Tag: Debt

January 10, 2018

Perspective

Howmuch.net – Credit Scores & Household Incomes in America – Raul 1/8

Pew – Most dads say they spend too little time with their children; about a quarter live apart from them – Gretchen Livingston 1/8

WSJ – Daily Shot: Deutsche Bank – Road Quality by US State 2016 1/9

Worthy Insights / Opinion Pieces / Advice

A Teachable Moment – Will Wealth Inequality Slay the Bull Market? – Anthony Isola 1/8

  • “Revolution is the ultimate Black Swan.”
  • “Thirty percent of U.S. households have zero or negative non-home wealth. One thing is certain; this is not the location of the ‘cash on the sidelines’.” 
  • “Unfortunately, wealth inequality is a feature, not a bug, of democracy and capitalism.”
  • “’According to research from the New York University economist Edward Wolff, the top 10 percent of American households now own 84% of all stocks. That’s up from 77% ownership in 2001′.”
  • “90% of America barely participated in the massive bull market the last several years.”
  • “’The majority of middle-class wealth is tied to homes, as more than 60% of investible assets are in a primary residence. Stock ownership makes up less than 10% of total assets for the middle class’.” 
  • But do you have the fortitude to suffer the draw-downs…
  • “The men who can manage men manage the men who can manage only things, and the men who can manage money manage all.” – Will and Ariel Durant

Bloomberg View – Stock Investors Will Benefit Most From Corporate Tax Overhaul – Ben Carlson 1/5

NYT – Amway Made China a Billion-Dollar Market. Now It Faces a Crackdown. – Ryan McMorrow and Steven Lee Myers 1/8

WSJ – China’s Strategy to Psych Out the West Is Paying Off – Andrew Browne 1/9

  • “The China scholar Perry Link once called the party ‘the anaconda in the chandelier’.”
  • “Just by hovering, it induces self-censorship and subtle behavioral changes.”
  • “‘Normally the great snake doesn’t move. It doesn’t have to,’ Mr. Perry wrote in a 2002 essay in the New York Review of Books.”
  • “‘Its constant silent message is ‘You yourself decide.””

Markets / Economy

WSJ – The Price Gap That’s Squeezing the Auto Market – Stephen Wilmot 1/8

WSJ – Daily Shot: US Consumer Credit Net Change 1/8

  • “Consumer credit balances saw the greatest monthly increase in 16 years.”

WSJ – Daily Shot: FRED – Total US Consumer Credit Relative to Disposable Personal Income 1/8

WSJ – Daily Shot: Piper Jaffray – US Consumers living beyond their means 1/8

WSJ – Daily Shot: FRED – Total Consumer Loans by Credit Unions 1/8

WSJ – Daily Shot: FRED – Total US Student Loan Balance 1/8

WSJ – Daily Shot: US Financial Accounts Q3 2017 1/8

WSJ – Daily Shot: Piper Jaffray – Consumer Confidence & Savings Rate Gap 1/8

  • “There is a widening gap between consumer sentiment and the savings rate. In the past, this divergence was a precursor to the end of the economic cycle.”

WSJ – Daily Shot: Market Ethos – US Output Gap 1/8

  • “The disappearance of the output gap also indicates that we are in the late stage of the cycle.”

Economist – Daily Chart: The fastest-growing and shrinking economies in 2018 1/5

Finance

WSJ – Daily Shot: Bitcoin 1/8

  • “Bitcoin appears to be range-bound, unable to breach the $17k level again.”

WSJ – Daily Shot: Investing.com – Ripple 1/8

  • “Ripple took a massive hit on Monday before recovering partially.”

Environment / Science

NYT – These Billion-Dollar Natural Disasters Set a U.S. Record in 2017 – Kendra Pierre-Louis 1/8

South America

FT – Smuggled cattle and petrol join exodus from Venezuela – Gideon Long 1/8

  • “Criminal gangs seize opportunity posed by hyperinflation and a plunging bolivar.”

WSJ – Daily Shot: Bloomberg – Venezuela 10yr USD Bond Price 1/8

January 5, 2018

Happy New Year!

I hope that you had a safe and enjoyable transition and I wish you a prosperous 2018.

While I wasn’t planning a post today, I don’t want to deluge you with too much content first thing Monday, so here is a mid-day post.

