Tag: Education

June 22, 2018

Perspective

WSJ – Growth in Retiring Baby Boomers Strains U.S. Entitlement Programs – Janet Adamy and Paul Overberg 6/21

Worthy Insights / Opinion Pieces / Advice

FT – The world’s progress brings new challenges – Martin Wolf 5/29

  • “Preserving peaceful relations in an era of rapid shifts in relative power is tough.”

Project Syndicate – Are We in a Corporate Debt Bubble? – Susan Lund 6/19

WSJ – Japan’s Yen: A Currency for All Seasons? – Richard Barley 6/21

WSJ – Why Home Prices Have Nowhere to Go But Up – Justin Lahart 6/20

  • “Low supply is keeping sales down despite higher rates and builders are in no rush to boost production.”

Markets / Economy

WSJ – Behemoths Have Dominated the Market Before, but Tech Is Different – James Mackintosh 6/14

Real Estate

FT – Blackstone remains global king of property funds – Chris Flood 6/2

WSJ – Daily Shot: Black Knight – US Foreclosure Starts 6/21

Finance

FT – The mystery trader who roiled Wall Street – Miles Johnson and Robert Smith 6/3

  • “Former Blackstone executive used complex credit derivatives to become a feared hedge fund manager but left behind a trail of recriminations.”

Education

NYT – The Numbers That Explain Why Teachers Are in Revolt – Robert Gebeloff 6/4

NYT – Top Colleges Are Cheaper Than You Think (Unless You’re Rich) – David Leonhardt 6/5

India

FT – Payments crunch pushes Indian power producers to brink of default – Simon Mundy and Kiran Stacey 6/20

  • “Possibility of writedowns hangs over banks still struggling from bad-loan crisis.”
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May 15, 2018

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

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

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

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

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

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

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

Markets / Economy

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

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

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

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

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

Real Estate

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

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

Energy

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

Finance

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

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

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

Cryptocurrency / ICOs

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

Agriculture

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

Construction

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

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

Education

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

South America

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

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

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

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

Other Interesting Links

Cannabis Benchmarks – Weekly Report 5-11-18

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

October 31, 2017

Happy Halloween!

If you were only to read one thing…

FT – Billionaire boom is a sign that rates need to rise – Merryn Somerset Webb 10/27

  • “It has been a good week for billionaires. The UBS/PwC Billionaires Report 2017 claimed the combined wealth of the world’s 1,542 billionaires rose by almost a fifth last year to $6tn: more than double the UK’s gross domestic product.”
  • “It has not been a particularly good week for governments. They have to deal with the fallout from rising wealth inequality, and that fallout is getting increasingly nasty. This kind of report does not do much for central bankers, either: the rise of the billionaires is as much about financial globalization as it is easy money, but every time a report lands on their desks, central bankers must stop to think about the economic, social and political havoc their policies have caused over the past 10 years.”
  • “The desperate attempt to avoid deflation via quantitative easing and record-low interest rates has had horrible side effects, and this observation is hardly controversial. The rich have become much richer; corporate wealth has become more concentrated; soaring house prices have created intergenerational strife; low yields have made all but the super-rich paranoid that they will be entirely unable to finance their futures. Most markets have ended up overvalued (this will really matter one day), while pension fund deficits and a constant sense of crisis have discouraged capital investment — and have possibly held down wages in the UK.”
  • “Set a target, get a distortion. This is standard stuff. But the fact that extreme monetary policy has been going on for so long means that central bankers do not just have macro problems to feel bad about. They are also effectively responsible for the increasingly dodgy micro policies governments have felt forced to put in place in an attempt to alleviate the nasty side effects of very low interest rates, over which they have no control.”
  • “A bit of good news is that this monetary experimentation has been about inflation targeting (everyone, for no obvious reason, is after 2%). And if you set a target and pursue it at the cost of everything else you usually get to it. So inflation is back. In the US, where expectations of inflation are low, September numbers showed average hourly earnings jumping 2.9%, the biggest rise in a decade.”
  • “The Monetary Policy Committee could dig out a list of excuses not to raise rates despite the last GDP growth numbers being rather better than expected. Raising rates will do harm at some point (asset prices will fall and the indebted will suffer). But not reversing is beginning to look like it could do more harm. Unless, of course, you are a billionaire.”

Perspective

Axios – ‘Degree inflation’ may be pushing workers out of the middle class – Christopher Matthews 10/25

  • “A growing number of U.S. employers are requiring bachelor’s degrees for jobs that have long been performed by workers without them, contributing to a rise in income inequality, according to a report published today.”
  • “Why it matters: The report, by Harvard Business School, Accenture, and Grads of Life estimates that 6 million American jobs are at risk of ‘degree inflation,’ a result of employers increasingly using a bachelor’s degree ‘as a proxy for a candidate’s range and depth of skills.'”

  • “‘This phenomenon is a major driver of income inequality,’ Joe Fuller of Harvard Business School tells Axios. ‘We’re hollowing out middle-class jobs and driving everyone to the extremes of the income spectrum.'”
  • “The number of U.S. job openings has reached an all-time high, but more than 13 million Americans — the vast majority with less than a four-year college degree — are unemployed or working part-time when they want full-time positions.”
  • “The costs of the shift are ‘profound’ for the two-thirds of American adults who lack a college degree, Fuller says.”
    • “90% of companies use screening software to weed out applicants lacking the education requirement. That means, even with the right experience, an applicant won’t even be considered by a human.”
    • “‘This puts significant pressure for people with certain aspirations to get a degree even when it’s not directly relevant to their career.'”
    • “When the 6-year graduation rate for 4-year schools in America is just 59%, that means Americans lacking the aptitude to excel in college take on debt for degrees they’ll never receive.”
    • “Hispanics and African Americans are disproportionately hurt by the phenomenon, because they have lower college graduation rates than the population at large.”

Visual Capitalist – Commuters and Computers: Mapping U.S. Megaregions – Nick Routley 10/28

  • “We tend to think of cities as individual economic units, but as they expand outward and bleed together, defining them simply by official jurisdictions and borders becomes difficult. After all, many of the imaginary lines divvying up the country are remnants of decisions from centuries ago – and other county and state lines exist for more counterintuitive reasons such as gerrymandering.”
  • “By ignoring borders and looking purely at commuter data, geographer Garrett Nelson and urban analyst Alasdair Rae looked to map the relationship between population centers in their paper, An Economic Geography of the United States: From Commutes to Mega-regions.”

