Tag: Technology

June 25, 2018

Worthy Insights / Opinion Pieces / Advice

WSJ – Anger Over Tourists Swarming Vacation Hot Spots Sparks Global Backlash – Rachel Pannett 5/22

  • “In Venice, Barcelona, Thailand and New Zealand, ‘overtouristing’ is straining local infrastructure and prompting restrictions; the ‘Lord of the Rings’ effect.”

Markets / Economy

NYT – Your Recycling Gets Recycled, Right? Maybe, or Maybe Not – Livia Albeck-Ripka 5/29

  • “Plastics and papers from dozens of American cities and towns are being dumped in landfills after China stopped recycling most ‘foreign garbage.'”

Real Estate

FT – How WeWork’s revenue-sharing leases could affect property investors – Aime Williams 6/21

  • WeWork is starting to work percentage rent deals with some of its landlords/co-investors.

Tech

FT – Mary Meeker warns tech giants that growth will be harder to find – Tim Bradshaw 5/30

  • “Veteran Silicon Valley analyst sees competition intensifying now half the world is online.”

Health / Medicine

FT – Spread of western lifestyle hampers battle against cancer – Darren Dodd 5/31

  • “The good news is that about 40% of cancer cases are preventable and that smoking, the biggest single cause, is in decline across much of the world. The bad news is that overall rates are shooting up as more countries adopt western lifestyles.”
  • “By 2035, the number of new cases is set to rise by 58% to 24m, according to a report from the World Cancer Research Fund.”
  • “’Over the next 20 or 30 years, unless anything is done to stop it, [obesity or being overweight] is going to overtake smoking as the number one risk factor for cancer,’ says Dr Kate Allen, executive director of science and public affairs at the WCRF.”
  • “The report is a synthesis of a decade of research on cancer risks with a new set of recommendations (see graphic) to minimize a person’s chances of developing the disease. It says 12 cancers are now linked to being overweight or obese.”
  • “’It has taken 40 or 50 years to make a big dent in tobacco consumption,’ Dr Allen says. In dealing with the problems of obesity, ‘it’s going to take at least that to get some traction,’ she adds.”

Canada

NYT – In Vancouver, a Housing Frenzy That Even Owners Want to End – Conor Dougherty 6/2

  • “Vancouver is so expensive that politicians want to tax its real estate market into submission, and many homeowners — who will lose money if home prices fall — think it’s the best idea they’ve heard in years.”
  • “Like many cities around the world, Vancouver is grappling with punishing housing costs that have pushed out large swaths of residents — and are causing distress among young adults who can’t afford rent today and take it for granted that they will never own a home.”
  • “Vancouver, surrounded by snow-capped mountains and wide maritime views, has never been especially cheap. But home and condominium prices are up by close to 16% over the past year, and about 60% over the past three, according to the Real Estate Board of Greater Vancouver.”
  • “What makes these gains so remarkable is that unlike Silicon Valley, London or New York — where the presence of high-paying tech and finance jobs helps explain housing costs — Vancouver has relatively low salaries. As part of their bid for Amazon’s second headquarters, Vancouver officials boasted about having ‘the lowest wages of all North American tech hubs’.”
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June 22, 2018

Perspective

WSJ – Growth in Retiring Baby Boomers Strains U.S. Entitlement Programs – Janet Adamy and Paul Overberg 6/21

Worthy Insights / Opinion Pieces / Advice

FT – The world’s progress brings new challenges – Martin Wolf 5/29

  • “Preserving peaceful relations in an era of rapid shifts in relative power is tough.”

Project Syndicate – Are We in a Corporate Debt Bubble? – Susan Lund 6/19

WSJ – Japan’s Yen: A Currency for All Seasons? – Richard Barley 6/21

WSJ – Why Home Prices Have Nowhere to Go But Up – Justin Lahart 6/20

  • “Low supply is keeping sales down despite higher rates and builders are in no rush to boost production.”

Markets / Economy

WSJ – Behemoths Have Dominated the Market Before, but Tech Is Different – James Mackintosh 6/14

Real Estate

FT – Blackstone remains global king of property funds – Chris Flood 6/2

WSJ – Daily Shot: Black Knight – US Foreclosure Starts 6/21

Finance

FT – The mystery trader who roiled Wall Street – Miles Johnson and Robert Smith 6/3

  • “Former Blackstone executive used complex credit derivatives to become a feared hedge fund manager but left behind a trail of recriminations.”

Education

NYT – The Numbers That Explain Why Teachers Are in Revolt – Robert Gebeloff 6/4

NYT – Top Colleges Are Cheaper Than You Think (Unless You’re Rich) – David Leonhardt 6/5

India

FT – Payments crunch pushes Indian power producers to brink of default – Simon Mundy and Kiran Stacey 6/20

  • “Possibility of writedowns hangs over banks still struggling from bad-loan crisis.”