Cheers,

Duff

Perspective

NYT – Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg – Nathaniel Popper 1/4

  • “The virtual currency boom has gotten so heated that it is throwing the list of the world’s richest people into disarray.”
  • “Consider what has happened to the founders of an upstart virtual currency known as Ripple, which has seen its value skyrocket in recent weeks.”
  • At one point on Thursday, Chris Larsen, a Ripple co-founder who is also the largest holder of Ripple tokens, was worth more than $59 billion, according to figures from Forbes. That would have briefly vaulted Mr. Larsen ahead of Facebook chief executive Mark Zuckerberg into fifth place on the Forbes list of the world’s richest people.”
  • “Other top Ripple holders would have also zoomed up that list as the value of their tokens soared more than 100% during the last week — and more than 30,000% in the last year. The boom has turned Ripple into the second largest virtual currency, within striking distance of the original behemoth, Bitcoin.”
  • “While most of these currencies were worth nearly nothing a year ago, many are now responsible for creating billionaires — albeit with rapidly fluctuating fortunes. If this is a tulip fever, the fever has spread to chrysanthemums and poppies.”
  • “Ripple, whose tokens are known as XRP, is far from the only virtual currency being fueled by the hysteria. In 2017, there were 29 tokens — including Einsteinium and Byteball — that rose more than Bitcoin’s remarkable 1,600% jump, according to OnChainFx, a data provider.”
  • “Nearly 40 virtual currencies are worth more than $1 billion — when all the outstanding tokens are counted at their current value — despite many of them not having been used in any sort of transaction other than speculative trading.”
  • For perspective, “… all the outstanding Ripple tokens were worth $140 billion on Thursday, while all Bitcoin were worth $250 billion.”
  • “Mr. Larsen was Ripple’s chief executive from 2012 until he stepped down last year to become the company’s executive chairman. During his tenure, Ripple focused on helping banks use its software to shift money between different foreign currencies, something that most banks currently do through a cumbersome process involving separate accounts in every country where they operate.”
  • “Ripple has said it has signed up more than 100 banks to use the company’s technology, including American Express and Banco Santander.”
  • “But banks do not need to use Ripple tokens for Ripple’s software to transfer dollars, euros and yen. That point appears to be lost on many small time investors who are buying Ripple tokens.”
  • “Most of the buying and selling of Ripple tokens is happening in South Korea, according to data providers that track virtual currency exchanges, where ordinary investors have thrown money at a wide array of virtual currencies.”
  • “…Even virtual currency analysts who believe in Ripple’s software have said there is a big difference between Ripple the company being successful, and Ripple the token gaining enough traction to justify current prices.”
  • “’An impossibly long list of things already needs to go right for XRP to become a reserve currency for banks,’ Ryan Selkis, a virtual currency analyst, wrote in a post on Thursday.”
  • “But, Mr. Selkis added, that doesn’t mean Ripple’s price won’t keep ascending. Why? ‘Because this is crypto, and everyone in the industry is now slinging crack crypto cocaine to retail addicts,’ he wrote.”

WSJ – The Cashless Society Has Arrived – Only It’s in China – Alyssa Abkowitz 1/4

  • “Though the U.S. saw $112 billion of mobile payments in 2016, by a Forrester Research estimate, such payments in China totaled $9 trillion, according to iResearch Consulting Group, a Chinese firm.”
  • “For Alibaba and Tencent, the payoff isn’t just the transaction fees they make from merchants, typically 0.6%. It’s also the consumer data collected, which can transform their apps into marketing platforms for an expanding array of services, from bike sharing to travel.”
  • “Conditions in China made it ripe for this innovation. Credit cards never caught on in a big way. Discretionary spending wasn’t an option for most people until recent years, and there has long been a cultural aversion to debt in China. On top of that, the government made it tough for Visa Inc. and Mastercard Inc. to set up shop.”
  • “The rise of tech companies as financial powers has dealt a blow to traditional banks. China’s state-owned banks lost nearly $23 billion in fees in 2015 they might have collected from card fees, according to a November 2016 report from EY (formerly Ernst & Young) and Singapore’s DBS Bank. The report projected the annual fee loss could widen to $60 billion by 2020.”
  • “The larger problem for banks might be that Alibaba and Tencent often know more about their customers than they do. If a Beijing car dealer uses a bank debit card for a business trip to Shanghai, the bank knows what airline he or she flew, as well as the hotel and restaurants patronized. ‘But if the ‘customer interface’ is happening elsewhere, the bank has zero visibility over transactions,’ said James Lloyd, Asia-Pacific FinTech Leader at EY. ‘That’s not a good situation to find yourself in’.”
  • “Tencent and Alibaba say they have no plans to push their payment platforms to U.S. consumers. Many Americans don’t see the need for mobile payments, since their plastic cards and cash are welcomed and some merchants still accept checks.”
  • “’Any new way of paying has to prove itself to be incrementally better than any other options you have,’ said James Wester of research firm IDC Financial Insights. In the U.S., ‘plastic is convenient, widely accepted and understood by the customer’.”