  • “The study used network partitioning software to link together 4 million commutes between census tracts. This gives us a very granular look at the ‘gravitational pull’ of America’s population centers, and helps us better understand the economic links that bind a region together.”
  • “By combining visual and mathematical approaches, and some creative place-naming, the researchers created a map that they hope reflects America’s true economic geography.”

WSJ – Daily Shot: State College Graduation Rates – Highest & Lowest 10/29

Worthy Insights / Opinion Pieces / Advice

The Atlantic – Harvey Weinstein and the Economics of Consent – Brit Marling 10/23

  • “The blunt power of the gatekeeper is the ability to enforce not just artistic, but also financial, exile.”

Bloomberg View – When Wall Street Looks Pricey, the Rest of the U.S. Thrives – Conor Sen

  • “When stocks are expensive, those with capital are more inclined to expand a business or start a new one.”
  • We’ll see…

Bloomberg View – Faster Growth Begins With a Land Tax in U.S. Cities – Noah Smith 10/24

  • This would cause a major political fight. The odds are that a land value tax would initially be passed onto tenants, until of course there is enough push back.
  • Granted, this goes against the goal of having property in core markets with the ability to benefit from economic rents…

Business Insider – Jeff Flake isn’t brave, he’s helpless – and he doesn’t understand why – Josh Barro 10/24

FT – Investors pass the buck on governance – Rana Foroohar 10/29

  • “Proxy advisers incentivize the wrong company behavior by creating rigid checklists.”

NYT – A Long-Delayed Reckoning of the Cost of Silence on Abuse – Jim Rutenberg 10/22

NYT – Forget Washington. Facebook’s Problems Abroad Are Far More Disturbing. – Kevin Roose 10/29

Real Estate

WSJ – Daily Shot: Moody’s – US Single Family Home Sales 10/29

  • “Moody’s is projecting that many more homes will be sold next year as homeowners finally make their move.”

Others are not as optimistic.

WSJ – Daily Shot: John Burns RE Consulting – US Existing Single Family Home Sales 10/29

FT  – Sand castles on Jersey Shore: property boom defies US flood risk – Gregory Meyer 10/29

  • “Sandy exposed the perils of shoreline living, as the climate warms and sea levels creep higher. In the US alone it left 162 dead, laid waste to 650,000 homes and cost $65bn — the second most expensive weather disaster in history.”
  • “On New Jersey’s fragile barrier islands, the response to Sandy has not been to withdraw inland but rather to build bigger. ‘They did not rebuild bungalows. They knocked those down and built McMansions,’ says Walter LaCicero, Lavallette’s mayor.”
  • That’s one way to do eminent domain.
  • “Improbably, the disaster created a once-in-a-lifetime buying opportunity. Older families unable to pay for repairs sold properties.”
  • “House prices in the worst-hit communities cratered after Sandy. In Lavallette, the median sale price of $532,500 in October 2012 had more than halved to $225,000 by February 2013, according to New Jersey Realtors. This past summer, median prices reached $660,000 and were higher by the beach.”
  • “The Federal Emergency Management Agency has paid out more than $25bn in New Jersey and New York alone, reimbursing towns for the cost of removing debris, repairing roads and bridges, and renting emergency equipment. Gaps in local tax revenue lost when assessed property values collapsed were filled with federal money. The agency granted $1.4bn to 179,000 people and households in the region to cover their costs of shelter and rebuilding.”
  • “Critics say federal policy rewards local officials for hazardous coastal development. ‘If someone told you you’re going to get a new beach every time the oceans washed yours away, you’re probably going to feel more secure allowing high-priced homes to be built there,’ says Rob Moore, senior policy analyst at the NRDC (National Resources Defense Council).”
  • “The aid has strings attached: all new and rebuilt houses must now rest on stilts at least one foot above the estimated crest of a once-in-a-100-year flood.”
  • “Relatively cheap schemes such as hazard zoning and land purchases have typically received about 5% of disaster relief funds, according to a report by the National Research Council, an expert body. Washington is also picking up a bigger tab from coastal disasters, covering 75% of the damages from Sandy compared with 6% for Hurricane Diane in 1955.”
  • “‘Developers, builders and state and local governments reap the rewards of coastal development but do not bear equivalent risk, because the federal government has borne an increasing share of the costs of coastal disasters,’ the council’s study said.”
  • “The prospect of higher and more frequent floods driven by climate change comes as the Trump administration unravels US commitments to rein in carbon emissions, including pulling out of the Paris agreement and abandoning an initiative to factor climate risks into infrastructure spending. As Irma bore down on Florida last month Scott Pruitt, administrator of the Environmental Protection Agency, said the time to discuss the causes and effects of the storm was ‘not now’.”

WSJ – Stuck in Place, U.S. Homeowners Hunker Down as Housing Supply Stays Tight – Laura Kusisto and Christina Rexrode 10/29

FT – Boston prices its graduates out of starter homes – Hugo Cox 10/24

Energy

WSJ – Your Next Home Could Run on Batteries – Christopher Mims 10/15

  • “The rise of these home batteries isn’t just a product of our collective obsession with new tech. Their adoption is being driven by a powerful need, says Ravi Manghani, of GTM Research: renewable energy.”

  • “Without batteries and other means of energy storage, the ability of utility companies to deliver power could eventually be threatened.”
  • “Solar power, especially, tends to generate electricity only at certain times—and it’s rarely in sync with a home’s needs. In some states, such as California and Arizona, there’s an overabundance of solar power in the middle of the day during cool times of the year, then a sudden crash in the evenings, when people get home and energy use spikes.”
  • “For utilities, it’s a headache. The price of electricity on interstate markets can go negative at certain times, forcing them to dump excess electricity or pay others to take it.”
  • “’This is not a long-term theoretical issue that might happen—this is now,’ says Marc Romito, director of customer technology at Arizona Public Service, the state’s largest electric utility.”

