Tag: Debt

June 21, 2018

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

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

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

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

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

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

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

Markets / Economy

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

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

Real Estate

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

Energy

Economist – Global Coal Consumption 6/14

Health / Medicine

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

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

Britain

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

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

China

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

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

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

Europe

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

 

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May 9, 2018

Perspective

WSJ – Daily Shot: OECD – Levels of Working Poor by Country 5/8

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Bad Advice Can Be Expensive – Ben Carlson 5/6

Bloomberg Businessweek – The Future of News – John Micklethwait 5/3

  • “…is journalism really in such a parlous state? Look closer. News is an industry in transition, not in decline. It is reemerging as something more digital, more personalized, more automated, more paid for—and (eventually) less fake. In many ways history is repeating itself, with the main surprise being the survival of so many established names. And good journalism still does have the power to change lives.”
  • “In a world where the facts are known, commentary will become ever more important…”
  • “That points to the final series of changes: the multiplicity of formats. The standard print news story is being broken up, split among explainers, videographics, podcasts, and so on. Editorship is increasingly a matter of choosing the best way to deliver information to a time-starved consumer. News is likely to get shorter, quicker, and more graphical. But if you need to understand Syria or cryptocurrencies, you may save time reading one long story in Businessweek or the New Yorker rather than endless small ones.”
  • “The newspaper has not so much died as transmuted. News is in a state of transition—and what’s emerging is molded by both new technology and old verities. As journalists, we have to work harder to keep our audiences. But I’m still optimistic—not least about fake news. It won’t go away; it never has. But it will play a smaller role. And the big winner will be you, the consumer. Even if you have to pay a little more for it.”

Economist – So long, farewell – Buttonwood 5/8

The Registry – Does WeWork at All? – John McNellis 5/8

Visual Capitalist – Interactive: Comparing Asian Powers to the U.S. (Lowy Institute) – Jeff Desjardins 5/8

Markets / Economy

FT – Walmart takes on Amazon in India with Flipkart deal – Simon Mundy and Arash Massoudi 5/8

  • “US retailer to pay $15bn for 75% stake in India’s largest ecommerce group.”

FT – Retail: Is the beauty industry ‘Amazon-proof’? – Anna Nicolaou and Aimee Keane 5/6

WSJ – Daily Shot: LPL Research – Length of Economic Expansions 5/8

Real Estate

WSJ – Daily Shot: Green Street Advisors – US Commercial Property Price Index 5/8

Energy

WSJ – Oil Costs How Much? How the Oil Rally Took Forecasters by Surprise – Alison Sider and Georgi Kantchev 5/6

Finance

WSJ – Daily Shot: Bianco Research – State Muni Yields vs. S&P Muni Index 5/8

WSJ – Pension Funds Still Making Promises They Probably Can’t Keep – Heather Gillers 5/8

  • “Retirement plans across the country still project their investments will grow at a median rate of 7.25%, according to Wilshire Consulting, an adviser to pension funds. Yearly returns on public pension plans have returned a median 6.79% over the past decade and 6.49% over the past 20 years, according to Wilshire Trust Universe Comparison Service, a database.”
  • “Unlike corporations, public pensions have wide latitude in projecting investment returns.”
  • “Public retirement systems had an average 72% of assets they need to pay for retirement promises in 2016, according to the latest data available in the Public Plans Database, which tracks about 170 pension funds. The figure a decade earlier was 85%.”
  • “Companies don’t have the same flexibility to set return expectations on their pension plans. Pension plans sponsored by S&P 1500 companies have an average 87% of assets needed to cover their pensions promises, according to Mercer, a consultancy.”

Agriculture

WSJ – Scientist in China Race to Edit Crop Genes, Sowing Unease in U.S. – Jacob Bunge and Lucy Craymer 5/6

Construction

WSJ – Daily Shot: CME Lumber (Jul) 5/7

Education

Axios – The disappearing Chinese student visa – Stef W. Kight 5/6

China

Bloomberg Businessweek – The $94 Billion Mystery: What Will Be Left of HNA’s Empire? – Matthew Campbell and Prudence Ho 5/3

  • “An annual report released in late April revealed that HNA spent more on interest than any nonfinancial company in Asia last year, a $5 billion bill that represented a more than 50% increase from the year before.”
  • “Overall debt rose 21% in 2017, according to the report, with short-term borrowing climbing by 25%, to about $30.3 billion. Total debt amounted to about 20 times HNA’s earnings before interest and taxes…”
  • “Nonetheless, HNA, which Chen co-founded in the 1990s, counting George Soros among its early investors, isn’t at risk of immediate catastrophe. At the start of 2018, according to people familiar with the matter, it told creditors it would sell about $16 billion in assets in the first half to lighten its balance sheet. Happily for the banks that financed its rise, HNA is already nearing that goal, thanks largely to the Hilton sale ($8.5bn).”