June 19, 2018

Worthy Insights / Opinion Pieces / Advice

FT – Watch the Fed’s balance sheet, not interest rates – Gillian Tett 6/7

  • “The US central bank’s unwinding has contributed to turmoil in emerging markets.”

FT – China is winning the global tech race – Michael Moritz 6/17

FT – Donald Trump’s trade tirade shows his mastery of the message – Rana Foroohar 6/17

Polygon – What if Star Wars never happened? – Kevin Lincoln 6/7

  • “Imagining a world where George Lucas’ space fantasy didn’t revolutionize Hollywood.”

Markets / Economy

WSJ – Daily Shot: indeed – Older workers are the gig economy 6/18

Energy

FT Energy Source: BP – World Fuel Sources by proportionate share – Ed Crooks 6/17

LA Times – Shale country is out of workers. That means $140,000 for a truck driver and 100% pay hikes – David Wethe 6/8

Finance

WSJ – The Finance Industry’s Incredible Ability to Keep the Money Rolling In – Paul J. Davies 6/15

  • “Banks, brokers and money managers have kept their revenue steady for 130 years.”

Cryptocurrency / ICOs

FT – Who really owns bitcoin now? – Hannah Murphy 6/7

  • “Initially in the crypto space, you had people who really understood the technology. Then there was a typical bandwagon investor situation and you know how it ends — and it did.” – Campbell Harvey, finance professor at Duke University and an investment strategy adviser for Man Group.
  • “But how many have gained — and lost — from the bitcoin bubble? Exclusive data from blockchain research company Chainalysis seen by the FT provides some tantalizing answers.”
  • “The Chainalysis data quantifies this distinct shift in the make-up of bitcoin owners from longer-term investors — those who held the asset for more than a year — to short-term investors who have traded more recently, by analyzing how regularly coins have changed hands.”
  • “Last November — before December’s pricing peak — the amount of bitcoin held for investment was roughly three times that held by traders.”
  • “However, by April 2018, the data show the amount held by investors — about 6m bitcoin — was much closer to the amount held by short-term speculators, with 5.1m bitcoin.”
  • Indeed, Chainalysis estimates that longer-term holders sold at least $30bn worth of bitcoin to new speculators over the December to April period, with half of this movement taking place in December alone.
  • “’This was an exceptional transfer of wealth,’ says Philip Gradwell, Chainalysis’ chief economist, who dubs the past six months as bitcoin’s ‘liquidity event’.”
  • “Mr Gradwell argues that this sudden injection of liquidity — the amount of bitcoin available for trading rose by close to 60% over that period — has been a ‘fundamental driver’ behind the recent price decline. At the same time, bitcoin trading volumes have now fallen in tandem with the prices, from close to $4bn daily in December to $1bn today.”
  • “So will the price of bitcoin ever surpass December’s peak? Part of the answer lies in who holds bitcoin now that the hype has died down.”
  • “Born in 2009 in the wake of the financial crisis, bitcoin is rooted in a libertarian quest for a means of exchange that is unshackled from the central banking system. Proponents — among them, computer experts and political activists — heralded the arrival of an alternative monetary system that could replace fiat currency.”
  • “But despite the recent crypto boom, there are few signs that this is happening. According to research published this month by Morgan Stanley, only four of the top 500 US e-commerce merchants accepted cryptocurrencies in the first quarter of 2018, compared with three at the beginning of 2017.”
  • “Chainalysis notes that the ‘vast majority’ of transactions it analyzed showed bitcoin being received from exchanges and rarely sent to merchant services to pay for goods or services.”
  • “Only a finite number of coin — 21m — can be created. Of this, about 4m are yet to be mined. Just as physical coins can be lost down the back of a sofa, so can bitcoins if users lose or forget the passwords needed to access their online wallets. The Chainalysis data separates out coins it deems to be lost or unused for years — which total 3.7m bitcoin, worth about $28bn.”
  • “’Speculation remains the primary use case for these digital assets; merchant or institutional adoption does not appear to be a primary driver of price,’ says Preston Byrne, an English structured finance lawyer and cryptocurrency observer.”
  • “Given this breakdown in bitcoin owners, most market watchers do not rule out another rapid price run-up. However, they say this would likely be the random movement of pure speculation or market manipulation rather than anything else.”
  • “’It’s very important to stress, this is not in any sense a rational market,’ says David Gerard, the author of Attack of the 50 Foot Blockchain.”
  • “’It’s very thinly traded, very badly structured . . . and it’s stupendously manipulated,’ he adds. ‘Anyone who goes in not realizing just how manipulated the crypto markets are will get skinned.’”
  • “The Chainalysis data also show that the bitcoin marketplace is skewed in terms of wealth distribution. A small cluster of investors — known colloquially as ‘whales’ — capture a hefty proportion of the market, which stands at odds with bitcoin’s mission to democratize finance. This brings its own risks.”
  • “Overall, some 1,600 bitcoin wallets — managed by both speculators and investors — contained at least 1,000 bitcoin each in April, according to Chainalysis, collectively holding nearly 5m bitcoin, or close to a third of the available total.”
  • “Of those, just under 100 wallets owned by longer-term investors contained between 10,000 and 100,000 bitcoin — so between $75m and $750m at today’s prices.”
  • “Nevertheless, some point out that the excitement and influx of fresh funds into the market has allowed its infrastructure to mature — albeit gradually — which could be a boon for those looking to trade bitcoin more safely in future.”
  • “Much of the future of bitcoin trading will depend on the approach that regulators take, experts say. There are stirrings across the world, though to date, little coherence. Asian financial centers such as Tokyo are now regulating crypto exchanges, while China has banned them outright. Meanwhile, the US Securities and Exchange Commission last month announced a criminal probe into potential bitcoin price manipulation.”
  • “Banks in particular have been reticent to engage with cryptocurrencies and the companies that handle them, partly due to the difficulty of conducting anti-money laundering checks on transactions.”
  • “’Bank compliance officers really, really hate cryptos . . . be prepared to demonstrate the provenance of every penny from every crypto,’ says Mr Gerard.”
  • “Any more widespread adoption of bitcoin would need regulators, central banks and tax regulators to allow the transfer of wealth movement from the current financial system into the new one, says Gavin Brown, senior lecturer in financial economics at Manchester Metropolitan University and director of cryptocurrency hedge fund Blockchain Capital.”

