Tag: Investment Management

April 17, 2018

Perspective

WSJ – Daily Shot: FRED – The state of education…or, rather, the education of states – Ana Maria Santacreu and Heting Zhu 4/12

Axios – Embry-Riddle: The best (and worst) airlines this year – Haley Britzky 4/14

Markets / Economy

WSJ – Daily Shot: BoAML – S&P 500 Sectoral Dominance 4/16

Energy

eia – U.S. production of crude oil grew 5% in 2017, likely leading to record 2018 production – Jeff  Barron and Emily Geary 4/4

China

WSJ – Daily Shot: Estimate of China’s Total Debt to GDP 4/16

Japan

WSJ – Japan to Expand Program to Bring in Foreign Workers – Peter Landers 4/12

Other Interesting Links

Economist – Great news for the dead: the funeral industry is being disrupted – Leaders 4/14

  • “Changing social norms, competition and technology are shaking up a stodgy and exploitative business.”

 

April 16, 2018

After speaking with some readers, it appears that my little experiment wasn’t working out as I intended. It was not clear that the majority of the content was being hosted on the website, while the direct email was only showing one article.

So, back to the old format.

Thanks for reading – and if you like this blog, please be sure to tell your peers about it.

Sincerely,

Duff Janus

If you were only to read one thing…

Bloomberg – What It Was Like to Get Caught in Toronto’s Housing Slump – Natalie Wong 4/11

  • “Toronto’s housing market has seen a stunning slowdown in the past year. Now one brokerage has cataloged the damage for 988 homeowners who got caught in the eye of the hurricane.”
  • “In the space of four months last year, the homeowners lost a collective C$135 million ($107 million) as the median house price slid 18%, a faster decline than any major market during the U.S. market crash, according to Realosophy Reality Inc.”
  • “The story goes like this: The median house price surged 30% from January to peak at C$765,000 in March, largely driven by investors who were pouring money into the market for quick returns, Realosophy said in a report. To tame the beast, the government instituted a series of regulations, including a foreign buyers tax, starting in April.”
  • “Some 866 homeowners had clinched a sale but were not able to close, eventually selling to another buyer later in the year for C$140,200 less on average. Some buyers had to walk away as they weren’t able to sell their own homes or the banks appraised the house for less than what they agreed to. Another 122 sellers sold their houses for an average $107,325 lower than what they bought it for earlier. By the time the dust had settled in July, the median price had dropped to C$626,000 from C$765,000 in March.”
  • “To put that 18% four-month decline in perspective, it took major U.S. cities 20 months on average for prices to fall 18% from their peaks between 2005 and 2006, with Miami the shortest at 12 months, according to the report.”
  • “This February, Toronto led the drop in Canadian home prices falling for the first time since 2010, a consequence of the housing downturn which saw additional mortgage lending rules put in place this year amid higher interest rates. For now, prices have largely stabilized for detached-homes. But there’s a new hot spot to watch out for: Toronto’s condominium market has seen prices soaring about 20% since last February and is a target for speculative investment.”

Worthy Insights / Opinion Pieces / Advice

Pragmatic Capitalism – Yeah, That Debt Article Was Kinda Bad… – Cullen Roche 4/12

NYT – China’s Communists Rewrite the Rules for Foreign Businesses – Alexandra Stevenson 4/13

  • “The party is strengthening its influence – often gaining direct decision-making power – over the international firms doing business in China.”

WSJ – A Dollar Peg That Will Stay on the Line – Jacky Wong 4/12

Markets / Economy

WSJ – Daily Shot: Scotiabank – Combined Central Bank QE Projections 4/13

WSJ – Daily Shot: Scotiabank – Forecast Central Bank Rates 4/13

WSJ – Amid Trade Feud, Recycling Is in Danger of Landing on Trash Pile – Bob Tita 4/12

  • “Chinese trade barriers are compounding the problems faced by companies that recycle scrap paper, plastic and metal.”
  • “The U.S. generates more recyclable waste than any other country. China is the top customer for that scrap. China bought two-thirds of the used paper and half the scrap aluminum that the U.S. sold overseas last year, according to the Institute of Scrap Recycling Industries Inc., part of an overall haul of 13 million metric tons of cast-off American packaging, periodicals and shredded car bodies.”
  • “China’s 25% tariff on U.S. scrap aluminum would make reusable metal from other countries more appealing. China also recently imposed tougher quality standards on other imported recyclables, sending the U.S. recycling industry into a tailspin.”
  • “Prices for discarded newspaper, office paper and magazines have fallen to zero in the U.S. Inventories of paper, crushed milk jugs and old cardboard are swelling. No other country wants to buy as much U.S. junk as China had during the past several years.”

Real Estate

WSJ – Boise, Idaho, Feels the Growing Pains of a Surging Population – Jim Carlton 4/15

Finance

Reuters – Spotify puts bank IPO paydays under fund manager scrutiny – Sinead Cruise 4/12

  • “After shaking up the music industry, Spotify is now prompting investors to question the value they get from investment banks underwriting new listings with its low-cost IPO.”
  • “The music streaming firm effectively deprived banks of hundreds of millions of dollars in fees by shunning them in its $26.5 billion New York Stock Exchange float on April 3.”
  • “Banks can charge companies as much as 7% of the amount raised in a U.S. listing and fund managers in London, another of the main centers for initial public offerings (IPOs), say Spotify’s success means underwriters will now have to show more clearly what value they bring to companies and their backers.”
  • “Banks have been richly rewarded for co-ordinating IPOs and ensuring companies raise the money, pocketing annual fees of $33.6 billion in the U.S. and $14.4 billion in Europe over the last decade, Thomson Reuters data shows.”
  • “But while critics claim that high costs have discouraged some firms from joining the stock market, crimping their prospects and hindering the growth of the economy, bankers say few are likely to be able to replicate Spotify’s direct listing.”
  • “This was only possible because a large number of founding shareholders wanted to sell and it was not raising a large sum of capital, meaning that for now, the route may only be open to well-known, highly valued internet firms like Spotify.”
  • “Banks help to make trading in newly listed shares less volatile by hand-picking institutional investors who are likely to hold them over the medium to long term, and by limiting the volume of stock sold to day traders keen to make a quick buck.”

