Tag: Steel Industry

March 12, 2018

Perspective

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.”

Finance

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

Canada

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.”

China

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.”

India

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.”
Advertisements

October 30, 2017

The tally is in – daily (or at least close to it).

Perspective

WEF – This chart might change how you think about migration – Frank Chaparro 8/29

How Much – How Trump Tax Rate Changes Affect You – Raul 10/22

Economist – Globalization has marginalized many regions in the rich world 10/27

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – Italians Have Perfected the Art of Waiting It Out – Vernon Silver 10/18

Bloomberg Businessweek – Amazon Is Getting a Good Deal in Ohio. Maybe Too Good – Mya Frazier 10/26

  • “Amazon’s nine-figure tax incentives in Ohio have strained local public services as the state’s employment growth continues to lag the national average.”

Bloomberg View – Morningstar’s Star System Was Always a Bright Shinny Object – Barry Ritholtz 10/26

  • “Retail and professional investor alike seem to ignore the fact that every single document ever generated by any investment-related firm has a warning on it to the effect that ‘Past performance is not an indicator of future returns.’ Every chart ever drawn, each investing idea back-tested and every single historical comparison is testament to how little mind humans pay to that disclaimer.”

Bloomberg View – Think the U.S. Has a Facebook Problem? Look to Asia – Editorial Board 10/22

  • “…its platform exacerbates the potential for violence and social breakdown.”

Economist – Globalization’s losers: The right way to help declining places – Leaders 10/21

  • “Mainstream parties must offer voters who feel left behind a better vision of the future, one that takes greater account of the geographical reality behind the politics of anger.”
  • “Economic theory suggests that regional inequalities should diminish as poorer (and cheaper) places attract investment and grow faster than richer ones. The 20th century bore that theory out: income gaps narrowed across American states and European regions. No longer. Affluent places are now pulling away from poorer ones. This geographical divergence has dramatic consequences. A child born in the bottom 20% in wealthy San Francisco has twice as much chance as a similar child in Detroit of ending up in the top 20% as an adult. Boys born in London’s Chelsea can expect to live nearly nine years longer than those born in Blackpool. Opportunities are limited for those stuck in the wrong place, and the wider economy suffers. If all its citizens had lived in places of high productivity over the past 50 years, America’s economy could have grown twice as fast as it did.”

Economist – Why Airbus’s tie-up with Bombardier is so damaging for Boeing 10/19

Economist – Firms that burn up $1bn a year are sexy but statistically doomed – Schumpeter 10/21

  • “Consider Tesla, a maker of electric cars. This year, so far, it has missed its production targets and lost $1.8bn of free cashflow (the money firms generate after capital investment has been subtracted). No matter. If its founder Elon Musk muses aloud about driverless cars and space travel, its shares rise like a rocket—by 66% since the start of January. Tesla is one of a tiny cohort of firms with a license to lose billions pursuing a dream. The odds of them achieving it are similar to those of aspiring pop stars and couture designers.”
  • Investing today for profits tomorrow is what capitalism is all about. Amazon lost $4bn in 2012-14 while building an empire that now makes money.”
  • Tell that to the mom and pop shops that are crowded out because they have to be profitable.
  • “Most billion-dollar losers today are energy firms temporarily in the doldrums as they adjust to a recent plunge in oil prices. Their losses are an accident.”
  • “But a few firms love life in the fast lane. Netflix, Uber and Tesla are tech companies that say their (largely unproven) business models will transform industries. Two others stand out for the sheer persistence of their losses. Chesapeake Energy, a fracking firm at the heart of America’s shale revolution, has lost at least $1bn of free cashflow a year for an incredible 14 years in a row. Nextera Energy, a utility that runs wind and solar plants, and which investors value highly, has managed 12 years on the trot.”
  • “Collectively these five firms have burned $100bn in the past decade, yet they boast a total market value of about $300bn… The experience of the five suggests that bending reality today has three elements: a vision, fast growth, and financing.
  • “…Sustaining a reality distortion field is possible, but the longer it goes on for, the harder it gets. More capital has to be raised and, in order to justify it, the bigger the firm’s projected ultimate size—its terminal value—has to be.”
  • “A few firms other than Amazon have defied the odds. Over the past 20 years Las Vegas Sands, a casino firm, Royal Caribbean, a cruise-line company, and Micron Technology, a chip-maker, each lost $1bn or more for two consecutive years and went on to prosper. But the chances of success are slim. Of the current members of the Russell 1000 index, since 1997 only 37 have lost $1bn or more for at least two years in a row. Of these, 21 still lose money.”
  • “To justify their valuations, the five firms examined by Schumpeter must grow their sales by an estimated 8-33% each year for a decade. Based on the record of all American companies since 1950, and the five firms’ present revenue levels, the probability of this happening ranges between 0.1% and 25%, using statistical tables from Credit Suisse, a bank.”

