Tag: Environment

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.”

January 29, 2018

Perspective

BLS – TED: The Economics Daily – Union Membership Rates in each State, 2017 1/25

  • “New York continued to have the highest union membership rate (23.8%), while South Carolina continued to have the lowest (2.6%).”

statista – The Countries Most Optimistic About 2018 – Niall McCarthy 1/22

Visual Capitalist – Visualizing a Global Shift in Wealth Over 10 Years – Jeff Desjardins 1/26

WSJ – Daily Shot: US Upward Mobility 1/26

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Some Lessons For Living From Older Generations – Ben Carlson 1/25

Project Syndicate – Blockchain’s Broken Promises – Nouriel Roubini 1/26

WSJ – My 10-Year Odyssey Through America’s Housing Crisis – Ryan Dezember 1/26

Markets / Economy

Bloomberg – Worthless Auto Trade-Ins Signal Riskier Loans – Claire Boston 1/25

  • “A growing share of the trade-ins that U.S. auto dealers and lenders accept for car-purchase financing are worthless on paper, a sign that banks and finance companies are making riskier loans to keep up revenue as vehicle sales slow.”
  • “Almost a third of cars traded in last year were worth less than the loans that had been financing them, according to car-shopping website Edmunds. That’s up from about a quarter a decade earlier, said Edmunds, which looked at cars traded in as part of financing packages for new auto purchases in the U.S.”
  • “Underwater trade-ins are just one example of the greater risks that lenders are taking now. New vehicle sales fell 1.8% to 17.2 million in 2017, but lending volume for new and used car purchases was on track to be higher than ever, according to data from the Federal Reserve Bank of New York and consumer credit bureau Experian. The growth in the average amount financed for a new car outpaced median income growth between 2013 and 2016, Moody’s said, suggesting borrowers are getting more strained.”
  • “Any pain from car-loan trouble will likely be just a shadow of the housing bubble collapse, because the auto debt market is much smaller. There were around $9 trillion of mortgages outstanding at the end of the third quarter, compared with $1.2 trillion of auto debt, the New York Fed said. And so far, many of the bonds backed by subprime auto loans are performing well thanks to built-in protections for investors. Wells Fargo analysts said in a note Wednesday that bonds issued by two of the biggest subprime auto lenders — Santander Consumer USA Holdings Inc. and General Motors Co.’s finance arm — have room to reach prices not seen since before the financial crisis.”
  • “The higher percentage of underwater loans on trade-ins may be a sign that car owners are trading in their vehicles sooner than they had previously. A consumer is often the most underwater on his or her auto loan in the first few years of ownership, because the value of the vehicle drops fastest over that time.”
  • “For borrowers who do trade in their underwater cars, lenders are essentially giving them the money to pay down their loan. The dealer sells the used car, and whatever balance remains on the old loan is folded into the new loan. The borrower might get a longer-term loan than he or she had before to help keep monthly payments manageable.”

Real Estate

Commercial Property Executive – REIT Gets SEC OK for St. Regis Aspen Resort IPO – Gail Kalinoski 1/26

  • “Aspen REIT Inc. has been given approval by the Securities and Exchange Commission for a $33.5 million initial public offering allowing investors to buy shares in the luxury St. Regis Aspen Resort in Colorado.”
  • “Upon closing of the IPO, Aspen REIT will be the first single-asset REIT to list on a national securities exchange in the U.S., according to the company.”
  • “Aspen REIT is offering 1,675,000 shares at $20 per share in the Regulation A+ IPO. The REIT applied to list its common stock on the NYSE American stock exchange under the ticker symbol AJAX. Aspen REIT intends to use substantially all of the net proceeds from the IPO, together with equity in Aspen REIT’s subsidiary operating partnership, to acquire the St. Regis Aspen Resort, a full-service, 179-key luxury hotel at the base of Aspen Mountain in the Rocky Mountains.”
  • Well that’s another way to ‘crowd source’ / syndicate funds.