Environment / Science

Quartz – To hit climate goals, Bill Gates and his billionaire friends are betting on energy storage – Akshat Rathi 6/12

China

FT – Beijing leans on lenders to back debt-hit HNA’s bond sale – Lucy Hornby and Sherry Fei Ju 6/15

  • “Chinese banks have been urged by government officials to ‘support’ bonds issued by HNA as the troubled finance-to-aviation conglomerate tries to extricate itself from a massive debt burden racked up during an acquisition binge.”
  • “HNA plans to issue Rmb4bn ($620m) in domestic bonds, paying interest of 6.5-7.5%.”

Other Interesting Links

Bloomberg – It’s Billionaires at the Gate as Ultra-Rich Muscle In on Private Equity – Simone Foxman and Sonali Basak 6/11

WSJ – Daily Shot: Plastic Surgery Portal – Most Searched Plastic Surgery Procedures by State 6/18

June 14, 2018

I’m back. Sorry for the leave of absence.

Perspective

Visual Capitalist: Mary Meeker 2018 Internet Trends Report – How American Household Finances are Changing – Jeff Desjardins 6/1

Worthy Insights / Opinion Pieces / Advice

Axios – Millennials are moving to the exurbs in droves – Steve LeVine 6/10

FT – China’s Achilles heel lies with property companies – Henny Sender 6/12

  • “Heavy issuance of dollar debt could be exposed if currency rises further.”

NYT – A Rescue Plan for a Jobs Crisis in the Heartland – Edward L. Glaeser, Lawrence H. Summers, and Ben Austin 5/24

WSJ – Daily Shot: John Burns RE – US Economic Recovery Projection 6/13

Real Estate

WSJ – Blackstone Triples REIT’s Fundraising Goal – Peter Grant 6/12

Energy

WSJ – The New Tech That Terrifies OPEC – Spencer Jakab 6/1

  • “U.S. shale oil drillers are boosting efficiency with giant pads and walking rigs, lowering prices to a point that could hurt exporters like Saudi Arabia.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Bianco Research – Bitcoin Trading Activity by Currency 6/13

Tech

Bloomberg – Native Programmable Microcomputer Shipments – Barry Ritholtz 5/11

Entertainment

WSJ – Why Empty Seats at Taylor Swift’s Concerts Are Good for Business – Anne Steele 5/15

Environment / Science

how much.net – The Most Expensive Weather and Climate Disasters in the US – Raul 5/29

Automotive

WSJ – A Worrying Turn Ahead for Auto Loans – Aaron Back 5/29

  • “Auto loan delinquencies are too high considering the strong economy.”