Finance

FT – Wall St banks ride boom in leveraged loans as volumes soar – Joe Rennison and Eric Platt 10/29

  • “Wall Street banks are having a strong year underwriting and selling riskier loans, with the volume so far this year already surpassing the whole of 2016.”
  • “The overall industry has underwritten leveraged loans worth $1.251tn, and earlier this month eclipsed its previous full-year record set in 2013, according to Dealogic. Volumes are up 38% from a year earlier and more than 60% of the deals have been companies refinancing existing loans.”
  • “The relative dearth of new loans, as opposed to refinancings, has also given borrowers the upper hand. As well as lower rates, borrowers are also able to cut the number of investor protections, called covenants, written into the loans.”
  • “’Net new supply is relatively low so demand is exceeding supply,’ said Christina Padgett, an analyst at Moody’s. ‘Investors are going to get squeezed on price and the issuers are going to take advantage so they have really flexible credit agreements.’”

FT – Why credit is the Hotel California of markets – Michael Mackenzie 10/24

  • “The endless debate over valuation metrics that have accompanied the storming bull run in stocks misses a much bigger point about investing in 2017. Thanks to the outsized role of central banks, it is the credit markets that run the show. If you want clues on when the bull run in equities is entering the red zone, keep your eyes on the corporate debt market.”
  • “Before central banks’ quantitative easing policies engineered the current cycle of financial suppression, credit markets had already established their bona fides as an early warning system for investors. When equities peaked in October 2007, the credit market had already begun turning lower.”
  • “A decade on, the risk premium, or additional yield, offered by corporate bonds over that of a US government bond is at its narrowest since 2007. That provides very little protection for buyers, with even a modest drop in bond prices erasing the meagre fixed income being paid by borrowers.”
  • The big lesson digested by investors since the financial crisis is that you need to own yield, and the money gushing into bond funds remains immense. About $241bn flowed into US high grade bond funds and exchange traded funds in the first nine months of the year, according to Bank of America Merrill Lynch estimates. That’s a whopping 34% higher than 2012’s full-year record of $180bn, the bank says.”
  • “This high tide of money means companies can keep selling debt — running at a record $1.4tn pace this year in the US — at very low interest rates. The resulting higher leverage in the system helps explain why the equity market keeps updating the record books with alacrity.”
  • “’As long as people are tripping over themselves to buy bonds, it remains a very favorable environment for risk taking,’ says Jack Ablin, chief investor officer at BMO Wealth Management.”
  • “True, a number of strategists concede the current credit cycle is looking a little long in the tooth, but they also think the water can remain warm and soapy for a while yet.”
  • “The Federal Reserve may have begun trimming its balance sheet, but other central banks are still buying and the scale of their largesse keeps US credit spreads tight as international money hunts yield. Not until next March will collective bond buying from the Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England peak at around $15.3tn, according to BofA.”
  • “But kick the tires of the credit machine a little harder and there are nascent signs of trouble.”
  • “The quality of covenants — designed to protect bondholders from a borrower defaulting — loiters in the gutter, reflecting a market awash with far too much money.”
  • “In another troubling sign, companies have raised just $215bn from the US high yield market in 2017, the second-slowest figure since 2011, as flows of money into the sector have been choppy this year. While this suggests that some money managers are doing their credit homework, the recent bankruptcy filing of Toys R Us sends a grim tiding about market complacency.”
  • “Bonds in the highly indebted retailer were trading near par and then plunged below 30 cents on the dollar.”
  • “So where does this leave investors? Sure the music is still playing and will probably do so for some time yet. But watch the yield curve. The Fed’s autopilot sequence of rate increases has sharply narrowed the difference between yields on short and long dated Treasuries. This reflects expectations that inflation will stay low — bad for debtors — as well as concern that the economy’s growth prospects are limited.”
  • “If there’s further curve flattening after a tax reform deal, that will send a gloomy signal about the economy, finally push credit spreads wider and should worry the most ardent of equity bulls.”
  • “As we know from 2008, there is no exit once the credit market turns. Credit is the Hotel California of markets — and equity investors usually discover they are trapped in the basement.”

China

FT – Inside China’s secret ‘magic weapon’ for worldwide influence – James Kynge, Lucy Hornby, and Jamil Anderlini 10/25

  • “Xi is quietly ramping up a Communist party department to expand Beijing’s soft power.”

India

FT – India agrees $32bn plan to recapitalize state banks – Simon Mundy 10/24

  • “India’s government has announced a $32bn recapitalization plan for the country’s ailing state-controlled banks in a bid to tackle a festering economic problem.”
  • “The finance ministry promised on Tuesday to take a ‘massive step . . . to support credit growth and job creation’ by shoring up bank balance sheets strained by soaring corporate defaults over the past three years.”
  • “The state banks have been faced with weak credit demand this year and have lost market share to private sector rivals.”
  • “Concerns about the condition of the state-owned banks, which account for more than two-thirds of sector assets, have been mounting along with estimates of their bad loans.”
  • “This is because of a spurt in loans to companies in sectors such as steel and infrastructure over much of the past decade, many of which subsequently turned sour. Gross non-performing loans at the state-controlled banks rose to 13.7% of their assets at the end of June, up from 5.4% in March 2015.”
  • “Beyond the recapitalization, the government promised to push the banks to step up their lending to small and medium-sized enterprises, including by partnering with financial technology companies.”
  • “This sector was badly hit by India’s demonetization last year, which triggered a shortage of bank notes that rocked companies long used to dealing entirely in cash.”

Japan

WSJ – Japan to Young Investors: Loosen Up – Suryatapa Bhattacharya 10/29

Puerto Rico

Rhodium Group – America’s Biggest Blackout – Trevor Houser and Peter Marsters 10/26

Russia

NYT – In Russia, a Bribery Case Lifts the Veil on Kremlin Intrigue – Andrew Kramer 10/21

South America

WSJ – Daily Shot: Latinobarometro – Does Your Government Favor the Elite 10/29

  • It would be hard to argue it doesn’t.