Finance

Topdown Charts – ChartBrief 182 – Bond Yield Outlook – Callum Thomas 1/24

  • “There has been a lot of talk lately about trendlines, key levels and breakouts by some of the big names… Ray Dalio, Jeffrey Gundlach, Bill Gross.  But anyway, you don’t need to be a famous hedge fund manager to see the writing slowly showing up on the wall here across the major global sovereign bond markets.  The charts below show US and German 10-year bond yields have already broken out, and Japan/UK are getting close.”

WSJ – Daily Shot: US 3 Month LIBOR Rate 1/24

Cryptocurrency

Bloomberg – Coincheck Says It Lost Crypto Coins Valued at About $400 Million – Yuji Nakamura and Andrea Tan 1/26

Environment / Science

Yale News – 2018 Environmental Performance Index: Air quality top public health threat 1/23

Mexico

Reuters – Mexico’s drug cartels, now hooked on fuel, cripple the country’s refineries – Gabriel Stargardter 1/24

Puerto Rico

NYT – Hurricane-Torn Puerto Rico Says It Can’t Pay Any of Its Debts for 5 Years – Patricia Mazzei and Mary Williams Walsh 1/24

  • “The devastation wrought by Hurricane Maria has made Puerto Rico’s already dire financial situation even worse: The island’s leaders acknowledged late Wednesday that they will not be able to pay down any portion of their more than $70 billion debt for the next five years because of the damage.”
  • “Just before the hurricane, Puerto Rico had made plans to pay creditors a total of $3.6 billion through 2022. That was a fraction of the amount due, had the island, a United States territory, not gone into default.”
  • “Now, Puerto Rico expects its budget to be $3.4 billion in the red this year — a deficit that will take five years to close — because of the storm’s toll.”
  • “Nearly a third of customers remain without electricity, more than four months after the storm.”
  • “The government projects its population will shrink by 19.4% over the next five years, with a total exodus of over 600,000 people.”

 

January 26, 2018

Perspective

statista – Is Airbnb Really Cheaper Than A Hotel Room? – Niall McCarthy 1/24

Visual Capitalist: TitleMax – A Decade of Grocery Prices for 30 Common Items – Jeff Desjardins 1/24

Worthy Insights / Opinion Pieces / Advice

Bloomberg – Dalio Says Bonds Face Biggest Bear Market in Almost 40 Years – Nishant Kumar and Erik Schatzker 1/24

CNNMoney – Here’s how much money Americans think you need to be wealthy in 10 major US cities – Kathleen Elkins 1/24

Economist – Why armed intervention is Venezuela is a bad idea – Bello 1/18

NYT – Apple Can’t Resist Playing by China’s Rules – Chen Guangcheng 1/23

  • This is in regard to providing its users’ (in China) data to Big Brother.

WSJ – GE Looks Ugly in Its Underwear – Spencer Jakab 1/24

  • “GE’s new transparency is welcome, but a focus on cash shows the company is probably no bargain even after its swoon.”

Markets / Economy

WSJ – Daily Shot: Central Bank Net Asset Purchases 1/25

WSJ – A Shortage of Trucks Is Forcing Companies to Cut Shipments or Pay Up – Jennifer Smith 1/25

Cryptocurrency

CNBC – Ratings firm issues first grades on cryptocurrencies, sparking outrage online and a cyberattack – Evelyn Cheng 1/24

WSJ – Hedge Funds Grow Wary of Cryptocurrency Mania – Gregor Stuart Hunter and Laurence Fletcher 1/24

Tech

FT – Germany threatens curbs on Facebook’s data use – Guy Chazan 1/24

  • “Antitrust investigation puts social network’s business model under scrutiny.”

Environment / Science

Economist – How China cut its air pollution 1/25

  • “The biggest polluters are state-owned, so government efforts to reduce concentrations of the smallest polluting particles have been effective.”