FT – Chinese group with $7bn in debt seeks Beijing bailout – Gabriel Wildau 5/7

  • “In a test of Chinese authorities’ commitment to reducing financial risk, a large Chinese manufacturing group has begged for a government bailout to avoid default on up to $7bn in debt after a regional lender withdrew loans.”
  • “Over the past year, China has tightened credit in a bid to tackle an explosion of corporate debt that the International Monetary Fund has called ‘dangerous’. But the plea highlights how painful Beijing’s deleveraging campaign has been for some indebted groups.” 
  • “According to Caixin, a respected Chinese financial news website, the crisis involving DunAn began when Zheshang Bank, a regional lender in Zhejiang, demanded early repayment of loans, causing other banks to restrict lending to the group.” 
  • “DunAn employs 29,000 workers and manufactures a range of equipment including air-conditioning parts, civil explosives and wind power equipment. It has also expanded into asset management and real estate.” 
  • “Government bailouts are most common for state-owned companies, but officials have also rescued private groups when their potential collapse raised the prospect of contagion.” 
  • “The Shanghai government shielded investors from losses on bonds from privately owned Chaori Solar, whose 2014 default was the first in China’s domestic bond market.” 

 

April 30, 2018

This will be the only post this week from me. This week I’m attending the ULI Spring Meeting in Detroit, MI.

Cheers,

Duff

Perspective

WSJ – Why Tech Titans Are Betting on India, in 14 Charts – Newley Purnell, Min Jung Kim, and Rosa de Acosta 4/18

  • Clearly there is some disconnect between showing just this chart and the title. Emphasis less on India and more on the gender split of Facebook users.

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – China Quietly Rolled Out a Very Big Bang – John Micklethwait 4/19

Bloomberg – Latest Climate Threat for Coastal Cities: More Rich People – Christopher Flavelle 4/23

Financial Samurai – Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today – Sam

WSJ – Real Estate Stocks Are on Sale but No One Is Buying – Ken Brown 4/27

Markets / Economy

WSJ – Cable TV’s Cord-Cutting Woes Grow, Highlighting Divergence With Netflix – Shalini Ramachandran 4/27

Energy

Reuters – Venezuela faces heavy bill as grace period lapses on China loans – Corina Pons 4/27

Finance

FT – WeWork bond finds home in yield-starved market – Alexandra Scaggs 4/26

  • “This week high-yield bond investors faced a puzzle: how to value a bond sold by an unprofitable company that does not own hard assets or offer a clear outlook for its free cash flow?”
  • “The company in question was WeWork, the office-sharing company that last year attracted a $4.4bn equity investment from Japan’s Softbank. WeWork, which hired JPMorgan to lead the sale but had more than a dozen other banks working as well, attracted enough demand to increase the sale to $702m from $500m.”
  • “Several investors who steered clear of the bond — and one who bought it — said WeWork’s debt was not the type that typically appealed to high-yield investors. But nor was it the first company vowing to disrupt an industry to have found buyers in the junk market. Last year electric carmaker Tesla sold a $1.8bn high-yield bond, and in March, Uber raised $1.5bn in a leveraged loan.”
  • “A combination of low interest rates and shrinking supply has made it harder for money managers to find bonds with attractive yields. WeWork’s bonds were sold at a yield of 7.875%.”

Environment / Science

LAT – A Hawaiian island got about 50 inches of rain in 24 hours. Scientist warn it’s a sign of the future – Heidi Chang 4/28

Construction

WSJ – Daily Shot: CME Lumber (Jul) 4/26

China

FT – China’s HNA reports debts have soared to $94bn – Lucy Hornby 4/28

Middle East

Visual Capitalist – Knight Frank: A Time-lapse of Dubai’s Astonishing Growth – Nick Routley 4/28

  • Very cool animation.