Visual Capitalist – China’s Digital Wallets Offer a Glimpse at the Future of Payments – Nick Routley 12/30

NYT – Three Months After Maria, Roughly Half of Puerto Ricans Still Without Power – Frances Robles and Jess Bidgood 12/29

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – When Things Don’t Make Any Sense – Ben Carlson 1/4

  • Some perspective on the cryptocurrency boom.

FT – Fed risks massive hangover as it begins ‘great unwind’ – Michael Hassenstab (CIO – Templeton Global Macro) 12/27

  • “Only a strong economy can stop damage in Treasuries spreading to equities and credit.”

FT View – A healthy economy is a risk for stock markets 12/29

  • “If the big US tax cut that brought 2017 to a conclusion has its intended consequences, then capital expenditures will start to rise in the next year, as will wages. With consumer confidence high, that should lead to higher consumption. It would also lead to monetary policy at the tightest end of what currently seems probable. The European Central Bank and Bank of Japan would indeed desist from their asset purchases, the Federal Reserve would reduce its balance sheet, and liquidity would flow out of world markets. The Fed could be expected to raise rates four times.”
  • “This would be a consummation devoutly to be wished, vindicating both the belated fiscal stimulus that the US has just administered and the desperate muddle-through strategy that preceded it. But significantly higher rates and lower liquidity would be bad news for equity markets, which look historically expensive. High valuations can be justified while rates are historically low. Future earnings can be discounted at a low rate and the cash yields on stocks look attractive. But if all goes according to the US Republican party’s plan, interest rates will need to be significantly higher a year from now, and valuations will come under pressure.”
  • “The alternative scenario is that the tax cut achieves no meaningful stimulus, and is merely put towards higher corporate dividends and expensive mergers and acquisitions. The synchronized global economic recovery of the past year peters out, as other brief post-crisis recoveries have done. In this situation, the Fed tightens far less aggressively, other central banks blink and keep buying assets, and bond yields stay where they are, or even fall. On this gloomy prognosis, the legacy of the tax cut would be no more than greater inequality. But equity markets would enjoy much the same benign conditions they have had this year.”
  • “Amid Wall Street’s bullish prognoses for 2018, an inverse relationship is becoming clear. Those who are more optimistic for the economy tend to be more pessimistic about the prospects for risk assets. Some say they are so bullish they are bearish.”
  • “This is realistic. If monetary stimulus really does give way to a successful fiscal stimulus, investors should expect much higher volatility, and probably outright price falls, from equity markets.”

The Guardian – The sugar conspiracy – Ian Leslie 4/7/16

WSJ – China’s Bid to Dominate Oil Pricing Will Fail – Nathaniel Taplin 12/26

Markets / Economy

Bloomberg Quint – World’s Wealthiest Gain $1 Trillion in ’17 on Market Exuberance – Tom Metcalf and Jack Witzig 12/28

FT – Uber’s rise triggers financial crisis at taxi lenders – Alistair Gray 12/30

  • “Credit unions at risk of failure as loan losses mount.”

Real Estate

WSJ – Daily Shot: UBS Estimates – US Retail Store Closures 2017 – 1/5

FT – Brookfield moves into private rented sector for fresh profit – Aime Williams 12/29

  • “Fund manager to keep 1m sq ft space in Canary Wharf Group towers.”
  • “Brian Kingston, chief executive of Brookfield Property Partners, said property prices in London had ‘always been high’, but were now ‘very high’.”
  • “’You would always have people starting out renting, but they would graduate to owning,’ said Mr Kingston. ‘But in New York and London, you could be a fairly well-compensated individual and you could still not afford to buy’.”

Tech

FT – Travis Kalanick to sell part of his Uber stake for first time – Tim Bradshaw 1/4

  • “Deal will earn ousted chief over $1bn in sale to SoftBank as part of their tender offer.”

Entertainment

FT – China’s Hollywood romance turns sour – Matthew Garrahan and Charles Clover 12/26

China

NYT – China’s New Lenders Collect Invasive Data and Offer Billions. Beijing Is Worried. – Alexandra Stevenson and Cao Li 12/25

FT – China share pledges soar as founders seek new borrowing tools – Gabriel Wildau and Yizhen Jia 12/26

  • “Chinese stockholders are ramping up borrowing against shares, driving revenue for securities houses but creating risk of a chain reaction in the event of a sharp market downturn.”
  • “Shareholders in 317 Shanghai and Shenzhen-listed companies had pledged shares worth at least 40% of those companies by December 18, up from 224 companies on the same date a year earlier, according to Wind Info.”
  • “Share-pledging is especially common for small and mid-cap companies, where a single shareholder often owns a large stake. Controlling shareholders sometimes reinvest the proceeds into company projects or buy additional company shares on the secondary market to boost the share price.”
  • “In September China’s two main bourses published draft rules that would tighten regulation on share pledging. One provision caps the value of loans secured by shares at 60% of the market value of the pledged shares, ensuring a buffer that will protect the lender in case a share price falls.”
  • At least the mainland exchanges require that such pledges be disclosed, unlike the Hong Kong exchange, where other shareholders can be surprised.