FT – The downside of the race to be Amazon’s second home – Richard Florida 10/23

  • For Amazon to really make an impact, forgo the offered public incentives, among other things.

Markets / Economy

Bloomberg Businessweek – Under Trump, Made in America Is Losing Out to Russian Steel – Margaret Newkirk and Joe Deaux 10/25

  • “Foreign steel imports into the U.S. are up 24% in 2017. As the industry grows angry at Trump’s lack of trade action, Russia’s Evraz continues winning pipeline contracts.

WSJ – Daily Shot: Overstock.com 10/24

  • Overstock.com which has been languishing for some time now is on a tear since it announced an initial coin offering (ICO). I suspect that other companies that have been struggling for growth will follow.

WSJ – Daily Shot: Banca Monte dei Paschi di Siena 10/25

  • “Shares of the bailed-out Italian bank Monte dei Paschi resumed trading on Wednesday and promptly declined 70% from the last closing price.”

Real Estate

WP – America’s affordable-housing stock dropped by 60 percent from 2010 to 2016 – Tracy Jan 10/23

  • “The number of apartments deemed affordable for very low-income families across the United States fell by more than 60% between 2010 and 2016, according to a new report by Freddie Mac.”
  • “The report by the government-backed mortgage financier is the first to compare rent increases in specific units over time. It examined loans that the corporation had financed twice between 2010 and 2016, allowing a comparison of the exact same rental units and how their affordability changed.”
  • “At first financing, 11% of nearly 100,000 rental units nationwide were deemed affordable for very low-income households. By the second financing, when the units were refinanced or sold, rents had increased so much that just 4% of the same units were categorized as affordable.”
  • “’We have a rapidly diminishing supply of affordable housing, with rent growth outstripping income growth in most major metro areas,’ said David Brickman, executive vice president and head of Freddie Mac Multifamily. ‘This doesn’t just reflect a change in the housing stock.’”
  • “Rather, he said, affordable housing without a government subsidy is becoming extinct. More renters flooded the market after people lost their homes in the housing crisis. The apartment vacancy rate was 8% in 2009, compared to 4% in 2017. That trend, coupled with a stagnant supply of apartments, resulted in increased rents.”
  • “The study defined ‘very low income’ as households making less than 50% of the area median income, and ‘affordable’ rent as costing less than 30% of household income.”
  • “Most new construction of multifamily housing generally serves high-income renters, according to Freddie Mac. The corporation — along with Fannie Mae, another government-sponsored enterprise with a similar mission — significantly reduced its role in financing multifamily housing after the Great Recession.”
  • “Together, they had financed about 70% of all original loans for multifamily properties in 2008 and 2009 as private capital pulled back, said Karan Kaul, a research associate at the Housing Finance Policy Center at the Urban Institute. By the end of 2014, their market presence declined to 30%.”
  • “‘The affordability issues are becoming more severe at the lower end of the market,’ said Kaul, a former researcher at Freddie Mac. ‘Absent some kind of government intervention or subsidy, there is just not going to be any investments made at that lower end of the market.'”

Energy

FT –  US oil floated on cheap money – John Dizard 10/28

Construction

WSJ – Daily Shot: CME Lumber Futures 10/23

  • “Lumber futures are soaring in response to the NAFTA jitters. US home construction/renovation costs are sure to rise.”

Middle East

Economist – The boycott of Qatar is hurting its enforcers 10/19

  • “If Saudis and Emiratis will not trade with Doha, Iranians will.”