South America

NYT – ‘Their Country Is Being Invaded’: Exodus of Venezuelans Overwhelms Northern Brazil – Ernesto Londono 4/28

April 16, 2018

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

So, back to the old format.

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

Sincerely,

Duff Janus

If you were only to read one thing…

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

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

Markets / Economy

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

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

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

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

Real Estate

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

Finance

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

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

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

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

China

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

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

April 12, 2018

If you were only to read one thing…

NYT – British Banks Will Have to Cut Ties to Sanctioned Oligarchs, U.S. Says – Ellen Barry 4/10

  • “The United States on Tuesday ratcheted up its efforts to block Kremlin-linked industrialists from doing business in the West, warning that British banks will have to sever their relationships with the tycoons if they want continued access to American financial institutions.”
  • “Sigal P. Mandelker, a top American Treasury official in London to meet with her counterparts, said British banks could face ‘consequences’ if they continued to carry out significant transactions on behalf of the 24 influential Russians sanctioned by Washington on Friday. The list includes the industrialists Oleg Deripaska and Viktor Vekselberg, along with Kirill Shamalov, who American officials have identified as President Vladimir V. Putin’s son-in-law.”
  • “The warning has resonated in London, which for decades has served as a haven for Russia’s wealthiest families. Russian investors own iconic British assets like the Chelsea Football Club and swaths of high-end London real estate, and they support thriving networks of lawyers, financial advisers and estate agents.”
  • “The new American sanctions expose financial institutions outside the United States to penalties if they ‘knowingly facilitate significant financial transactions’ on behalf of the listed Russian oligarchs.”
  • “The wording is similar to secondary sanctions imposed against Iran. These ‘essentially prohibit the individuals involved from taking part in the dollar economy,’ said Daragh McDowell, an analyst for Europe and Central Asia at Verisk Maplecroft, a consulting firm based in Bath.”
  • “It is likely to compel risk-averse British banks to cancel the Russians’ accounts altogether, said Brian O’Toole, a former senior official at the Treasury Department’s Office of Foreign Assets Control, which administers and enforces American sanctions.”

Continue reading “April 12, 2018”

April 3, 2018

Perspective

Visual Capitalist – Visualizing the Average Commute Time in U.S. States and Cities – Jeff Desjardins 4/1

Worthy Insights / Opinion Pieces / Advice

FT – Columbus shows Trump how to thrive in the new world order – Rana Foroohar 4/1

  • “The city’s success shows why industrial policy, not tariffs, is the winning strategy.”

Project Syndicate – Will China Really Supplant US Economic Hegemony? – Kenneth Rogoff 4/2

Seeking Alpha – Tesla Model 3 Costs More To Charge Than A Gasoline Car – Anton Wahlman 4/1

WSJ – U.S. Fiscal Future Won’t Be Like Its Carefree Past – Greg Ip 3/28

Energy

FT – Wary shale investors warn against drilling at all costs – Ed Crooks 4/1

Finance

WSJ – Daily Shot: FRED – Federal Reserve Total Assets (Balance Sheet) 4/2

WSJ – Daily Shot: FRED – Commercial and Industrial Loans 4/2

Cryptocurrency / ICOs

WSJ – Daily Shot: Investing.com – Bitcoin v. Bitcoin Cash 4/2

Entertainment

WSJ – Dominant Box Office Run of ‘Black Panther’ Underscores a Growing Hollywood Problem – Ben Fritz 4/1

  • “This year’s box office so far has been a story of one completely dominant movie, ‘Black Panther,’ highlighting a potentially troubling trend for Hollywood in which ticket sales are increasingly concentrated among just a few ultra-successful pictures.”
  • “With $650.7 million and counting, ‘Black Panther’ is on track to become the third highest grossing movie ever in the U.S. and Canada. It accounted for 23% of all ticket sales in the first three months of the year, ending Saturday, according to comScore. That is the second-highest percentage ever behind only ‘Titanic,’ which took 25% in the winter of 1998.”
  • “’Black Panther’ is an extreme example of the trend that Hollywood has been struggling with for some years. In 2015, 2016 and 2017, the top 10 movies raked in between 32% and 35% of total box office, comScore said. Previously, that figure never exceeded 30%. So far this year, it is 58%.

