Tag: Health / Medicine

March 9, 2018


WSJ – Daily Shot: Terrorism Deaths vs. Coverage 3/8

Worthy Insights / Opinion Pieces / Advice

FT – The rise – and fall – of the crypto-currency millionaires – Aaron Stanley 3/7

Mauldin Economics – Why American Workers Aren’t Getting A Raise: An Economic Detective Story – Jonathan Tepper 3/7

  • “Areas with fewer employers have lower wages.” (Source: Roosevelt Institute)

Markets / Economy

WSJ – Daily Shot: FRED – Total US Consumer Loans owned by Federal Government 3/8


WSJ – Daily Shot: eia – U.S. crude oil exports in perspective 3/7


WSJ – Daily Shot: Credit Suisse – Active & Passive Fund Flows 3/8

  • “February was a rough month, with both passive and active products losing capital.”

WSJ – Daily Shot: Credit Suisse – Equity Flows by Strategy 3/8

Market Watch – CVS’s $40 billion debt deal to fund Aetna takeover puts credit rating in peril – Ciara Linnane 3/7

WSJ – Daily Shot: Largest Corporate Bond Deals 3/8


WSJ – YouTube Hiring for Some Positions Excluded White and Asian Men, Lawsuit Says – Kirsten Grind and Douglas MacMillan 3/1

Health / Medicine

WSJ – Daily Shot: Moody’s – Pipeline for nursing graduates by US State 3/8


WSJ – Daily Shot: FRED – Average Amount Financed for New Car Loans 3/8

  • “The average size and duration of new automobile loans in the US keep rising.”

WSJ – Daily Shot: FRED – Average Maturity for New Car Loans 3/8


Bloomberg Quint – Super Rich Indians’ Love of Stocks Dwarfs Rest of the World – Dhwani Pandya 3/8

  • Super rich being those with net assets of $50 million or more.


March 2, 2018


Economist – The hidden cost of congestion – Daily Chart 2/28

  • “In rich countries, city-dwellers lose nearly $1,000 a year while sitting in traffic.”

Tax Foundation – Sources of Personal Income 2015 Update – Erica York 2/27

Visual Capitalist – The World as 100 People over the last two centuries – Jeff Desjardins 2/28

WEF – These will be the world’s most populated countries by 2100 – Rob Smith 2/28

Worthy Insights / Opinion Pieces / Advice

Economist – Black Americans are over-represented in media portrayals of poverty – C.K. 2/20

  • “The poverty rate amongst black Americans, at 22%, is higher than the American average of 13%. But black people make up only 9m of the 41m poor Americans.”

FT – Millennials poorer than previous generations, data show – Sarah O’Conner 2/23

  • “Stagnant wages and rising house prices hit disposable income levels.”

NYT – Is Bitcoin a Waste of Electricity, or Something Worse? – Binyamin Appelbaum 2/28

  • “Money is supposed to be a means of buying things. Now, the nation’s hottest investment is buying money. And the investment rush is raising questions about whether one reason for the slow pace of economic growth in recent years is that the nation is busy distracting itself. While Bitcoin mining may not be labor intensive, it diverts time, energy and capital from other, more productive activities that economists say could fuel faster growth.”
  • “By a wide range of measures, America has a productivity problem. The economy is growing slowly, and almost 20% of adults in their prime working years are neither working nor trying to find work. Americans who do have jobs are less likely to start their own companies. Even the most basic kind of production is in decline. Americans are having less sex and making fewer babies.”

Real Estate

PBN – Hawaii homebuyers top nation with highest mortgage debt-to-income ratio – Janis Magin 2/28

  • “Homebuyers in Honolulu have the highest mortgage debt-to-income ratio in the nation, while homebuyers on Maui have a ratio that’s third-highest in the U.S., topped only by San Jose in California’s Silicon Valley, according to a report by the personal finance company SmartAsset.”
  • “Homebuyers in the Honolulu metropolitan area have mortgages worth 3.959 times their annual income, on average, according to an analysis of data from the Consumer Financial Protection Bureau.” 
  • “The data showed that Honolulu homebuyers have an average income of $131,639 and that the average mortgage is for $521,201.”
  • “Maui homebuyers in the Kahului-Wailuku-Lahaina metro area have an average income of $131,681, and the average mortgage there is $468,597, putting their mortgage-to-income ratio at 3.559.”
  • “By contrast, homebuyers in San Jose have an average income of $207,062 and an average mortgage of $740,693, giving them a ratio of 3.577.”
  • California had 17 of the top 25 cities with the largest mortgage-to-income ratios on the list, while Hawaii had two of the top three.
  • “Nationally, the average mortgage-to-income ratio was 2.119.”

WSJ – Retailers Post Strong Numbers – And Mall Shares Keep Falling – Esther Fung 2/27

  • “Prospect of higher interest rates a worry to shopping mall REIT investors.”
  • “While mall landlords generally have shown they are able to keep occupancy levels buoyant, there are growing concerns about pressure on rents and higher capital expenditures as they look to attract and retain tenants, many of which are shrinking their store footprints.”
  • “Recent comments by Starbucks Corp. Executive Chairman and founder Howard Schultz that he expects rents to fall also weighed on the retail property sector Tuesday.”
  • “’Over the last few weeks I have been in a number of U.S. cities and observed firsthand the abundance of empty storefronts across the country, in prime A1 locations,’ Mr. Schultz said in an email to Starbucks senior leadership team on Sunday.”
  • “’We are at a major inflection point as landlords across the country will be forced (sooner than later) to permanently lower rent rates to adjust to the ‘new norm’ as a result of the acute shift away from traditional brick-and-mortar retailing to e-commerce,’ he added.”