Health / Medicine

Economist – Obesity: not just a rich-world problem 1/24

  • YouTube video

Shipping

WSJ – A Brief History of Shipping – Costas Paris, Thomas Di Fonzo, and Liliana Llamas 1/24

  • Video

Britain

FT – ‘Sixty per cent of older buy-to-let loans will become loss making’ – James Pickford 1/24

  • “Tax relief changes will have a huge impact on landlords’ mortgages, report finds.”

China

Economist – China is getting tougher on Taiwan – Banyan 1/18

South America

WSJ – Daily Shot: Buenos Aires Stock Exchange Merval Index 1/24

  • Reforms in Argentina have been working.

January 22, 2018

Perspective

Visual Capitalist – What Assets Make Up Wealth? – Jeff Desjardins 1/19

Worthy Insights / Opinion Pieces / Advice

A Teachable Moment – These Are Like, Really Bad Funds – Anthony Isola 1/18

Bloomberg View – No One Wants Your Used Clothes Anymore – Adam Minter 1/15

  • “A once-virtuous cycle is breaking down. What now?”

FT – Fixation on timing of peak oil is ‘misguided’ – Anjli Raval 1/17

Pragmatic Capitalism – 2 Annoying Myths About Low Rates – Cullen Roche 1/19

  • “There’s usually two forms of ideological rhetoric that accompany low interest rates. The first is that the Fed has ‘manipulated’ interest rates lower. And the second is that the Fed is ‘punishing savers’. These myths have scared people away from stocks and bonds and left them frozen in cash or worse, chasing commodities and gold. So let’s take a look at each of these ideas because some clarity might help put things in a more practical perspective.”

Wolf Street – What Will Rising Mortgage Rates Do to Housing Bubble 2? – Wolf Richter 1/20

  • “The US government bond market has further soured this week, with Treasuries selling off across the spectrum. When bond prices fall, yields rise. For example, the two-year Treasury yield rose to 2.06% on Friday, the highest since September 2008.”
  • “In the chart, note the determined spike of 79 basis points since September 8, 2017. That was the month when the Fed announced the highly telegraphed details of its QE Unwind.”
  • “The ten-year yield – the benchmark for financial markets that most influences US mortgage rates – jumped to 2.66% late Friday.”
  • “This is particularly interesting because the 10-year yield had declined from March 2017 into August despite the Fed’s three rate hikes last year, and rising short-term yields.”
  • “At 2.66%, the 10-year yield has reached its highest level since April 2014, when the ‘Taper Tantrum’ was winding down. That Taper Tantrum was the bond market’s way of saying ‘we’re shocked and appalled,’ when Chairman Bernanke dropped hints the Fed might eventually begin tapering what the market had called ‘QE Infinity’.”
  • “The 10-year yield has now doubled since the historic intraday low on July 7, 2016 of 1.32% (it closed that day at 1.37%, a historic closing low):”
  • “Friday capped four weeks of pain in the Treasury market. But it has not impacted yet the corporate bond market, and the spread in yields between Treasuries and corporate bonds, and particularly junk bonds, has further narrowed. And it has not yet impacted the stock market, and there has been no adjustment in the market’s risk pricing yet.”
  • “But it has impacted the mortgage market. On Friday, the average 30-year fixed-rate mortgage with conforming loan balances ($417,000 or less) for top-tier borrowers, according to Mortgage News Daily, ended at 4.23%, the highest in nine months.”
  • “But historically, 4.25% is still very low. And likely just the beginning of a long, uneven climb higher.”
  • “And the impact on mortgage payments can be sizable. When rates rise for example from 3.5% to 4.5%, the payment for a $250,000 mortgage jumps by $144 to $1,267 a month (a 13% increase).”
  • “A one-percentage-point increase takes on larger proportions in a place like San Francisco, where it might take a mortgage of $1.25 million to buy a median home. At 3.5%, the monthly payment is $5,613. At 4.5%, it jumps to 6,334, an increase of $721 a month and an increase of $8,652 a year.”
  • “A mortgage rate of 4.5% is still very low! And it is likely headed higher.”
  • “Since the Financial Crisis, the ultra-low mortgage rates were among the factors that have caused home prices to soar. But as rates are heading higher, the housing market is in for a big rethink. These higher rates are going to be applied to the now prevailing sky-high home prices.”
  • “There’s another aspect to this equation: Homebuyers who are willing and able to stretch to cough up those higher mortgage payments can’t spend this money on other things. Falling mortgage rates gave a huge boost to home prices and to the entire economy in numerous ways. But that process will go into reverse.”