September 5, 2017

Perspective

Howmuch.net – The Working Class Can (Not) Afford the American Dream – Raul 8/31

Howmuch.net – The Rising Costs of Sending Your Kids to a Private School – Raul 8/20

Howmuch.net – Status of US State Economies – Raul 8/15

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Why Private Equity Has $963 Billion in Dry Powder – Melissa Mittelman 8/31

  • “Investors give private equity managers their capital with the expectation that they’ll make it grow. But today these managers are sitting on a record $963.3 billion of dry powder, as they call money that they’ve raised but have yet to invest. The size of that pile, and the fact that it keeps rising, is making everyone antsy. A little dry powder is great if managers are holding out for better deals. But a lot can make for overly itchy trigger fingers, or can start to make investors wonder if there are cheaper ways to do nothing with cash.”

LA Times – Yes, ExxonMobil misled the public – Naomi Oreskes and Geoffrey Supran 9/1

NYT – To Understand Rising Inequality, Consider the Janitors at Two Top Companies, Then and Now – Neil Irwin 9/3

Bloomberg View – The Flaws in India’s Growth Model Are Becoming Clear – Mihir Sharma 9/3

  • “India has a way of confounding expectations. Analysts agreed that, months after Prime Minister Narendra Modi’s ill-fated decision to withdraw 86 percent of currency from circulation overnight, growth would bounce back. Economists polled by Bloomberg expected growth in the April to June quarter to be 6.5%; other estimates were even higher. So when the government’s official statisticians released the real number last week — 5.7% over the equivalent quarter of the previous year — there was general surprise, even shock.”
  • “India’s economy has been growing less and less healthy for awhile. GDP growth has now declined steadily for six straight quarters. This is a slowdown caused by factors deeper than the cash ban or any other temporary phenomenon. Something is broken in the Indian government’s policy mix.”
  • “…Government spending and low oil prices have deceptively boosted the growth numbers, masking the true state of the economy. In fact, if public spending is excluded, growth in the past quarter barely topped 4%. Export growth is terrible and industrial growth is the lowest in five years. And the government will struggle to keep investing at these levels; it started spending big unusually early in India’s financial year, which starts in April, and has already run through 93% of its budgeted fiscal deficit.”
  • “…Effective reform — and political will — is precisely what’s needed now. The government’s first task should be to clean up bad debts far quicker than it has so far — even if powerful people, including company owners, lose money in the process. Second: The government needs to stop chasing after foreign capital to replace shy domestic capital, if it means that the rupee stays high and exports struggle. And third: Officials must quickly fix those parts of the GST that are putting small companies and exporters out of business.”

Finance

Visual Capitalist – The Unparalleled Explosion in Cryptocurrencies – Jeff Desjardins 9/1

FT – University start-ups aim for the Facebook formula – Hugo Greenhalgh 8/31

  • Rather than watch their students leave University to pursue a worthwhile business start-up, Universities are getting in on the venture capital business seeking to support and nurture the talent within.

FT – Credit cards: dealing with delinquency – Lex 8/31

Tech

Fortune – Everything You Needed to Know About Overvalued Unicorns in One Chart – Anne VanderMey 8/24

Fortune – 5 Ways Businesses Are Already Using Blockchains – Jeff John Roberts – 8/21

Health / Medicine

NYT – The First Count of Fentanyl Deaths in 2016: Up 540% in Three Years – Josh Katz 9/2

  • “The first governmental account of nationwide drug deaths in 2016 shows overdose deaths growing even faster than previously thought.”
  • “Drug overdoses killed roughly 64,000 people in the United States last year, according to the first governmental account of nationwide drug deaths to cover all of 2016. It’s a staggering rise of more than 22% over the 52,404 drug deaths recorded the previous year.”
  • “Drug overdoses are expected to remain the leading cause of death for Americans under 50, as synthetic opioids — primarily fentanyl and its analogues — continue to push the death count higher. Drug deaths involving fentanyl more than doubled from 2015 to 2016, accompanied by an upturn in deaths involving cocaine and methamphetamines. Together they add up to an epidemic of drug overdoses that is killing people at a faster rate than the H.I.V. epidemic at its peak.
  • “It’s an epidemic hitting different parts of the country in different ways. People are accustomed to thinking of the opioid crisis as a rural white problem, with accounts of Appalachian despair and the plight of New England heroin addicts. But fentanyls are changing the equation: The death rate in Maryland last year outpaced that in both Kentucky and Maine.”

Canada

WSJ – The Underappreciated Risks to Canadian Banks – Aaron Back 8/31

  • “Americans looking north to Canada see a housing market that echoes their own before the financial crisis. While there are substantial differences that make Canadian lenders more resilient, investors still should be on guard.”
  • “Canadian housing prices have been rapidly rising for years, prompting local governments in frothy areas to take draconian measures such as a 15% tax on foreign buyers.”
  • “It isn’t all foreign cash—Canadian debt levels also have soared. Last year its households had debt equivalent to 176% of disposable income, according to the OECD. That compares to 112% in the U.S., down from a 2007 peak of 144%.”
  • “Canada’s banks, however, are showing no signs of stress. The country’s six biggest lenders that dominate this highly concentrated market have just reported solid quarterly earnings. Mortgage delinquency rates are remarkably low, at only around 0.2%.”
  • “It helps that most Canadian mortgages are ‘full recourse’ loans, making it much harder for borrowers to default and walk away. Around half of the mortgages written by the big six banks are also insured, directly or indirectly, by the Canadian government.”
  • “Nonetheless, the risks are substantial. Unlike in the U.S., where 30-year fixed rates are the norm, the standard Canadian mortgage rate resets every five years. In July, Canada’s central bank raised rates for the first time in seven years. Analysts expect more hikes, especially after Canada reported strong 4.5% annualized gross domestic product growth for the second quarter. That will make regular debt payments even more burdensome for Canadian households.”