WSJ – Daily Shot: US Total Crude Oil Production 2/23


Bloomberg – Investing in Index Funds Is No Longer Passive – Dani Burger 2/27

  • “Passive has gotten so large that it’s killed everything in its path — including itself. Welcome to the ‘Passive Singularity‘.”
  • “There are now so many indexes that putting your money in an index-tracking fund is a move requiring an active decision, according to researchers at Sanford C Bernstein & Co. The industry’s growth has even forced active managers to focus on selecting indexes themselves — be that to invest in, or to benchmark against.”
  • “It’s the latest broadside from Bernstein’s team, which in 2016 labeled passive investing ‘worse than Marxism’. Investors so far aren’t paying heed: passive mutual funds and ETFs absorbed $692 billion last year, compared to $45 billion in outflows for active funds, according to data compiled Bloomberg Intelligence.”
  • “The Bernstein strategists base their conclusions around the millions of indexes in existence, which far surpass the number of single securities. Do a little math and the madness is clear: with 3,000 easily-investable stocks, the number of possible combinations to turn into an index is a Googol (that number, written out, would be 1 followed by 100 zeros.)”
  • “With nearly half of equity assets managed passively in the U.S., there’s no sign that investors will stop gravitating toward cheaper, index-tracking products. Bernstein’s new research wrestles with a world where passive is larger than ever, and active managers have to fight for the trust of their clients. The team concedes that ‘passive investing has been a great force for democratizing access to capital markets and reducing the costs to society of managing assets’.”
  • “But a massive bull market rally across equities and debt markets has left many investors blind to the risks, which smart asset allocation can help to mitigate, Bernstein said.”
  • “In January, investors added $25 billion to active ETFs and mutual funds while allocating $103 billion to passive vehicles, data from Bloomberg Intelligence show.”
  • “’By all means, investors should save money on implementation by using passive vehicles as part of their allocation,’ the strategists wrote. ‘But the myth of purely passive investment will be exposed by a low-return world.’”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 2/28

  • “Bitcoin has been much less volatile in the past few days.”

Health / Medicine

Our World in Data – Causes of Death – Hannah Ritchie and Max Roser Feb. 2018


WSJ – With Lumber in Short Supply, Record Wood Costs Are Set to Juice Home Prices – Benjamin Parkin 3/1

  • “A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years.”
  • “Builders say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more.”

  • “Prices are rising as lumber yards try to stock up ahead of what looks likely to be a busy building season this spring. A strong economy and tight supply of houses are heating up the home-building market. The number of new units under construction in the U.S. rose almost 10% in January, the Commerce Department said, as strong demand kept builders working through the winter. Permits for new homes, a sign of anticipated construction, also rose.”
  • “Material prices now rival labor shortages as builders’ main concerns, a National Association of Home Builders survey showed in January. Prices for common building varieties like spruce and southern pine are at or near records, according to price-tracking publication Random Lengths. March-dated lumber futures at the Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board feet last week after climbing more than 50% in 14 months.”
  • “That run-up began with a trade dispute between the U.S. and Canada, which provides about a third of U.S. timber, leaving many dealers hesitant to restock at elevated prices. The Trump administration eventually instituted tariffs of 20% or more on Canadian sawmills.”
  • “Problems mounted. The worst wildfires on record hit Canada’s Pacific coast. Hurricane Irma temporarily closed mills in the forests of Florida and Georgia. And then came a shortage of railcars and trucks to transport timber from forests in places like the Pacific Northwest. Rates for flatbed trucks rose 24% in January from a year earlier, according to DAT Solutions LLC.”

March 01, 2018


NYT – By Day, a Sunny Smile for Disney Visitors. By Night, an Uneasy Sleep in a Car. – Jennifer Medina 2/27

Worthy Insights / Opinion Pieces / Advice

Economist – How Putin meddles in Western democracies – Leaders 2/22

FT – A world of debt mortgages our economic future – Derek Scissors 2/22

  • “Irresponsible borrowing by the US, China and India imperils global growth.”

WSJ – The Wayfair Riddle – Elizabeth Winkler 2/26

  • “The furniture retailer’s business has serious flaws, but the stock keeps soaring.”


FT – Rising interest rates punish US power sector – Ed Crooks 2/22

  • “US utilities, sustained for years in a warm bath of favorable financial conditions, are facing a cold shower.”
  • “An expected rise in interest rates and the shake-up of the tax system passed into law at the end of last year are threatening to squeeze utilities’ finances. Already, the S&P 500 utility sector index has dropped 13% from its peak in November.”

FT – Fundamentals do not matter to new breed of oil speculator – Gregory Meyer 2/27


FT – Rising tide of debt to hit rich countries’ budgets, warns OECD – Kate Allen and Chris Giles 2/22

  • “Developed nations face a rising tide of government debt that poses ‘a significant challenge’ to budgets as interest rates increase around the world, the OECD has warned.”
  • “Low interest rates have helped sustain high levels of government debt and persistent budget deficits since the financial crisis, according to the OECD, but the ‘relatively favorable’ sovereign funding environment ‘may not be a permanent feature of financial markets’.”
  • “The warning on the longer-term consequences of high public borrowing marks a shift in stance by the OECD, which as recently as November was praising countries for easing fiscal policy to help global growth.”
  • “In an Economic Outlook, published at that time, the Paris-based organization said that ‘even a lasting increase in 10-year government bond yields of 1 percentage point . . . might worsen budget balances on average by only between 0.1% and 0.3% of GDP annually in the following three years’.”
  • “The total stock of OECD countries’ sovereign debt has increased from $25tn in 2008 to more than $45tn this year. Debt to GDP ratios across the OECD averaged 73% last year, and its members are set to borrow £10.5tn from the markets this year.”
  • “Because much of the debt raised in the aftermath of the financial crisis is set to mature in the coming years, developed nations will have to refinance 40% of their total debt stock in the next three years, the OECD said.”