WSJ – Daily Shot: Reuters – US & European Annual IPO Fees 4/13

WSJ – Daily Shot: Credit Suisse – Fund Flows and Domestic Equity Flows 4/13

China

FT – HK currency intervention boosts property market risk – Emma Dunkley 4/12

  • “Hong Kong has been forced to intervene twice in the past two days to support its currency after the Hong Kong dollar slumped to its weakest level since 2005, in a move that risks putting pressure on mortgage borrowers and Hong Kong’s high-priced property market.”
  • “The Hong Kong Monetary Authority took the rare action of stepping in to prop up the currency on Thursday night in Asia, after it dropped to HK$7.85 against the US dollar, the lower end of its permitted trading band.”
  • “The Hong Kong dollar is one of the few currencies to trade within a band pegged to the US currency, ranging from HK$7.75-HK$7.85 against the US dollar.”
  • “Mr. Lee (Howard Lee, deputy chief executive of the Hong Kong Monetary Authority) said this will ‘provide a more conducive environment for the normalization of the interest rate in Hong Kong following more closely the interest rate level in the US . . . so we will expect that interest rates will rise incrementally . . . so I hope that people with debt burden will be watchful about this rise in interest rates.’”

April 10, 2018

Worthy Insights / Opinion Pieces / Advice

NYT – Federal Budget Deficit Projected to Top $1 Trillion in 2020 – Thomas Kaplan 4/9

  • “The federal government’s annual budget deficit is set to widen significantly in the next few years, topping $1 trillion in 2020 despite healthy economic growth, according to new projections from the nonpartisan Congressional Budget Office released Monday.”
  • “The national debt, which has topped $21 trillion, is expected to soar to more than $33 trillion in 2028. By then, debt held by the public will almost match the size of the nation’s economy, reaching 96% of gross domestic product, a higher level than any point since just after World War II and well past the level that economists say could court a crisis.”

Markets / Economy

WSJ – Daily Shot: Garth Friesen – 10-year Government Yield Comparison 4/9

Real Estate

WSJ – Daily Shot: MBA – Top 10 Commercial & Multifamily Mortgage Originators in 2017 4/9

Cryptocurrency / ICOs

FT – Celebrities warned over risk of cryptocurrency endorsements – Joshua Oliver and Hannah Murphy 4/8

  • “Celebrity endorsers of cryptocurrency fundraisers are at risk of legal action from regulators and investors, legal experts have warned, following a US case that highlighted the involvement of famous promoters in a so-called initial coin offering that collapsed.”
  • “The Securities and Exchange Commission last week charged two men with taking $32m from thousands of investors via an ICO, a crowdfunding mechanism used to raise money for digital currency ventures. The co-founders allegedly raised the funds for a ‘fraudulent’ start-up called Centra Tech, with the scheme touted on social media by champion boxer Floyd Mayweather and musician DJ Khaled.”
  • “While the SEC stopped short of naming the celebrity promoters in their statement, it noted their involvement — an unusual move because they are not defendants in the case. Experts said celebrities who have endorsed ICOs could now face legal action from regulators, as well as investors who believe they have been scammed.”
  • “Charles Whitehead, a professor at Cornell Law School, warned that even if an ICO was not a scam, promoters could face legal action. In most cases, someone who promoted an ICO that was not registered with the regulator could have violated market rules, he said, noting that US laws tightly regulate publicity around the sale of new securities.”

Asia – excluding China and Japan

Economist – Cases against two ex-presidents of South Korea fit an alarming pattern 4/7

  • “The past seven heads of state have all been embroiled in corruption scandals.”

China

FT – China’s fund industry predicted to grow fivefold by 2025 – Chris Flood 4/8

  • “China will provide the ‘single largest growth opportunity’ for global investment managers, with the country’s mutual fund assets forecast to multiply fivefold to reach $7.5tn (Rmb47tn) by 2025.”
  • “This expansion could create a fee pool for running mutual funds worth $42bn a year, a lucrative new stream of profits for international managers with an established Asian presence, according to UBS, the Swiss bank.”
  • “China is on course to become the world’s second biggest fund market, behind the US.”
  • “Beijing unveiled far-reaching reforms in November intended to accelerate the growth of China’s under-developed investment industry with less than 5% of Chinese household assets held in mutual funds.”
  • “It plans to relax or eliminate foreign ownership limits on Chinese financial services groups, including asset managers, a change that is designed to attract greater involvement by large international players.”
  • “Stewart Aldcroft, Asia chief executive of CitiTrust, the securities and fund services arm of US bank Citigroup, said Beijing’s decision to allow foreigners to own 100% of mainland fund management companies as early as 2020 had provided a ‘huge opportunity’ for international players.”
  • “He noted that about $17tn in assets is held in unregulated wealth management products.”
  • “’Chinese regulators want a large proportion of those assets to move to the regulated areas so they are making it easier for fund management companies to operate,’ said Mr Aldcroft.”

April 9, 2018

Trying a new approach. Thoughts?

 

Trade War. Chinese Aviation. Japan Sex Industry. Facebook. Investment Management. Interest Rates. Solar Installations. US Treasuries. Shipping. Ireland. Britain. Former presidents Park and Lula.

Continue reading “April 9, 2018” →

April 6, 2018

If you were only to read one thing…

Bloomberg Businessweek – How Facebook Helps Shady Advertisers Pollute the Internet – Zeke Faux 3/27

