Tag: Environment

April 24, 2018

Perspective

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

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

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

Markets / Economy

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

Real Estate

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

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

Energy

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

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

Cryptocurrency / ICOs

WSJ – Daily Shot: Barchart – Bitcoin 4/23

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

Britain

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

Europe

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

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

South America

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

Other Interesting Links

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

April 12, 2018

If you were only to read one thing…

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

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

Continue reading “April 12, 2018”

April 11, 2018

If you were only to read one thing…

WSJ – Americans Face Highest Pump Prices in Years – Stephanie Yang 4/8

  • “Americans are spending more at the pump than they have in years. Prices could rise even higher just as drivers hit the road for family vacations.”
  • “Crude prices have jumped thanks to continuing production cuts by major exporters. As a result, gasoline is also becoming more expensive. According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week—the highest level since 2015.”
  • “While higher fuel prices could herald an end to the glut that has plagued the energy market since 2014, they also threaten to dampen demand and hit consumers in their pocketbooks.”
  • “Since the Organization of the Petroleum Exporting Countries and other major oil producers, including Russia, agreed to collectively limit output two years ago, U.S. oil futures have risen about 40%, closing at $62.06 a barrel on Friday. Gasoline futures are up 8.6% this year.”
  • And of course, Venezuela’s drop off in production…
  • “In recent months, the U.S. has also exported record amounts of gasoline, mostly to Latin and South America. In January, exports totaled more than 33 million barrels, near an all-time monthly high set in November.”
  • “’That’s a big difference from a decade ago, or even a few years ago,’ said Tom Kloza, global head of energy analysis at the Oil Price Information Service. ‘We’re kind of refiners to the entire Western Hemisphere right now.’”

Continue reading “April 11, 2018”

March 28, 2018

Worthy Insights / Opinion Pieces / Advice

Bloomberg Gadfly – Users Built Facebook’s Empire, and They Can Crumble It – Nir Kaissar 3/26

FT – It is Venezuela’s crisis that is driving the oil price higher – Nick Butler 3/25

  • “While the Maduro-military alliance holds, output is likely to fall further.”

NYT – Live in a Drainpipe? Five Extreme Ideas to Solve Hong Kong’s Housing Crisis – Austin Ramzy 3/26

NYT – Repeal the Second Amendment – John Paul Stevens (retired associate justice of US Supreme Court) 3/27

NYT – New Leadership Has Not Changed Uber – Steven Hill 3/26

  • “The problem with Uber was never that the chief executive had created a thuggish ‘Game of Thrones’-type culture, as Susan Fowler, an engineer, described it in a blog post. The problem was, and still is, Uber’s business model: Its modus operandi is to subsidize fares and flood streets with its cars to achieve a transportation monopoly. In city after city, this has led to huge increases in traffic congestion, increased carbon emissions and the undermining of public transportation.”
  • Most customers who love Uber don’t realize that the company subsidizes the cost of many rides. This is likely a major factor in Uber’s annual losses surging from 2.8 billion in 2016 to $4.5 billion in 2017. This seemingly nonsensical approach is actually Uber’s effort to use its deep pockets to mount a predatory price war and shut out the competition. That competition is not only taxis and other ride-sharing companies, but public transportation.”
  • Ridership on public transportation is down in nearly every major American city, including New York City (which recorded its first ridership dip since 2009). This is hurting the revenue that public transportation needs to sustain itself. Uber passengers and public transportation users alike now find themselves stuck in heavy traffic for far longer because of what’s been called ‘Uber congestion.’ In Manhattan, there are five times as many ridesharing vehicles as yellow taxis, which has caused average speeds to decline by 15% compared with 2010, before Uber.
  • “Ride-sharing services could potentially add something positive to our transportation options, but only if they are regulated properly.”
  • “First, regulators should limit the number of ride-sharing cars. Traditional taxis already have a sensible limit to minimize congestion. A balance must be found between having enough taxi-type vehicles but not so many that the streets are choked with traffic. Fix NYC, a panel appointed by Gov. Andrew Cuomo of New York, has called for all Ubers, Lyfts and taxis to be outfitted with GPS technology to track congestion and to charge a fee on for-hire vehicles that could help reduce traffic and generate hundreds of millions of dollars for public transportation.”
  • “Second, Uber should be prohibited from subsidizing its fares. It should be required to charge at least the true cost of each ride. If Uber refuses, a ‘fairness fee’ should be added to each fare.”
  • “Third, ride-sharing companies and their vehicles should be required to follow the same laws as traditional taxis, especially in terms of background checks for drivers and insurance requirements.”
  • “Fourth, Uber should be required to share its data with regulators, including information about its drivers and their contact information, so that members of this ‘distributed work force’ can more easily contact one another and organize collectively if they choose.”
  • “Finally, regulations should ensure that Uber treats its drivers fairly. Mr. Khosrowshahi asserts that drivers’ wages are adequate, but according to one study, more than half of Uber drivers earn less than the minimum wage in their state, and some even lose money once the costs of driving are taken into account. That helps explain why, according to Uber’s own internal study, half of its drivers leave after a year.”