WSJ – Can We Be Brutally Honest About Investment Returns – Jason Zweig 1/19

  • “Pension funds have fantastical expectations of the market.”

Markets / Economy

Economist – Return of the Mac – Daily Chart 1/18

WSJ – IBM Revenue Grows for the First Time Since 2012 – Ted Greenwald 1/18

  • First time in 23 quarters.

Bloomberg – Inflation Isn’t Missing Fed’s 2% Target in West’s Booming Cities – Steve Matthews 1/17

Real Estate

Bloomberg – The Value of New York Real Estate Jumps More Than 9% – Martin Z Braun 1/17

  • “The city set a value of $1.26 trillion for its more than one million properties for the fiscal year beginning in July, an increase of 9.4% over the previous period that promises to boost the government’s tax collections.”
  • “Residential and commercial property value in Brooklyn rose 12%, the most of New York’s five boroughs, to $335.5 billion, according to the city’s finance department. Manhattan property rose 7.3% to $483.6 billion, the slowest growth.”
  • We’ll see if the values hold up in Brooklyn as rents – hence revenues – soften; see below.

WSJ – Brooklyn Landlords Slash Rents to Attract Tenants – Josh Barbanel 1/17

  • “The median rent across the borough has declined by more than 9% since the peak in 2014, forcing landlords to offer more concessions.”

NYT – Tax Overhaul Is a Blow to Affordable Housing Efforts – Conor Dougherty 1/18

  • “’It’s the greatest shock to the affordable-housing system since the Great Recession,’ said Michael Novogradac, managing partner of Novogradac & Company, a national accounting firm based in San Francisco.”
  • “According to an analysis by his firm, the new tax law will reduce the growth of subsidized affordable housing by 235,000 units over the next decade, compounding an existing shortage.”

Reuters – German discounter Lidl slows U.S. expansion – Douglas Busvine 1/17

WSJ – It’s Time for China’s Property Developers to Quit Gambling – Jacky Wong 1/19

  • “Chinese house prices have been booming for two years and shares of the country’s home builders—which have made big leveraged bets on the market—have likewise been on a tear. The question now, as the market shows signs of cooling, is: Should they hold or fold?”
  • Some of the sector’s best performers are also the most indebted. Shares in China Evergrande, which sits on net debt of $63 billion, have surged nearly six times in value since the beginning of 2017 (this has led to the company’s chairman – Hui Ka Yan – becoming the wealthiest person in China). Likewise, Sunac China’s shares have risen more than five times in the same period. Its net debt is equivalent to four times its equity, while the ratio is 240% for Evergrande. The average for U.S. real-estate firms, by contrast, is 96%, according to S&P Global Market Intelligence.”
  • “There have been signs of developers deleveraging. Evergrande raised a total of $20 billion last year by selling about a third of its property business in three rounds—the latest in November. Sunac raised $1 billion from issuing new shares last month.”
  • “More remedial action will be needed if the cooling of China’s housing market continues. Data this week showed housing prices in China ticked up slightly in December; but growth is much slower now than a year ago, and prices are heading down in major markets such as Beijing. Lower revenues mean developers will have to reduce their already sky-high debt-servicing costs: Evergrande’s interest bill in the first half of last year was equal to about half its operating profit, for example. The company has reported negative operating cash flow ever since it was listed in 2009.”