  • Affiliate networks (‘affiliates’) = companies/brokers that design advertisements and pay to place them on social media sites on behalf of merchants.
  • “Granted anonymity, affiliates were happy to detail their tricks. They told me that Facebook had revolutionized scamming. The company built tools with its trove of user data that made it the go-to platform for big brands. Affiliates hijacked them. Facebook’s targeting algorithm is so powerful, they said, they don’t need to identify suckers themselves—Facebook does it automatically.”
  • “The basic process isn’t complicated. For example: A maker of bogus diet pills wants to sell them for $100 a month and doesn’t care how it’s done. The pill vendor approaches a broker, called an affiliate network, and offers to pay a $60 commission per sign-up. The network spreads the word to affiliates, who design ads and pay to place them on Facebook and other places in hopes of earning the commissions. The affiliate takes a risk, paying to run ads without knowing if they’ll work, but if even a small percentage of the people who see them become buyers, the profits can be huge.”
  • “Affiliates once had to guess what kind of person might fall for their unsophisticated cons, targeting ads by age, geography, or interests. Now Facebook does that work for them. The social network tracks who clicks on the ad and who buys the pills, then starts targeting others whom its algorithm thinks are likely to buy. Affiliates describe watching their ad campaigns lose money for a few days as Facebook gathers data through trial and error, then seeing the sales take off exponentially. ‘They go out and find the morons for me,’ I was told by an affiliate who sells deceptively priced skin-care creams with fake endorsements from Chelsea Clinton.”
  • “In a sense, affiliate scammers are much like Cambridge Analytica. Because Facebook is so effective at vacuuming up people and information about them, anyone who lacks scruples and knows how to access the system can begin to wreak havoc or earn money at astonishing scale.”
  • This is not a new game.
  • Affiliates are “…applying tricks on Facebook that had been invented by email spammers, who’d in turn borrowed the tactics of fax spammers in the 1980s and ’90s. New forms of media have always been hijacked by misleading advertising: 19th century American newspapers were funded in part by dishonest patent medicine ads. Within days of Abraham Lincoln’s inauguration, the makers of Bellingham’s Onguent were placing ads claiming the president had used their product to grow his trendy whiskers.”
  • “Fake personal endorsements and news reports are still the most effective tricks. Dr. Oz, the Shark Tank judges, and Fixer Upper co-host Joanna Gaines are among the most popular imprimaturs…”

Perspective

howmuch.net – How Much Income You Need to Afford the Average Home in Every State in 2018 – Raul 4/2

WSJ – Daily Shot: Deutsche Bank – US Households with Zero or Negative Home Wealth 4/5

WSJ – Daily Shot: Deutsche Bank – Road Quality in the US 4/5

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Situational Awareness – Ben Carlson 4/5

Bloomberg Businessweek – The Ancient History of Bitcoin – Peter Coy 3/29

  • “Cryptocurrencies may seem brand-new and disruptive, but look to the past and it’s clear they can be regulated.”

Civil Beat: The Associated Press – Hawaii’s Low Unemployment Rate Masks Underlying Problems 4/4

  • “In a state with a jobless rate of 2.1%, island residents have work if they want it. But their incomes often don’t pay the bills.”

NYT – Why China Is Confident It Can Beat Trump in a Trade War – Steven Lee Myers 4/5

  • “In the political realm, however, Mr. Xi enjoys advantages that may allow him to cope with the economic fallout far better than Mr. Trump can. His authoritarian grip on the news media and the party means there is little room for criticism of his policies, even as Mr. Trump must contend with complaints from American companies and consumers before important midterm elections in November.”
  • “The Chinese government also has much greater control over the economy, allowing it to shield the public from job cuts or factory closings by ordering banks to support industries suffering from American tariffs. It can spread the pain of a trade war while tolerating years of losses from state-run companies that dominate major sectors of the economy.”
  • “’The American agricultural sector is quite influential in the Congress,’ said Wang Yong, a professor of economics at Peking University, explaining why China has targeted farm products such as soybeans with possible retaliatory tariffs. ‘China wants the American domestic political system to do the work.’”

Visual Capitalist – The Jump from Millionaire to Billionaire, and How Long That Takes – Jeff Desjardins 4/4

WSJ – Even After a Tumble, the Stock Market’s Price Isn’t Right – Spencer Jakab 4/4

WSJ – At Quarter End, Tesla Suddenly Got Busy – Michael Rapoport 4/4

Markets / Economy

howmuch.net – How Vulnerable is Each State to a Trade War – Raul 3/27

Real Estate

WSJ – Daily Shot: LendingTree – Home Mortgage Purchase APR by Credit Score Range 4/5

Energy

FT – Alphabet becomes biggest corporate renewable energy buyer in US – Leslie Hook 4/4

  • “Alphabet bought enough renewable energy last year to match the power needs of all its data centers and global operations, making it the biggest corporate buyer of renewable power in the US.”
  • “The company has secured 3GW of renewable energy, making it the largest corporate buyer of renewable power, according to Bloomberg New Energy Finance, while Amazon and Apple are in second and third place.”
  • “Amazon has pledged that its cloud computing business will be 50% matched by renewables in 2017, while Apple has promised to source four gigawatts of renewable power by 2020, and has been trying to reduce the emission footprint of its supply chain.”

Finance

WSJ – Bill Ackman’s Pershing Square Faces Wave of Investor Redemptions – David Benoit 4/5

Cryptocurrency / ICOs

WSJ – Daily Shot: Barchart.com – Bitcoin 4/4

Automotive

WSJ – Car Makers Step Back From Cars – Mike Colias and Christina Rogers 4/4

  • “GM to stop production of the Chevrolet Sonic, Ford plans to end U.S. sales of Fiesta and Taurus amid Detroit’s broader exodus from passenger cars.”

China

Reuters – China’s HNA to sell some or all of $6.3 billion Hilton stake – Ankit Ajmera and Koh Gui 4/5

 

April 5, 2018

Perspective

The Verge – South Korean millennials are reeling from the Bitcoin bust – Rachel Premack 4/3