WSJ – Turkey Is the One to Watch for Emerging Markets Risk – Richard Barley 3/26

WSJ – How a Tiny Latvian Bank Became a Haven for the World’s Dirty Money – Drew Hinshaw, Patricia Kowsmann, and Ian Talley 3/26

Markets / Economy

WSJ – Libor’s Rise Accelerates, Squeezing Short-Term Borrowers – Ben Eisen and Chelsey Dulaney 3/27

  • “The three-month London interbank offered rate climbed to 2.29% in the U.S. on Monday, its highest since November 2008. Libor measures the cost for banks to lend to one another and is used to set interest rates on roughly $200 trillion in dollar-based financial contracts globally, from corporate loans to home mortgages.”
  • “Libor has been rising for the last 2½ years as the Federal Reserve lifts its key policy rate, but recently the pace has picked up. It has climbed nearly a full percentage point in the last six months—outpacing the Fed—and could rise further with the approaching end of the quarter, typically a time of elevated demand for short-term funds in the banking sector, analysts say.”
  • “Demand for dollars at the end of the first quarter could send Libor up an additional 0.2 percentage point in the coming days, market analysts say, as investors rebalance their portfolios and banks rein in their balance sheets. The end of March also marks the finish of Japan’s fiscal year, potentially compounding the moves as big investors bring money back to Japan.”
  • “Libor has already sprinted ahead of the rates indicated by central bank policies, an acceleration that has baffled economists and traders. That widening gap has alarmed those who watch it as a signal of stress in the financial system. Others have pinned it on a series of technical factors, such as rising short-term debt sales by the U.S. government and new corporate tax policies.”
  • “Other markets that can be tapped for dollars—including through the swaps market and liquidity lines maintained by global central banks—aren’t yet showing a big dollar squeeze.”

Real Estate

The Big Picture – WeWork: Manhattan’s 2nd-biggest Private Office Tenant – Barry Ritholtz 3/27

FT – House prices falling in two-fifths of London postcodes – James Pickford 3/26

  • “House prices are falling in two out of five London postcodes, according to research that underlines the growing divergence between prices in southern English cities and those elsewhere in the UK.”
  • “The average annual rate of price growth in the capital has slowed to 1%, down sharply from 4.3% a year ago, meaning it is at its lowest level since August 2011, according to research by Hometrack, a housing market analyst. This stands in contrast to UK-wide average house price growth of 5.2% in the year to February 2018, up from 4% a year ago.”
  • “Prices are under greatest pressure in central London, where owners of the most expensive types of property began cutting prices in 2015 responding to the impact of higher taxes. In the past year, however, the trend has deepened in areas beyond the prime zones of Westminster and Kensington & Chelsea. The boroughs that saw the greatest drop in value were the City of London, Camden, Southwark, Islington and Wandsworth, according to Hometrack’s research.”
  • “Hometrack is predicting that the number of areas of the capital experiencing falling house prices will multiply during this year as trapped sellers reduce their asking prices to drive through transactions. ‘The net result will be a negative rate of headline price growth for London by the middle of 2018,’ the research said.”
  • “Outside southern England, house prices are more likely to be rising, in some places at a substantial pace. Edinburgh, Liverpool, Leicester, Birmingham and Manchester are adding more than 7% a year to their average house price, Hometrack found, with Leeds, Nottingham and Sheffield pegging rises of 6% or more.”
  • “The laggards in the 20-city index were Aberdeen (down by 7.7%), Cambridge (down by 1.5%) and Oxford (up by just 0.5%).”

