Tag: Interest Rates

March 12, 2018


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

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

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

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

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

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

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

Real Estate

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

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


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

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

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 3/8

WSJ – Daily Shot: Ripple 3/8


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

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

WSJ – Daily Shot: Canada Housing Starts 3/8

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


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

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


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

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

March 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 26, 2018


Economist – Daily Chart: Are alpha males worse investors? 2/20

WSJ – Household Debt Sees Quiet Boom Across the Globe – Josh Zumbrun 2/18

WSJ – Daily Shot: United Nations – Global Population Trends 2/23

  • “The global population pyramid is expected to invert by 2100 as the population gets closer to peak levels.”

Markets / Economy

WSJ – Daily Shot: Credit Suisse – Domestic Equity Flows 2/23

Real Estate

WSJ – Daily Shot: FRED – US mortgage rates 2/23


WSJ – Daily Shot: U.S. 3-Month LIBOR Exchange Rate 2/20

WSJ – Daily Shot: U.S. Borrowing Costs Among Highest in Developed World – Richard Barley 2/21


WSJ – Daily Shot: Bitcoin 2/22


Economist – The rapid rise and fall of the Anbang empire 2/23

  • “China’s government takes control of its would-be financial colossus.”

WSJ – Daily Shot: BMI, Chinawealth – China Wealth Management Product Growth 2/22

WSJ – China’s Communist Party Proposal Sets Stage for Xi to Hold Onto Power – Chun Han Wong 2/25

  • “Proposal would eliminate the constitutional cap on presidential terms.” Currently set at two terms of five years each.

February 14, 2018

Happy Valentine’s Day!


Worthy Insights / Opinion Pieces / Advice

The Atlantic – How Humans Sank New Orleans – Richard Campanella 2/6

Economist – The roots of hyperinflation – J.O’s 2/12

  • “Fifty-seven cases of runaway inflation have been documented. They have common patterns.”
  • “In a country where the annual inflation rate is in four figures, the previous month can seem like a golden age. Venezuela’s currency, the bolívar, has lost 99.9% of its value in a short time. It is hard to fathom how a government can get its economic policy so wrong when the effects of hyperinflation are so severe.”
  • “Hyperinflations do not last long. They end in one of two ways. With the first, the paper currency becomes so utterly worthless that it is supplanted by a hard currency. This is what happened in Zimbabwe at the end of 2008, when the American dollar took over, in effect. Prices will stabilize, but other problems emerge. The country loses control of its banking system and its industry may lose competitiveness. With the second, hyperinflation ends through a reform program. This typically involves a commitment to control the budget, a new issue of banknotes and a stabilization of the exchange rate—ideally all backed with confidence-inspiring foreign loans. Without such reform, Venezuela’s leaders, though scornful of America, may find that its people are forced eventually to adopt its dollar anyway.”

FT – HNA/HK property: throttling back – Lex 2/13

  • “On Tuesday it (HNA Group) sold two parcels of land near the old airport to Hong Kong developer Henderson Land for HK$15.8bn ($2bn). The pull back of a formerly acquisitive group is a warning sign for the territory’s property market.”
  • “True, Henderson is paying 11.2% more than the sum HNA paid for the plots less than a year and a half ago. Back then, a report by real estate services group JLL estimated that the initial price was 13% above the higher end of the market.”
  • Bottom line, the recent run up has been juiced by mainland developers and expect them to be pulling back.

FT – ‘Self-inspection’ campaign looms for China’s online lenders – Henny Sender 2/12

  • “Regulators tighten their grip on fears that borrowers are overstretched.”

Markets / Economy

Bloomberg Businessweek – This Bond Market Could Get Uglier – Brian Chappatta, John Gittelsohn, and Liz McCormick 2/6

FT – US craft beer slowdown sends hops market from boom to bust – Emiko Terazono 2/12

  • “A sharp slowdown in US craft beer sales growth has sent the specialty hop market from boom to bust with its effects starting to be felt by growers beyond its shores.”
  • “Many of the hop varieties popular among craft beer makers have plunged from their peaks between 2015 and 2016. For example, Citra, known for its smooth floral and citrus aroma and flavor, has almost halved from $23 a pound, according to Lupulin Exchange, a US online hop exchange.”
  • “Another variety, Cascade, was trading at $6-$7 a pound in 2015-16, but is now on the market for $1.20, said Mr MacKinnon (Douglas MacKinnon, chief executive of trader 47hops).”
  • “The main issue has been the sudden slowing of growth in the craft beer market, which until a few years ago had been rising annually by double digits. However, market saturation, as well as competition from other alcoholic beverages, have affected growth, which peaked in 2014 at 18%, slowing to about 5% last year.”
  • “The oversupply situation has been made worse by the jump in hop production and acreage which almost doubled in the past five years. Brewers fearing a shortage rushed to sign three- to five-year contracts with farmers, who increased plantings on the back of those contracts and high prices.”
  • “The rising output amid falling demand has resulted in a hop glut, with inventories in pre-harvest September rising 15% to a record 98m pounds, according to the US Department of Agriculture. Of the total, growers and merchants held an all-time-high share of 65%.”
  • “But despite the supply overhang, hop farmers — who on the back of demand invested in expanding operations, need to repay bank loans — are still expected to plant about 1,500 new acres.”

