workspace providers is driving commercial demand in leading cities.”

Honolulu Star Advertiser – Mayor signs bill temporarily banning permits for new ‘monster houses’ – Gordon Y.K. Pang 3/13

  • “Honolulu Mayor Kirk Caldwell signed into law today a bill imposing a moratorium of up to two years on building permits for ‘monster’ houses, giving the city Department of Planning and Permitting time to come up with permanent rules to deal with the growing phenomenon.”
  • “DPP will, for the most part, not approve building permit applications during the moratorium for houses that cover more than seven-tenths of a lot under Bill 110 (2017). For example, a 5,000-square-foot lot could not have a living space that’s 3,500 square feet or larger.”
  • Another instance of a market where housing prices have gone well beyond what local incomes can support. As a result, people come up with ‘work-arounds’ which tend to overburden the local infrastructure and upset neighborhoods, resulting in blunt regulatory reaction. Honolulu is not unique to this problem.

WSJ – The Next Housing Crisis: A Historic Shortage of New Homes – Laura Kusisto 3/18

  • “America is facing a new housing crisis. A decade after an epic construction binge, fewer homes are being built per household than at almost any time in U.S. history.“
  • “Home construction per household a decade after the bust remains near the lowest level in 60 years of record-keeping, according to the Federal Reserve Bank of Kansas City.”
  • “What makes the slump puzzling is that by most other measures, the American economy is booming. Jobs are plentiful, wages are on the rise and the stock market is near record highs. Millennials, the largest generation since the baby boomers, are aging into home ownership.”
  • “A combination of tightened housing regulations, a lack of construction labor and a land shortage in highly prized areas is driving the crisis, according to industry experts.”
  • “Even during the deep recession of the mid-1970s and the downturn in the early 2000s, builders put up significantly more homes per U.S. household than they are constructing now, in the ninth year of an economic expansion. Only at the bottom of the 1981 and 1991 economic downturns were per-household construction levels near what they are now, according to Jordan Rappaport, an economist at the Kansas City Fed. He says the only period when the U.S. might have built fewer homes by population was during World War II.”
  • “The National Association of Home Builders estimates builders will start fewer than 900,000 new homes in 2018, less than the roughly 1.3 million homes needed to keep up with population growth. The overall inventory of new and existing homes for sale hit its lowest level on record in the fourth quarter of 2017, at 1.48 million, according to the National Association of Realtors.”
  • “That, in turn, is pushing up prices at what economists say is an unsustainable pace. The S&P CoreLogic Case-Shiller National Home Price Index rose 6.3% in 2017. That was roughly twice the rate of income growth and three times the rate of inflation.”
  • “Builders cite numerous factors contributing to the construction slump. A decades long push for young people to go to college has driven down trade-school enrollment, depriving builders of skilled labor. Declining numbers of immigrant construction workers have sapped builders of unskilled labor.”
  • “The construction workforce in the U.S. declined to 10.5 million in 2016, from 10.6 million in 2010, when the real-estate market was near bottom, according to an analysis of U.S. Census data by Issi Romem, an economist at BuildZoom, a startup that tracks construction data for building contractors.”
  • “Nationwide, membership in the National Association of Home Builders peaked at 240,000 in 2007, then dropped to 140,000 in 2012, where it has remained throughout the recovery.”
  • “Builders in far-flung exurbs are encountering stiffer resistance from young buyers even as prices ratchet higher for land closer to cities. Economists say that in many large metropolitan areas, suburbanization might simply have reached its limits, as potential buyers increasingly reject long commutes. During the 1950s, buying a home in a new suburb, where land was plentiful and cheap, often meant driving half an hour to a job in the city. Today, commutes from new developments can be several times that long.”
  • “’There’s a tremendous mismatch between the places where people want to live and the places where it’s easiest to build,’ says Edward Glaeser, a professor of economics at Harvard University who studies constraints on housing supply.”
  • “But building remains below historical averages, and economists say it is unlikely to return to those levels before the next recession.”
  • “’It’s hard for me to see on single-family how you can build your way out of this,’ Mr. Rappaport says. ‘Even with these heroic efforts’ to overcome barriers to building new housing, he says, there is little chance ‘that you’re going to get a new stream of single-family homes that can relieve demand.’”
  • “Coastal cities such as San Francisco, Los Angeles, New York and Boston have taken criticism for their restrictive building codes, which make it more difficult to create enough housing to keep up with population growth.”
  • “Even metropolitan areas with more permissive approaches to building are lagging behind their historical construction levels. Housing permits in Memphis, Tenn., were 44% below their historical average in 2017, according to the latest Census figures analyzed by real-estate data firm Trulia, while permits in the Minneapolis metropolitan area were 16% below average.”