NYT – Grocery Wars Turn Small Chains Into Battlefield Casualties – Michael Corkery 3/26

WSJ – Homeowners Ditch Refinancings as Mortgage Rates Rise – Christina Rexrode 3/26

  • “Last year, 37% of mortgage-origination volume was because of refinancings, according to industry research group Inside Mortgage Finance. That is the smallest proportion since 1995, and the number of refinancings is widely expected to shrink again this year. In 2012, refinancings were 72% of originations.”
  • “While purchase activity has climbed steadily from a post-financial-crisis nadir in 2011, growth in 2017 wasn’t enough to offset a $366 billion decline in refinancing activity. The result: The overall mortgage market fell around 12%, to $1.8 trillion, according to Inside Mortgage Finance.”
  • “What’s more, there are fewer homeowners eligible to refinance because of rising rates. The number of borrowers who could benefit from a refinancing is down about 37% from the end of last year, estimates Black Knight Inc., a mortgage-data and technology firm. At 2.67 million potential borrowers, this group is at its smallest since 2008.”
  • “Home-purchase activity has so far been holding up. Sales of previously owned homes in February rose 1.1% from a year earlier, countering worries that a downturn the previous month signaled a peak for the market.”
  • “Still, rising interest rates, a shortage of housing inventory and higher home prices are all long-term threats to purchase activity.”
  • “For refinancings, rising rates are a more immediate worry. Freddie Mac said last week that the average rate on a 30-year fixed-rate mortgage was 4.45%, up from 3.95% at the beginning of the year.”
  • “The Mortgage Bankers Association expects mortgage-purchase volume to grow about 5% in 2018 but refinancing volume to drop 27%. Refinance applications fell 5% in the week ended March 16 from the prior one, according to the group.”

Cryptocurrency / ICOs

Bloomberg – Fewer Americans Hold Cryptocurrencies Than You Probably Think – Olga Kharif 3/16

  • “More than 90% of American adults don’t own cryptocurrencies – and most have a lot of concerns about the coins, a new survey from Finder found.”

Fishing

Bloomberg – Maine’s Lobster Tide Might Be Ebbing – Justin Fox 3/23

  • “The numbers came in earlier this month on Maine’s 2017 lobster harvest. By historical standards, the 110.8 million-pound, $434 million haul was pretty spectacular. But it was a lot lower than 2016’s 132.5 million-pound, $540 million record, and it was another sign that the Great Lobster Boom that has surprised and delighted Maine’s lobster fishermen since the 1990s — and brought lobster rolls to diners from coast to coast — may be giving way to … something else.”
  • “The lobster boom does not seem to be the result of overfishing; Maine’s lobster fishermen figured out a set of rules decades ago that appear to allow them to manage the catch sustainably. There are just lots and lots more lobsters off the coast of Maine than there used to be. Why? In a column last spring, I listed four reasons that I’d heard during a trip to Maine:”
    • “Warmer temperatures in the Gulf of Maine.”
    • “A collapse in the population of cod, which eat young lobsters.”
    • “Reduced incidence of a lobster disease called gaffkemia.”
    • “Increased effort and efficiency on the part of lobstermen, who go farther offshore and can haul in more traps in a day than they used to.”
  • “Given how quickly the lobster harvests grew, though, especially from 2007 through 2012, it’s hard not to wonder whether they might not eventually collapse. They already have in several states farther down the Atlantic coast. Lobster landings were still on the rise as of 2016 (data aren’t available yet for 2017) in New Hampshire and Massachusetts but peaked in Rhode Island in 1999, Connecticut in 1998, New York in 1996 and New Jersey in 1990.”
  • “So that’s some evidence for the warming-ocean-temperatures theory of the lobster boom. This would imply that eventually even the oceans off Maine will get too warm, although it doesn’t give much of a hint as to when.”
  • Canada has been benefiting as well.