Reuters – China’s lenders fret over debts lurking in shadow banking system – Engen Tham, Matthew Miller and David Lague 12/28

December 21, 2017

Perspective

Visual Capitalist – Sellbrite: Breaking Down How Amazon Makes Money – Jeff Desjardins 12/19

NYT – How the Winklevoss Twins Found Vindication in a Bitcoin Fortune – Nathaniel Popper 12/19

WSJ – Daily Shot: BMO & statista – US States with Highest rates of debt collection 12/19

Worthy Insights / Opinion Pieces / Advice

FT – The long and short of H&M’s travails – Richard Milne 12/19

  • “Concerns rise that family-controlled Swedish retailer needs radical change.”

ZeroHedge – China Systemic Risk: Liquidity Problem Surfaces at HNA Group Less Than Two Weeks After Company’s Denial 12/18

Markets / Economy

Bloomberg Businessweek – Fees Rise for Underfunded Pensions – Katherine Chiglinsky and Brandon Kochkodin 12/14

  • “The largest pension plans held by S&P 500 companies face a $348 billion funding gap. As a result, they’re paying higher annual fees to the U.S. Pension Benefit Guaranty Corp., the government agency that backstops plans. ‘There’s increased awareness that an underfunded plan imposes risk on employees, it imposes risk on shareholders, and it’s getting more expensive,’ says Olivia Mitchell, a professor at the University of Pennsylvania’s Wharton School and executive director of the Pension Research Council.”
  • “Only about two dozen companies in the S&P 500 have overfunded pensions. Nine of them are banks.”
  • “Offloading risk isn’t on the table for every company. Insurers don’t take on obligations from underfunded plans…”

CNN Money – SEC suspends trading of red-hot bitcoin stock – Paul R. La Monica 12/19

WSJ – Cryptocurrency Exchange Collapses, Files for Bankruptcy After Second Hack – Eun-Young Jeong and Steven Russolillo 12/19

  • “Yaipan, which operates South Korea’s Youbit, said latest security breach caused it to lose 17% of its total assets.”

Bloomberg – South Korean Crypto Exchange Files for Bankruptcy After Hack – Todd White and Kyungjin Yoo 12/19

  • “Korea has emerged as a sort of ground zero for the global crypto-mania. So many Koreans have embraced bitcoin that the prime minister recently warned that cryptocurrencies might corrupt the nation’s youth. The craze has spread so far that, in Korea, bitcoin is trading at a premium over prevailing international rates.”

Real Estate

Yahoo Finance – The hottest housing market of 2017 – Amanda Fung 12/20

  • Spoiler alert: it’s Seattle.

Tech

ARS Technica – Currency-mining Android malware is so aggressive it can physically harm phones – Dan Goodin 12/19

Britain

FT – Help! My house has been hijacked – Lucy Warwick-Ching 12/19

  • “Fake tenants adopt a property owner’s identity and sell the property.”

Europe

WSJ – EU Triggers ‘Nuclear Option’ in Fight With Poland – Valentina Pop 12/20

Other Interesting Links

NYT – ‘Porch Pirates’ Steal Holiday Packages as They Pile Up at Homes – Nick Wingfield 12/19

December 13, 2017

Perspective

Bloomberg Businessweek – The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market – Olga Kharif 12/8

  • “Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3% of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40% of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90%. Many large owners are part of the teams running these projects.”

WEF – This is every US state’s biggest trading partner – Andy Kiersz 11/16

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – What Happens When the Government Uses Facebook as a Weapon? – Lauren Etter 12/7

  • “Internet.org was just one part of a decade-long campaign of global expansion for Facebook. In countries such as the Philippines, the efforts have been so successful that the company is able to tout to its advertisers that its network is, for many people, the only version of the internet they know. Repressive governments originally treated Facebook, and all social media, with suspicion—they saw how it could serve as a locus for dissidents, as it had in the Arab Spring in 2011. But authoritarian regimes are now embracing social media, shaping the platforms into a tool to wage war against a wide range of opponents—opposition parties, human-rights activists, minority populations, journalists.”
  • Maria Ressa, co-founder of the country’s leading online news site “recalled that she started as a journalist in the Philippines in 1986, the year of the People Power Revolution, an uprising that ultimately led to the departure of Ferdinand Marcos and the move from authoritarian rule to democracy. Now she’s worried that the pendulum is swinging back and that Facebook is hastening the trend. ‘They haven’t done anything to deal with the fundamental problem, which is they’re allowing lies to be treated the same way as truth and spreading it,’ she says. ‘Either they’re negligent or they’re complicit in state-sponsored hate’.”