May 22, 2018

Perspective

howmuch.net – Hourly Wage Required to Rent a Two-Bedroom Home in Every State – Raul 5/13

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Do Long-Term Investors Need Bonds? – Ben Carlson 5/20

Economist – America must use sanctions cautiously – Leaders 5/17

  • “The dollar gives the Treasury extraordinary power over global finance. It should not be used lightly.”

FT – Batteries are the next frontier of industrial competition – Nick Butler 5/20

  • “Why the race is on to host the factories that will serve the electric vehicle market.”

FT – Tech lessons from Amazon’s battle in Seattle – Gillian Tett 5/17

Markets / Economy

FT – Ant Financial valued at $150bn in offering – Henny Sender and Louise Lucas 5/20

  • “The enthusiasm for Ant Financial is partly a reflection of the scale of the company’s operations in China, as well as the need among investors to deploy huge funds being raised.”
  • “’If you are too conservative, you lose a lot of opportunities,’ said one mainland Chinese investor, who is also involved in the transaction. ‘In the last few years, we were not gung-ho enough and left too much money on the table’.”

WSJ – Daily Shot: Moody’s – Youth Unemployment Rate – European Countries 5/21

Real Estate

FT Alphaville – Retail is not dead – Jamie Powell 5/20

This is one of the few instances when I’ve posted the article in its entirety…

  • “Readers may have seen a few articles about the ‘DEATH OF RETAIL’ (add exclamation marks where appropriate) recently. To say it’s been a popular meme in US economic commentary would be, well, quite an understatement. Courtesy of CBInsights, here’s a timeline of retail bankruptcies up to March 2018:”
  • “Bogey men blamed for the decline range from Amazon to pesky private equity to, erm, tourists. To get a feel for the distressed nature of the sector, as of March 2018, retailers make up nearly 20% of the companies which Standard & Poor’s awards a they-may-not-make-it CCC credit rating. In short, defaults are still coming.”
  • “Yet is it all doom and gloom for bricks and mortar retail? Adam Ozimek, of Moody’s Analytics, begs to differ — laying out his case in a blogpost yesterday. Let’s take a look at his reasoning.”
  • “First Mr Ozimek points to retail payrolls running at a near historical high at 15.3m jobs, only 22,000 positions short of the peak reached in 2017:”
  • “The hiring boom is despite physical retail having a relatively smaller share of the economy from its peak in the credit-fueled boom years under Ronald Reagan:”
  • “So retail is a touch less influential in the US economy, but it still a key supplier of jobs. Looking at the first chart, however, the doubling of retail jobs in absolute terms isn’t quite as impressive when you consider retail employment also came close to peaking in 2000, and since then the US economy has nearly doubled according to the St. Louis Federal Reserve:”
  • “As physical retail’s share of the economy has fallen, there has been a bleeding of the value which used to be captured by the sector. However a lot of this shift can be explained by employment moving to e-commerce, according to Mr Ozimek:”
    • “Employment gains in e-commerce are visible in warehousing and nonstore retailers, the latter of which includes e-commerce sellers like Amazon. Over the last decade, nonstore retailers have added 157,000 jobs and warehousing has added almost 369,000, which combined more than offset the job losses of 392,000 in department stores.”
  • “So why are people so obsessed with the ‘Death of Retail’ meme?”
  • “Perhaps one reason is the vast retail space left behind in the recent consolidation in the sector. Cowan Research recently found the US has circa 49 square feet of retail space per capita, double the UK’s 22 square feet and almost four times Canada’s 13 square feet.”
  • “So in any retail contraction, the empty units left behind will be more noticeable to the naked eye than say in, Canada, thanks to the sheer amount of constructed retail space. This may give the impression of the death of retail, even if the facts don’t back it up.”
  • “Public struggles for big brand names like Sears and JC Penny, which last year closed 141 stores, may also help re-enforce the impression of decrepitude.”
  • “In fact, the former bastion of the mall, the department store, seems to be the only form of retail really struggling.”
  • “Last year research house IHL published a compelling report titled ‘Debunking the Retail Apocalypse‘ (get a copy for free here) in which they helpfully chartered store openings versus closures across different types of retailer:”
  • “We know this data is a little old, but department stores were the only group not to plan to open new stores in 2017, re-enforcing the idea that the collapse of famous brands, such as Radioshack, has driven the idea of bricks and mortar stores struggling.”
  • “Our readers may be asking – who is doing well in this environment to offset the struggles of Sears, Kmart and Radioshack?”
  • “The answer, perhaps unsurprisingly given trends in inequality, is any retailer shifting merchandise at bargain basement prices. Think Primark and Aldi in the UK, or aptly named Dollar General and Dollar Tree in the US. Here’s another neat chart from IWC showing store openings in 2017:”
  • “Not exactly a sign of a healthy US consumer, right? This trend is also repeated across restaurants, with the cheap, convenient and filling providers of processed goodness leading the way:”
  • “Regardless of the evident collapse in both diet and spending power, this data is not indicative of retail dying a death.”
  • “A month ago, we published a piece examining the pivot many online only retailers, such as Warby Parker, are making to bricks and mortars stores. The reason? Stores are a surprisingly cheap way of acquiring affluent customers and building brand familiarity, compared with internet advertising.”
  • “Given the data above perhaps the death of retail is more a misunderstanding of a sector adapting to demand not just from the internet, but also a lopsided societal structure. A country where affluent urbanites shop for luxury hand luggage in LCD lit stores, while the masses get by on Dunkin Donuts and Dollar General.”