China

FT – Beijing’s uneasy deals with overseas car groups under strain – Charles Clover 8/31

  • “A spate of new foreign joint ventures in China’s car industry has revived debate about an often criticized three-decade-old policy of trading market access for technology.”
  • “This week, the Renault-Nissan alliance became the latest car group to sign a joint venture to produce electric vehicles with longtime partner Dongfeng Motor Corporation, based in Wuhan, following an announcement by Ford in August that it plans to partner with little-known Zotye Auto to make EVs.” 
  • “The Renault-Nissan Dongfeng partnership is significant because it goes further than other JVs and calls for the groups to share a common technological platform. It is not clear whether other overseas car groups will follow this course because of issues over trust on the sharing of technology.”
  • “The new EV joint ventures are part of a Chinese effort to master the technology for electric vehicles — and rely on a tried and tested model of working with the global car industry since the 1980s. In a nutshell, joint ventures are the only way for foreign groups to access the world’s largest and most lucrative market. China gives the overseas companies the right to sell cars in exchange for their technology, management expertise and a share of their profits.” 
  • “’China’s central planners said ‘how can we basically force global automakers to participate and bring their very best electric vehicle technology to China?’’ says Michael Dunne, president of Dunne Automotive, a Hong Kong-based car consultancy.” 
  • “Since 1984, starting with Jeeps, foreign carmakers have been allowed to produce cars in China — but only in concert with a local partner holding at least 50 per cent of the venture. In practice, this is almost always one of six anointed state companies.”
  • “The results of the three-decade-old policy have been mixed. Rather than transforming Chinese car companies into technology giants, the joint venture companies have arguably made Chinese carmakers complacent, according to Chinese policymakers. He Guangyang, a former minister of industry, controversially described the JVs as ‘like opium’ in an interview five years ago.”
  • “Bart Demandt of carsalesbase.com says this is a legacy of the joint ventures. ‘The state-owned companies, especially those which have 50/50 joint ventures with foreign automakers, have had little incentive to invest in their domestic brands as the profits have been pouring in from producing import-brand cars for their partners.’” 
  • “However, the Chinese government is still relying on this model, and recently set its sights on the nascent battery powered car industry. Last year it included EVs as one of 10 sectors that it wants to be internationally competitive by 2025 as part of a new industrial policy ‘Made in China 2025’.” 
  • “Foreign carmakers are wary of the new requirements and have pressed on China to delay the EV quotas by at least a year. But they have few alternatives. ‘The global automakers say ‘wow, this really has teeth, because if we want to grow in this market we don’t have a choice. There is no work around’,’ says Mr Dunne.” 
  • “The second prong of the policy is to pressure foreign carmakers to ‘localize’ their electric vehicle technology, meaning in practice to share it with their joint venture partners.” 
  • “Bill Russo, head of Gao Feng Advisory in Shanghai, calls this ‘a real game-changer for the multinational carmakers’.” 
  • “’They must comply with a new set of regulations for both component localization and credits for EV sales in order to be in the game. As carmakers will be required to pay fines if they are not selling EVs, they will be required to add EV production in order to sustain their existing business in China.’” 
  • “This has created fears that their proprietary technology could be stolen. Over the past two decades, foreign makers of everything from high-speed trains to fighter planes have licensed the technology to local Chinese partners only to find a few years later that their partner is a major international competitor.” 

FT – Anbang sells stakes in Chinese megabanks amid troubles – Gabriel Wildau 8/31

  • “Anbang Insurance Group, the Chinese conglomerate that captured global attention with splashy foreign acquisitions, sold stakes worth as much as $1bn in the country’s largest banks this year, as the company struggles with a sudden drop in premiums.”
  • “In May, China’s insurance regulator banned Anbang’s life insurance unit from selling policies for three months and accused the group of ‘wreaking havoc’ on the market with aggressive pricing.” 
  • “Anbang had relied on sales of high-yield investment products to fund foreign private-equity acquisitions as well as stakes in Chinese listed companies. Chinese investors flocked to so-called ‘universal insurance’, which combined high yields with short maturities and bore little resemblance to traditional insurance.” 
  • “But an industry-wide crackdown on universal insurance has caused premiums from such products to drop more than half in the first half of the year, according to data from the China Insurance Regulatory Commission. At Anbang, such premiums fell 98%, due in part to the CIRC ban.” 
  • “The sales of shares in China’s ‘big four’ state-owned commercial banks appear to suggest that, with cash inflows from product sales drying up, Anbang sold assets to meet payouts on maturing products. Anbang said the share sales did not reflect cash flow problems.” 
  • “Last month, a Chinese credit-rating agency downgraded Anbang’s Life Insurance, saying that ‘income has fallen substantially [and] the availability of debt financing is reduced’. The agency also noted that Anbang Life posted a net loss in the first half.” 
  • “Anbang dropped off the lists of the top 10 shareholders in three of China’s big four state-owned commercial banks in the second quarter, according to the banks’ financial statements released this week. In the fourth bank, Anbang also reduced holdings but remained in the top 10.” 
  • “Anbang is also not the only insurer to sell stakes in big banks in the second quarter. Ping An Insurance, the country’s largest insurer by assets, sold down in ICBC.”

NYT – As Bike-Sharing Brings Out Bad Manners, China Asks, What’s Wrong With Us? – Javier Hernandez 9/2

  • “There are now more than 16 million shared bicycles on the road in China’s traffic-clogged cities, thanks to a fierce battle for market share among 70-plus companies backed by a total of more than $1 billion in financing. These start-ups have reshaped the urban landscape, putting bikes equipped with GPS and digital locks on almost every street corner in a way that Silicon Valley can only dream of.”
  • “But their popularity has been accompanied by a wave of misbehavior. Because the start-ups do not use fixed docking stations, riders abandon bicycles haphazardly along streets and public squares, snarling traffic and cluttering sidewalks. Thieves have taken them by the tens of thousands, for personal use or selling them for parts. Angry and mischievous vandals hang them in trees, bury them in construction sites and throw them into lakes and rivers.”
  • “Such problems have raised questions about the sustainability of China’s bike-share boom. But the debacle has also led many Chinese to look for deeper explanations and ask if bike-sharing has revealed essential flaws in the national character, prompting a far-reaching debate about social decay and the decline of decorum and morality in the country.”
  • “Some say abuse of the bicycles reflects an every-man-for-himself mentality in China that has its roots in the extreme poverty of the last century. Others are bothered by what they see as a lack of concern for strangers and public resources. The transgressions have been chronicled in the local news media with a tone of disbelief, in part because Chinese generally see themselves as a law-abiding society and crime rates are relatively low.”
  • “In many cities, the supply of bicycles far exceeds demand, bringing chaos to sidewalks, bus stops and intersections and prompting grumbles that excessive competitiveness — seen as a national trait — is spoiling a good thing. In Shanghai, where officials have struggled to maintain order, there is now one shared bike for every 16 people, according to government statistics.
  • “In some places, the authorities have confiscated tens of thousands of bicycles and imposed parking restrictions. News outlets have documented the waste with astounding images of mountains of candy-colored bicycles, each hue representing a different bike-share company.”