  • “From the outside, the Korean economy appears to be flourishing: the country is home to major industry leaders such as Samsung, Hyundai, and Kia. It’s the 11th-largest economy in the world, with semiconductors, car LCDs, and other high-tech products dominating its exports. The overall unemployment rate is just 4.6%.”
  • “Still, young people can’t find jobs. Youth unemployment has hovered around 10% in Korea for the past five years. The underemployment rate — defined by those involuntarily working jobs they’re overqualified for or are part-time — is even higher as of this year: it hovered at 38% in 2016, according to Dongseo University professor Justin Fendos.”
  • “In this highly educated economy, it can be hard for young Koreans to distinguish themselves from their peers. Nearly 70% of all Koreans ages 25–34 have a post-secondary degree, the highest of all Organization for Economic Co-operation and Development (OECD) countries, and a high school degree is nearly universal. Entire neighborhoods in Seoul are full of college graduates studying to pass hiring exams in order to get in at Korea’s biggest companies or the enviable public sector.”
  • “’The design of Korean society is a big reason why the cryptocurrency became so popular,’ says Yohan Yun, a 25-year-old assistant reporter in Seoul who invested around $400 in Ethereum. ‘People here are generally unhappy with their current status in society.’”
  • “Even employed young people are pessimistic about their economic prospects: a survey conducted in 2015 showed that half of young Koreans don’t believe that they will do better than their parents’ generation, compared to 29% in 2006.”
  • “For young Koreans, cryptocurrency seems like a rare shot at prosperity. Months after last year’s bubble started to implode in February, the Korean won remains the third most traded currency for Bitcoin. The country of 52 million comprises 17% of all Ethereum trading, and it was the location of two-thirds of world’s biggest exchanges this winter, Korea Expose reported in February.”
  • “An estimated three in 10 salaried workers in Korea had invested in e-currencies by December 2017, according to a survey by Korean recruiting firm Saramin. Eighty percent of those people were in their 20s and 30s.”
  • “But now that the prices of cryptocurrency coins like Bitcoin, Ethereum, and Ripple have tanked, many Korean youths are dealing with the mental and financial aftermath of their losses. Korean psychologists have reported an uptick of patients from the so-called ‘Bitcoin blues,’ divorce counselors say marriages are splitting from failed investments, and even the country’s prime minister said that virtual currencies are on track to cause ‘serious distortion or pathological social phenomena’ among Korea’s young population.”
  • “Real estate used to be the traditional way to grow one’s fortune in Korea, but prices have become exceedingly expensive for even upper-middle-class people. And interest rates for savings accounts are rarely more than a few percentage points a year.” 
  • “Koreans’ hyperconnectivity helped spur Bitcoin’s popularity. Teens and young adults spend around four hours a day using mobile phones in Korea. Nearly every Korean home has internet access, and 88% have smartphones, the highest percentage globally. Such an abundance of connectivity allowed potential traders of all ages to learn about the craze and hear about the insane amounts of money one could make on trading. Cryptotrading clubs, where people can meet like-minded traders and share tips, popped up at many Korean universities.”
  • “Thanks in part to the frenzy, some coins cost up to 51% more in Korean markets than anywhere else. Bitcoin’s price was up nearly $8,000 in January, Bloomberg reported. The ‘kimchi premium’ drew foreign traders to buy their coins abroad and trade them in the Korean market.”
  • “But then came the crash. From January 6th to January 16th, 2018 the price of Bitcoin to Korean won tumbled from a high of a US-equivalent $25,065 to $13,503, according to Korbit. It continued to fall to $7,410 by February 5th, and as of April 2nd, the price of a bitcoin sits at $7,241.”
  • “In total, the Bitcoin crash wiped out $44 billion of value in January, or more than Ford’s entire market capitalization, according to Bloomberg. New regulations against cryptocurrency trading, particularly ones from a worried South Korean government, helped usher the fall.”

Worthy Insights / Opinion Pieces / Advice

Business Insider – People have stopped paying their mobile-home loans, and it’s a warning sign of the economy – Matt Turner 4/3

  • “The mobile-home market is showing signs of stress.”
  • “The delinquency rate on mobile-home loans has increased by 200 basis points, or 2 percentage points, over the past year, according to research cited by UBS. The 30-day-plus delinquency level is now about 5%, the highest level since 2005.”
  • “The increase in the number of struggling mobile-home borrowers suggests that a large chunk of these people haven’t benefitted from the economic growth of the past few years, despite the low unemployment level.”
  • “This data represents a piece of a jigsaw puzzle of the condition of consumer finances in the US. And the picture that’s emerging, according to UBS, is of a two-speed economy, with lower-income consumers and younger borrowers with substantial student debt moving at a slower pace than more affluent and established participants.”
  • “‘We believe weakness in these two groups (lower-income consumers and younger borrowers) will drive higher credit losses at some stage over the next few years — particularly in credit card, installment, and student loans — with macroeconomic inflection from job growth to job loss as a likely catalyst,’ UBS said.”

NYT – How Dr. King Lived Is Why He Died – Jesse Jackson 4/3

WSJ – Telsa’s Model 3 Is No Model T – Charley Grant 4/3

  • “First-quarter production is not as rosy as the electric-car maker believes.”

Markets / Economy

WSJ – Daily Shot: Deutsche Bank – US Actual vs Potential GDP 4/4

WSJ – Iowa’s Employment Problem: Too Many Jobs, Not Enough People – Shayndi Raice and Eric Morath 4/1

Real Estate

John Burns RE Consulting – California Has Density Solutions, but Not Enough New Housing – Pete Reeb 4/3

Finance

WSJ – Daily Shot: Deutsche Bank – European Bond Issuance v ECB Purchases 4/4

WSJ – Daily Shot: Deutsche Bank – Emerging Market USD & EUR Debt Issuance 4/4

China

WSJ – Daily Shot: Deutsche Bank – Credit Expansion in BRIC Countries 4/4

WSJ – Daily Shot: Hong Kong Retail Sales 4/4

  • “Hong Kong’s retail sales jumped by most in eight years as wealthy shoppers from the mainland return.”

Japan

WSJ – Daily Shot: Deutsche Bank – Declining Service Quality in Japan 4/4

  • “Instead of inflation, Japan’s extremely tight labor markets are translating into reduced-quality services for consumers. The US is starting to experience this trend as well.”

Puerto Rico

Bloomberg – Stunned Investors Reap 95% Gains on Defaulted Puerto Rico Bonds – Michelle Kaske 4/3

  • “Not only are Puerto Rico’s bonds the top performer in the $3.9 trillion municipal market, they’ve gained more than any other dollar-denominated debt in the world, according to data compiled by Bloomberg.”

WSJ – Daily Shot: Puerto Rico General Obligation Bonds 4/4

April 4, 2018

Perspective

FT – Naspers trims Tencent stake with $10bn share sale – Joseph Cotterill and Louise Lucas 3/22

  • “Naspers, the South African media company that is one of the biggest shareholders in Tencent, said that it would sell down part of its stake in the Chinese technology giant for the first time in almost two decades.”
  • “In a statement on Thursday, Naspers said that it would sell stock worth more than $10bn, equivalent to 2% of the shares in Asia’s biggest company by market capitalization, to fund investments elsewhere.”
  • “The transaction would reduce Naspers’ stake in Tencent, the world’s biggest gaming company and the owner of China’s WeChat and QQ social networks, from 33% to 31%.”
  • “Naspers added that it did not plan to sell any more of its Tencent shares for at least the next three years.”
  • “But even Thursday’s limited sell down is a landmark for what has been one of the most successful venture capital investments in history, and comes as Hong Kong-listed Tencent shifts strategy after years of explosive growth.”
  • “Naspers’ investment of $32m in Tencent in 2001, now worth $175bn, powered its rise from a publisher and pay-TV operator to Africa’s biggest company by market capitalization.”
  • Approximately a 65.91% compound growth rate over 17 years. How do you like them apples?