Bloomberg Businessweek – Millions Are Hounded for Debt They Don’t Owe. One Victim Fought Back, With a Vengeance – Zeke Faux 12/6

  • “The concept is centuries old: Inmates of a New York debtors’ prison joked about it as early as 1800, in a newspaper they published called Forlorn Hope. But systematic schemes to collect on fake debts started only about five years ago. It begins when someone scoops up troves of personal information that are available cheaply online—old loan applications, long-expired obligations, data from hacked accounts—and reformats it to look like a list of debts. Then they make deals with unscrupulous collectors who will demand repayment of the fictitious bills. Their targets are often poor and likely to already be getting confusing calls about other loans. The harassment usually doesn’t work, but some marks are convinced that because the collectors know so much, the debt must be real.”
  • Americans are currently late on more than $600 billion in bills, according to Federal Reserve research, and almost one person in 10 has a debt in collectors’ hands. The agencies recoup what they can and sell the rest down-market, so that iffier and iffier debt is bought by shadier and shadier individuals. Deception is common. Scammers often sell the same portfolios of debt, called ‘paper,’ to several collection agencies at once, so a legitimate IOU gains illegitimate clones. Some inflate balances, a practice known as ‘overbiffing.’ Others create ‘redo’ lists—people who’ve settled their debt, but will be harassed again anyway. These rosters are actually more valuable, because the targets have proved willing to part with money over the phone. And then there are those who invent debts out of whole cloth.”

The Guardian – Former Facebook executive: social media is ripping society apart – Julia Carrie Wong 12/11

Markets / Economy

WSJ – Daily Shot: Bloomberg – Prime-age male labor-force participation 12/11

Real Estate

FT – New Zealand looks to ban foreigners from buying houses – Jamie Smyth 12/9

FT – Unibail-Rodamco sees 100m annual synergies in $24.7bn Westfield takeover – Jamie Smyth 12/11

FT – Hong Kong investors go defensive in $3bn property auction – Henny Sender 12/11

Finance

WSJ – Daily Shot: Bitcoin 12/11

  • “Bitcoin’s volatility is on the rise as the cryptocurrency hit new highs.”

Health / Medicine

NYT – A Nasty, Nafta-Related Surprise: Mexico’s Soaring Obesity – Andrew Jacobs and Matt Richtel 12/11

  • “Mexico began lifting tariffs and allowing more foreign investment in the 1980s, a transition to free trade given an exclamation point in 1994, when Mexico, the United States and Canada enacted the North American Free Trade Agreement. Opponents in Mexico warned that the country would lose its cultural and economic independence.”
  • “But few critics predicted it would transform the Mexican diet and food ecosystem to increasingly mirror those of the United States. In 1980, 7% of Mexicans were obese, a figure that tripled to 20.3% by 2016, according to the Institute for Health Metrics and Evaluation at the University of Washington. Diabetes is now Mexico’s top killer, claiming 80,000 lives a year, the World Health Organization has reported.”

China

WSJ – China’s Clean Energy Future Has a $1.2 Trillion Problem – Nathaniel Taplin 12/11

  • “China’s enormous coal-power debt overhang limits its ability to shift rapidly to cleaner fuels.”

Europe

WEF – Which countries feel they’ve benefitted from the EU? – Niall McCarthy 11/6

Other Interesting Links

Bloomberg Businessweek – This Crowdfunding Site Runs on Hate – Adam Popescu 12/4

December 11, 2017

If you were only to read one thing…

A Wealth of Common Sense: How Does Something Like Bitcoin Happen? – Ben Carlson 12/7

  • The best synopsis of the cryptocurrency I’ve read to date.
  • A taste: “Anyone who tells you they know where this thing is heading, how to value it, where it ends, etc. is nuts. No one has a clue. This is everything you’ve ever read about the markets all wrapped into one — FOMO, supply & demand, human nature, behavioral biases, volatility, booms, busts, uncertainty about the future, etc.”