Health / Medicine

Economist – How to stop lead poisoning – Leaders 2/22


WSJ – Daily Shot: To Stay on the Land, American Farmers Add Extra Jobs – Jacob Bunge and Jesse Newman 2/25

Sovereign Wealth Funds

FT – Norway oil fund posts $131bn return for 2017 – Richard Milne 2/27

  • “Norway’s $1.1tn oil fund returned 13.7% — or NKr1tn ($131bn) — beaten only by 2009 and 2013 in percentage terms.”
  • “Strong stock markets contributed to a 19.4% return for equities while property returned 7.5% and bonds 3.3%.”


Nikkei Asian Review – The hidden risks of China’s war on debt – Yusho Cho 2/28


FT – Huge fraud at Indian bank spurs privatization calls – Amy Kazmin 2/27

  • “In 1969, India’s then prime minister, Indira Gandhi, transformed the country’s banking landscape when she nationalized its 14 biggest commercial lenders, which together accounted for around 70% of the system’s deposits.”
  • “Nationalization was touted as way to protect depositors and force banks — which mainly catered to big industrial houses — to lend to a broader swath of the population, including farmers, traders and small businesses.” 
  • “State dominance over the banking system has not worked out so well for India. Politically driven lending decisions, difficulties agreeing realistic debt workouts when loans sour, as well as uninspired, even fearful bureaucratic management and outdated IT systems have left state lenders with a far higher bad debt burden than their private rivals, hindering India’s economic prospects.” 
  • “Now, the discovery of an alleged $1.8bn fraud at India’s second-largest state lender, Punjab National Bank, is prompting vigorous and concerted calls for New Delhi to admit the failure of Mrs. Gandhi’s bank nationalization — and reverse it.” 
  • “According to PNB, staff at one of its Mumbai branches issued fraudulent bank guarantees for luxury jeweler Nirav Modi, and his diamond-trader uncle Mehul Choksi, to take cash advances from the overseas branches of other Indian banks — all ostensibly guaranteed by PNB.”
  • “Antiquated software systems — guarantees were issued without requisite documents or collateral — meant PNB’s management had no idea of the obligations mounting in its name. Nor did the banks that received the guarantees, mostly other state lenders, suspect any impropriety.” 
  • “Analysts say the scam, which PNB says went on for several years without detection, highlights the rot in state banks and the need for radical change.” 
  • “At the heart of India’s banking crisis, however, is New Delhi’s political control over what should be run as commercial entities and the inherent conflict of interest in the state’s multiple roles as economic policymaker, the largest bank owner and the industry regulator.” 
  • “While New Delhi is now in the middle of a $32bn recapitalization scheme to shore up bank balance sheets after the last wave of bad debts, the PNB fraud has raised fears the government is simply throwing good money after bad.” 
  • “Privatization of some, or even most, of India’s state banks is not a simple or quick solution to the sector’s problems. Analysts say the legacy of five decades of state ownership — and its impact on personnel, incentives and decision-making — will take years to undo. But the PNB fraud has persuaded many Indians it is time to start.”


WSJ – Daily Shot: TD Securities – Japanese Investors Looking For Returns Abroad 2/27

Puerto Rico

WSJ – Daily Shot: CNN – ‘Exodus’ from Puerto Rico: A visual guide – John D. Sutter and Sergio Hernandez 2/21

South America

Bloomberg – Hungry Venezuelan Workers Are Collapsing. So Is the Oil Industry – Fabiola Zerpa 2/22

  • “Starving employees are growing too weak for heavy labor, hobbling the refineries that keep the economy running.”

February 20, 2018


Tax Foundation – State Corporate Income Tax Rates for 2018 – Morgan Scarboro 2/7

Visual Capitalist – Mapping the World’s Wealthiest Cities – Jeff Desjardins 2/16

WSJ – Daily Shot: Credit Suisse – Timeline of Relative Market Capitalizations Since 1900 2/16

WSJ – Daily Shot: TRACE – NRA Contributions to select political candidates 2/15

Worthy Insights / Opinion Pieces / Advice

University of Oxford – Stranded Property Assets in China’s Resource-based Cities: implications for financial stability? – Gerard Dericks, Robert Potts, & Ben Caldecott February 2018

The Atlantic – The Plot Against America – Franklin Foer – March 2018

  • In depth profile on Paul Manafort.

The Atlantic – How WeWork Has Perfectly Captured the Millennial Id – Laura Bliss – March 2018

  • “The company sells a somewhat uneasy combination of capitalist ambition and cooperative warmth.”

WSJ – Growth Is the Missing Ingredient for Kraft Heinz – Aaron Back 2/16

Markets / Economy

FT – Food industry giants struggle to keep up with changing tastes – Anna Nicolaou 2/16

  • “Sales woes at Kraft Heinz, Danone and others force groups to cut costs and eye deals.”