FT – China’s migrant workers feel pinch as Beijing pulls back on wages – Tom Hancock 9/3

Europe

Bloomberg Businessweek – Germany’s Housing Market is Red Hot, But Don’t Call It a Bubble – Stephan Kahl and Andrew Blackman 8/21

  • A different way of engaging with rising real estate values…

South America

Bloomberg Businessweek – Brazil’s Lost Decade: The Invisible Costs of an Epic Recession – David Biller and Gabriel Shinohara 8/21

  • “Once the emerging-market darling of Wall Street, Brazil’s economy went from growth of 7.5% in 2010 to shrink by virtually the same amount in the last two years. Unemployment has risen to a near-record high, GDP per capita fell to 2009 levels and the budget deficit is hovering around 10% of GDP. There is no sign the Latin American giant will recover its investment-grade status any time soon.”
  • Fortunately…

FT – Brazil ends worst recession as GDP expands for second straight quarter – Joe Leahy 9/1

  • “Brazil’s gross domestic product expanded for the second consecutive quarter in the three months ended June, officially ending the worst recession in Latin America’s largest economy.”
  • “GDP grew just 0.2% in the quarter compared to the first three months of the year and 0.3% compared with the same quarter a year earlier, the state statistics agency, IBGE, said.”

July 26, 2017

If you were to read only one thing…

NYT – 110 N.F.L Brains 7/25

  • “Dr. Ann McKee, a neuropathologist, has examined the brains of 202 deceased football players. A broad survey of her findings was published on Tuesday in The Journal of the American Medical Association.”
  • “Of the 202 players, 111 of them played in the N.F.L. – and 110 of those were found to have chronic traumatic encephalopathy, or C.T.E., the degenerative disease believed to be caused by repeated blows to the head.”
  • “The brains here are from players who died as young as 23 and as old as 89. And they are from every position on the field – quarterbacks, running backs and linebackers, and even a place-kicker and a punter.”

Perspective

WSJ – Daily Shot: Forbes – Large Tech Firm Lobby Budgets 7/25

WSJ – U.S. Military’s Space in Trump Tower Costs $130,000 a month – Paul Sonne 7/19

  • It’s a 3,475 sq. ft. space, so $37.41 per sq. ft. per month. Mind you, “the most expensive Trump Tower listing recently was a 3,725 sq. ft., three-bedroom apartment on the 62nd floor. It was listed in the spring of 2016 for $50,000 a month unfurnished and $60,000 a month furnished, according to Streeteasy.com.”
  • Basically, Trump’s neighbor recognizes they have a captive audience.

FT – Google and Facebook lay foundations for modern-day company towns – George Hammond 7/19

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Fund Managers and Strategists Think the Bull Market Is Ending Next Year – Adam Haigh, Natasha Doff, Dani Burger and Julie Verhage 7/25

  • “We have had a liquidity-fueled bull market. If that is taken away, there is a pressure point.” – Remi Olu-Pitan, Schroder Investment Management Ltd.

WP – Disabled and disdained – Terrence McCoy 7/21

  • “In rural America, some towns are divided between those who work and those who don’t.”

FP – The argument to be a buyer of the Saudi Aramco IPO – John Dizard 7/21

  • “As one international oil analyst says, though: ‘The Permian is preventing high prices today, but ensuring high oil prices tomorrow. The low prices are holding back investment in most of the world, and that is storing up a significant problem in meeting demand in the future.'”
  • “That is the argument to be a buyer of the Saudi Aramco IPO.”
  • “There are two bets involved in the listing. Can Saudi Arabia contain the social and strategic pressures caused by cheap oil? And will the capital markets eventually stop subsidizing shale producers?”

WSJ – Investors, Stop Worrying About Why ‘Nobody’ Is Worrying – Jason Zweig 7/21

Markets / Economy

WSJ – In Reversal, Colleges Rein In Tuition – Josh Mitchell 7/23

  • “U.S. college tuition is growing at the slowest pace in decades, following a nearly 400% rise over the past three decades that fueled middle class anxieties and a surge in student debt.”
  • “Abundant supply is running up against demand constraints. The number of two-year and four-year colleges increased 33% between 1990 and 2012 to 4,726, Education Department data show. But college enrollment is down more than 4% from a peak in 2010, partly because a healthy job market means fewer people are going back to school to learn new skills.”
  • “Longer-running economic and demographic shifts also are at play. Lower birthrates and the aging of baby boomer children have reduced the pool of traditional college-age Americans. The number of new high-school graduates grew 18% between 2000 and 2010 but only 2% in the first seven years of this decade, Education Department data show.”
  • “Another factor: Congress last increased the maximum amount undergraduates could borrow from the government in 2008. Some economists have concluded schools raise prices along with increases in federal financial aid. A clampdown on aid, in turn, could limit the ability of schools to charge more.”
  • “But other factors could keep cost pressures rising. George Pernsteiner, head of State Higher Education Executive Officers, a trade group that tracks state funding for schools, notes that many states are on track to experience budget crunches as the population ages and health-care and public pension costs rise. That could squeeze public support for schools.”

Real Estate

WSJ – Americans Pour Record Sums Into Home Improvements – Laura Kusisto and Sarah Chaney 7/25

  • “A shortage of new single-family homes across the U.S. is pushing up prices and locking many buyers out of the market. The silver lining: a boom in renovations of existing homes.”
  • “Americans are expected to pour a record $316 billion into home remodeling this year, up from $296 billion a year earlier, according to Harvard University’s Joint Center for Housing Studies.”