Energy

Bloomberg Businessweek – Solar Beats Coal on U.S. Jobs – Brian Eckhouse 5/16

WSJ – Solar-Panel Makers Ramp Up U.S. Manufacturing Plans – Erin Ailworth 5/11

WSJ – Daily Shot: Moody’s – Clean Energy Initiatives by US State 5/21

Finance

FT – The great Maryland pension fees gap – Chris Flood 5/20

  • However, in this case, it appears the drag is coming from elsewhere in the portfolio.

WSJ – U.S. Government Bonds Pay More Than Debt From Other Developed Nations – Daniel Kruger 5/20

WSJ – Daily Shot: Italy – Germany 10yr Government Bond Spread 5/18

Insurance

Economist – The life-insurance industry is in need of new vigor 5/17

  • “As the rich world ages and retires, total life-insurance premiums are flat or falling…”

Australia

FT – Australia divided over ‘Brazilian-scale’ land clearance – Jamie Smyth 5/20

  • “Pristine eucalyptus forest near Great Barrier Reef becomes political battleground.”

Other Interesting Links

Cannabis Benchmarks – State Price Delta to US Spot Index 5/18

April 30, 2018

This will be the only post this week from me. This week I’m attending the ULI Spring Meeting in Detroit, MI.

Cheers,

Duff

Perspective

WSJ – Why Tech Titans Are Betting on India, in 14 Charts – Newley Purnell, Min Jung Kim, and Rosa de Acosta 4/18

  • Clearly there is some disconnect between showing just this chart and the title. Emphasis less on India and more on the gender split of Facebook users.

Worthy Insights / Opinion Pieces / Advice

Bloomberg Businessweek – China Quietly Rolled Out a Very Big Bang – John Micklethwait 4/19

Bloomberg – Latest Climate Threat for Coastal Cities: More Rich People – Christopher Flavelle 4/23

Financial Samurai – Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today – Sam

WSJ – Real Estate Stocks Are on Sale but No One Is Buying – Ken Brown 4/27

Markets / Economy

WSJ – Cable TV’s Cord-Cutting Woes Grow, Highlighting Divergence With Netflix – Shalini Ramachandran 4/27

Energy

Reuters – Venezuela faces heavy bill as grace period lapses on China loans – Corina Pons 4/27

Finance

FT – WeWork bond finds home in yield-starved market – Alexandra Scaggs 4/26

  • “This week high-yield bond investors faced a puzzle: how to value a bond sold by an unprofitable company that does not own hard assets or offer a clear outlook for its free cash flow?”
  • “The company in question was WeWork, the office-sharing company that last year attracted a $4.4bn equity investment from Japan’s Softbank. WeWork, which hired JPMorgan to lead the sale but had more than a dozen other banks working as well, attracted enough demand to increase the sale to $702m from $500m.”
  • “Several investors who steered clear of the bond — and one who bought it — said WeWork’s debt was not the type that typically appealed to high-yield investors. But nor was it the first company vowing to disrupt an industry to have found buyers in the junk market. Last year electric carmaker Tesla sold a $1.8bn high-yield bond, and in March, Uber raised $1.5bn in a leveraged loan.”
  • “A combination of low interest rates and shrinking supply has made it harder for money managers to find bonds with attractive yields. WeWork’s bonds were sold at a yield of 7.875%.”

Environment / Science

LAT – A Hawaiian island got about 50 inches of rain in 24 hours. Scientist warn it’s a sign of the future – Heidi Chang 4/28

Construction

WSJ – Daily Shot: CME Lumber (Jul) 4/26

China

FT – China’s HNA reports debts have soared to $94bn – Lucy Hornby 4/28

Middle East

Visual Capitalist – Knight Frank: A Time-lapse of Dubai’s Astonishing Growth – Nick Routley 4/28

  • Very cool animation.