Real Estate

CoStar – Oaktree Becomes Latest Investment Manager to Launch Non-Traded REIT, Looking to Raise up to $2 Billion – Mark Heschmeyer 2/16

  • “Oaktree joins a growing list of major investment firms to expand into non-traded REIT fundraising. The Blackstone Group kicked off the trend in September 2016. So far, other big investors that have followed its lead into the non-traded REIT sector include Nuveen’s TH Real Estate, BGC Partners’ Cantor Fitzgerald, Starwood Capital Group, KKR & Co., and TPG Capital.”

WSJ – New York’s Commercial Property Slump Shows Signs of Slowing – Keiko Morris 2/11


Bloomberg – Hedge Fund Startups in Asia See Signs of Revival – Bei Hu and Klaus Wille 1/21

WSJ – The Rise of Private Assets Is Built on a Mountain of New Debt – Paul J. Davies 2/15


WSJ – Daily Shot: Bitcoin 2/15


FT – SpaceX joins race to make web truly worldwide – Richard Waters 2/15

  • “SpaceX will on Saturday officially enter the race to bring internet access to all parts of the earth’s surface with the planned launch of its first test satellites for a globe-encompassing communications network.”
  • “The latest trial from Elon Musk’s private space company is a world away from last week’s spectacular first launch of Falcon Heavy, the world’s biggest rocket. Undertaken with none of the Tesla chief executive’s usual showman flair — he has not even mentioned it on Twitter — it is an early technical trial for a communications service that could be years from completion.”
  • “If successful, however, SpaceX has said it plans to start launching its first commercial satellites next year, with a constellation of more than 11,000 circling the earth in low-earth orbit by the time the network is complete in 2024.”
  • “SpaceX’s application for approval to test a satellite internet service from the Federal Communications Commission (FCC) is one of 12 made to the US regulators, highlighting the extent of the potential competition.”
  • “SpaceX plans to connect its constellation of satellites to form a so-called mesh network, passing information among them and blanketing the earth.”

Health / Medicine

FT – Good bacteria can help brain function better – Clive Cookson 2/15

  • “Researchers are discovering remarkable new links between gut bacteria and the brain. Problems from poor sleep to memory loss could be helped by manipulating the microbiome, the trillions of bacteria living inside healthy human bodies, the American Association for the Advancement of Science heard on Thursday.”


February 9, 2018


Economist – When the prices are too damn high – Daily Chart 2/5

WSJ – Hard Lessons From the Federal Student-Loan Program’s Coming $36 Billion Shortfall – Josh Mitchell 2/4

  • “U.S. officials have long maintained the federal government would make a profit on its $1.4 trillion student loan portfolio or at least break even, but two recent reports suggest just the opposite will be the case. Government lending to college and graduate students could soon become an immense drain on federal coffers, worsening an already deteriorating U.S. budget picture.”
  • “The Education Department’s inspector general, an agency watchdog, in a report released last week said the profitability of the U.S. federal student-lending program is being squeezed because millions of Americans who borrowed heavily in recent years—including many graduate students—are flocking into a program to have substantial portions of their debts forgiven.”
  • “Students who borrowed in the fiscal year ended Sep. 30, 2015, and enrolled in such ‘income-driven repayment’ plans, for example, are expected to pay back $11.5 billion less than they took to pay tuition and other schooling costs.”
  • “The government still earns billions of dollars every year in interest on the loans it has made to 43 million American undergraduates, graduate students and parents of undergrads. But the losses from those not repaying are now projected to mount and could eat up all of the gains. It is hard to get precise estimates, but the Education Department’s annual financial report, released in November, offered a clue. A footnote in the report projected that money coming in for government student loan and guarantee programs will be $36 billion short of what’s needed to cover outstanding debt and accrued interest.”
  • “A year earlier, the department projected the shortfall at $8.4 billion, while in prior years it projected the program would generate billions of dollars in taxpayer surpluses. The latest report explained that one reason for the sharp switch was the rise of income-driven repayment plans. These plans set monthly payments as a share of a borrower’s income and then forgive any balance that remains after 10, 20 or 25 years, depending on the borrower’s work status and loan size.”
  • “While that $36 billion projection doesn’t quite compare to the $4 trillion federal budget, it’s still an immense sum. To put it in perspective, the government ultimately paid $33 billion in its response to the financial crisis through the Troubled Asset Relief Program, according to the Congressional Budget Office.”

Worthy Insights / Opinion Pieces / Advice

FT – The discreet terror of the American bourgeoisie – Edward Luce 2/7

  • “Elites thought they could have it both ways: capital gains and moral certainty.”

Mauldin Economics – Kill the Quants – John Mauldin 2/7: Once Again – “Kill the Quants (and the Levered ETFs and ETNs) Before They Kill Our Markets” – Douglas A. Kass 2/6

Project Syndicate – Justice Without Borders for Venezuela – Ricardo Hausmann 2/7

  • “According to estimates from MIT’s Billion Prices Project, month-on-month food inflation in Venezuela reached 117.6% in January, or the equivalent of 1,130,000% a year. At the same time, the exchange rate depreciated at an annual rate of more than 700,000%, while the real purchasing power of wages – which barely represented 1,400 calories a day in December – was decimated further. A survey published in early January estimated recent out-migration at four million people, nearly as many as from Syria.”

Markets / Economy

Bloomberg – World’s Largest ETF Hit by Biggest Four-Day Outflow on Record – Sid Verma and Dani Burger 2/7

  • “The global market maelstrom spurred money managers to yank a record $17.4 billion from the mighty SPDR S&P 500 ETF over the past four trading sessions. The $8 billion removed on Tuesday alone was the third-largest daily withdrawal in the post-crisis era.”