 

March 26, 2018

Markets / Economy

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

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

Real Estate

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

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

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

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

Environment / Science

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

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

 

March 12, 2018

Perspective

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

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

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

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

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

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

Real Estate

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

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

Finance

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

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

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 3/8

WSJ – Daily Shot: Ripple 3/8

Canada

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

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

WSJ – Daily Shot: Canada Housing Starts 3/8

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

China

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

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

India

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

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

March 7, 2018

Perspective

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

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

Markets / Economy

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

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

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

Real Estate

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

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

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

Finance

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

Environment / Science

Economist – The known unknowns of plastic pollution 3/3

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

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

Automotive

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

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

China

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

South America

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

March 5, 2018

Worthy Insights / Opinion Pieces / Advice

naked capitalism – MIT Study: Median Uber and Lyft Profits Less Than Half Minimum Wage; 30% of Drivers Lose Money – Yves Smith 3/2

  • “A team from Stanford, Stephen M. Zoepf, Stella Chen, Paa Adu and Gonzalo Pozo, under the auspices of MIT’s Center for Energy and Environmental Policy Research obtained information from 1100 Uber and Lyft drivers using questionnaires and information about vehicle-specific operating costs, such as insurance, maintenance, repairs, fuel and depreciation.”
  • Their main finding:”
    • “Results show that per hour worked, median profit from driving is $3.37/hour before taxes, and 74% of drivers earn less than the minimum wage in their state. 30% of drivers are actually losing money once vehicle expenses are included. On a per-mile basis, median gross driver revenue is $0.59/mile but vehicle operating expenses reduce real driver profit to a median of $0.29/mile.”

Markets / Economy

Bloomberg Businessweek – Harvard Blew $1 Billion in Bet on Tomatoes, Sugar, and Eucalyptus – Michael McDonald and Tatiana Freitas 3/1

NYT – China’s Biggest Deal Maker Spent Billions. Now the Bill Comes Due. – David Barboza and Alexandra Stevenson 3/2

WSJ – Boom in Share Buybacks Renews Question of Who Wins From Tax Cuts – Akane Otani, Richard Rubin, and Theo Francis 3/1

Environment / Science

NYT – Europe Was Colder Than the North Pole This Week. How Could That Be? – Kendra Pierre-Louis 3/1

China

FT – China’s super-rich lose political clout – Tom Mitchell 3/1

  • “Sharp drop in billionaires at parliamentary sessions as standing falls under Xi Jinping.”

Visual Capitalist – China’s Staggering Demand for Commodities – Jeff Desjardins 3/2

New Zealand

FT – ‘Billionaire bolt-holes’ under threat in New Zealand – Jamie Smyth 3/1

February 15, 2018

Perspective

WEF – Norway’s Central Bank has recommended oil and gas holdings are removed from its sovereign wealth fund – Thomas Colson 11/20/17

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Ten Years After the Crisis, Banks Win Big in Trump’s Washington – Robert Schmidt and Jesse Hamilton 2/9

Economist – As California’s fires died down, fraudsters arrived 2/8

  • “David Passey, a spokesperson for FEMA, says that more than 200,000 applications for relief related to the hurricanes and northern California wildfires are suspected to be fraudulent.”

Economist – China is in a muddle over population policy 2/8

Economist – The merits of revisiting Michael Young – Bagehot 2/8

  • “A book published 60 years ago predicted most of the tensions tearing contemporary Britain apart.”

Markets / Economy

Bloomberg – Teslas Are Finally Replacing Porsches on the Autobahn – Elisabeth Behrmann 2/12

WSJ – Daily Shot: NY Fed – US Consumer Debt Balance 2/14

WSJ – Daily Shot: NY Fed – US Consumer Delinquent Debt Percentage 2/14

WSJ – Brace Yourself for Higher Cellphone Bills This Year – Drew FitzGerald 2/8

Real Estate

Economist – How a brothel owner created the world’s biggest industrial park 2/10

  • “Google, eBay, Tesla and dozens of other tech firms have bought nearly all of the Tahoe Reno Industrial Center’s vast tract of land.”

Energy

Bloomberg Gadfly – OPEC’s Oil Price Nightmare Is Coming True – Julian Lee 2/11

Tech

NYT – The Autonomous Selfie Drone Is Here. Is Society Ready for it? – Farhad Manjoo 2/13

  • “Autonomous drones have long been hyped, but until recently they’ve been little more than that. The technology in Skydio’s machine suggests a new turn. Drones that fly themselves — whether following people for outdoor self-photography, which is Skydio’s intended use, or for longer-range applications like delivery, monitoring and surveillance — are coming faster than you think.”

Environment / Science

Economist – Antidepressants are finding their way into fish brains 2/8

China

Bloomberg Businessweek – China Takes a Hard Look at Corporate Borrowers – Enda Curran 2/6

  • “China’s total debt equaled 162% of gross domestic product in 2008. By 2016 it had climbed to 259%, an increase of more than $22 trillion, in large part because of massive corporate borrowing. And even with the current push to deleverage, it could reach 327% by 2022, according to Bloomberg Economics.”