Finance

FT – Private equity groups are calling the shots – Javier Espinoza 3/14

  • “In business, the mantra goes, the customer is always right and should get the best deal.”
  • “The opposite is happening in private equity where investors, including large pension funds, endowments, sovereign wealth funds and family money, face unfavorable fund terms and, in all likelihood, lower returns.”
  • “Private equity firms are clearly calling the shots and that is illustrated by the record amount of money they are turning away.”
  • “Huge institutional investors have so much money burning a hole in their pockets (Singapore’s GIC alone has $100bn of assets under management) they are under enormous pressure to find a home for this cash somewhere.”
  • “Hence their willingness to commit their cash to funds even if managers cut or reduce the so-called hurdle rate, which is the return that is guaranteed before a buyout group can claim a share of the profits. The industry standard is a preferred return of 8% on deals.”
  • “Advent International, the Boston and London-based group, raised eyebrows in 2016 when it announced it was closing a mega $13bn buyout fund without offering minimum returns to its investors. Last year, CVC, the former owner of F1, also said it was cutting its hurdle rate from 8% to 6%. The buyout firm also scrapped early-bird discounts given to new investors.”
  • “Rather than take their money and run from unfavorable terms, investors have doubled down on these private equity funds, which raised record amounts of cash in their fastest time ever. Advent had set out to raise $12bn and received more than $20bn of interest from investors. CVC raised €16bn but closed the door on billions more because demand was close to €30bn.”
  • “Rubbing salt into the wound of poorer terms, private equity managers are also warning them that returns should come down.”
  • “’The investors have accepted the idea of lower returns as OK,’ said the head of a private equity group. ‘It used to be that investors would earn 20% net internal rate of returns. Now they are happy with 14% or 15% net internal rate of returns.’”

Cryptocurrency / ICOs

Visual Capitalist – The Rising Problem of Crypto Theft, and How to Protect Yourself – Jeff Desjardins 3/20

Tech

WSJ – The Battery Boost We’ve Been Waiting for Is Only a Few Years Out – Christopher Mims 3/18

Health / Medicine

NYT – How to Stop Eating Sugar – David Leonhardt 3/18

China

Bloomberg – Xi Gives Stark Taiwan Warning in Hands-Off Message to Trump – Keith Zhai, Peter Martin and Dandan Li 3/20

NYT – Hard-Charging Chinese Energy Tycoon Falls From Xi Government’s Graces – Alexandra Stevenson 3/14

  • The tycoon: Ye Jianming. The company: CEFC China Energy.

India

Bloomberg Gadfly – Ambani’s Jio Triple Play Deserves to Upend This Cozy Club – Andy Mukherjee 3/20

Russia

NYT – Russian Election: Videos Show Possible Fraud – Camilla Schick 3/20

  • Did Putin really need the help?…

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.”

March 19, 2018

Worthy Insights / Opinion Pieces / Advice

NYT – ‘Testilying’ by Police: A Stubborn Problem – Joseph Goldstein 3/18

Top Down Charts – A Familiar if Ominous Sign in the US IPO Market – Callum Thomas 3/13

Real Estate

WSJ – Daily Shot: John Burns RE Consulting – US Housing Supply Overview 3/15

WSJ – Daily Shot: FRED – US Commercial RE Loans – Percentage Change YoY  3/15

Energy

Bloomberg Businessweek – Was This Oil Giant Smart or Just Lucky? – Kevin Crowley and Javier Blas 3/7

  • “Chevron’s long-ignored acreage in the Permian Basin has made it a shale leader.”

Cryptocurrency / ICOs

Bloomberg – Crypto Advocates Push For Regulatory Guidance at Congressional Hearing – Lily Katz 3/14

Bloomberg – Technology Meant to Make Bitcoin Money Again Is Now Live – Camila Russo 3/15

Automotive

Business Insider – Tesla’s newest rival just highlighted a big problem for the company that no one is talking about – Matthew DeBord 3/10

  • Segmentation.

China

WSJ – China’s Super-Regulator Can’t Kill Shadow Banking – Nathaniel Taplin 3/13

Visual Capitalist – Visualizing China’s Most Ambitious Megaproject – Jeff Desjardins 3/15

Europe

FT – Backlash grows over Chinese deals for Germany’s corporate jewels – Guy Chazan 3/12

Japan

Bloomberg Businessweek – Convenience-Store Squeeze Shows Deflation Dilemma Facing BOJ – Lisa Du and Yuko Takeo 3/5

 

March 12, 2018

Perspective

statista – Proportion Of Female CEOs Is Hugely Overestimated – Niall McCarthy 3/7

Our World in Data – Fertility Rate – Max Roser 12/2/17

WSJ – Daily Shot: OECD – Time spent eating and drinking by Country 3/8

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – The Power of Narrative – Ben Carlson 3/8

Bloomberg Businessweek – Bitcoin Is Ridiculous. Blockchain Is Dangerous. – Paul Ford 3/9

Business Insider – Uber and Lyft drivers are selling candy and snacks in their cars – and it’s indicative of a dark truth – Aine Cain 3/9

Economist – Self-driving cars offer huge benefits-but have a dark side – Leaders 3/1

  • “Policymakers must apply the lessons of the horseless carriage to the driverless car.”

Pragmatic Capitalism – Why is the US Economy Becoming More Stable? – Cullen Roche 3/9

WSJ – Daily Shot: Trump Alienates Allies Needed for a Trade Fight With China – Greg Ip 3/7

Real Estate

WSJ – Mortgage Rates at a Four-Year High Threaten to Roil Housing – Christina Rexrode and Laura Kusisto 3/8