Real Estate

Bloomberg – HNA Group Puts $4 Billion of U.S. Properties on Market – Sarah Mulholland 2/8

  • “Among the properties on the block is 245 Park Ave., according to a marketing document seen by Bloomberg. HNA bought that skyscraper less than a year ago for $2.21 billion, one of the highest prices ever paid for a New York office building.”

Health / Medicine

NYT – In Sweeping War on Obesity, Chile Slays Tony the Tiger – Andrew Jacobs 2/7

  • “New regulations, which corporate interests delayed for almost a decade, require explicit labeling and limit the marketing of sugary foods to children.”


FT – Canada’s housing market flirts with disaster – Ben McLannahan 2/7

  • “Canada is in the grip of a housing crisis more severe, by some measures, than anywhere else in the world. Household debt now amounts to more than 100% of the country’s gross domestic product, according to the Basel-based Bank for International Settlements, one of the highest of any developed nation. House prices have raced ahead of wages for years, boosted by loose lending, low interest rates and lax controls on foreign money.”
  • “For now, the number of home loans in arrears across Canada is still very low, suggesting that people are finding ways to cope with ever-larger debts. But rising interest rates are beginning to bite, while a new stress test for mortgages issued by regulated banks has tightened the supply of credit. This week the Toronto Real Estate board said that sales in Canada’s biggest city dropped 22% in January, the weakest for that month since 2009.”
  • “Bullish observers say fears of a meltdown are overblown. Canada can sustain high house prices, they argue, because they reflect the country’s high levels of net migration, restrictive zoning laws and low unemployment.”
  • “Henry Lotin, a retired diplomat and principal at research group Integrative Trade and Economics, says the same forces that have pushed up prices in global hubs such as New York are now doing the same to the most attractive parts of Canada. ‘Torontonians should be thankful and we should manage it as best we can. We really have to be prepared that demand is going to exceed supply for the foreseeable future’.”
  • “Many also note that mortgage books at the big banks look rock-solid. Royal Bank of Canada, for example, which recently joined the club of the world’s most systemically important banks thanks to years of rapid asset growth, had a Canadian residential mortgage portfolio of an average C$231bn in the year to October. Defined as estimates of losses on impaired loans and losses incurred but not yet identified, provisions for credit losses were just C$33m — or one one-hundredth of 1%.”
  • “Others say pristine loan books are not a good indicator of the stress lurking in the system. For one thing, every homebuyer with a down payment of less than 20% of the purchase price (if less than C$1m) has to buy insurance against default. That has the effect of flattering the banks’ books but shifts the risk of default to insurers such as the state-backed Canada Mortgage and Housing Corporation.”
  • “CMHC was set up after the second world war to help returning veterans find housing. These days it insures about C$480bn of residential mortgages, or almost one-third of the outstanding stock in Canada, using an automated system to process about two-thirds of applications.”
  • “Meanwhile, the uninsured segment is growing. As the market has barreled upwards in recent years, borrowers have been able to convert insured mortgages into uninsured mortgages simply by buying a property, waiting for the price to rise, then refinancing.”
  • “Uninsured buyers made up about three-quarters of new loans at federally regulated banks in 2017, up from two-thirds in 2014, according to the Bank of Canada. In Vancouver, where the average sales price of condos hit a record of C$1.1m in January, more than double the level a decade earlier, about 90% of new mortgages are uninsured.”
  • “Laurentian Bank, Canada’s seventh-biggest by assets, said in December that it would have to buy back about C$300m of mortgages it had sold to third parties, having found that borrowers had ’embellished’ income and assets. Last month, the Montreal-based bank said the buyback obligations had increased to about C$400m, and it would have to raise more capital.”
  • “That kind of disclosure — in dribs and drabs, each more alarming than the last — has echoes of the beginning of the US mortgage crisis, when terms such as ‘liar loan’ began to enter the vernacular. ‘Trends are developing . . . that we took for granted were not an issue in Canada,’ says Gabriel Dechaine, an analyst at National Bank of Canada. ‘There are puffs of smoke, but I don’t want to yell fire in a crowded theater’.”
  • “More strains could emerge. With interest rates rising — three increases in the central bank’s policy rate since July has left it at 1.25% — many borrowers may be facing a struggle to refinance in a market where almost all mortgages are renewed every five years or less.”
  • “Anecdotal evidence suggests tougher rules on underwriting are also beginning to curb lending. On January 1 the federal banking regulator, the Office of the Superintendent of Financial Institutions, introduced a rule requiring all new mortgage applicants to show they could cope with interest rates substantially higher than their contracted rate. Previously, stress tests applied only to insured mortgages.”


Bloomberg – Frenzy of Fines for China’s Bank Is Only Just Getting Started – Jun Luo and Alfred Liu 2/5

  • “China’s banking regulator is increasingly showing its teeth, slapping a record amount of fines on financial institutions in the past several months for transgressions such as lax lending procedures and manipulating bad-loan data. Expect the unprecedented frenzy to continue.”
  • “The China Banking Regulatory Commission (CBRC) announced 3,452 penalties and confiscations of funds involving 1,877 financial institutions and totaling 2.93 billion yuan ($465 million) in 2017, a 10-fold surge from the previous year, according to official data. Some 270 banking executives were punished, including being banned from the industry for life, according to a CBRC official speaking on CCTV.”
  • “The frenzy continues this year, with an average 16 fines imposed every day of January.”
  • “The biggest of 2018 so far was levied against Shanghai Pudong Development Bank Co., fined 462 million yuan for what the CBRC termed ‘a well-organized fraud.’ Last Friday, the CBRC fined Industrial & Commercial Bank of China Ltd. and 18 other banks’ branches in central China 52.5 million yuan for accepting low-quality gold as collateral for 19 billion yuan worth of loans, resulting in the banks being defrauded.”
  • “After his appointment last year as CBRC chairman, Guo Shuqing embarked on a campaign to root out malpractice in the $39 trillion banking industry, improve implementation of lending policies and curb cross-holdings of financial products.”