Perspective

WEF – California is the world’s sixth largest economy. Now is the perfect time for it to step up – Rodrigo Tavares 12/7

WP – Americans are drowning in debt. Here’s where they have it the worst. – Christopher Ingraham 12/8

Worthy Insights / Opinion Pieces / Advice

Be Inspired: The Power of Morning Routine – Jim Kwik 11/26 (YouTube Video)

Bloomberg – HNA Warning Signs Keep Sprouting Up Over Mounting Debt Costs – Judy Chen and Dong Lyu 12/6

Farnam Street – Maker vs. Manager: How Your Schedule Can Make or Break You – Shane Parrish 12/9

Fortune – Inside Elliott Management: How Paul Singer’s Hedge Fund Always Wins – Jen Wieczner 12/7

FT – Self-driving finance could turn into a runaway train – Gillian Tett 12/7

  • “…at a recent financial technology conference at Michigan Law School, regulators and academics estimated that computers are now generating around 50-70% of trading in equity markets, 60% of futures and more than 50% of treasuries. Increasingly, machine learning and artificial intelligence are being added to the mix, to analyze data, trade securities and offer investment advice.”
  • “What we are seeing, in other words, is the rise of self-driving investment vehicles, matching the auto world. But while the sight of driverless cars on the roads has sparked public debate and scrutiny, that has not occurred with self-driving finance.”

FT – $400m for a Leonardo da Vinci. Has the art world gone mad? – Jan Dalley 12/7

Investment News – Stripped of fat commissions, nontraded REIT sales tank – Bruce Kelly 12/7

  • “The Department of Labor’s fiduciary standard, and new securities industry account statement rules for greater clarity in the prices of products, have forced nontraded real estate investment trusts to slice their commissions. Since then, sales of the product have collapsed.”
  • “No fat commissions on REITs means poor sales by brokers.”
  • “REIT managers and broker-dealer executives are likely reluctant to make the connection, at least publicly. But there is no denying that brokers’ appetite for the product disappeared almost overnight once upfront commissions were cut from 7% on an A share to 3% for a T share.”
  • “When REIT sales were booming a few years ago, the product’s pitch was simple: real estate kicks off an income stream of 6% to 7% annually, real estate is an asset class that is not correlated to the stock market, and with interest rates at record lows, investors needed the yield.”
  • “Those conditions haven’t changed dramatically, but nontraded REIT sales have tanked regardless.”
  • InvestmentNewsreported last month that Robert A. Stanger & Co. expects nontraded REIT sales this year to reach just $4.4 billion, about $100 million less than last year and the lowest levels since 2002.”
  • “If the ‘income, diversify and interest rate’ pitch was accurate back in 2012 and 2013, when REIT sales were booming, why isn’t it working today? There is little change in the narrative.”
  • “Interest rates have risen only marginally, and with the stock market roaring, wouldn’t it make sense for a broker to peel off some clients’ gains and invest in commercial real estate, a hard asset not correlated to stocks?”
  • “With brokers no longer getting juicy commissions for REIT sales, they simply don’t appear interested in selling the product.”
  • “Most brokers who still sell nontraded REITs no longer earn the eye-popping 7% commission, the standard rate paid to brokers who sold the product back in 2013, when REIT sales hit their all-time high and brokers sold $19.6 billion of the product.”
  • “The Financial Industry Regulatory Authority Inc. recently put into place a new rule, known as 15-02, that makes pricing of illiquid securities like nontraded REITs more transparent to investors. In the past, client account statements showed illiquid securities like REITs at the value they were bought by the client and did not subtract commissions, which were high.”
  • “‘Now that REITs are getting priced on statements, with Finra 15-02, advisers are having to consider these positions from a total return standpoint, not just income,’ Mr. Rooney said. ‘They are re-evaluating the client’s perception of the product.'”

Markets / Economy

WSJ – Daily Shot: FRED – US Treasury Securities Held by the Federal Reserve 12/8

  • “And so it begins… Quantitative tightening is finally here.”

Real Estate

Business Insider – Here’s where the future of retail is headed in 2018 – Stephanie Pandolph 12/5

  • Industry to top $5.5tn by 2020.

FT – Norway’s oil fund makes first Asian property investment – Richard Milne 12/7

  • “Sovereign wealth fun takes stake in 5 buildings in Tokyo and plans more deals.”

Finance

WSJ – Daily Shot: WP – Bitcoin Rising 12/7

  • “Bitcoin blasts past $15k, $16k, $17k in less than 24 hours.”

WSJ – Bitcoin’s Wildest Rise Yet: 40% in 40 Hours – Paul Vigna and Steven Russolillo 12/7

  • “Bitcoin mania reached new highs Thursday as the price of the digital currency jumped about 40% in 40 hours, smashing through five separate $1,000-barriers and surging past $16,000.”