  • “U.S. mortgage rates have hit their highest level since 2014, a new challenge for a housing market that has been central to the economic recovery but remains vulnerable to even modest headwinds.”
  • “The rate for a 30-year fixed-rate mortgage rose to 4.46%, the highest in more than four years and the ninth consecutive week of increases, according to data Thursday from mortgage-finance giant Freddie Mac . At the start of the year, the average rate was 3.95%.”
  • “If the trend persists, it could hamper a sector that represents about 15% of U.S. gross-domestic product. Rising mortgage rates already have crimped refinancing activity and pushed would-be home buyers who are on the margins out of the market as home prices also have risen.”
  • “While the rates remain low by historical standards, millennial buyers, who are often making their first home purchase, could suffer sticker shock. ‘They will be the preponderance of the market purchasing homes over the next 10 years,’ said Ed Robinson, head of the mortgage business at Fifth Third Bancorp. ‘And they’ve never seen 5%’.”
  • “Initially, the housing market often does well when mortgage rates rise. Potential buyers may hurry to complete purchases before rates rise further. Rising rates often signal underlying confidence in the broader economy, which could make some people more apt to buy.”
  • “Historically, there is little correlation between the level of the increases that recently have occurred with mortgage rates and declines in home prices.”
  • “’It takes a pretty big rise in mortgage rates to offset the strength in the economy that causes rates to rise,’ said David Berson, chief economist at Nationwide Insurance and a former chief economist at Fannie Mae.”
  • “Economists expect renters who want to become homeowners will still try to do so, although they may have to look for cheaper homes or make other spending changes. Economists believe mortgage rates would have to rise to roughly 6% before they start to significantly affect borrowers’ decisions about whether to buy a home or what they can afford.”
  • “However, in higher-cost markets, such as New York City and San Francisco, higher rates can have a bigger effect given that loan balances are larger. A 3.5% rate on a $500,000 loan would create a monthly payment of $2,245, according to LendingTree Inc., an online loan information site. At 4.5%, the monthly payment would be $2,533. (That excludes taxes and insurance.)”
  • “Rising rates tend to have a bigger impact on the market for refinancing existing mortgages. The Mortgage Bankers Association expects mortgage-purchase originations to increase about 7% this year. It forecasts the refinancing market, which is smaller, to plunge by nearly 28%, adding to a sharp drop in 2017.”

Finance

WSJ – Brokers to Investors: Your Cash Ain’t Nothin’ But Trash – Jason Zweig 3/9

  • “According to the Financial Industry Regulatory Authority, free credit balances — one partial measure of uninvested cash in brokerage accounts — totaled $350.2 billion at the end of January.”
  • “Assuming the average yield of 0.12% that Crane Data estimates for brokerage sweep accounts, investors would earn an aggregate of only $420 million in income on that money over the next year.”
  • “If, instead, investors shopped around to improve their yield and earned an average of 1% on that cash, they would pocket $3.5 billion in income. Overall, then, the cost of that inertia is roughly $3.1 billion.”
  • “If you don’t shop around for better yields on your cash, you’re handing your broker another 1% a year.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 3/8

WSJ – Daily Shot: Ripple 3/8

Canada

Bloomberg – Toronto Home Builders Just Had Their Busiest February Since 1948 – Theophilos Argitis 3/8

Bloomberg – Loonie Slide Fails to Unsettle Forecasts for 2018 Outperformance – Anooja Debnath 3/8

WSJ – Daily Shot: Canada Housing Starts 3/8

  • “Canadian housing starts exceeded expectations and continue to trend higher.”

China

Bloomberg – China’s War on Pollution Will Change the World – Jeff Kearns, Hannah Dormido, and Alyssa McDonald 3/9

  • “China is cracking down on pollution like never before, with new green policies so hard-hitting and extensive they can be felt across the world, transforming everything from electric vehicle demand to commodities markets.”
  • “Four decades of breakneck economic growth turned China into the world’s biggest carbon emitter. But now the government is trying to change that without damaging the economy—and perhaps even use its green policies to become a leader in technological innovation.”
  • “China’s air pollution is so extreme that in 2015, independent research group Berkeley Earth estimated it contributed to 1.6 million deaths per year in the country.”
  • “The smog is heaviest in northern industrial provinces such as Shanxi, the dominant coal mining region, and steel-producing Hebei. Emissions there contribute to the planet’s largest mass of PM 2.5 air pollution—the particles which pose the greatest health risks because they can become lodged in the lungs. It can stretch from Mongolia to the Yellow Sea and often as far as South Korea.”
  • “The country had become the world’s No.1 carbon dioxide emitter as it rose to dominate global exports, a process which began several decades ago but got its biggest lift with World Trade Organization entry in 2001. Emissions have started to fall again.”
  • “The government’s war on air pollution fits neatly with another goal: domination of the global electric-vehicle industry. Elon Musk’s Tesla Inc. might be the best-known name, but China has been the global leader in EV sales since 2015, and is aiming for 7 million annual sales by 2025.”
  • “To get there, it’s subsidizing manufacturers and tightening regulation around traditional fossil-fuel powered cars.”
  • “Worldwide, solar panel prices are plunging—allowing a faster shift away from carbon—thanks to the sheer scale of China’s clean-energy investment. It’s spending more than twice as much as the U.S. Two-thirds of solar panels are produced in China, BNEF (Bloomberg New Energy Finance) estimates, and it’s home to global leaders, including JinkoSolar Holding Co. and Yingli Green Energy Holding Co.”
  • “But China isn’t stopping there. As well as wind and solar, it’s exploring frontier clean energy technologies like hydrogen as an alternative to coal.”
  • “The trend towards clean energy is poised to keep gathering steam worldwide. BNEF projects global investment in new power generation capacity will exceed $10 trillion between 2017 and 2040. Of this, about 72% is projected to go toward renewable energy, roughly evenly split between wind and solar.”
  • “Five years ago, Beijing’s ‘airpocalypse’ unleashed criticism of the government so searing that even Chinese state media joined in. Last year, the capital’s average daily concentration of PM2.5 particles was almost a third lower than in 2015, compared with declines of about a tenth for some other major cities.”
  • “The turnaround isn’t just limited to improving air quality. China has stopped accepting shiploads of other countries’ plastic and paper trash, a response to public concern over pollution and a decreased need for scrap materials.”