February 6, 2018

If you were only to read one thing…

Economist – Pyramid schemes cause huge social harm in China 2/3

  • “The authorities call them ‘business cults’. Tens of millions of people are ensnared in these pyramid schemes that use cult-like techniques to brainwash their targets and bilk them out of their money.”
  • “Many countries suffer from Ponzi schemes, which typically sell financial products offering extravagant rewards. They pay old investors out of new deposits, which means their liabilities exceed their assets; when recruitment falters, the schemes collapse. China is no exception. In 2016 it closed down Ezubao, a multi-billion-dollar scam that had drawn in more than 900,000 investors. By number of victims, it was the world’s largest such fraud.”
  • “Chinese pyramid schemes commonly practice ‘multi-level marketing’ (MLM), a system whereby a salesperson earns money not just by selling a company’s goods but also from commissions on sales made by others, whom the first salesperson has recruited. People often earn more by recruiting others than from their own sales. Since 1998 China has banned the use of such methods, although it does allow some, mostly foreign, MLM companies to do business in China as ‘direct sellers’. This involves recruiting people to sell products at work or at home.”
  • “The distinguishing feature of the Chinese scams is the way they combine pyramid-type operations with cult-like brainwashing.”
  • “Many perfectly legal companies try to boost morale by getting staff to sing company songs or organizing awaydays. China’s business cults, however, combine such techniques with violence.”
  • “Business cults seem to be growing. In the first nine months of 2017 the police brought cases against almost 6,000 of them, twice as many as in the whole of 2016 and three times the average annual number in 2005-15. This was just scratching the surface. In July 2017 the police arrested 230 leaders of Shan Xin Hui, a scheme that was launched in May 2016 and had an estimated 5m investors just 15 months later. In August 2017, after the government launched its campaign against ‘diehard scams’, police in the southern port of Beihai, Guangxi province, arrested 1,200 people for defrauding victims of 1.5bn yuan ($223m). One scheme in Guangxi, known as 1040 Project, was reckoned to have fleeced its targets of 600m yuan.”
  • “The scale of the scams worries the government. Their cultish features make it even more anxious. The Communist Party worries about any social organization that it does not control. Cults are especially worrisome because religious and quasi-religious activities give their followers a focus of loyalty that competes with the party.”
  • “The authorities will find it hard to curb the scams for three main reasons. First, in order to encourage cheap loans for industry, the central bank keeps interest rates low. For years they were negative, i.e, below inflation. That built up demand among China’s savers for better returns. With gross savings equal to just under half of GDP, it is not surprising that some of that pool of money should be attracted to schemes promising remarkable dividends.”
  • “Second, it is often hard for consumers to spot frauds. In 2005 China legalized direct selling, arguing that there was a distinction between that practice and the way that Ponzi schemes operate. But Qiao Xinsheng of Zhongnan University of Economics and Law argues that the difference is often ‘blurred’ in the eyes of the public. Scammers can easily pass them themselves off as legitimate. Dodgy companies exploit government propaganda in order to pretend they have official status. For example, they may claim to be ‘new era’ companies, borrowing a catchphrase of China’s president, Xi Jinping.”
  • “Third, argues Mr Li, business cults manipulate traditional attachments to kin. Companies in America often appeal to individual ambition, promising to show investors how to make money for themselves. Those in China offer to help the family, or a wider group. Shan Xin Hui literally means Kind Heart Exchange. It purported to be a charity, offering higher returns to poor investors than to rich ones. (In reality everyone got scammed.) Business cults rely on one family member to recruit another, and upon the obligation that relatives feel to trust each other. This helps explain why investors who have lost life savings continue to support the companies that defrauded them.”

Worthy Insights / Opinion Pieces / Advice

Economist – Why sub-zero interest rates are neither unfair nor unnatural – Free exchange 2/3

NYT – Early Facebook and Google Employees Form Coalition to Fight What They Built – Nellie Bowles 2/4

NYT – Amazon Asked for Patience. Remarkably, Wall Street Complied. – Michael Corkery and Nick Wingfield 2/4

  • “In a business environment that demands, and rewards, quarterly profits and short-term strategic thinking, Amazon showed extraordinary resolve in focusing on long-term goals, somehow persuading investors to go along.”
  • “Over its first decade in existence, including long stretches where it consistently reported losses, Amazon enjoyed a luxury afforded few companies: leeway.”
  • “Amazon has reported an annual profit in only 13 of the 21 years that it has operated as a publicly traded company, according to FactSet, a financial data firm.”
  • “And its profit margins, already low by some measures, have fluctuated from year to year — hardly moving in the straight upward line that Wall Street usually likes to see.”
  • “Yet investors have rewarded Amazon for plowing its profits back into growing its businesses, whether in online retail, cloud computing or, most recently, in grocery stores, with the acquisition of Whole Foods Market.”

Vanity Fair – Twitter’s Dirty Secret – Nick Bilton 2/2

  • “Twitter knew about all its fake followers, and always has – eliminating just enough bots to make it seem like they care, but not enough that it would affect the perceived number of active users on the platform.”

WSJ – China Shows How It Will Fight a Trade War – Nathaniel Taplin 2/5

  • “U.S. agriculture will be in China’s crosshairs if a trade war erupts.”