Health / Medicine

Axios – Opioid prescription rates dropping across the country – Stef W. Kight and Lazaro Gamio 3/31

Canada

Bloomberg – Toronto’s Tale of Two Markets Is Hot Condos and Cold Houses – Natalie Wong 3/29

  • “After a decade as one of the world’s hottest housing markets, Toronto is moving in two directions. Transactions have certainly cooled since May as the government introduced new rules to tame runaway prices. But the impact has been largely on big, expensive detached homes, with sales plunging 41% in February from a year earlier, and prices dropping 12% since hitting a record last year. Condo prices, in contrast, soared about 20% since last February.”
  • “The deviation is largely as a result of mortgage regulations that went into effect on Jan. 1 as well as rising interest rates. The rule requires that even people with a 20% down payment, who don’t require mortgage insurance, prove they can make payments at least 2% points above the rates under which they go into contract.”
  • “That’s pushing buyers out of the detached segment and right into the condo market.”

China

FT – China’s P2P lenders brace for renewed regulatory crackdown – Emily Feng 4/1

  • “Thousands of online lenders could be facing extinction as China rolls out a new licensing framework, amid complaints about a lack of clarity on how the regime will work.”
  • “P2P platforms match borrowers with investors online. China’s P2P lending industry recorded transactions valued at $445bn in 2017, according to Online Lending Club, a data company.”
  • “Many P2P lenders, including one of the largest, Hongling Capital, were weeded out in crackdowns in 2016 and 2017 after agencies reporting to China’s central bank began closing fraudulent platforms and those selling high-interest loans.”
  • “Of more than 6,000 online lending platforms launched over the past several years, fewer than 2,000 were still in operation at the end of February, according to Online Lending House, a data provider — a sign of how regulation, competition and fraud have thinned the industry’s ranks.”
  • “As part of the regulatory overhaul, P2P lenders are barred from guaranteeing principal or interest on loans they facilitate; are limited to loans of no more than Rmb1m ($159,000) for individual borrowers and Rmb5m for companies; and must use custodian banks.”

FT – China revives long-stalled property tax to combat housing bubble – Gabriel Wildau and Yizhen Jia 3/31

  • “After years of delay and quiet opposition from vested interests, China will push ahead with a property tax that is viewed as crucial to taming the country’s housing bubble.”
  • “House prices in major Chinese cities are among the highest in the world in terms of price-income ratios, with speculative demand from Chinese investors — who see few other good places to park their savings — as a major driver. The result is an estimated 50m empty homes, according to a broad survey by researchers from Southwestern University of Finance and Economics in Chengdu.”
  • “A landmark blueprint for economic reform that the Communist party leadership approved five years ago included a pledge to push ahead with a property tax. But a subsequent slowdown in the economy, including a housing-market downturn in 2014-15, prompted authorities to shelve those plans.” 
  • “Quiet opposition from wealthy urbanites, including government officials who own multiple homes, also hindered progress.” 
  • “’When will the tax actually come out is difficult to say, but at least the intention has strengthened,’ said Chen Shen, head of property research at China Securities in Shanghai. ‘Two years ago everyone was discussing whether it would ever happen, but now it’s very clear that it will’.” 

Japan

WSJ – Daily Shot: @NickTimiraos – Change in Home Prices – Japan & U.S. 4/2

Other Interesting Links

WSJ – Dockless Bike Share Floods into U.S. Cities, With Rides and Clutter – Eliot Brown 3/26

 

March 26, 2018

Markets / Economy

FT – IMF warns of mounting debt crisis risk in poor countries – Kate Allen 3/22

  • “The world’s poorest countries are increasing their borrowing at a worrying pace and face the mounting risk of debt crises, the IMF has warned.”
  • “Since 2013, the median ratio of public debt to gross domestic product in low-income countries has risen 13 percentage points to hit 47% in 2017, according to new research by the IMF.”
  • “The research found that 40% of low-income developing countries face ‘significant debt-related challenges’, up from 21% just five years ago.”
  • “Fiscal deficits rose between 2013 and 2017 in nearly three-quarters of the nations the IMF studied, and in nearly half of those cases the deficit increase came despite a decline in investment, an indication that the debt was not being put to productive use economically. “
  • “As a result it is becoming increasingly likely that more poor countries will face a debt crisis, the IMF staff paper said.” 