Worthy Insights / Opinion Pieces / Advice

Forbes – Canadian Real Estabe Bubble Blowing Up North – Bob Haber 4/2

  • “According to the Real Estate Board of Greater Vancouver, single detached homes in Vancouver (on a local currency basis) have risen from approximately $400K CAD to $1.75 million CAD since 2002. That’s a 337% increase in 15 years. With incredibly fast rising prices, a large portion of the population is engaged in real estate brokerage, real estate development, construction, renovations, and everything that goes along with that. The echoes of Phoenix, Las Vegas, and San Diego from 2006 cannot be ignored.”
  • “…Taxation and interest rates are going higher. Cap rates on rentals or commercial properties are shockingly low (think 1% to 3% in most circumstances). In fact, Canada’s price-to-rent ratios are now well above what they were in the U.S. during the 2006 housing debacle. According to the Bank of Canada, 47% of Canada’s mortgages will reset in the next 12 months. To put that in perspective, a five-year fixed mortgage rate in Canada averages approximately 5.14%. This is 11% higher versus the 4.64% that it averaged for most of the past 2 years.”

NYT – Teachers in Oklahoma and Kentucky Walk Out: ‘It Really Is a Wildfire’ – Dana Goldstein 4/2

Markets / Economy

engadget – New York approves surcharge for Uber and Lyft rides in Manhattan – David Lumb 4/2

  • “As part of the budget that New York lawmakers passed last Friday, ride-hailing services and taxis face a new fee if they drive in Manhattan. These aren’t nickel-and-dime increases, either: Uber, Lyft and the like face a $2.75 charge for each ride, taxis get a $2.50 increase and group ride services like Via and uberPOOL will be charged $0.75 per customer. It’s meant to combat congestion and help fund subway repair and improvements, providing an expected $400 million per year going forward for the MTA.”
  • “Unsurprisingly, it’s already catching flak from customers and from taxi drivers, who have become far outnumbered by ride-sharing cars in the last several years. Of the 103,000 vehicles for hire in NYC, 65,000 are driven by Uber contractors alone, while taxis remain capped by law at 13,600, The New York Times reported. As a result, average traffic in Manhattan has slowed from 6.5 miles per hour to 4.7.”
  • “Other cities have enacted their own surcharges for ride-hailing services in recent years, but they are far lower than those New York just passed. Seattle instated a $0.24 charge for each trip in 2014, Portland, OR agreed to levy a $0.50 fee per customer in 2016, both of which funnel money collected toward regulating ride-sharing services. Chicago passed one in 2014 that will reach $0.65 this year and directs part of the funds raised toward public transit, much like New York’s will.”

FT – Walmart extends money transfer operation to 200 countries – Anna Nicolaou and Ben McLannahan 4/2

  • “Walmart is expanding its money transfer operation to 200 countries, the latest move in the retail giant’s slow but steady push into financial services.”
  • “Through the new scheme, people will be able to deliver money from Walmart’s nearly 5,000 US stores to locations abroad within 10 minutes, the company said.” 
  • “Arkansas-based Walmart first unveiled a money transfer service four years ago, allowing customers to send funds between its stores, and aiming to reach the “underbanked” — about 27% of Americans have limited access to traditional banking, according to the Federal Deposit Insurance Corporation. Walmart claims it has saved customers $700m in fees because it charges cheaper rates.” 
  • “The retailer has partnered with MoneyGram, one of the big wire transfer groups, to expand globally this month. The service will allow US residents to send money to countries such as Mexico, which received nearly $30bn in remittances last year, according to Mexico’s central bank.”
  • “Walmart’s push into money transfers comes a few months after it announced it was partnering with PayActiv and Even, two financial-technology firms, to offer its 1.4m US employees tools for money management and on-demand access to their earned wages.”
  • “The moves suggest the retailer may see itself as a partner of the big financial services companies rather than a direct rival going head to head with basic products such as checking accounts or credit cards.”

WSJ – Daily Shot: Political Calculations – Why Bad News for Big Tech Is Bad for Stocks 3/29

WSJ – Daily Shot: SPDR Americas – Equity Geographical Flows 4/3

WSJ – Daily Shot: Deutsche Bank – Drawdown Durations 4/3

Real Estate

FT – Manhattan apartment sales plunge – Lindsay Fortado 4/2

  • “The number of co-op and condominium sales in Manhattan fell nearly 25% during the first quarter compared to the same period last year, according to new research by Miller Samuel real estate appraisers and Douglas Elliman real estate brokers.”
  • “It was the largest annual decline in sales in nine years, according to the report.”
  • “The average sale price across Manhattan fell by 8.1% from the year-earlier quarter, and the average price per square foot also recorded a sharp decline, falling by 18.5% to $1,697.”
  • “Luxury apartment sales, considered the most expensive 10% of all properties, were hit particularly hard, as were new developments.”
  • “The average sales price of a luxury apartment fell 15.1%, down from $9.36m in the first quarter of 2017 to $7.94m in the first quarter of this year, and the number of sales was down 24.1%. The number of newly built apartments that went into contract fell 54%.”

WSJ – Daily Shot: Black Knight – Mortgage Equity 4/3

  • “Turning to consumer credit, how much borrowing capacity do households have against their homes? The answer is $5.4 trillion. $2.8 trillion of that capacity is with borrowers who have the highest credit scores.”

WSJ – Daily Shot: Black Knight – Hurricane-related mortgage delinquencies in Florida and Puerto Rico 4/3

Finance

WSJ – Daily Shot: Deutsche Bank – Countries with Negative-Yielding Bonds 4/3

Cryptocurrency / ICOs

Bloomberg – The Crypto Hedge-Fund Bubble Is Starting to Deflate – Olga Kharif 4/2

Tech

FT – Why south-east Asia’s politics are proving  problem for Facebook – John Reed and Hannah Kuchler 4/2

  • “One of the company’s fastest-growing markets is also one of its most complex where hate speech and political manipulation are making it hard to remain neutral.”

China

FT – China moves its factories back to the countryside – Emily Feng 4/2

  • “After decades of urbanization and rural neglect, China’s Communist party is seeking to revitalize the countryside, where wages and standards of living have stagnated compared with those of big cities.”