South America

NYT – ‘Their Country Is Being Invaded’: Exodus of Venezuelans Overwhelms Northern Brazil – Ernesto Londono 4/28

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 21, 2018

Perspective

AEIdeas – Creative Destruction, the Uber effect, and the slow death of the NYC taxi cartel – Mark J. Perry 3/17

WP – Toys R Us’s baby problem is everybody’s baby problem – Andrew Van Dam 3/15

  • “There are endless reasons a big-box toy store would collapse during a retail apocalypse — and Toys R Us acknowledged a number of them in its most recent annual filing: the teetering tower of debt incurred by its private-equity owners, competition from Amazon, Walmart and Target.”
  • “They even wrung their hands about app stores, labor costs and potential tariffs raising the costs of the imported goods they sell.”
  • “But one risk stood out. Toys R Us said there just weren’t enough babies…”
  • “It may not have been the biggest existential threat confronting Geoffrey the Giraffe (the store’s mascot), but it’s the one with the broadest implications outside of the worlds of toys and malls.”
  • “Measured as a share of overall population, U.S. births have fallen steadily since the Great Recession. They hit their lowest point on record in 2016 — the most recent year for which the Centers for Disease Control and Prevention has comparable data.”
  • “Even adjusted for the aging population and declining share of women of childbearing age, U.S. fertility rates are at all-time lows.”
  • “That’s problematic for Toys R Us, which also operates the Babies R Us stores. The company claims in its annual report that its income is linked to birthrates, and it appears to be right.”
  • “There are, to be sure, numerous other factors at play. The same economic forces that encourage people to have children may also encourage them to splurge on toys, for example.”
  • “But it’s nonetheless apparent that Toys R Us’s fortunes rise and fall with the population of its target market.”
  • “And that’s why the company’s demise should worry the rest of us. Toys R Us focuses on kids, so it’s feeling the crunch from declining birthrates long before the rest of the economy. But it’s just a matter of time before the trends that toppled the troubled toy maker put the squeeze on businesses that cater to consumers of all ages.”
  • “Eventually, unless the country does something significant to encourage larger families or immigration, that narrowing base of the population pyramid will crawl upward.”
  • “In the end, Toys R Us will just have been the first of many businesses of all descriptions facing the same hard demographic truth: Economic growth is extremely difficult without population growth.

Worthy Insights / Opinion Pieces / Advice

Bloomberg – How Amazon’s Bottomless Appetite Became Corporate America’s Nightmare – Shira Ovide 3/14

Bloomberg Quint – The World Economy Risks Turning Too Hot to Handle as G-20 Meets – Enda Curran and Rich Miller 3/15

CNN Money – Amazon didn’t kill Toys ‘R’ Us. Here’s what did – Chris Isidore 3/15

Economist – Malaysia’s PM is about to steal an election – Leaders 3/10

  • Impunity…

FactsMaps – US News – U.S. Best States Overall Ranking – 2018

FT – Fresh blood: why everyone fell for Theranos – Andrew Hill 3/18

FT – Saudi Aramco: sand trap – Lex 3/12

  • “Justifying a $2tn valuation for the state oil company requires hard persuasion.”

Maps on the Web – Average ACT score by US State – Reddit 3/19

NYT – Big Sugar Versus Your Body – David Leonhardt 3/11

Markets / Economy

Economist – America’s companies have binged on debt; a reckoning looms 3/8

  • “The total debt of American non-financial corporations as a percentage of GDP has reached a record high of 73.3%”

WalletHub – Credit Card Debt Study: Trends & Insights – Alina Comoreanu 3/8

Real Estate

Business Insider – American homes are more affordable than they’ve been in 40 years – but that could change sooner than you think – Tanza Loudenback 3/19

  • “‘Thanks to low mortgage rates, buying a home is actually more affordable now than in the past 40 years,’ Alexandra Lee, a housing data analyst at Trulia, told Business Insider.”
  • “Mortgage interest rates hit 16.6% in 1981 in response to massive inflation in the US. In 2016, interest rates fell to about 3.5%, and they’re about 4.5% right now.”
  • “Trulia found that the typical household in 1980 could afford only about three-fourths of the median home price, compared with the median household in 2016, which could afford a home 1 1/2 times the median home price.”
  • “Twenty-two US metros crossed the threshold from unaffordable to affordable over the past four decades, according to the data. The markets that are too expensive for the average buyer now, including San Francisco, Seattle, and San Jose, California, were always too expensive.”
  • “Trulia ultimately found that Americans’ homebuying power has strengthened in the past 40 years.”
  • “Take Salt Lake City, for example. From 1990 to 2016, home prices increased 53%, but the affordability index jumped to 131 from 122. That is because interest rates dropped to 3.4% from 10% during that time. Homeownership in Salt Lake City became even more affordable over the 26-year period — and the case appears the same for many of the largest US metros.”
  • “Only the Denver, Miami, and Portland, Oregon, metro areas dropped in affordability during that time, Lee said.”
  • “By the end of 2017, a monthly mortgage payment on the median home in the US required just 15.7% of the typical household income, according to a report by Trulia’s parent company Zillow. Back in the late 1980s and 1990s, a mortgage payment took up 21% of the typical American’s income.”
  • Granted, coming up with a down payment on a house these days is no easy task.