NYT – Bitcoin’s Price Has Soared. What Comes Next? – Nathaniel Popper 12/8

China

WSJ – Jailed for a Text: China’s Censors Are Spying on Mobile Chat Groups – Eva Dou 12/8

  • If only George Orwell could see the tools at Big Brother’s disposal now.

FT – International investors chase the red dragon – Chris Flood 12/9

November 21, 2017

Perspective

WSJ – Daily Shot: Moody’s – Higher Ed & Not For Profit Debt Rating Changes 11/19

  • “College debt continues to get downgraded. Some suggest that this could become a severe problem if the economy slows (colleges are no longer able to raise tuition at the rate they used to). Will we see colleges consolidating or even going under?”

WSJ – Google Has Picked an Answer for You – Too Bad It’s Often Wrong – Jack Nicas 11/16

Worthy Insights / Opinion Pieces / Advice

FT – Can journalists ever regain Americans’ trust? – Andrew Edgecliffe-Johnson 11/16

  • “According to Gallup, Americans’ trust in mass media peaked at 72% in 1976, the year All The President’s Men hit cinemas. By last year, that figure had plunged to 32% — just 14% among Republicans.”
  • “America is not unique in this, but in few countries are views of journalists more defined by party allegiance and in no other has a president so weaponized that mistrust.”
  • “A Politico/Morning Consult poll in October found 46% of Americans believe news organizations fabricate Trump stories, and more than three quarters of Republicans think we are making it up. Far more Americans now define ‘fake news’ as sloppy or biased reporting than White House spin.” 
  • “Knowing the consequences my colleagues and I would face if we fabricated a story, I find such polls baffling and alarming. It is tempting to quibble with the methodology or even to despair of those who don’t understand how we work. But it feels more important to examine how we became so vulnerable to the ‘fake news’ charge.” 

FT – US trade problems begin at home not abroad – Rana Foroohar 11/19

FT – China’s growth miracle has run out of steam – Michael Pettis 11/19

  • “Beijing must reveal the true level of GDP and wasted investment.”

FT – Lex in depth: Hammond’s housebuilding budget fix will not repair market – Jonathan Eley 11/19

  • “What if a lack of homes is not the real problem.”

WSJ – How to Spot a Market Top – Ken Brown 11/19

  • “The issue isn’t whether the market will crash, it is how much money investors will make, or lose, in the coming years. With cash sloshing around the global financial system, prices can go higher, but investors who buy at those prices shouldn’t expect their returns to match those earned in the past few years.”

Finance

WSJ – Daily Shot: Bitcoin 11/19

Britain

FT – Left behind: can anyone save the towns the economy forgot? – Sarah O’Connor 11/15

  • “Soaring antidepressant usage, falling life expectancy: Blackpool embodies much of what is going wrong on the fringes of Britain.”

China

Bloomberg Businessweek – Patient Deaths Show Darker Side of Modern Chinese Medicine – Hui Li 11/2

November 13, 2017

Perspective

FT – How Germany got its gold back – Claire Jones 11/10

  • “It was kept abroad to escape the Soviet Union. But then Germany decided to bring it home.”

NYT – After Weinstein: A List of Men Accused of Sexual Misconduct and the Fallout for Each – Sarah Almukhtar, Larry Buchanan, and Michael Gold 11/12

Worthy Insights / Opinion Pieces / Advice

FT – Little room for error as investors chase leveraged loan boom – Ben McLannahan 11/9

  • “Riskier ‘covenant-lite’ loans now account for about 70% of new leveraged loans, up from 30% before the Lehman Brothers crisis. Protections that were standard back then have now vanished altogether.”
  • “’As long as investors keep buying these loans, there’s nothing really to put the brakes on,’ says Derek Gluckman, a vice-president at Moody’s. ‘Things just keep getting worse.’”
  • “’Loan terms never got this bad in ‘07,’ says Mr. Cohen (founder and CEO of Covenant Review). ‘The contracts … are the worst they’ve ever been. Period, full stop.’”

Markets / Economy

WSJ – A Starbucks Coffee Costs What? – Chelsey Dulaney and Ira Iosebashvili 11/9

  • You’ve heard of the Big Mac Index, this is the Starbucks proxy.