Real Estate

Bloomberg – The Manhattan Luxury-Home Market Is Screaming: I’m Overpriced! – Oshrat Carmiel 3/23

  • “Homes prices at $4 million or more that went into contract in the first 12 weeks of the year had their asking prices cut by an average of 10%, the most in data going back to 2012, according to Olshan Realty Inc.”

FT – China looks to Reits to ease housing woes – Gabriel Wildau and Yizhen Jia 3/22

  • “Xi’s drive to encourage building of residences for rent opens market worth a potential $2tn.”
  • “Since 2014, 30 quasi-REITs worth Rmb65bn have been issued on the Shanghai and Shenzhen stock exchanges and through private placements, according to the China REITs Alliance, an industry group.” 
  • “But these products trade over the counter, so liquidity is poor. Most are also not accessible to retail investors. Some also differ from true REITs because their yields derive partly from capital appreciation, not only rental income.”
  • “The value of Chinese REITs could reach Rmb4 to Rmb12tn if their share of gross domestic product or of total real estate assets were comparable to the same ratios in the US, according to estimates last year by researchers at Peking university’s Guanghua School of Management.”
  • “But experts say a more active REITs market in China requires action from the tax bureau. The boom in Chinese housing and land prices over the past decade means that absent new policy, older property sold off to a REIT would be subject to large capital gains taxes.”
  • High property prices also mean that rental yields are low — often less than 3% for commercial real estate and under 1% for residential. Without tax benefits, dividend yields on REITs would be too low to attract investor interest.” 

Environment / Science

BBC News – Plastic patch in Pacific Ocean growing rapidly, study shows – Helen Briggs 3/22

  • “A collection of plastic afloat in the Pacific Ocean is growing rapidly, according to a new scientific estimate.”
  • “Predictions suggest a build-up of about 80,000 tons of plastic in the ‘Great Pacific Garbage Patch’ between California and Hawaii.”
  • “This figure is up to sixteen times higher than previously reported, say international researchers.”
  • “One trawl in the center of the patch had the highest concentration of plastic ever recorded.”

 

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 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 7, 2018

Perspective

Bloomberg Businessweek – Asian Cities Dominate Expat Salary Rankings – Andy Hoffman and Zoe Schneeweiss 2/26

US Census Bureau – Stats for Stories – Academy Awards 3/4

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Anbang Out With a Whimper – Nisha Gopalan 2/22

FT – How the Middle East is sowing seeds of a second Arab spring – Andrew England and Heba Saleh 3/4

NYT – State Dept. Was Granted $120 Million to Fight Russian Meddling. It Has Spent $0. – Gardiner Harris 3/4

Markets / Economy

Bloomberg Businessweek – KFC’s Big Screw-Up Left Restaurants Without Chicken – Christopher Jasper and Eric Pfanner 2/28

WSJ – Big Banks Enter Branch Warfare – Aaron Back 3/5

  • “Banks are entering a new period of growth, bolstered by healthy capital levels, less burdensome regulation and higher interest rates. Branch openings will remain a key competitive tactic for banks. As for Wells Fargo, with the Federal Reserve capping its growth and new sales controversies still emerging, it looks like a sitting duck to rivals.”

Real Estate

WSJ – Daily Shot: BofAML – Genworth Mortgage Insurance: US First-time homebuyers 3/6

WSJ – Daily Shot: BofAML – NAR: US Home Affordability and Mortgage Payment Components 3/6

WSJ – Daily Shot: John Burns RE Consulting – Home Price Relative Values 3/6

Finance

WSJ – Daily Shot: John Burns RE Consulting – Changes in American Debt 3/6

Environment / Science

Economist – The known unknowns of plastic pollution 3/3

Economist – Only 7% of the world’s plastic is recycled – Daily Chart 3/6

WEF – The Arctic is sending us a powerful message about climate change. It’s time for us to listen – Jennifer Francis, Jeremy Wilkinson, and Gail Whiteman 3/5

Automotive

Bloomberg Businessweek – The Car of the Future Will Sell Your Data – Gabrielle Coppola and David Welch 2/20

  • “As smarter vehicles become troves of personal information, get ready for coupon offers at the next stoplight.”

China

WSJ – China Spends More on Domestic Security as Xi’s Powers Grow – Josh Chin 3/6

South America

Bloomberg – Venezuelans, Go Home: Xenophobia Haunts Refugees – Ezra Fieser and Matthew Bristow 3/5