Finance

Visual Capitalist – The Periodic Table of Commodity Returns – Jeff Desjardins 1/18

Cryptocurrency

Bloomberg – Hackers Have Walked Off With About 14% of Big Digital Currencies – Olga Kharif 1/18

  • “Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms.”
  • “In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and rival currency Ether, according to Lex Sokolin, global director of fintech strategy at Autonomous Research LLP. Given the currencies’ explosive surge at the end of 2017, the cost in today’s money is much higher.”
  • “Blockchain records are shared, making them hard to alter, so some users see them as super-secure. But in many ways they are no safer than any other software, Matt Suiche, who runs the blockchain security company Comae Technologies, said in a phone interview.”
  • “And since the market is immature, blockchains may even be more vulnerable than other software. There are thousands of them, each with its own bugs. Until the field is winnowed to a few favorites, as happened with web browsers, securing them all will be a challenge.”
  • “Many blockchains started as forks that diverged from existing crypto ledgers, and as Taiwanese security researchers have pointed out, every fork gives hackers a new way to try to falsify data.”
  • “In a Dec. 25 paper, researchers at the Institute of Electrical and Electronics Engineers outlined ways hackers can spend the same Bitcoins twice, the very thing blockchains are meant to prevent. In a Balance Attack, for instance, hackers delay network communications between subgroups of miners, whose computers verify blockchain transactions, to allow for double spending.”

Business Insider – Some cryptocurrency traders in South Korea took the bitcoin ‘bloodbath’ to a whole new level – David Choi 1/18

  • Check out the photos / comments.

Cointelegraph – Bitconnect Ponzi Scheme – No Sympathy From Crypto Community – Gareth Jenkinson 1/19

NYT – When Trading in Bitcoin, Keep the Tax Man in Mind – Tara Siegel Bernard 1/18

Tech

Statista – Global PC Market Shrinks to Decade Low – Felix Richter 1/17

Environment / Science

FT – Home fuel blamed for 25% of India’s air pollution deaths – Kiran Stacey 1/11

  • “Main cause of 1.1m annual toll is domestic burning of wood, coal or even cow dung.”

NYT – Warming, Water Crisis, Then Unrest: How Iran Fits an Alarming Pattern – Somini Sengupta 1/18

  • “In short, a water crisis — whether caused by nature, human mismanagement, or both — can be an early warning signal of trouble ahead. A panel of retired United States military officials warned in December that water stress, which they defined as a shortage of fresh water, would emerge as ‘a growing factor in the world’s hot spots and conflict areas’.”
  • “’With escalating global population and the impact of a changing climate, we see the challenges of water stress rising with time,’ the retired officials concluded in the report by CNA, a research organization based in Arlington, Virginia.”

China

FT – China births fall despite relaxation of one-child policy – Tom Hancock 1/18

Reuters – China’s Dalian Wanda Group says 2017 revenue down 10.8% – Clare Jim and Julie Zhu 1/20

South America

WSJ – Venezuela’s Oil Production Is Collapsing – Anatoly Kurmanaev and Kejal Vyas 1/18

  • “Crude oil production fell 12% in December from the month before, according to government figures released Thursday. Over all of 2017, output was down 29%, among the steepest national declines in recent history, driven by mismanagement and under investment at the state oil company, say industry observers and oilmen.”
  • “The drop is deeper than that experienced by Iraq after the 2003 war there—when the amount of crude pumped fell 23%—or by Russia during the collapse of the Soviet Union, according to data from the Organization of the Petroleum Exporting Countries.”
  • “’In Venezuela, there is no war, nor strike,’ said Evanán Romero, a former director of government-run Petróleos de Venezuela SA. ‘What’s left of the oil industry is crumbling on its own’.”