  • “China’s banking regulator last summer ordered lenders to examine their exposure to private conglomerates, which was a way to slow borrowing by corporations without raising benchmark interest rates. In China, the amount of lending, rather than official interest rates, is the best indicator of how tight or loose government monetary policy is. And the picture is pretty clear: Broad-based money supply growth slowed to 8.2% in December, the weakest since data became available in 1998. ‘They are tightening,’ says Chetan Ahya, chief Asia economist at Morgan Stanley. ‘China has always relied more on actually controlling the flow of credit through direct measures’.”

Bloomberg – China’s War on Risk Has Banks Fleeing Shadowy Wealth Products – Jun Luo 2/7

  • “Chinese regulators appear to be winning their war against risk in one of the more dangerous corners of the country’s shadow banking industry — the so-called wealth management products that banks buy from each other in a search for easy profits.”
  • “Interbank holdings of WMPs more than halved last year, to 3.25 trillion yuan ($514 billion) in December from 6.65 trillion yuan a year earlier, according to the annual report of China Central Depository & Clearing Co., an industry body. That suggests higher interest rates and increased scrutiny by regulators are deterring Chinese banks from their previous practice of using cheap interbank borrowing to invest in each others’ higher-yielding WMPs.”
  • “The interbank WMP market will continue to contract this year, as China keeps interest rates high as part of its campaign against financial-sector risk, according to analysts from Shenwan Hongyuan Group Co. and Macquarie Group Ltd. Higher rates make it less profitable to use interbank borrowings to invest in WMPs. And many were deterred after the China Banking Regulatory Commission (CBRC) ordered banks to ‘self-review’ their interbank and shadow banking exposures in April, widely seen as a move to rein in the lenders.”
  • “The CBRC and other regulators are working closely in an unprecedented campaign to curb the $16 trillion shadow banking industry, of which WMPs issued by banks are the largest component. Another risky area that is contracting rapidly is some $3.8 trillion of so-called trust products, which have been a popular way for debt-ridden property developers and local governments to raise funds. That market has been hit by delayed payments as wealthy Chinese savers turn sour on the products.”
  • “Despite the retreat in the interbank sector, the wider WMP market continued to grow last year, albeit at a slower pace, according to the industry body. Strong appetite among individual investors helped the outstanding balance of WMPs rise 1.7% to 29.5 trillion yuan in December from a year earlier. Still, the escalating clampdown on all types of asset management products slowed the growth rate markedly from an average compound rate of about 50% between 2013 and 2015.”

Economist – Creditors call time on China’s HNA 2/8

  • “Analysts had foreseen an unravelling for some time, before even the regulatory wrist-slapping. A Chinese business expert calls HNA’s empire-building ‘a classic case of overextending’. For five years it has only been able to service its debts by taking on new ones. Returns on its investments have not exceeded 2% in almost a decade, according to calculations by Bloomberg, a data provider. As a result, HNA’s ratio of debt to earnings before interest, depreciation and amortization is around a lofty ten, estimates Standard & Poor’s, a ratings agency. Bond investors have grown nervous, and the firm’s financing costs have soared.”

South America

WSJ – Daily Shot: Venezuela Official Exchange Rate VEF/USD 2/13

  • “Venezuela has devalued its official exchange rate to be closer to the levels seen in the black market. This chart shows how many (bags of) bolivares are needed to buy one dollar – the official rate.”

  • “This move eliminated a major source of corruption.”
    • “BMI Research: – The move to … devalue the … official exchange rate is a positive step, as it will help to correct some of the extreme distortions in the market for foreign exchange. The massive discrepancy between the official and black market exchange rates has been a major source of corruption and arbitrage over recent years. Those with access to the subsidized exchange rate typically re-sell dollars on the black market at a substantial profit, rather than using the currency to import goods that must be sold at artificially low prices due to the country’s system of price controls. The market has reacted positively to the news of the devalued exchange rate, with the black market value of the bolivar rising to VEF233,531.1/USD as of February 6, up from a low of VEF266,630.7/USD on January 28.”