Effect of interest rate rises are starting to bite.

CNBC – Mortgage refinances fall to decade low – Diana Olick 3/14

  • “Interest rates for home loans have risen each week this year, so each week homeowners have had less incentive refinance their mortgages.”
  • “Higher interest rates caused applications to refinance a home loan to fall 2% for the week and 18% from a year ago, when rates were lower. The refinance share of all mortgage applications fell to 40%, the lowest since 2008.”
  • “Housing is more expensive today than it has been in a decade, and a decade ago credit was a lot easier to get. The average monthly mortgage payment is now up nearly 13% from a year ago, according to Realtor.com — a combination of higher home prices and higher interest rates.”

Economist – Asian and European cities compete for the title of most expensive city – The Data Team 3/15

  • “Singapore remains the most expensive city in the world for the fifth year running, according to the latest findings of the Worldwide Cost of Living Survey from The Economist Intelligence Unit.”

FT – WeWork is ‘victim of own success’ as office rivals gather – Aime Williams 3/12

  • “A wave of lease purchases by flexible workspace providers is driving commercial demand in leading cities.”

Honolulu Star Advertiser – Mayor signs bill temporarily banning permits for new ‘monster houses’ – Gordon Y.K. Pang 3/13

  • “Honolulu Mayor Kirk Caldwell signed into law today a bill imposing a moratorium of up to two years on building permits for ‘monster’ houses, giving the city Department of Planning and Permitting time to come up with permanent rules to deal with the growing phenomenon.”
  • “DPP will, for the most part, not approve building permit applications during the moratorium for houses that cover more than seven-tenths of a lot under Bill 110 (2017). For example, a 5,000-square-foot lot could not have a living space that’s 3,500 square feet or larger.”
  • Another instance of a market where housing prices have gone well beyond what local incomes can support. As a result, people come up with ‘work-arounds’ which tend to overburden the local infrastructure and upset neighborhoods, resulting in blunt regulatory reaction. Honolulu is not unique to this problem.

WSJ – The Next Housing Crisis: A Historic Shortage of New Homes – Laura Kusisto 3/18

  • “America is facing a new housing crisis. A decade after an epic construction binge, fewer homes are being built per household than at almost any time in U.S. history.
  • “Home construction per household a decade after the bust remains near the lowest level in 60 years of record-keeping, according to the Federal Reserve Bank of Kansas City.”
  • “What makes the slump puzzling is that by most other measures, the American economy is booming. Jobs are plentiful, wages are on the rise and the stock market is near record highs. Millennials, the largest generation since the baby boomers, are aging into home ownership.”
  • “A combination of tightened housing regulations, a lack of construction labor and a land shortage in highly prized areas is driving the crisis, according to industry experts.”
  • “Even during the deep recession of the mid-1970s and the downturn in the early 2000s, builders put up significantly more homes per U.S. household than they are constructing now, in the ninth year of an economic expansion. Only at the bottom of the 1981 and 1991 economic downturns were per-household construction levels near what they are now, according to Jordan Rappaport, an economist at the Kansas City Fed. He says the only period when the U.S. might have built fewer homes by population was during World War II.”
  • “The National Association of Home Builders estimates builders will start fewer than 900,000 new homes in 2018, less than the roughly 1.3 million homes needed to keep up with population growth. The overall inventory of new and existing homes for sale hit its lowest level on record in the fourth quarter of 2017, at 1.48 million, according to the National Association of Realtors.”
  • “That, in turn, is pushing up prices at what economists say is an unsustainable pace. The S&P CoreLogic Case-Shiller National Home Price Index rose 6.3% in 2017. That was roughly twice the rate of income growth and three times the rate of inflation.”
  • “Builders cite numerous factors contributing to the construction slump. A decades long push for young people to go to college has driven down trade-school enrollment, depriving builders of skilled labor. Declining numbers of immigrant construction workers have sapped builders of unskilled labor.”
  • “The construction workforce in the U.S. declined to 10.5 million in 2016, from 10.6 million in 2010, when the real-estate market was near bottom, according to an analysis of U.S. Census data by Issi Romem, an economist at BuildZoom, a startup that tracks construction data for building contractors.”
  • “Nationwide, membership in the National Association of Home Builders peaked at 240,000 in 2007, then dropped to 140,000 in 2012, where it has remained throughout the recovery.”
  • “Builders in far-flung exurbs are encountering stiffer resistance from young buyers even as prices ratchet higher for land closer to cities. Economists say that in many large metropolitan areas, suburbanization might simply have reached its limits, as potential buyers increasingly reject long commutes. During the 1950s, buying a home in a new suburb, where land was plentiful and cheap, often meant driving half an hour to a job in the city. Today, commutes from new developments can be several times that long.”
  • “’There’s a tremendous mismatch between the places where people want to live and the places where it’s easiest to build,’ says Edward Glaeser, a professor of economics at Harvard University who studies constraints on housing supply.”
  • “But building remains below historical averages, and economists say it is unlikely to return to those levels before the next recession.”
  • “’It’s hard for me to see on single-family how you can build your way out of this,’ Mr. Rappaport says. ‘Even with these heroic efforts’ to overcome barriers to building new housing, he says, there is little chance ‘that you’re going to get a new stream of single-family homes that can relieve demand.’”
  • “Coastal cities such as San Francisco, Los Angeles, New York and Boston have taken criticism for their restrictive building codes, which make it more difficult to create enough housing to keep up with population growth.”
  • “Even metropolitan areas with more permissive approaches to building are lagging behind their historical construction levels. Housing permits in Memphis, Tenn., were 44% below their historical average in 2017, according to the latest Census figures analyzed by real-estate data firm Trulia, while permits in the Minneapolis metropolitan area were 16% below average.”