Real Estate

The Real Deal – Everything must go: Chinese investors sell off their foreign RE holdings – Erin Hudson 2/3

WSJ – Daily Shot: Bankrate.com US 30-Yr Fixed Rate Mortgage Rate 2/2

WSJ – Daily Shot: FRED – Home Equity Loans 2/5

  • “Home equity loan balances continue to slip as Americans remain uneasy tapping this form of credit.”


Reuters – JGBs pare losses as Bank of Japan offers “unlimited” buying to curb rising yields – Hideyuki Sano 2/1

WSJ – What Markets Are Really Telling Us About Higher Rates – Richard Barley 2/5

  • “Companies are paying slightly more to borrow, but higher risk-free yields haven’t fed through fully. This is significant.”
  • “…the ECB, is still at play. The ECB’s bond-buying actions have a twist: in the first four weeks of January, corporate purchases as a share of government purchases stood at 27%, versus 11.5% when the program was running full-tilt at €80 billion a month, according to Deutsche Bank . In other words, corporates are still getting decent support from ECB purchases.”
  • “One snag is that corporate-bond spreads are already so tight there is little room for error. In Europe, the investment-grade ICE BofAML corporate index yield premium over government bonds is just 0.74 percentage points, its lowest level since August 2007.”
  • “Investors should watch closely if spreads do widen significantly. It would mean either companies are making riskier, top-of-market types of bets or investors are getting concerned about growth and underlying cash flows. For now, the message from higher interest rates is, don’t sweat it.”


FT – ‘Crypto crazy’ Japanese mystified by virtual heist – Leo Lewis and Robin Harding 2/2

  • “The $500m theft of XEM coins by an anonymous hacker is threatening the country’s faith in cryptocurrencies.”

FT – Bitcoin investors find tax demands are not virtual – Ben McLannahan and Vanessa Houlder 2/4

  • “Cryptocurrency traders in many jurisdictions may be liable for hefty capital gains tax bills.”

NYT – Making a Crypto Utopia in Puerto Rico – Nellie Bowles 2/2

Reuters – Bitcoin extends slide, falls below $7,000 – Gertrude Chavez-Dreyfuss 2/5

  • “Digital currency bitcoin BTC=BTSP fell more than 15% on Monday to a nearly three-month low amid a slew of concerns ranging from a global regulatory clampdown to a ban on using credit cards to buy bitcoin by British and U.S. banks.”
  • “On the Luxembourg-based Bitstamp exchange, bitcoin fell as low as $6,853.53 in early afternoon trading in New York. That marked a fall of more than half from a peak of almost $20,000 hit in December.”
  • “Bitcoin has fallen in six of the last eight trading session.”
  • “The currency, which surged more than 1,300% last year, has lost about half its value so far in 2018, as more governments and banks signal their intention for a regulatory crackdown. Last week bitcoin suffered its worst weekly performance since 2013.”


NYT – Early Facebook and Google Employees Form Coalition to Fight What They Built – Nellie Bowles 2/4

Health / Medicine

Economist – A revolution in health care is coming – Leaders 2/1

Asia – excluding China and Japan

WSJ – Samsung Heir Lee Jae-yong Freed From Prison by Appeals Court – Eun-Young Jeong 2/5


The Sydney Morning Herald – China said to mull legal gambling on Hainan – Keith Zhai and Daniela Wei 2/4


Bloomberg Businessweek – India’s Phantom Flats Leave Homebuyers’ Dreams in Tatters – Pooja Thakur Mahrotri, Upmanyu Trivedi, and Dhwani Pandya 1/30

  • “Across the metropolitan area that surrounds New Delhi, a string of real-estate developers including Unitech, Jaypee Infratech Ltd. and Amrapali Group have been dragged to court by irate homeowners who shelled out payments for apartments that have yet to be completed. Many of these firms took money from a stream of buyers. As sales slumped and the once red-hot market cooled, their businesses unraveled — leaving them grappling with debt.”
  • “The fallouts from the shakeup in the $126 billion property market are reverberating across companies, markets and the broader economy. Unitech, once India’s largest developer, has plunged to a fraction of its previous valuation. Jaypee is in insolvency court. State-owned banks — the lifeblood of the economy — are grappling with a pile up of bad loans from the industry. Indian families, who have long poured their life savings into real estate, are now pulling back.”
  • “Indian real-estate businesses expanded as long as firm were able to draw new buyers for planned projects. But as the economy slowed and demand softened, many firms were left short of cash and struggling to manage their debt. The downturn only worsened last year after the government tightened regulations to protect homebuyers and separately introduced a new services tax across all industries. India’s residential sector appears to have shrunk to a fraction of its size in less than a decade, according to Shishir Baijal, managing director of Knight Frank India.”
  • “Prices dropped 3% on average across the top six cities, according to Knight Frank, with some declining as much as 15% after accounting for developer discounts. And in the capital region, last year’s prices were 9% below their 2015 peak. The outlook remains bleak.”
  • “The property developers are adding to a pile-up of bad loans in India’s banking sector, which is already struggling to manage a spike in stressed assets across several industries.”
  • “India’s government has stepped in to regulate the real-estate industry with new laws, including one that forces developers to use at least 70% of sale proceeds to complete residential projects, rather than funnel money to different jobs. Other measures prevent them from pre-selling apartments before all building approvals are obtained.”
  • “The pain hasn’t been restricted to the North. India’s financial capital, Mumbai, last year witnessed a decline in residential property prices for the first time in a decade. New residential launches across eight Indian cities dropped 41% last year and were down 78% from their peak in 2010, Knight Frank data show.”