Investment News – SEC offers advisers amnesty to move clients out of high-fee mutual fund share classes – Jeff Benjamin 2/12

  • “Enforcement division giving advisers until June 12 to declare intentions to self-report fiduciary violations and make financial restitution.”

Real Estate

Bloomberg – This Mall Is Only for the Rich, and It’s Doing Fine – Kim Bhasin 2/8

Visual Capitalist – UBS: Real Estate Bubbles: The 8 Global Cities at Risk – Jeff Desjardins 2/13

WSJ – Daily Shot: Lawler Economic & Housing Consulting – Home Builder Net Orders 2/12


WSJ – Daily Shot: Bloomberg – Broadcom Lines Up Biggest Debt Financing Ever for Qualcomm – Molly Smith and Jacqueline Poh 2/12

WSJ – Daily Shot: FRED – LIBOR and Bank Rate Spread 2/12

  • It’s good to be a banker again.


BBC – Bitcoin energy use in Iceland set to overtake homes, says local firm – Chris Baraniuk 2/12

Bloomberg – Bitcoin Risks Crashing to $900 If Dot-Com Mania Is Any Guide – Eddie Van Der Walt 2/12

  • “Already slashed by more than half since hitting a record near $20,000 in December, the cryptocurrency could plunge a further 90% in an environment of unsustainably growing supply, according to Bloomberg Intelligence commodity strategist Mike McGlone.” 
  • While the creators of Bitcoin intended to limit supply to 21 million coins, forks mean that there are already more than 50 million outstanding coins based on the original blockchain. There’s also nothing preventing rivals from spawning an infinite amount of clones, he said. The number of tradable cryptocurrencies jumped 120% in the past year.”
  • “’Parabolically increasing supply is the primary limitation to cryptocurrency market-price appreciation,’ McGlone said. ‘There’s strong gravitational pull toward $900, the average price since inception and the start of 2017’.”

Environment / Science

NYT – Here Are the Places That Struggle to Meet the Rules on Safe Drinking Water – Brad Plumer and Nadja Popovich 2/12


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.”

February 2, 2018


statista – The U.S. Cities With The Most Homeless People – Niall McCarthy 1/26

Worthy Insights / Opinion Pieces / Advice

FT – Short sellers eye better days after Steinhoff and Carillion wins – Miles Johnson and Robert Smith 1/31

  • “A rising tide, as the saying goes, lifts all boats. This effect, which has been played out across financial markets for several years, has inflicted pain and frustration on specialist short sellers of stocks and bonds who try and profit by betting against companies they believe harbor accounting irregularities.”
  • “But after years of frustration, some of the funds who have been doggedly shorting certain companies have been rewarded. Hedge funds that made bearish bets against the South African retailer Steinhoff International and the UK construction group Carillion saw these trades dramatically pay off as both companies collapsed under the weight of their debts.”
  • “’In the past few months there have been a number of accounting-related shorts, such as Steinhoff International and Carillion, that have been big money makers,’ says Alper Ince, an investor in hedge funds at Paamco. ‘I think there is an expectation among short sellers that we may see more of these after years of companies making big acquisitions and taking on more leverage’.”
  • “’There had been chatter about Steinhoff’s accounting for years, but being short investment grade companies has been an absolute death trade,’ says a London based credit trader. ‘It’s a bit like the old mantra ‘don’t fight the Fed’ — you can’t short investment grade bonds when you know the ECB is buying them on the other side’.”
  • “The ECB was one of the largest holders of Steinhoff’s outstanding €800m bond, owning around €100m of the debt before it sold its position entirely at a deep loss earlier this month.”

NYT – Worries Grow That the Price of Bitcoin Is Being Propped Up – Nathaniel Popper 1/31

  • “A growing number of virtual currency investors are worried that the prices of Bitcoin and other digital tokens have been artificially propped up by a widely used exchange called Bitfinex, which has a checkered history of hacks and opaque business practices.”

Markets / Economy

WSJ – Daily Shot: German 5yr Bond Yield 1/31


WSJ – Daily Shot: US Crude Oil Production 1/26

FT – Shale powers US oil output to heights of 1970 – Ed Crooks 1/31


Bloomberg Quint – India to Curb Cryptocurrency Use While Embracing Blockchain – Anto Antony 2/1

  • “India’s government said it doesn’t consider cryptocurrencies as legal tender and will take all measures to eliminate payments using them.”

How much.net – Visualizing The Meteoric Rise of Cryptocurrency in the Past 5 Years – Raul 1/30

Reuters – South Korea says no plans to ban cryptocurrency exchanges, uncovers $600 million (in) illegal trades – Dahee Kim, Cynthia Kim 1/30

Social Media

NYT – Twitter Followers Vanish Amid Inquiries Into Fake Accounts – Nicholas Confessore, Gabriel Dance, and Rich Harris 1/31


FT – Distressed debt investors line up to offer HNA financing – Henny Sender and Don Weinland 1/31

  • “Chinese conglomerate seeks up to $2bn secured against Hong Kong land holdings.”

Other Interesting Links

NYT – San Francisco Will Clear Thousands of Marijuana Convictions – Timothy Williams and Thomas Fuller 1/31

  • “Thousands of people with misdemeanor convictions for marijuana possession dating back 40 years will have their criminal records cleared, the San Francisco district attorney’s office said Wednesday. San Diego is also forgiving old convictions.”

January 29, 2018


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.


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


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


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.”