January 17, 2018

Perspective

A Wealth of Common Sense – Updating My Favorite Performance Chart For 2017 – Ben Carlson 1/14

Worthy Insights / Opinion Pieces / Advice

A Teachable Moment – The Power of Fee Shaming – Anthony Isola 1/15

Yahoo Finance – Business Insider: China is heading toward a debt crisis that will throw into question everything we think we know about its economy – Pedro Nicolaci da Costa 1/15

Markets / Economy

Bloomberg – The Stock Market Never Goes Down Anymore – Elena Popina 1/12

  • “Up eight times in the first nine days of 2018, the S&P 500 has broken away from a trend line, its 200-day moving average, with a velocity unseen since 2013, the best year for equities in a generation. The benchmark now sits more than 11% above the level, putting it in the 92nd percentile of momentum, data going back 20 years show.”
  • “Something has changed in equities. If 2017 was a slow but steady slog, 2018 has been off to the races, with shares rising at four times last year’s daily rate on the back of Donald Trump’s tax package and gathering signs of economic strength. Forty seven companies in the S&P 500 are already up at least 10% this year, compared with just two down as much.”
  • “Fear of missing out is rampant not just on Wall Street but worldwide. Globally, stock funds saw a $24 billion inflow in the five days through Thursday, the sixth largest weekly total ever.”
  • “The average of 23 strategists predictions is for the S&P 500 to reach 2,914 at year-end. If stocks were to maintain the same upward trajectory they’ve exhibited in the last nine days, it would take roughly two more weeks to reach the strategists’ target.”
  • “At 3.4 times its book value, the S&P 500 trades at the most expensive level since 2002, while its 14-day relative strength index reached a level unseen since 1996. The S&P 500 rose 1.6% to 2,786 this week, pushing the spread between the gauge and its 200-day moving average to 11.5%, the widest in five years.”
  • “To Walter Todd, Greenwood Capital chief investment officer, the optimism over earnings growth could continue to propel the stocks even higher.”
  • “’The fundamentals for the rally are strong, though the higher it goes, the higher the risk of a correction, and the higher the risk that the correction will be steep,’ Todd said by phone. ‘For now, fear of missing out is prompting investors who’ve stayed on the sidelines to jump in, as people say, ‘we missed the rally last year, we’re not going to miss on it again’’.”

NYT – BlackRock’s Message: Contribute to Society, or Risk Losing Our Support – Andrew Ross Sorkin 1/15

  • “Laurence D. Fink, founder and chief executive of the investment firm BlackRock, is going to inform business leaders that their companies need to do more than make profits — they need to contribute to society as well if they want to receive the support of BlackRock.”
  • “Mr. Fink has the clout to make this kind of demand: His firm manages more than $6 trillion in investments through 401(k) plans, exchange-traded funds and mutual funds, making it the largest investor in the world, and he has an outsize influence on whether directors are voted on and off boards.”

Real Estate

WSJ – Daily Shot: Vanguard REIT ETF 1/12

  • “REITs broke out to the downside on higher bond yields.”

Energy

FT – Gas and oil producers among hardest hit by US tax reforms – Ed Crooks 1/15

  • “US oil and gas producers are among companies hit hardest by new restrictions on tax relief for interest payments, an analysis of the impact of the reforms has shown.”
  • “The sweeping overhaul of the US tax system signed into law by President Donald Trump just before Christmas cut the main rate for corporations sharply, but will still mean higher bills for some businesses because it sets limits on deductions for interest payments.”
  • “The new law will put pressure on heavily indebted companies to reduce their borrowings, and could push over-burdened companies into steeper decline if their earnings fall.”
  • “Companies in industries including oil and gas, coal mining, casinos and trucking are among those likely to be most affected, according to Greensill Capital, a trade finance firm.”

WSJ – Daily Shot: Brent Crude 1/15

Finance

WSJ – Trouble Ahead for the Treasury Market – Justin Lahart 1/15

  • “Inflation, less central bank bond buying, an increase in supply – there are plenty of reasons for Treasury yields to go a lot higher this year.”