India

Bloomberg Quint – Bond Trading Tumbles in India as Banks Stare at $3 Billion Loss – Subhadip Sircar 3/9

  • “If the RBI’s (Reserve Bank of India) reluctance to play the role of savior is any indication, it looks unlikely that Indian bond traders will see their predicament end soon.”

March 9, 2018

Perspective

WSJ – Daily Shot: Terrorism Deaths vs. Coverage 3/8

Worthy Insights / Opinion Pieces / Advice

FT – The rise – and fall – of the crypto-currency millionaires – Aaron Stanley 3/7

Mauldin Economics – Why American Workers Aren’t Getting A Raise: An Economic Detective Story – Jonathan Tepper 3/7

  • “Areas with fewer employers have lower wages.” (Source: Roosevelt Institute)

Markets / Economy

WSJ – Daily Shot: FRED – Total US Consumer Loans owned by Federal Government 3/8

Energy

WSJ – Daily Shot: eia – U.S. crude oil exports in perspective 3/7

Finance

WSJ – Daily Shot: Credit Suisse – Active & Passive Fund Flows 3/8

  • “February was a rough month, with both passive and active products losing capital.”

WSJ – Daily Shot: Credit Suisse – Equity Flows by Strategy 3/8

Market Watch – CVS’s $40 billion debt deal to fund Aetna takeover puts credit rating in peril – Ciara Linnane 3/7

WSJ – Daily Shot: Largest Corporate Bond Deals 3/8

Tech

WSJ – YouTube Hiring for Some Positions Excluded White and Asian Men, Lawsuit Says – Kirsten Grind and Douglas MacMillan 3/1

Health / Medicine

WSJ – Daily Shot: Moody’s – Pipeline for nursing graduates by US State 3/8

Automotive

WSJ – Daily Shot: FRED – Average Amount Financed for New Car Loans 3/8

  • “The average size and duration of new automobile loans in the US keep rising.”

WSJ – Daily Shot: FRED – Average Maturity for New Car Loans 3/8

India

Bloomberg Quint – Super Rich Indians’ Love of Stocks Dwarfs Rest of the World – Dhwani Pandya 3/8

  • Super rich being those with net assets of $50 million or more.

 

March 8, 2018

If you were only to read one thing…

FT Alphaville – China’s household debt problem – Matthew C Klein 3/6

  • “The rapidity and size of China’s debt boom in the past decade has been almost entirely without precedent. The few precedents that do exist — Japan in the 1980s, the US in the 1920s — are not encouraging.”
  • “Most coverage has rightly focused on China’s corporate sector, particularly the debts that state-owned enterprises owe to the big four state-owned banks. After all, these liabilities constitute the biggest bulk of the total debt outstanding, and also explain most of the total growth in Chinese debt since the mid-2000s.”
  • “Chinese households, however, are quickly catching up. This is bad news.”
  • “The simple story of China’s debt boom is that government-backed companies borrow from government-controlled banks to pay for wasteful investments to support jobs and other political objectives. This creates lots of problems for China today and in the future, but it does have one virtue: the losses from centralized credit allocation can be distributed over a broad population over a long period of time.”
  • “Household debt is different. Borrowers are widely dispersed and lack political power. The lenders are often newer finance companies or loan sharks. Worst of all, there is essentially zero chance that additional household borrowing pays for productive investment. Some of China’s additional infrastructure and manufacturing capacity may prove valuable one day. Household debt probably won’t. Atif Mian and Amir Sufi have ably shown that increases in household borrowing tend to predict slower income growth and higher joblessness.”
  • “This chart is therefore cause for concern:”
  • “As of mid-2017, Chinese households had debts worth about 106% of their disposable incomes. For perspective, Americans currently have debts worth about 105% of their disposable incomes, on average. The difference is that American indebtedness has been basically flat the past few years after steady declines since 2007.”
  • “Chinese households have been experiencing rapid income growth by rich-country standards for a long time, but their debts have grown far faster:”
  • “Since the start of 2007, Chinese disposable household income has grown about 12% each year on average, while Chinese household debt has grown about 23% each year on average. The cumulative effect is that (nominal) income has slightly more than tripled but debts have grown by nearly a factor of nine. The mismatch has been getting worse recently, as can be seen in the kink in the pink line towards the end.”
  • “All this is finally starting to affect the aggregate debt numbers. Household debt in China is still small relative to the total — about 18% as of mid-2017 — but household borrowers are now responsible for about one third of the growth in total nonfinancial debt:”
  • “The problem is that households cannot service their debts out of GDP. Instead they have to rely on their meagre incomes. Since 2007 the share of Chinese national output going to households has ranged from as high as 46% to as low as 42% of GDP. (The rest of China’s national income is mostly captured by government-controlled enterprises and their elite managers.) The household share of income has dropped by about 1 percentage point just in 2017:”
  • “For comparison, disposable income in the US has tended to hover between 71% and 76% of GDP over the past few decades.”
  • “The trick for Beijing now is to bring non-productive investment down as rapidly as it can without causing unemployment to rise to dangerous levels. Because it has proven difficult to replace non-productive investment with productive investment (and, I have long argued, unrealistic even to expect it could happen), the only way to do so is to replace it with consumption. But levered consumption obviously cannot solve the problem of rapid debt growth, so rising consumption must be driven by rising household income, even as declining investment causes workers on investment projects to be fired. In the end this may be politically a difficult problem, but economically it is just an arithmetic problem about wealth reallocation.” – Michael Pettis

Perspective

CNBC – 42% of Americans are at risk of retiring broke – Jessica Dickler 3/6

© GOBankingRates

US Census Bureau – Irish-American Heritage Month and St. Patrick’s Day 2/6

Worthy Insights / Opinion Pieces / Advice

Business Insider – Underpaying drivers is ‘essential’ to Uber’s business model, according to a new study on low wages – Shona Ghosh 3/7

Economist – How the West got China wrong – Leaders 3/1

  • “It bet that China would head towards democracy and the market economy. The gamble has failed.”