FT – Chinese developers seek piece of booming education market – Emily Feng 4/2

  • “When China’s premier Li Keqiang recently vowed progress on a property tax intended to rein in home prices, it signaled to the country’s real estate developers that more than a decade of double-digit growth would soon end.”
  • “Facing slowing growth in their core business, top developers are betting on the education market, building and operating international schools for tens of thousands of students.”
  • “The country’s three biggest property developers — Country Garden, Evergrande and Vanke — have seen sales slow in the first quarter of this year, according to an industry ranking compiled by research agency China Real Estate Information Corp. Meanwhile, home price growth has dipped following a clampdown on lending and property speculation.”
  • “That has already made a dent in developers’ financials. Dalian Wanda reported a revenue drop of almost 11% in 2017 while other residential developers are girding for longer-term impact. JPMorgan Chase has forecast as much as a 6% decline in mainland Chinese home sales this year.“
  • “Now developers are ‘looking at other sectors in which to invest in order to get the returns that they need to continue growth’, says John Mortensen, regional director of real estate investment and management company JLL, which often works with universities.”
  • “Meanwhile, China’s education market is booming. The sector will grow from Rmb1.64tn ($261bn) in revenue in 2015 to Rmb2.9tn ($461bn) in 2020, according to Deloitte, with particularly high demand for English-language curriculums.”
  • “Amid fierce competition to get into good universities at home and overseas, proximity to a good school is often a key factor in determining Chinese property prices. A 2012 study of Shanghai housing found that prices were more than 40% higher in top-rated school districts.”
  • “That has prompted residential developers to build new complexes with schools within walking distance of apartments, hiring or building in-house education teams to recruit teachers and design bilingual curriculums.”
  • “Guangzhou-based Country Garden, China’s top residential developer by sales, is now also among the country’s biggest private education providers. Its education subsidiary, Bright Scholar, runs 52 bilingual international schools that each offer a full education from kindergarten to secondary school. Bright Scholar listed on the New York Stock Exchange last year, raising more than $150m.”
  • “Vanke Group, China’s second biggest residential developer by sales, set up its own education group in 2015 as part of a strategic shift aimed at offering a ‘full ecology’ to families.”
  • “Dalian Wanda is another property group with a growing interest in schools — its children’s education and entertainment group almost tripled its sales last year even as the group’s total revenues fell more than 10%.”

India

NYT – Jeweler to the Stars Flees as India Seethes Over Bank Fraud – Maria Abi-Habib 4/3

  • “About a week after Mr. Modi grinned for the cameras with the prime minister, a state-run Indian bank told regulators that it had found nearly $1.8 billion in fraudulent transactions linked to the jeweler’s account. Indian officials now accuse Mr. Modi, his family and business associates of assembling a global empire with nearly $3 billion in money obtained illegally, mostly from government-run banks. He denies wrongdoing.”
  • “For many Indians, the allegations against Mr. Modi further cement the notion that taxpayer-owned banks are footing the bill for the lavish lifestyles of a rising elite. That idea has particular resonance in a country where stark poverty — India is home to a third of the world’s poorest people — remains dire.”
  • “Just a decade ago, during the global financial crisis, Indian lenders were held up as a bastion of stability. Today, they are considered more vulnerable than those in other leading emerging markets, mostly because state-controlled lenders dominate the sector, according to the International Monetary Fund.”
  • “Of the $6.5 billion in fraudulent loans that have hit the industry over the past two years, the most egregious cases were at government-owned banks, according to figures released by Parliament. Executives at those lenders are more likely to be appointed for their political connections than for their talent, financial analysts say.”

Russia

FT – Russia plans ‘bad bank’ for $19bn in toxic assets – Max Seddon 4/2

  • “Russia’s central bank is to create a ‘bad bank’ to ringfence Rbs1.1tn ($19bn) in toxic assets from three nationalized top-10 lenders, vastly increasing the total bill for bailing them out.” 
  • “Vasily Pozdyshev, a deputy central bank governor, told Russian news agencies on Monday that the central bank would transfer assets from three collapsed banks into Trust, another failed lender.” 
  • “Taxpayers are footing the largest bank rescue bill in Russia’s history to fund the central bank’s takeover of three privately held banks last year to stave off a collapse in the sector.”
  • “The largest of them, Otkritie, was Russia’s biggest privately held bank by assets until it was nationalized in August. The central bank then nationalized B & N Bank, another top-10 lender, and Promsvyazbank to stop them from going under.” 
  • “Under Ms Nabiullina (Elvira Nabiullina, Russian central bank governor), the central bank is conducting an unprecedented clear-up of the sector under which it has wound down more than 300 banks since 2013. To rescue the three top-10 lenders, however, Ms Nabiullina had to create a separate bailout mechanism that allowed the central bank to take direct stakes in their capital.” 

FT – Russia’s $55bn pipeline gamble on China’s demand for gas – Henry Foy 4/2

  • “The pipeline is Russia’s most ambitious, costly and geopolitically critical energy project since the fall of the Soviet Union, and represents a $55bn bet on uncharted territory by the world’s biggest gas company.”
  • “Russia’s first eastern pipeline is the most striking physical manifestation of President Vladimir Putin’s diplomatic pivot towards China amid rapidly worsening relations with the west. It is the biggest and most critical element in a suite of energy deals, funding packages and asset sales that seek to warm a once frosty relationship.”
  • “For Gazprom, the Kremlin-controlled gas export monopoly behind the pipeline, the mega-project is the largest and most expensive in its history. When the taps are switched on in December 2019, the world’s largest gas exporter will be connected for the first time with its largest energy importer.”