FT – Funds hunt for cracks in most-prized US shopping malls – Miles Johnson 7/21

  • “A defining feature of the financial crisis was a group of hedge funds making vast sums by wagering against supposedly AAA-rated mortgage debt well before markets imploded in 2008.”
  • “Now some believe a similar story will play out for US shopping malls — that the most risky investments will end up being those that investors now believe to be the safest. Central to their premise is the idea that too much faith may be being placed in a classification system used for shopping malls that is little known outside of the real estate sector.”
  • “Malls are given ratings by a small group of property consultants generally ranging from A++ to C based on factors that include their sales per square foot and location. While there is no universally accepted system for ranking the malls, with each consultant having slightly different methodologies, banks and investors tend to rely on these ratings to make decisions over how secure each mall is as a creditor or investment.”
  • “The stock market has until recently appeared to believe that prime ‘A’ malls are largely insulated from the pain being felt across a US retail sector being shaken by e-commerce.”
  • “Yet there is growing evidence to suggest that these prime malls, which have been treated by investors and lenders alike as rock solid bets in the face of the internet headwinds, are not as protected as once thought.”
  • “The hedge funds wagering against the highest quality malls believe that the wider market will come to believe these A-quality malls are far more similar to lesser ranked ones. ‘This idea that there are these magic malls in America that are immune to secular change is a myth,’ the US-based hedge fund manager says.”
  • “Some argue that the market underappreciates that A class mall operators and B and C class mall operators all have very similar tenant bases, in spite of being in different locations.”

Energy

BloombergGadlfy – Venezuela’s Perfect Storm for Oil May Be About to Break – Liam Denning 7/21

  • “We may be about to see the first sovereign producer to unequivocally fail.”
  • “The oil producer in question is Venezuela, and that assessment comes courtesy of Helima Croft, who is global head of commodity strategy at RBC Capital Markets and formerly worked with both the Council on Foreign Relations and the CIA.”
  • “But things are building to a head, partly due to the relentless logic of the bond market and partly due to the more proprietary logic of U.S. foreign policy.”
  • “Venezuelan bonds, which haven’t looked rock-solid for a few years, crashed this week as embattled President Nicola Maduro renewed calls to rewrite the country’s constitution, which would effectively disenfranchise the millions of Venezuelans who oppose him and entrench his regime. The U.S. has warned it may impose much tougher sanctions if Maduro goes ahead with his plan.”
  • “Venezuela’s economy is in free-fall: By the end of this year, it will have shrunk by 32% compared to where it was at the end of 2013, according to International Monetary Fund forecasts. Also by the end of this year, the government is on the hook to pay back more than $5 billion in debt — including bonds owed by the state-owned oil champion, Petróleos de Venezuela, S.A., or PdVSA — plus billions more in interest. As of this week, Venezuela’s international reserves stood at less than $10 billion.”
  • “Meanwhile, mismanagement, a lack of investment and re-nationalization of foreign oil companies’ interests have caused Venezuela’s oil production to slump from around 3.3 million barrels a day a decade ago to about 2 million now. Even allowing for the fact that domestic consumption has dwindled along with GDP, Venezuela’s surplus of oil available for earning export dollars has shrunk considerably.”
  • “Compounding this is the fact that the country must devote a lot of its output to paying off loans from China and Russia, further reducing the actual amount it can use to generate cash. Francisco Monaldi, a fellow in Latin American energy policy at Rice University’s Baker Institute for Public Policy, estimates that could be as little as 800,000 barrels a day.”
  • “For three years, oil watchers have been waiting for a chaotic wave of bankruptcies in places like Texas and North Dakota to jolt the market. They’ve been looking in the wrong place.”

FT – Coal has no future, says US railroad boss – Gregory Meyer 7/19

  • “One of the largest haulers of US coal says fossil fuels have no future, despite pledges to the contrary from President Donald Trump.”
  • “CSX, a freight railroad company with origins in the bituminous coal seams of Appalachia, will not buy a single new locomotive to pull coal trains, chief executive Hunter Harrison told analysts on Wednesday.”
  • “’Fossil fuels are dead,’ Mr Harrison said. ‘That’s a long-term view. It’s not going to happen overnight. It’s not going to be in two or three years. But it’s going away, in my view.’” 
  • “North American railroads have reshaped their asset holdings in acknowledgment that coal’s apex has passed.”
  • “Lance Fritz, chief executive of the Union Pacific railroad, said in a recent interview that Mr Trump’s move to scrap Clean Power Plan regulations was unlikely to grow its coal business. ‘It takes away a headwind,’ he said.”

Tech

NYT – Silicon Valley Giants Confront New Walls in China – Paul Mozur and Carolyn Zhang 7/22

  • “It’s basically like someone who has been training for Olympic taekwondo going up against a street fighter. The Olympic fighter is waiting for the whistle, and the street fighter already has him on the ground hitting him with elbows. There’s no rules.” – Andy Tian, co-founder of Asia Innovations Group and former general manager of Zynga China

FT – Uber, Amazon and Microsoft braced for accounting shake-up – Leslie Hook and Richard Waters 7/19

  • “Uber’s reported revenues are being cut in half and sales at Amazon and Microsoft could be higher than previously stated — all thanks to a forthcoming change to accounting rules.”
  • “An update to generally accepted accounting principles (GAAP) for US companies is turning out to have particularly large consequences in parts of the tech industry, which is having to overhaul the way it reports revenues and costs.”
  • “One of the more dramatic impacts will affect car-booking services such as Uber, a private company whose GAAP revenue drops by more than half when it adopts the new standard, which it plans to do this year.”
  • “Uber’s first-quarter revenue this year was $3.4bn under old GAAP accounting, but it says that under the new rules its revenue would have been just $1.5bn for the same period. Uber has already started sharing the lower figure with investors.”
  • “Under the old standard, car-booking services such as Uber and Lyft counted their commissions from regular rides, plus the entire fare of carpool rides, as revenue. Under the new standard, only the commissions from both regular and carpool rides will count as revenue.”
  • “The shift is due to changes to the ‘principal versus agent’ rules that determine when a company is acting as a principal and when it is acting as an agent. The car-booking services were previously considered the ‘principal’ for carpooled rides. As private companies, they must adopt the new standard by the beginning of 2019, although Uber has moved to do so much earlier.”
  • “The new standard, known as Revenue from Contracts with Customers, is designed to narrow the distance between US GAAP rules and International Financial Reporting Standards (IFRS).”

Agriculture 

WSJ – Daily Shot: CBOT Soft Red Winter Wheat Futures 7/24

  • “The recent wheat rally has been almost entirely reversed.”