FT – Forget flu, it’s time for your fake-news jab – Hannah Kuchler 3/6

  • “News literacy should be taught like sex and drugs education, to protect individuals and society as a whole.”

Medium – A Lack of Clarity is The Biggest Inhibitor of Progress Towards Your Goals – Srinivas Rao 3/5

Real Estate

WSJ – Daily Shot: Cresset Wealth Advisors – US Housing Price Change from Pre-Crisis Peak 3/7

WSJ – New York Housing Is Getting (Gasp!) More Affordable – Josh Barbanel 3/7

  • “Housing costs are taking a smaller bite out of the typical household’s monthly budget, according to a new U.S. Census Bureau survey that is conducted every three years. The survey also shows a record amount of new housing and the third-highest rental-vacancy rate since the bureau’s first survey in 1965.”

WSJ – That Much Prophesied Commercial Property Bust Still Hasn’t Happened – Esther Fung 3/6

  • “The delinquency rate for securitized loans in the commercial real-estate industry has dropped for eight consecutive months, defying expectations in recent years of a wave of defaults.”
  • “According to real-estate data provider Trepp LLC, the delinquency rate for real-estate loans in commercial mortgage-backed securities clocked in at 4.51% in February, down from 5.31% in the same period a year earlier. The rate hit an all-time high of 10.34% in July 2012.”
  • “Investors had been expecting an increase in defaults in 2016 and 2017 as the large volume of CMBS packaged during the 2006 to 2007 period reached maturity. But rising real-estate values, low interest rates and a surge of debt capital from insurers and other sources have allowed property owners to refinance or restructure their debts.”

Yahoo Finance – Foursquare CEO: There are 2 types of malls that are seeing growth – Melody Hahm 3/6

  • “While consumers are getting lured online by cost savings and the convenience factor, there’s still ample data on foot traffic into physical stores, said Foursquare CEO Jeff Glueck. In fact, he’s found that the rise in online shopping has largely affected middle-market malls. Malls serving high-end and low-end customers are actually seeing growth.”

Finance

WSJ – The New ID Theft: Millions of Credit Applicants Who Don’t Exist – Peter Rudegeair and AnnaMaria Andriotis 3/6

Cryptocurrency / ICOs

Bloomberg – Bitcoin Dives After SEC Says Crypto Platforms Must Be Registered – Camila Russo and Lily Katz 3/7

Construction

WSJ – Daily Shot: Change in Construction Producer Price Index 3/7

  • “US construction firms continue to struggle with rising materials costs. Higher steel prices will exacerbate the problem, especially for commercial property developers.”

Asia – excluding China and Japan

WSJ – In China’s Shadow, Communist Vietnam Links Arms With Old Enemy, the U.S. – Jake Maxwell Watts 3/2

China

WSJ – China’s Financial Reach Leaves Eight Countries Vulnerable, Study Finds – Josh Zumbrum and Jon Emont 3/4

Europe

WSJ – Daily Shot: FRED – European Central Bank Balance Sheet 3/7

Puerto Rico

WP – Exodus from Puerto Rico grows as island struggles to rebound from Hurricane Maria – Arelis R. Hernandez 3/6

March 2, 2018

Perspective

Economist – The hidden cost of congestion – Daily Chart 2/28

  • “In rich countries, city-dwellers lose nearly $1,000 a year while sitting in traffic.”

Tax Foundation – Sources of Personal Income 2015 Update – Erica York 2/27

Visual Capitalist – The World as 100 People over the last two centuries – Jeff Desjardins 2/28

WEF – These will be the world’s most populated countries by 2100 – Rob Smith 2/28

Worthy Insights / Opinion Pieces / Advice

Economist – Black Americans are over-represented in media portrayals of poverty – C.K. 2/20

  • “The poverty rate amongst black Americans, at 22%, is higher than the American average of 13%. But black people make up only 9m of the 41m poor Americans.”

FT – Millennials poorer than previous generations, data show – Sarah O’Conner 2/23

  • “Stagnant wages and rising house prices hit disposable income levels.”

NYT – Is Bitcoin a Waste of Electricity, or Something Worse? – Binyamin Appelbaum 2/28

  • “Money is supposed to be a means of buying things. Now, the nation’s hottest investment is buying money. And the investment rush is raising questions about whether one reason for the slow pace of economic growth in recent years is that the nation is busy distracting itself. While Bitcoin mining may not be labor intensive, it diverts time, energy and capital from other, more productive activities that economists say could fuel faster growth.”
  • “By a wide range of measures, America has a productivity problem. The economy is growing slowly, and almost 20% of adults in their prime working years are neither working nor trying to find work. Americans who do have jobs are less likely to start their own companies. Even the most basic kind of production is in decline. Americans are having less sex and making fewer babies.”