April 2, 2018

Perspective

Visual Capitalist – A Deep Dive Into the World’s Oceans, Lakes, and Drill Holes – Nick Routley 3/31

Worthy Insights / Opinion Pieces / Advice

FT – Tech stock woes threaten Wall Street bull market – Richard Waters, Gregory Meyer, and Barney Jopson 3/30

  • “Rising political anger, a worry that the Big Tech boom will soon have run its course and the sense that an economic turning point may have been reached in the US have combined this week to threaten one of the underpinnings of the stock market boom.”
  • “The wild two-week swing in tech stocks, which included a bloodbath on Tuesday, began with reports of a massive leak of personal data from Facebook, and was extended by fears of a White House vendetta against Amazon.”
  • “Since then, the social networking company’s shares have dropped 14%, losing about $75bn in stock market value and wiping $10bn from the personal fortune of co-founder Mark Zuckerberg. Amazon, which found itself on the receiving end of another tweet from President Donald Trump on Thursday, has shed $61bn, Apple $54bn, Alphabet, parent of Google, $62bn, and Microsoft $26bn.”
  • “Despite the volatility that crept into a group of stocks that have led the market higher, Big Tech’s loyal army of fans among Wall Street analysts remained bullish.”
  • “After years in which it has paid to have a ‘buy’ recommendation on Big Tech, stock market analysts have largely reiterated their confidence in the sector’s fundamentals, despite the ructions. For Facebook, 44 of 48 analysts recommend buying the stock, according to Bloomberg data. Forty-eight of the 51 analysts covering Amazon rate it a buy.”
  • “Investors have been nervous for months that the growing political backlash against Big Tech would lead to a new wave of regulations or taxes, though they did not have anything specific to attach their fears to.”
  • “Now they do. The news that the personal information of some 50m Facebook users had been leaked to a data analysis firm that helped the Trump presidential campaign added to a wave of anger against the social media company on both sides of the Atlantic.”
  • “The wave of bad news in tech has also reinvigorated Wall Street’s short sellers — investors who sell shares they do not own in the hopes that the price will fall. Ihor Dusaniwsky, head of predictive analytics at S3 Partners, a financial analytics company, said Facebook, Amazon, Apple, Netflix and Google are now among the top 10 most-shorted US stocks, as measured by market value. The total short position in the five stocks is worth $34.9bn.”

Britain

FT – Quantitative easing ‘reduced UK wealth inequality’, says BoE – Gavin Jackson 3/31

  • “Wealth inequality in the UK was reduced by quantitative easing after the financial crisis, according research by staff at the Bank of England, contradicting the widespread belief that the policy concentrated wealth in fewer hands.”
  • “In a working paper last week, researchers claimed the UK’s Gini coefficient, a commonly used measure of wealth inequality, declined slightly in comparison with a scenario where the central bank did not change its monetary policy following the crisis.”
  • “…the bank’s researchers said the effect on the housing market, which saw prices continue to rise, meant that those on lower and middle incomes saw a bigger proportional increase in their net worth than the wealthiest households did.”
  • “Housing wealth is the most equally distributed form of wealth and increases in financial and pension wealth, which are more unequally distributed, were not enough to offset the effect of higher house prices.”
  • “But the BoE also acknowledged that the cash gains for the wealthiest households were much larger than for poorer families.”
  • “Every age group and income group benefited from the policies compared to if it had not changed policy following the financial crisis, researchers said.”
  • “Younger workers earned more because lower interest rates helped to support economic growth and employment and avoid a deeper recession, while older families, who often rely on interest on savings, were more likely to see increases in their net worth.”
  • “The researchers estimated that a third of households were £500 worse off because of lower interest income but this fell to 4% once all effects on financial wealth, pension wealth and property values were included.”

 

March 30, 2018

Worthy Insights / Opinion Pieces / Advice

FT – Chinese tycoons have to play the connections game – Jamil Anderlini 3/28

  • “Making use of guanxi can be lucrative but is also fraught with danger.”

FT – Russia and the west’s moral bankruptcy – Edward Luce 3/28

  • “Vladimir Putin’s wealth extraction machine could not operate without our connivance.”

Markets / Economy

Bloomberg – Tesla Bonds Are in Free Fall – Molly Smith 3/28

  • “On Wednesday, Tesla’s notes plunged to a low of 86 cents on the dollar, the clearest sign yet creditors aren’t totally sure the company will be money good.”

FT – Record ‘megadeals’ push global takeovers beyond $1.2tn – Eric Platt, Javier Espinoza, and Don Weinland 3/28

WSJ – Daily Shot: BofAML – State and Local Government Pension Funding Status 3/29

Real Estate

WSJ – Daily Shot: John Burns RE Consulting – Burns Home Value Index 3/29

WSJ – Daily Shot: John Burns RE Consulting – US Housing Expansion Timelines 3/29

Energy

WSJ – Daily Shot: eia – US gross and net energy trade 3/29

Finance

FT – US subprime mortgage bonds back in fashion – Ben McLannahan and Joe Rennison 3/28

  • “Yield-hungry investors turn to assets blamed for financial crisis a decade ago.”

WSJ – Daily Shot: CBOE VIX Futures 3/28

Health / Medicine

WSJ – What, Cocktails Have Calories? New Rules Will Show How Many – Saabira Chaudhuri 3/23

China

FT – China accuses Anbang former chairman Wu Xiaohui of fraud – Gabriel Wildau and Yizhen Jia 3/28

  • “Chinese prosecutors have accused the former chairman of acquisitive conglomerate Anbang Insurance Group of fraud and embezzlement, offering the first detailed explanation of why authorities toppled the once high-flying tycoon.”
  • “Prosecutors on Wednesday accused Mr Wu of issuing false financial statements, marketing materials and regulatory filings to gain approval to sell such products. He also exceeded fundraising limits approved by the China Insurance Regulatory Commission, prosecutors alleged.” 
  • “A whiff of political prosecution remains because the basic business model of selling universal insurance to finance high-profile acquisitions was not limited to Anbang, although Mr Wu’s group was the most aggressive.” 
  • “Prosecutors alleged Mr Wu oversold Rmb724bn ($115bn) in insurance products, diverting Rmb65bn to another company he controlled, which he used for overseas investments, debt repayment and ‘lavish personal spending’. Mr Wu was also accused of concealing his control of Anbang through the other company.”
  • “They also accused Mr Wu of using proceeds from the sale of universal insurance to inject capital back into Anbang, a form of circular financing designed to boost the company’s reported capital ratio and create the impression of financial strength.”

