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May 8, 2017

Worthy Insights / Opinion Pieces / Advice

FT – Puerto Rico: island of despair – Lex 5/4

Scientific American – High Ground Is Becoming Hot Property as Sea Level Rises – Erika Bolstad 5/1

  • “One of the great ironies of those historic housing patterns in Miami is that for decades under Jim Crow, laws and zoning restricted black people to parts of the urban core, an older part of the community that sits on relatively higher ground along a limestone ridge that runs like a topographic stripe down the eastern coast of South Florida. Now, many of those neighborhoods, formerly redlined by lenders and in some places bound in by a literal color wall, have an amenity not yet in the real estate listings: They’re on higher ground and are less likely to flood as seas rise.”

Real Estate

Visual Capitalist – Chart: The Downfall of Canada’s Largest Alternative Mortgage Lender – Jeff Desjardins 5/5


FT – Bullish bets on oil price fall to lowest since Opec output cut – Gregory Meyer 5/5

  • “A derivatives dealer who works with hedge funds said this week’s exodus was most severe in contracts for delivery in distant months such as December, rather than futures for imminent delivery, suggesting heightened concerns for the long-term price of oil.”


Investment News – LPL may have to refund up to $8 million to resolve New Hampshire REIT case – Bruce Kelly 5/3

  • “A third-party review found that 200 clients from the New England state bought nontraded REITs that violated LPL’s guidelines and are eligible for an average of $40,000 apiece.”


WSJ – China’s War on Debt Causes Stocks to Drop, Bond Yields to Shoot Up and Defaults to Rise – Lingling Wei and Chao Deng – May 5

  • “A wave of regulations aimed at cutting risk in China’s financial system is rippling through the country’s markets and sending banks and companies scrambling for funds.”
  • “During the past month, Chinese shares have fallen nearly 5%, draining almost half a trillion dollars out of the country’s markets. Bond yields have shot up to their highest levels in two years, and bond defaults hover at record levels. The uncertainty has also weighed on metals and commodity prices, already hurt by doubts around China’s growth momentum. The price of iron ore plunged 8% on Thursday, the daily trading limit.”
  • “Investors blame the volatility on a host of measures Chinese authorities have rolled out to curb runaway debt levels, from raising the cost of short-term funds to measures that are prompting banks to unwind hidden loans and securities. A particular target is high-risk, high-yielding investment products that banks have used to boost returns, but that regulators say may conceal dangerous amounts of risky lending.”
  • “The market turbulence will test Beijing’s resolve in tackling China’s snowballing debt, especially if it looks like regulators’ crackdown is jeopardizing short-term growth. If they can withstand the short-term squeeze and continue to push it through, the effort will help put China’s economy on a sounder footing longer-term.”
  • “Many economists and analysts say China’s economy has become so reliant on debt that leverage will have to keep growing to reach the leadership’s annual growth target, set at about 6.5% for this year. Recent official data show overall credit in China is still growing.”
  • “According to Fitch, total debt reached 258% of China’s GDP last year, a ratio it expects will grow this year and next. Beijing needs to keep interest rates at relatively low levels to not cause companies to default on their mounting debts, economists say.”
  • “’At most, the regulators can slow down the pace of leveraging,’ said Victor Shih, a professor at the University of California, San Diego who specializes in China’s politics and economy. ‘The day China sees true deleveraging is the day a financial crisis begins.'”

FT – Beijing chokes in Gobi desert sandstorm – Emily Feng 5/4

  • “A haze of sand has enveloped northern China, leading to extreme air pollution in Beijing as the country’s expanding deserts blow into cities hundreds of kilometers away.”
  • “Air quality index scores for PM10 – particulate matter with a diameter of 10 microns or less – for Beijing and surrounding cities hovered around 900-999, the upper limit for AQI apps, on Thursday. World Health Organization guidelines recommend a score no higher than 50.”

South America

FT – The implosion of the Venezuelan thugocracy 5/4