Real Estate

PBN – Hawaii homebuyers top nation with highest mortgage debt-to-income ratio – Janis Magin 2/28

  • “Homebuyers in Honolulu have the highest mortgage debt-to-income ratio in the nation, while homebuyers on Maui have a ratio that’s third-highest in the U.S., topped only by San Jose in California’s Silicon Valley, according to a report by the personal finance company SmartAsset.”
  • “Homebuyers in the Honolulu metropolitan area have mortgages worth 3.959 times their annual income, on average, according to an analysis of data from the Consumer Financial Protection Bureau.” 
  • “The data showed that Honolulu homebuyers have an average income of $131,639 and that the average mortgage is for $521,201.”
  • “Maui homebuyers in the Kahului-Wailuku-Lahaina metro area have an average income of $131,681, and the average mortgage there is $468,597, putting their mortgage-to-income ratio at 3.559.”
  • “By contrast, homebuyers in San Jose have an average income of $207,062 and an average mortgage of $740,693, giving them a ratio of 3.577.”
  • “California had 17 of the top 25 cities with the largest mortgage-to-income ratios on the list, while Hawaii had two of the top three.“
  • “Nationally, the average mortgage-to-income ratio was 2.119.”

WSJ – Retailers Post Strong Numbers – And Mall Shares Keep Falling – Esther Fung 2/27

  • “Prospect of higher interest rates a worry to shopping mall REIT investors.”
  • “While mall landlords generally have shown they are able to keep occupancy levels buoyant, there are growing concerns about pressure on rents and higher capital expenditures as they look to attract and retain tenants, many of which are shrinking their store footprints.”
  • “Recent comments by Starbucks Corp. Executive Chairman and founder Howard Schultz that he expects rents to fall also weighed on the retail property sector Tuesday.”
  • “’Over the last few weeks I have been in a number of U.S. cities and observed firsthand the abundance of empty storefronts across the country, in prime A1 locations,’ Mr. Schultz said in an email to Starbucks senior leadership team on Sunday.”
  • “’We are at a major inflection point as landlords across the country will be forced (sooner than later) to permanently lower rent rates to adjust to the ‘new norm’ as a result of the acute shift away from traditional brick-and-mortar retailing to e-commerce,’ he added.”

Energy

WSJ – Daily Shot: US Total Crude Oil Production 2/23

Finance

Bloomberg – Investing in Index Funds Is No Longer Passive – Dani Burger 2/27

  • “Passive has gotten so large that it’s killed everything in its path — including itself. Welcome to the ‘Passive Singularity‘.”
  • “There are now so many indexes that putting your money in an index-tracking fund is a move requiring an active decision, according to researchers at Sanford C Bernstein & Co. The industry’s growth has even forced active managers to focus on selecting indexes themselves — be that to invest in, or to benchmark against.”
  • “It’s the latest broadside from Bernstein’s team, which in 2016 labeled passive investing ‘worse than Marxism’. Investors so far aren’t paying heed: passive mutual funds and ETFs absorbed $692 billion last year, compared to $45 billion in outflows for active funds, according to data compiled Bloomberg Intelligence.”
  • “The Bernstein strategists base their conclusions around the millions of indexes in existence, which far surpass the number of single securities. Do a little math and the madness is clear: with 3,000 easily-investable stocks, the number of possible combinations to turn into an index is a Googol (that number, written out, would be 1 followed by 100 zeros.)”
  • “With nearly half of equity assets managed passively in the U.S., there’s no sign that investors will stop gravitating toward cheaper, index-tracking products. Bernstein’s new research wrestles with a world where passive is larger than ever, and active managers have to fight for the trust of their clients. The team concedes that ‘passive investing has been a great force for democratizing access to capital markets and reducing the costs to society of managing assets’.”
  • “But a massive bull market rally across equities and debt markets has left many investors blind to the risks, which smart asset allocation can help to mitigate, Bernstein said.”
  • “In January, investors added $25 billion to active ETFs and mutual funds while allocating $103 billion to passive vehicles, data from Bloomberg Intelligence show.”
  • “’By all means, investors should save money on implementation by using passive vehicles as part of their allocation,’ the strategists wrote. ‘But the myth of purely passive investment will be exposed by a low-return world.’”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 2/28

  • “Bitcoin has been much less volatile in the past few days.”

Health / Medicine

Our World in Data – Causes of Death – Hannah Ritchie and Max Roser Feb. 2018

Construction

WSJ – With Lumber in Short Supply, Record Wood Costs Are Set to Juice Home Prices – Benjamin Parkin 3/1

  • “A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years.”
  • “Builders say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more.”

  • “Prices are rising as lumber yards try to stock up ahead of what looks likely to be a busy building season this spring. A strong economy and tight supply of houses are heating up the home-building market. The number of new units under construction in the U.S. rose almost 10% in January, the Commerce Department said, as strong demand kept builders working through the winter. Permits for new homes, a sign of anticipated construction, also rose.”
  • “Material prices now rival labor shortages as builders’ main concerns, a National Association of Home Builders survey showed in January. Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.”
  • “That run-up began with a trade dispute between the U.S. and Canada, which provides about a third of U.S. timber, leaving many dealers hesitant to restock at elevated prices. The Trump administration eventually instituted tariffs of 20% or more on Canadian sawmills.”
  • “Problems mounted. The worst wildfires on record hit Canada’s Pacific coast. Hurricane Irma temporarily closed mills in the forests of Florida and Georgia. And then came a shortage of railcars and trucks to transport timber from forests in places like the Pacific Northwest. Rates for flatbed trucks rose 24% in January from a year earlier, according to DAT Solutions LLC.”