WSJ – Daily Shot: BMI Research – Venezuela Black Market Exchange Rate VEF/USD 2/14

 

January 30, 2018

Perspective

statista – Super Bowl LII – Felix Richter 1/26

Worthy Insights / Opinion Pieces / Advice

FT – The dangers of digital democracy – Rana Foroohar 1/28

FT – What Venezuela’s chaos means for the oil market – Nick Butler 1/28

  • “Anyone looking for an explanation of the recent uptick in the oil price towards $70 a barrel need look no further than the unhappy state of Venezuela. Oil production in the country fell 13% in 2017 (against the 2016 average), with the drop accelerating towards the end of the year. In the last three months alone output has fallen by more than 500,000 barrels a day to a 28-year low of just over 1.6m a day.”
  • “On any normal measure, Venezuela should be one of the world’s richest countries. With proven oil reserves of over 300bn barrels and a wealth of other natural resources, the 30m citizens of the Bolivarian Republic should be the beneficiaries of a secure regional market for oil supplies and of the skills accumulated in the industry over the last 80 years.”
  • “Instead, the country is on the verge of bankruptcy. The government is toying with inventing a currency — the petro — securitized against the contents of an oilfield in the Orinoco basin. But the first requirement of cryptocurrencies is trust and there is little or none of that for the government of President Nicolás Maduro. Inflation rate is running at 1,178%, according to unofficial estimates — the government has stopped publishing inflation data.”
  • “The collapse of Venezuela as a viable state has accelerated over the past six months and its effects have begun to hit the country’s core business — the production of oil. The state company PDVSA is deeply in debt. Including bonds, notes and other loans, it owes around $56bn. Schlumberger the international oil services company, took a write down of $938m last month because of bills the country has failed to pay.”
  • “Cuba, once the closest ally of Venezuela’s hard-left leadership, has taken control of PDVSA’s stake in a local refinery to offset unpaid debts. Russia and China have at times propped up the Maduro government but now the limit of generosity seems to be some relief on repayment terms rather than new loans.”
  • “In the absence of regime change there will be no rescue funds from the International Monetary Fund or anyone else. Meanwhile, the opposition, although vocal, lacks any effective power. In these circumstances, the country’s oil production is likely to stay down, and could well fall further during 2018.”
  • “For Venezuela the situation is a deepening tragedy. For the oil market, and Opec in particular, the loss of production from one of the most important producers outside the Middle East is a source of salvation.”

NYT – The Follower Factory – Nicholas Confessore, Gabriel Dance, Richard Harris, and Mark Hansen 1/27

  • “Everyone wants to be popular online. Some even pay for it. Inside social media’s black market.”

Energy

WEF – We’re getting closer to completing the energy transition – Faith Birol 1/18

Environment / Science

FT – The problem with plastic – Clive Cookson 1/23

  • “Every year an estimated 8 million tons of plastic end up in ocean.”

Health / Medicine

NYT – In Kenya, and Across Africa, an Unexpected Epidemic: Obesity – Jeffrey Gettleman 1/27

China

FT – China faces refinancing crunch with $2.7tn of bonds bearing down – Emma Dunkley and Gabriel Wildau 1/28

  • “China’s $4tn bond market faces a refinancing challenge over the next five years as more than half of the outstanding debt matures, heightening concerns over default risk by some borrowers.”

FT – China’s HNA tries to navigate turbulent times – Lucy Hornby 1/28

  • “In the space of just 12 months, Chinese airline-to-finance conglomerate HNA has morphed from a symbol of the ambition and wealth of China Inc into a cautionary tale of corporate indebtedness.”
  • “About $20bn in US dollar-denominated bonds issued by HNA and its subsidiaries are due to mature in 2018 or 2019. The yields on three of those dollar bonds issued by HNA’s main Hong Kong subsidiary have spiked, doubling this month to more than 18%.”
  • “There are also signs of a cash crunch rippling through the group’s complex structure, which includes 16 listed entities and many layers of shell companies and crossholdings. Several have raised debt from Chinese banks and HNA has also turned to high-interest peer-to-peer loans, making its renminbi-denominated debt harder to quantify.”

Japan

Project Syndicate – The Bank of Japan’s Moment of Truth – Takatoshi Ito 1/25

  • “After years of deflation, Japan’s labor market is the tightest it has been in decades and the Bank of Japan is still providing significant stimulus to the economy. But with inflation still well below target, central bankers are finding themselves between a rock and hard place.”