Asia – excluding China and Japan

FT – Jailed Duterte foe prepares for long haul – Michael Peel 7/20

  • “Philippine Senator Leila de Lima, 57, was arrested at her senate office in February on charges that she received payoffs from jailed drug lords. She has branded the allegations ‘simply surreal’ and said they were part of a ‘personal vendetta’ by a president who is ‘rather obsessed with me’.”
  • “Ms. de Lima has certainly earned implacable enmity from Mr. Duterte for her efforts to probe his bloody drugs wars first as a provincial mayor and now as president. She maintains her innocence but also accepts her stay in jail could be a long one. The same day she marks five months in detention next week, Mr. Duterte will give an annual state of the nation speech against a background of soaring approval ratings.”
  • “I think as long as Duterte is president (5 more years), I will be locked up in jail,” Ms. de Lima says. “I have no false hopes about achieving justice very soon.”

China

NYT – In China, Herd of ‘Gray Rhinos’ Threatens Economy – Keith Bradsher and Sui-Lee Wee 7/23

  • “Let the West worry about so-called black swans, rare and unexpected events that can upset financial markets. China is more concerned about ‘gray rhinos’ — large and visible problems in the economy that are ignored until they start moving fast.”
  • “The rhinos are a herd of Chinese tycoons who have used a combination of political connections and raw ambition to create sprawling global conglomerates. Companies like Anbang Insurance Group, Fosun International, HNA Group and Dalian Wanda Group have feasted on cheap debt provided by state banks, spending lavishly to build their empires.”
  • “Such players are now so big, so complex, so indebted and so enmeshed in the economy that the Chinese government is abruptly bringing them to heel. President Xi Jinping recently warned that financial stability is crucial to national security, while the official newspaper of the Communist Party pointed to the dangers of a ‘gray rhinoceros,’ without naming specific companies.”

FT – China’s LeEco appoints new chairman from Sunac – Emily Feng 7/21

  • Sunac continues to be busy. In addition to its property acquisitions from Dalian Wanda, Sunac’s chairman – Sun Hongbin, is adding a new chairmanship to his belt, that of the struggling Chinese tech company, LeEco.

WSJ – The Saga Isn’t Over for Dalian Wanda – Jacky Wong 7/20

NYT – At the Finish, Dalian Wanda of China Rewrites a Blockbuster Sale – Sui-Lee Wee and Zhang Tiantian 7/19

  • “Dalian Wanda Group, the Chinese conglomerate, tore up a $9.3 billion agreement to sell a portfolio of hotels and theme parks, unexpectedly reaching new deals on the properties that highlighted uncertainty over the financial health of the country’s biggest companies.”
  • “Wanda had reached an overall agreement with the property firm Sunac China Holdings last week, but Wanda announced at a signing ceremony on Wednesday that it was backtracking and would instead sell just the theme parks to Sunac. The hotels will instead be sold to R&F Properties, based in the southern Chinese city of Guangzhou.”
  • “The hasty reorganization of the deals has raised concern about the due diligence conducted by many of China’s first-generation dealmakers as they seek to become bigger players domestically and around the world.”
  • “The signing was dominated by the announcement that Sunac would pay $6.5 billion for a 91% stake in Wanda’s 13 theme parks across China, while R&F Properties would buy 77 hotels from Wanda for $3 billion. In a sign of the wildly fluctuating valuations of assets, however, Wanda had said last week that it was selling Sunac only 76 hotels, but that they were worth $5 billion.”

South America

WSJ – Daily Shot: Venezuelaecon.com – Venezuelan Bolivar Black Market Exchange Rate 7/25

Turkey

NYT – Turkey Sees Foes at Work in Gold Mines, Cafes and ‘Smurf Village’ – David Segal 7/22

  • “Since then (after the failed attempt to overthrow the government of President Recep Tayyip Erdogan on July 15, 2016), more than 950 companies have been expropriated, all of them purportedly linked to Fethullah Gulen, the Muslim cleric who Turkish leaders say masterminded the putsch.”
  • “About $11 billion worth of corporate assets — from small baklava chains to large publicly traded conglomerates — have been grabbed by the government, a systematic taking with few precedents in modern economic history. Several thousand dispossessed executives have fled overseas to cities as far-flung as Nashville and Helsinki. The less fortunate were imprisoned, part of a mass incarceration campaign that has included purged members of the military, judiciary, police and news media, adding 50,000 new inmates to the prisons.”

July 25, 2017

Perspective

WSJ – Daily Shot: Amazing Maps – Median age by continent 7/16

WSJ – Daily Shot: FRED – US Department Store Sales 7/16

WSJ – Daily Shot: Valuewalk – Global Bitcoin Mining Energy Consumption 7/20

WSJ – Daily Shot: howmuch – Cost of Olympic Games 7/20

WSJ – Daily Shot: Number of US Colleges that award federal student aid 7/21

Worthy Insights / Opinion Pieces / Advice

WSJ – Daily Shot: Bloomberg Businessweek – US Private School Enrollment Rate by Family Income bracket 7/21

The Registry – Over-Storing America – John McNellis 7/24

  • Developers are going to develop. Cities without structural advantages are going to seek activity for activity’s sake. Sought after locales will seek to keep nearly anything and everything from being built. And as a result, some places are over supplied – so much so, that the aggregate whole is over supplied.

Real Estate

WSJ – Daily Shot: Pew – US Share of Households who rent 7/20

WSJ – Daily Shot: Credit Suisse – Office & Retail Cap Rate Trends 7/23

WSJ – Daily Shot: John Burns RE Consulting – Construction Hourly Wages by Trade 7/23

WSJ – Daily Shot: John Burns RE Consulting – Construction Labor Shortages 7/23

WSJ – Daily Shot: John Burns RE Consulting – US Housing Supply Overview 7/23

Energy

WSJ – Daily Shot: eia – US Crude Oil Production by Region 7/20

Finance

WSJ – Daily Shot: Haver & IIF – Central Bank Liquidity Injections 7/19

China

NYT – In Urban China, Cash Is Rapidly Becoming Obsolete – Paul Mozur 7/16

  • “In 2016, China’s mobile payments hit $5.5 trillion, roughly 50 times the size of America’s $112 billion market, according to consulting firm iResearch.”

Other Links

WSJ – Daily Shot: Vox – Marijuana laws in the US 7/20