WSJ – Daily Shot: FRED – Financial Stress Index 11/10

FT – Catastrophes wipe $35bn from insurers’ profits – Oliver Ralph and Alistair Gray 11/12

  • “A string of natural disasters from Hurricane Harvey in the US to earthquakes in Mexico have left the insurance industry facing one of its most expensive years on record.”
  • “The catastrophes have wiped more than $35bn from insurers’ profits, according to a Financial Times analysis of third-quarter results that have laid bare the scale of the damage. Berkshire Hathaway, run by billionaire Warren Buffett, and AIG were among the hardest hit in the US, while in Europe Swiss Re and Munich Re face large claims. Lloyd’s, the London-based insurance market, expects to pay out a total of $4.5bn.” 
  • “Insurers say the final cost is likely to be larger and push up premiums. Commercial insurance and reinsurance have suffered from years of falling rates, as excess capacity and a lack of big claims combined to drive prices down.”
  • “’The losses have been extensive across reinsurance, commercial insurance and personal lines,’ said Kurt Karl, chief economist at Swiss Re. ‘There were $20bn of natural catastrophe losses across the industry in the first half. Hurricanes Harvey, Irma and Maria, combined with the earthquakes in Mexico, will create about $95bn of insured losses.’”
  • “Added together, the industry is facing more than $110bn of insured losses from natural catastrophes. Only 2005 — when Hurricane Katrina hit the US — and 2011 — when there were earthquakes in Japan and New Zealand — were more costly.”
  • “The $35bn figure, taken from company reports, does not include losses from unlisted companies, or from insurance-linked securities in which investors’ capital is used to directly back insurance risk.” 

Tech

Statista – Attack of the Clones – Felix Richter 11/9

Environment / Science

WP – The Earth’s ozone hole is shrinking and is the smallest it has been since 1988 – Marwa Eltagouri 11/3

  • “This year, the ozone hole is the smallest it has been since 1985. NASA and NOAA scientists have been studying the ozone layer and monitoring its hole over Antarctica for years. This year, the ozone hole is the smallest it has been since 1985.”
  • “Here’s a rare piece of good news about the environment: The giant hole in the Earth’s protective ozone layer is shrinking and has shriveled to its smallest peak since 1988, NASA scientists said.”
  • “The largest the hole became this year was about 7.6 million square miles wide, about two and a half times the size of the United States, in September. But it was still 1.3 million square miles smaller than last year, scientists said, and has shrunk more since September.”
  • “Warmer-than-usual weather conditions in the stratosphere are to thank for the shrinkage since 2016, as the warmer air helped fend off chemicals like chlorine and bromine that eat away at the ozone layer, scientists said. But the hole’s overall reduction can be traced to global efforts since the mid-1980s to ban the emission of ozone-depleting chemicals.”
  • “The ozone hole was largest in 2000, when it was 11.5 million square miles wide, according to NASA.”

Health / Medicine

WP – Aaron Hernandez suffered from most severe CTE ever found in a person his age – Adam Kilgore 11/9

India

FT – Smog-cloaked Delhi looks with envy at Beijing’s cleaner air – Kiran Stacey, Emily Feng, and Archie Zhang 11/10

  • “As Indian politicians squabble over who is to blame for the thick smog that has descended over the north of the country this week, citizens have been looking enviously over the border at China, where particulate levels have been falling for years.”
  • “Many in India believe Beijing has been better able to combat its air pollution problem because it does not get bogged down in political infighting. They blame India’s problems on the country’s raucous but inefficient democracy.”
  • This week, pollution in Delhi literally went off the charts, hitting the top reading of 999 on the US embassy’s air quality index. Anything over a reading of 100 is considered unhealthy.” 
  • By Wednesday afternoon, Delhi saw airborne levels of tiny damaging particles known as PM2.5 hit 833 parts per million, while in Beijing the level was 76. Anything over 50 is considered unhealthy, and anything over 300 hazardous.
  • “The difference between the two cities reflects a broader divergence over recent years, during which Delhi has taken over from Beijing as the world’s most polluted megacity.” 
  • “’Indian politicians have this very weird idea that we will do something about pollution when we are developed, but we won’t develop unless they invest in public health,’ says TK Joshi, director of the Centre for Occupational and Environmental Health in Delhi.”
  • “He adds: ‘Beijing has tackled this problem much better, but then it is much easier to control things in an authoritarian regime than in a democracy, especially one like India, where 50% of the people are so badly educated about the problem.’”

Middle East

WSJ – Saudi Crackdown Targets Up to $800 Billion in Assets – Margherita Stancati and Summer Said 11/7

  • “The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter.”
  • “The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of ‘persons of interest’ and said the move is ‘in response to the Attorney General’s request pending the legal cases against them.’”
  • “Much of that money is abroad, which will complicate efforts to reclaim it, people familiar with the matter said. But even a portion of that amount could help Saudi Arabia’s finances. A prolonged period of low oil prices forced the government to borrow money on the international bond market and to draw extensively from the country’s foreign reserves, which dropped from $730 billion at their peak in 2014 to $487.6 billion in August, the latest available government data.”

FT – Greed and intrigue grip Saudi Arabia – Simeon Kerr 11/10