South America

Bloomberg Businessweek – Venezuelan Pirates Rule the Most Lawless Market on Earth – Jonathan Franklin 1/30

Economist – China moves into Latin America – Bello 2/1

  • “The Asian giant is taking advantage of other powers’ lack of interest in the region.”

January 31, 2018

Worthy Insights / Opinion Pieces / Advice

FT – Lex in Depth: the case against share buybacks – Dan McCrum 1/29

  • “S&P 500 companies have spent $1.1tn on share repurchase programs over the past two years, as executives struggled to turn modest economic growth into higher earnings. Lacking opportunities to invest, or at least shareholder support to do so, companies have spent money buying their own stock, which provides a boost to the size of profits reported per share.”
  • “Fresh records for buybacks are likely to be set, with changes to the US tax regime expected to trigger a repatriation of profits that have been held offshore for years.”
  • “A string of companies, including Boeing and Honeywell, have announced close to $90bn worth of share buyback programs since the reforms were agreed in December. Bank of America Merrill Lynch estimates that of $1.2tn parked overseas, perhaps half of the post-tax total, or around $450bn, could be devoted to share buybacks.”
  • “Shareholders are going to be banging on doors saying we want some of that money,’ says Howard Silverblatt, senior index analyst at S&P Dow Jones. No matter that stock markets have set record highs of late, the expectation that spare cash must be returned to its rightful owners is putting managers under pressure.”
  • “They almost have to buy when the stock is high. Timing the market is not something most companies can do,’ adds Mr Silverblatt. But the new flood of dollars raises an old question about whose interest the practice serves.”
  • McCrum does an excellent job of outlining some of the motives and outcomes of the practice. Some highlights:
  • “The only year in the past 14 when big US companies spent less on buybacks than dividends was 2009, when the S&P 500 index hit rock bottom. ‘The best time to do [a buyback] is in a recession, but that’s when everyone is scared stupid,’ says Andrew Lapthorne, a quantitative strategist for Société Générale.”
  • “If a company has more cash than it needs, and nothing better to invest in, it should consider whether buying its own stock is a good investment. Yet the time when companies have plenty of spare cash tends to be when business is good and shares are overvalued.”
  • “Apple has admitted that a primary purpose of its buybacks is to neutralize the impact of stock compensation.”
  • “The company has spent $151bn on repurchasing stock in the past decade, about 17% of its almost $900bn market valuation. The number of shares has dropped by about the same amount — 17%. Yet when Apple started to buy in 2012, the shares could be bought for half today’s price. The difference has been handed to employees.”
  • “Some companies have managed to spend more on buybacks in recent years than the shares are worth today.”
  • “Since 1995 IBM, the consulting and supercomputer group, has spent $162bn to repurchase more than half of its outstanding shares. What is left, for those who did not sell, is a company now valued at $154bn, suggesting the money was spent in the wrong place.”
  • “Any company will wonder what its valuation might have been, were different decisions taken. Prof Lazonick (William Lazonick, professor of economics at the University of Massachusetts Lowell) points to the example of Cisco Systems, the world’s largest networking company. In two decades it has spent $75bn repurchasing stock, more than three times the total for capital investment in property or equipment. A serial acquirer of other businesses, it has long struggled to grow sales.”

Markets / Economy

WSJ – Daily Shot: Trading activity at retail-focused brokerages 1/29

  • “Retail investor trading activity has accelerated recently. It’s starting to look like the late 90s.”

Real Estate

Bloomberg – Singapore Overtakes China as Largest Asian Investor in U.S. Property – Pooja Thakur Mahrotri 1/28

Bloomberg – Wanda Selling $5.4 Billion Property Unit Stake, to Seek Listing ‘Soon’ – Jing Yang De Morel 1/29

  • More on the Tencent investment below. However, wanted to call attention to…
  • “Separately, Wanda put its last two overseas property developments up for sale, according to people familiar with the matter, in the latest unwinding of a decade-long overseas buying spree that drew scrutiny from Chinese regulators. The group is seeking buyers for a hotel, office and apartment complex in Chicago and a development in Beverly Hills, California, said the people, who asked not to be identified because discussions are private.”
  • Presumably the Beverly Hills site is the “One Beverly Hills,” aka Robinson May, site that was previously purchased by New Pacific Realty Corporation for $33.5m in 2004, sold to the Candy Brothers for $500M in 2007, bought out of foreclosure by Hong Kong based Joint Treasure International for $148M in 2010 and then sold to Dalian Wanda for $420M in 2014.

CNBC – America’s 10 most valuable malls are bringing in billions in sales. Here’s where they are – Lauren Thomas 1/29

NYT – New York’s Hidden Home Buyer Closing Costs: Luxury Boxes and Mint Mojitos – Shane Goldmacher 1/29

Health / Medicine

Economist – America’s opioid epidemic is driven by supply 1/29

  • “A new study shows that economic factors do not fully explain the rising number of drug deaths.”

WSJ – Schools Close as Flu Epidemic Spreads – Tawnell D. Hobbs and Sarah Toy 1/27

  • “Schools in at least 11 states have closed as the worst flu epidemic in nearly a

decade intensifies.”


WSJ – Why Tencent’s Latest Property Deal Makes Sense – Jacky Wong 1/30

  • Reminds me of when the Japanese Keiretsu’s were buying stakes in each other.
  • In this instance Dalian Wanda benefits from an association with Tencent and Tencent picks up some real estate equity on the cheap (maybe).