NYT – Anbang Was Seized by China. Now, It Has a Deal for You. – Sui-Lee Wee and Zhang Tiantian 3/29

  • “Less than a month after it was seized by the Chinese government, Anbang Insurance Group, the giant conglomerate, is once again offering small investors ‘you snooze, you lose’ investment opportunities — your money back, guaranteed.”
  • “Sold like stocks or bonds in bank branches around China, the products carry names like Anbang Abundant Stability No. 10, suggesting the investments are conservative. They are anything but.”
  • “Still, Anbang and other companies keep selling them — and Chinese investors keep buying them. When China took over Anbang, it only underlined the widely held — and potentially dangerous — belief that the Chinese government will always be there to bail them out.”
  • “China has a problem with debt. Shadowy, underground lenders have flooded the country with a staggering $15 trillion in credit, which threatens to hobble its economy.”
  • “Beijing now appears to be taking a harder stance with the companies in need of a bail out. On Wednesday, Chinese authorities accused a founder of Anbang, who was the deal maker who bought the Waldorf Astoria, of bilking investors of more than $10 billion. In a country where courts tend to convict, the accusations raised the likelihood that the executive, Wu Xiaohui, could face life in prison.”
  • “The Chinese authorities have pressured big issuers to slow down. In November, they proposed tightening disclosure rules and stopping firms from guaranteeing payments to investors, among other steps.”
  • “Data suggest China is making some headway. The total outstanding balance of wealth management products issued by Chinese banks was about $4.7 trillion in 2017, up just 1.7% from a year before, according to China Wealth, a state-backed company that tracks China’s wealth management products. Two years ago, sales were growing at roughly 50%.”
  • “Zhu Ning, a Tsinghua University economist, said the only way the government can prevent investors from taking on more risk that they can handle is to allow for ‘some real failures’.”
  • “China has been reluctant to allow for failures. Fearing mass unrest, the ruling Communist Party has repeatedly instructed Chinese banks and local officials to cave in to angry investors, who have protested outside government offices after losing their investments.”
  • “The real test, according to Mr. Zhu, could come later this year, when wealth management products issued years earlier have to be paid back.”
  • “’Nonperforming loans are going to be so severe that some of the weaker banks will be forced to face their Judgment Day — whether they are going to be bailed out or whether they are going to die,’ he said.”

 

March 29, 2018

Perspective

The Big Picture – Deutsche Bank: Household Net Worth is Down, except for Top 10% – Barry Ritholtz 3/28

Worthy Insights / Opinion Pieces / Advice

CNBC – Investment chief of $250 billion firm (Guggenheim investments) says financial markets are on a ‘collision course for disaster’ – Tae Kim 3/27

NYT – Income Mobility Charts for Girls, Asian-Americans and Other Groups. Or Make Your Own. – Emily Badger, Claire Cain Miller, Adam Pearce and Kevin Quealy 3/27

  • Visually stunning interactive income-mobility graphics.

Markets / Economy

WSJ – Wall Street Bankers Get Biggest Raise in Four Years – Telis Demos 3/26

Visual Capitalist – Wealth 101: Visualizing the Extraordinary Power of Compound Interest 3/28

Real Estate

WSJ – Retail Landlords Sell Assets to Raise Cash – Esther Fung 3/27

  • “Shares of real-estate investment trusts have underperformed the broader equity market for the third year running, in part because of rising interest rates, which cause these dividend-paying stocks to lose some of their appeal.”
  • “Because it would be difficult to issue new shares if REITs continue to trade at discounts, some are now compelled to sell assets to raise cash to help them reposition their remaining assets or fund share buybacks.” 
  • “REITs could sell individual assets, sell stakes in assets to other institutional investors and enter joint ventures where they also could earn some management fees, or be acquired entirely and privatized by an investor.”
  • “Industry insiders noted that while there are more for-sale signs popping up, these sales aren’t driven by the need to reduce debt because REITs have been more disciplined since the financial crisis, so property prices aren’t likely to fall drastically.”
  • “Listed REITs have been net sellers of assets since 2015, according to data from Real Capital Analytics. From January to March 23 of 2018, there were $6.91 billion in disposals, compared with $5.38 billion in acquisitions.”
  • “Disposals topped acquisitions in 2017 and 2016, $60.9 billion to $56.1 billion and $71.4 billion to $48.4 billion respectively, Real Capital said.”

Energy

FT – Subsidy-free renewable projects on ‘cusp of breakthrough’ – Sylvia Pfeifer 3/27

  • “In a few months’ time, if all goes to plan, designs will be drawn up for a wind farm that will be built 22km off the Netherlands’ coast. Once up and running in 2022, Hollandse Kust Zuid will be able to call itself Europe’s first offshore wind farm built without government subsidies.”
  • “The wind farm, expected to be fully operational in 2023, will boast around 90 turbines that will deliver up to 750MW of power — enough to produce renewable electricity for up to 2m homes.”

WSJ – China Tries to Lift Yuan’s Profile With Oil Futures – Mike Bird 3/26

Finance

Investment News – Real estate fraudsters to repay $30 million to investors – Jeff Benjamin 3/28

  • “SEC settles with McKinley Mortgage, which promised secure investments and 6% returns.”

WSJ – Daily Shot: Bianco Research – 5-trading day ETF Flows by category 3/28

Cryptocurrency / ICOs

WSJ – Daily Shot: Bitcoin 3/28

WSJ – Daily Shot: Charlie Bilello – Cryptocurrency Returns 3/28

Australia

FT – China academics divided over Australia influence crackdown – Jamie Smyth 3/27

  • “Canberra’s proposed crackdown on Chinese government influence in Australia has prompted a bitter split among academics, following claims the policy is driven by racism and is stigmatizing Chinese Australians.”
  • “A group of 35 China scholars based in Australia signed an open letter on Wednesday defending the Australian government’s efforts to identify and wind back Chinese Communist party (CCP) influence in the country.”
  • “Canberra is proposing to ban foreign political donations and target covert, deceptive and threatening actions by foreign groups and individuals in response to alleged interference by the CCP in the country’s internal affairs and in Chinese diaspora communities.”
  • “The letter said accusations of racism were a tool used by the CCP to silence the debate over foreign influence and drive a wedge between Chinese communities and the rest of Australia.” 

China

FT – China lets its rich invest more offshore as cash outflow fears ease – Don Weinland and Gabriel Wildau 3/27

  • “After a two-year wait, Chinese regulators have revived a program allowing global asset managers including JPMorgan Chase to raise funds from Chinese onshore clients for investment in offshore hedge funds.”
  • “The easing of capital controls shows how Chinese regulators are increasingly relaxed about cross-border capital flows amid a stable Chinese economy and persistent dollar weakness.”
  • “JPMorgan Asset Management has received a new quota for the program, and several other asset managers are expecting similar allotments, according to three people familiar with the situation. JPMorgan received a $50m quota in January, one of those people said.”