Cryptocurrency

Bloomberg Gadfly – Can Hedge Funds Handle a Bitcoin Bust? – Lionel Laurent 1/16

MarketWatch – Bitcoin tumbles to 6-week low as top cryptocurrencies all sell off – Victor Reklaitis 1/16

TechCrunch – Researchers find that one person likely drove Bitcoin from $150 to $1,000 – John Biggs 1/15

  • “Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman have written a fascinating paper on Bitcoin price manipulation. Entitled ‘Price Manipulation in the Bitcoin Ecosystem’ and appearing in the recent issue of the Journal of Monetary Economics the paper describes to what degree the Bitcoin ecosystem is controlled by bad actors.”
  • “The manipulation happened primarily via two bots, Markus and Willy, that seemed to be performing valid trades but did not actually own the bitcoin they were using. During the Mt. Gox hack a number of these bots were able to create fake trades and make off with millions while manipulating the price of BTC.”
  • “’As mainstream finance invests in cryptocurrency assets and as countries take steps toward legalizing bitcoin as a payment system (as Japan did in April 2017), it is important to understand how susceptible cryptocurrency markets are to manipulation. Our study provides a first examination,’ write the researchers.”

Environment / Science

South China Morning Post – China builds ‘world’s biggest air purifier’ (and it seems to be working) – Stephen Chen 1/16

  • “A 100-meter (328-foot) high air purification tower in Xian in Shaanxi province has helped reduce smog levels in the city, preliminary results suggest.”
  • “The head of the research, Cao Junji, said improvements in air quality had been observed over an area of 10 square kilometers (3.86 square miles) in the city over the past few months and the tower has managed to produce more than 10 million cubic meters (353 million cubic feet) of clean air a day since its launch. Cao added that on severely polluted days the tower was able to reduce smog close to moderate levels.”
  • “The experimental facility in Xian is a scaled-down version of a much bigger smog tower that Cao and his colleagues hope to build in other cities in China in the future.”
  • “A full-sized tower would reach 500 meters (1,640 feet) high with a diameter of 200 meters (656 feet), according to a patent application they filed in 2014.”
  • “The size of the greenhouses could cover nearly 30 square kilometers (11.6 square miles) and the plant would be powerful enough to purify the air for a small sized city.”

China

FT – China disrupts global companies’ web access as censorship bites – Yuan Yang and Lucy Hornby 1/16

  • “China is plugging the last holes in its ‘Great Firewall’ internet censorship apparatus, hampering global groups’ ability to operate in the country.”
  • “China aggressively censors the internet, cutting off locals’ access to Facebook, Google, YouTube and much more, to control what news and facts reach its population. A study by Freedom House, a US state-funded non-profit organization, in November ranked China last in the world for internet freedoms, for the third year in a row.”
  • “Multinationals have historically used software known as virtual private networks (VPNs) to bypass censorship and protect their communications from hacking and government surveillance. But in recent months, the companies said, they have had difficulty using their custom-built VPNs.”
  • “At the same time, regulators have been pushing multinationals to buy and use state-approved VPNs. The state-approved versions can cost tens of thousands of dollars a month and expose users’ communications to Beijing’s scrutiny.” 
  • “’This is a significant ramp-up from previous measures,’ said Carly Ramsey, associate director of consultancy Control Risks in Shanghai. ‘The Xi administration has prioritized control over all information flows within China, and in and out of its borders’.”
  • “’This is not just about tightening access, but also giving the government more visibility and control over cross-border connections. The government now has many new tools to make cyber space ‘secure and controllable’ on their terms,’ said Samm Sacks, senior fellow at the Center for Strategic and International Studies, a think-tank.”
  • “’In a society where the government wants to control the flow of communications and information, secure communications and encryption are certainly an ‘enemy’,’ said Sunday Yokubaitis, chief executive of VPN provider Golden Frog.”