February 26, 2018

Perspective

Economist – Daily Chart: Are alpha males worse investors? 2/20

WSJ – Household Debt Sees Quiet Boom Across the Globe – Josh Zumbrun 2/18

WSJ – Daily Shot: United Nations – Global Population Trends 2/23

  • “The global population pyramid is expected to invert by 2100 as the population gets closer to peak levels.”

Markets / Economy

WSJ – Daily Shot: Credit Suisse – Domestic Equity Flows 2/23

Real Estate

WSJ – Daily Shot: FRED – US mortgage rates 2/23

Finance

WSJ – Daily Shot: U.S. 3-Month LIBOR Exchange Rate 2/20

WSJ – Daily Shot: U.S. Borrowing Costs Among Highest in Developed World – Richard Barley 2/21

Cryptocurrency

WSJ – Daily Shot: Bitcoin 2/22

China

Economist – The rapid rise and fall of the Anbang empire 2/23

  • “China’s government takes control of its would-be financial colossus.”

WSJ – Daily Shot: BMI, Chinawealth – China Wealth Management Product Growth 2/22

WSJ – China’s Communist Party Proposal Sets Stage for Xi to Hold Onto Power – Chun Han Wong 2/25

  • “Proposal would eliminate the constitutional cap on presidential terms.” Currently set at two terms of five years each.

February 20, 2018

Perspective

Tax Foundation – State Corporate Income Tax Rates for 2018 – Morgan Scarboro 2/7

Visual Capitalist – Mapping the World’s Wealthiest Cities – Jeff Desjardins 2/16

WSJ – Daily Shot: Credit Suisse – Timeline of Relative Market Capitalizations Since 1900 2/16

WSJ – Daily Shot: TRACE – NRA Contributions to select political candidates 2/15

Worthy Insights / Opinion Pieces / Advice

University of Oxford – Stranded Property Assets in China’s Resource-based Cities: implications for financial stability? – Gerard Dericks, Robert Potts, & Ben Caldecott February 2018

The Atlantic – The Plot Against America – Franklin Foer – March 2018

  • In depth profile on Paul Manafort.

The Atlantic – How WeWork Has Perfectly Captured the Millennial Id – Laura Bliss – March 2018

  • “The company sells a somewhat uneasy combination of capitalist ambition and cooperative warmth.”

WSJ – Growth Is the Missing Ingredient for Kraft Heinz – Aaron Back 2/16

Markets / Economy

FT – Food industry giants struggle to keep up with changing tastes – Anna Nicolaou 2/16

  • “Sales woes at Kraft Heinz, Danone and others force groups to cut costs and eye deals.”

Real Estate

CoStar – Oaktree Becomes Latest Investment Manager to Launch Non-Traded REIT, Looking to Raise up to $2 Billion – Mark Heschmeyer 2/16

  • “Oaktree joins a growing list of major investment firms to expand into non-traded REIT fundraising. The Blackstone Group kicked off the trend in September 2016. So far, other big investors that have followed its lead into the non-traded REIT sector include Nuveen’s TH Real Estate, BGC Partners’ Cantor Fitzgerald, Starwood Capital Group, KKR & Co., and TPG Capital.”

WSJ – New York’s Commercial Property Slump Shows Signs of Slowing – Keiko Morris 2/11

Finance

Bloomberg – Hedge Fund Startups in Asia See Signs of Revival – Bei Hu and Klaus Wille 1/21

WSJ – The Rise of Private Assets Is Built on a Mountain of New Debt – Paul J. Davies 2/15

Cryptocurrency

WSJ – Daily Shot: Bitcoin 2/15

Tech

FT – SpaceX joins race to make web truly worldwide – Richard Waters 2/15

  • “SpaceX will on Saturday officially enter the race to bring internet access to all parts of the earth’s surface with the planned launch of its first test satellites for a globe-encompassing communications network.”
  • “The latest trial from Elon Musk’s private space company is a world away from last week’s spectacular first launch of Falcon Heavy, the world’s biggest rocket. Undertaken with none of the Tesla chief executive’s usual showman flair — he has not even mentioned it on Twitter — it is an early technical trial for a communications service that could be years from completion.”
  • “If successful, however, SpaceX has said it plans to start launching its first commercial satellites next year, with a constellation of more than 11,000 circling the earth in low-earth orbit by the time the network is complete in 2024.”
  • “SpaceX’s application for approval to test a satellite internet service from the Federal Communications Commission (FCC) is one of 12 made to the US regulators, highlighting the extent of the potential competition.”
  • “SpaceX plans to connect its constellation of satellites to form a so-called mesh network, passing information among them and blanketing the earth.”

Health / Medicine

FT – Good bacteria can help brain function better – Clive Cookson 2/15

  • “Researchers are discovering remarkable new links between gut bacteria and the brain. Problems from poor sleep to memory loss could be helped by manipulating the microbiome, the trillions of bacteria living inside healthy human bodies, the American Association for the Advancement of Science heard on Thursday.”

 

February 14, 2018

Happy Valentine’s Day!