Finance

FT – Private equity groups are calling the shots – Javier Espinoza 3/14

  • “In business, the mantra goes, the customer is always right and should get the best deal.”
  • “The opposite is happening in private equity where investors, including large pension funds, endowments, sovereign wealth funds and family money, face unfavorable fund terms and, in all likelihood, lower returns.”
  • “Private equity firms are clearly calling the shots and that is illustrated by the record amount of money they are turning away.”
  • “Huge institutional investors have so much money burning a hole in their pockets (Singapore’s GIC alone has $100bn of assets under management) they are under enormous pressure to find a home for this cash somewhere.”
  • “Hence their willingness to commit their cash to funds even if managers cut or reduce the so-called hurdle rate, which is the return that is guaranteed before a buyout group can claim a share of the profits. The industry standard is a preferred return of 8% on deals.”
  • “Advent International, the Boston and London-based group, raised eyebrows in 2016 when it announced it was closing a mega $13bn buyout fund without offering minimum returns to its investors. Last year, CVC, the former owner of F1, also said it was cutting its hurdle rate from 8% to 6%. The buyout firm also scrapped early-bird discounts given to new investors.”
  • “Rather than take their money and run from unfavorable terms, investors have doubled down on these private equity funds, which raised record amounts of cash in their fastest time ever. Advent had set out to raise $12bn and received more than $20bn of interest from investors. CVC raised €16bn but closed the door on billions more because demand was close to €30bn.”
  • “Rubbing salt into the wound of poorer terms, private equity managers are also warning them that returns should come down.”
  • “’The investors have accepted the idea of lower returns as OK,’ said the head of a private equity group. ‘It used to be that investors would earn 20% net internal rate of returns. Now they are happy with 14% or 15% net internal rate of returns.’”

Cryptocurrency / ICOs

Visual Capitalist – The Rising Problem of Crypto Theft, and How to Protect Yourself – Jeff Desjardins 3/20

Tech

WSJ – The Battery Boost We’ve Been Waiting for Is Only a Few Years Out – Christopher Mims 3/18

Health / Medicine

NYT – How to Stop Eating Sugar – David Leonhardt 3/18

China

Bloomberg – Xi Gives Stark Taiwan Warning in Hands-Off Message to Trump – Keith Zhai, Peter Martin and Dandan Li 3/20

NYT – Hard-Charging Chinese Energy Tycoon Falls From Xi Government’s Graces – Alexandra Stevenson 3/14

  • The tycoon: Ye Jianming. The company: CEFC China Energy.

India

Bloomberg Gadfly – Ambani’s Jio Triple Play Deserves to Upend This Cozy Club – Andy Mukherjee 3/20

Russia

NYT – Russian Election: Videos Show Possible Fraud – Camilla Schick 3/20

  • Did Putin really need the help?…

March 9, 2018

Perspective

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

Worthy Insights / Opinion Pieces / Advice

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

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

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

Markets / Economy

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

Energy

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

Finance

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

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

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

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

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

Tech

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

Health / Medicine

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

Automotive

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

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

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

India

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

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