FT – China reprimands companies calling Tibet and Taiwan independent – Emily Feng and Edward White 1/15

  • “Chinese regulators have publicly reprimanded a string of foreign corporations, including Qantas, Zara and Marriott, for labelling Tibet and Taiwan as independent countries, in online drop-down menus.” 
  • “’We welcome foreign corporations’ investment and operation in China,’ said Lu Kang, a spokesperson for the ministry of foreign affairs, at a regular press briefing last week. ‘Meanwhile, they should respect China’s sovereignty and territorial integrity, abide by China’s laws and respect Chinese people’s national feelings.’ Officials in Taipei said that China’s actions did not help Beijing earn the trust of Taiwanese people.”
  • “’Taiwan is undoubtedly a country,’ a spokesperson for President Tsai Ing-wen told the Financial Times. ‘Wiping out the name of Taiwan off the internet will not wipe out our existence in the world.’”

WSJ – China’s Hot Housing Market Begins to Cool – Dominique Fong 1/16

  • “While China has seen brief property downturns before, the high debt levels that fueled the boom makes this slump a particular risk for China’s economy and the policy makers trying to manage it.”
  • “Home prices fell 0.3% in November from a year earlier In Beijing and Shanghai, the most recent official data show. It was a small drop but a striking reversal from double-digit price surges that lasted more than a year.”
  • “Prices of advertised new Shanghai homes decreased 8% from October through mid-December, according to Brandon Emmerich at Granite Peak Advisory, a New York research firm that analyzed over 20,000 daily listings from Anjuke, a Chinese property-listing platform.”
  • “Though China’s Housing Ministry has said that property controls won’t be relaxed, the dangers of the downturn are lessened by the government’s ability to reboot demand by lifting restrictions—and Beijing has held off on introducing an anticipated property tax that could curb speculation but damp prices.”

 

January 11, 2018

Perspective

Reuters – Eastman Kodak unveils cryptocurrency, stock doubles – Noel Randewich 1/9

  • Really…

WSJ – Daily Shot: FactsMaps.com – US States Population Growth by Rate 1950-2016 1/9

Worthy Insights / Opinion Pieces / Advice

Economist – A small town in Japan doubles its fertility rate 1/9

  • “Subsidizing parenthood appears to work wonders.”

Economist – After a bumper 2017 will 2018 be kind to the financial markets? – Buttonwood 1/6

Markets / Economy

WSJ – Daily Shot: Advisor Perspectives – Buffett Indicators 1/9

Real Estate

Bloomberg Businessweek – Landlords Woo Startups With Built-In Clubs and Office Beers – Prashant Gopal and David M Levitt 1/5

  • “Stodgy office towers around the U.S. are getting millennial-friendly makeovers.”

Finance

MarketWatch – Ripple’s market cap cut in half as the cryptocurrency keeps falling – Victor Reklaitis 1/10

  • “Bitcoin falls below $14,000 while Ether coins rally.”

FT – China moves to shutter bitcoin mines – Gabriel Wildau 1/9

FT – US government bond sell-off gathers pace – Eric Platt and Robin Wigglesworth 1/10

  • “Ten-year yields near 2017 high as big bond investors declare the start of a new era.”

Environment / Science

UCSUSA.org: NOAA – U.S. 2017 Billion-Dollar Weather and Climate Disasters – Rachel Cleetus 1/8

China

Economist – China’s great firewall is rising 1/4

FT – Australia lashes out at China’s ‘useless’ Pacific projects – Mark Wembridge 1/10

  • “Canberra accuses Beijing of building roads to nowhere in developing nations.”

WSJ – Real News on Fake Data in China – Nathaniel Taplin 1/10

  • “There was some bad news from Inner Mongolia last week: Apparently its headline economic statistics are complete nonsense. The remote northern Chinese province, famous for its sweeping Midwest-like plains, said its 2016 industrial growth had been overstated by 40%, while government revenue was inflated a mere 26%.”
  • “The lesson is that Chinese GDP represents a reasonable long-term indicator of overall trends, but isn’t particularly helpful in capturing cyclical shifts, in part because figures from the more volatile, less diversified inland economies may be fudged during sharp slowdowns.”