 

Worthy Insights / Opinion Pieces / Advice

The Atlantic – How Humans Sank New Orleans – Richard Campanella 2/6

Economist – The roots of hyperinflation – J.O’s 2/12

  • “Fifty-seven cases of runaway inflation have been documented. They have common patterns.”
  • “In a country where the annual inflation rate is in four figures, the previous month can seem like a golden age. Venezuela’s currency, the bolívar, has lost 99.9% of its value in a short time. It is hard to fathom how a government can get its economic policy so wrong when the effects of hyperinflation are so severe.”
  • “Hyperinflations do not last long. They end in one of two ways. With the first, the paper currency becomes so utterly worthless that it is supplanted by a hard currency. This is what happened in Zimbabwe at the end of 2008, when the American dollar took over, in effect. Prices will stabilize, but other problems emerge. The country loses control of its banking system and its industry may lose competitiveness. With the second, hyperinflation ends through a reform program. This typically involves a commitment to control the budget, a new issue of banknotes and a stabilization of the exchange rate—ideally all backed with confidence-inspiring foreign loans. Without such reform, Venezuela’s leaders, though scornful of America, may find that its people are forced eventually to adopt its dollar anyway.”

FT – HNA/HK property: throttling back – Lex 2/13

  • “On Tuesday it (HNA Group) sold two parcels of land near the old airport to Hong Kong developer Henderson Land for HK$15.8bn ($2bn). The pull back of a formerly acquisitive group is a warning sign for the territory’s property market.”
  • “True, Henderson is paying 11.2% more than the sum HNA paid for the plots less than a year and a half ago. Back then, a report by real estate services group JLL estimated that the initial price was 13% above the higher end of the market.”
  • Bottom line, the recent run up has been juiced by mainland developers and expect them to be pulling back.

FT – ‘Self-inspection’ campaign looms for China’s online lenders – Henny Sender 2/12

  • “Regulators tighten their grip on fears that borrowers are overstretched.”

Markets / Economy

Bloomberg Businessweek – This Bond Market Could Get Uglier – Brian Chappatta, John Gittelsohn, and Liz McCormick 2/6

FT – US craft beer slowdown sends hops market from boom to bust – Emiko Terazono 2/12

  • “A sharp slowdown in US craft beer sales growth has sent the specialty hop market from boom to bust with its effects starting to be felt by growers beyond its shores.”
  • “Many of the hop varieties popular among craft beer makers have plunged from their peaks between 2015 and 2016. For example, Citra, known for its smooth floral and citrus aroma and flavor, has almost halved from $23 a pound, according to Lupulin Exchange, a US online hop exchange.”
  • “Another variety, Cascade, was trading at $6-$7 a pound in 2015-16, but is now on the market for $1.20, said Mr MacKinnon (Douglas MacKinnon, chief executive of trader 47hops).”
  • “The main issue has been the sudden slowing of growth in the craft beer market, which until a few years ago had been rising annually by double digits. However, market saturation, as well as competition from other alcoholic beverages, have affected growth, which peaked in 2014 at 18%, slowing to about 5% last year.”
  • “The oversupply situation has been made worse by the jump in hop production and acreage which almost doubled in the past five years. Brewers fearing a shortage rushed to sign three- to five-year contracts with farmers, who increased plantings on the back of those contracts and high prices.”
  • “The rising output amid falling demand has resulted in a hop glut, with inventories in pre-harvest September rising 15% to a record 98m pounds, according to the US Department of Agriculture. Of the total, growers and merchants held an all-time-high share of 65%.”
  • “But despite the supply overhang, hop farmers — who on the back of demand invested in expanding operations, need to repay bank loans — are still expected to plant about 1,500 new acres.”

Investment News – SEC offers advisers amnesty to move clients out of high-fee mutual fund share classes – Jeff Benjamin 2/12

  • “Enforcement division giving advisers until June 12 to declare intentions to self-report fiduciary violations and make financial restitution.”

Real Estate

Bloomberg – This Mall Is Only for the Rich, and It’s Doing Fine – Kim Bhasin 2/8

Visual Capitalist – UBS: Real Estate Bubbles: The 8 Global Cities at Risk – Jeff Desjardins 2/13

WSJ – Daily Shot: Lawler Economic & Housing Consulting – Home Builder Net Orders 2/12

Finance

WSJ – Daily Shot: Bloomberg – Broadcom Lines Up Biggest Debt Financing Ever for Qualcomm – Molly Smith and Jacqueline Poh 2/12

WSJ – Daily Shot: FRED – LIBOR and Bank Rate Spread 2/12

  • It’s good to be a banker again.

Cryptocurrency

BBC – Bitcoin energy use in Iceland set to overtake homes, says local firm – Chris Baraniuk 2/12

Bloomberg – Bitcoin Risks Crashing to $900 If Dot-Com Mania Is Any Guide – Eddie Van Der Walt 2/12

  • “Already slashed by more than half since hitting a record near $20,000 in December, the cryptocurrency could plunge a further 90% in an environment of unsustainably growing supply, according to Bloomberg Intelligence commodity strategist Mike McGlone.” 
  • “While the creators of Bitcoin intended to limit supply to 21 million coins, forks mean that there are already more than 50 million outstanding coins based on the original blockchain. There’s also nothing preventing rivals from spawning an infinite amount of clones, he said. The number of tradable cryptocurrencies jumped 120% in the past year.”
  • “’Parabolically increasing supply is the primary limitation to cryptocurrency market-price appreciation,’ McGlone said. ‘There’s strong gravitational pull toward $900, the average price since inception and the start of 2017’.”

Environment / Science

NYT – Here Are the Places That Struggle to Meet the Rules on Safe Drinking Water – Brad Plumer and Nadja Popovich 2/12