Tag: VIX

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.”

 

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February 16, 2018

新年快乐

Xīnnián kuàilè

Perspective

WSJ – Daily Shot: Do You Live Among Millionaires? – Eric Morath 2/9

Worthy Insights / Opinion Pieces / Advice

FT – Five reasons why universal basic income is a bad idea – Ian Goldin 2/11

  • “As the scale of the potential job losses arising from the artificial intelligence and robotics revolution becomes clearer, a chorus of otherwise disconnected billionaires, trade unionists and others are calling for universal basic income. Recognizing the threat posed by these dislocations is welcome and timely, but seeking solace in UBI is a bad idea.”
  • “It is misleading to think of this as yet another industrial revolution and take comfort in the fact that all previous industrial revolutions have resulted in more and better-quality jobs. This time is different, both in the pace and the reach of change. The growth of new jobs is slower than the destruction of old jobs — and their quality in many cases is inferior, as full-time career employment gives way to gig work or contingency contracts.”
  • “The places most vulnerable are also geographically isolated from the dynamic cities experiencing record earnings growth and low unemployment. Moving to these cities is increasingly difficult, as soaring housing and commuting costs reduce employment mobility. The result is rising geographical concentration of poverty and inequality in places left behind by change. The political reverberations are already being felt. The legitimate concerns of vulnerable workers must be addressed. But UBI is a red herring for five reasons.”
  • Reasons 3 and 4:
  • “Third, UBI will undermine social cohesion. Individuals gain not only income, but meaning, status, skills, networks and friendships through work. Delinking income and work, while rewarding people for staying at home, is what lies behind social decay. Crime, drugs, broken families and other socially destructive outcomes are more likely in places with high unemployment, as is evident in the drug pandemic in the US.”
  • “Fourth, UBI undermines incentives to participate. Stronger safety nets are vital. No decent society should tolerate dire poverty or starvation. But for those who are able, help should be designed to get individuals and families to participate in society; to help people overcome unemployment and find work, retrain, move cities. Wherever possible, safety nets should be a lifeline towards meaningful work and participation in society, not a guarantee of a lifetime of dependence.”

FT – Where is the Tea Party when you need it? – Edward Luce 2/14

Project Syndicate – The Social Media Threat to Society and Security – George Soros 2/14

  • “It takes significant effort to assert and defend what John Stuart Mill called the freedom of mind. And there is a real chance that, once lost, those who grow up in the digital age – in which the power to command and shape people’s attention is increasingly concentrated in the hands of a few companies – will have difficulty regaining it.”

Markets / Economy

FT – Why the 30-hour work week is almost here – Simon Kuper 2/14

  • “Qualified jobseekers are scarce. Finally, workers can make demands.”

Real Estate

WSJ – Mall Dividends Soar Above 15%, Tempting Big Investors – Esther Fung 2/13

  • “Some mall operators are paying high dividends to offset the lackluster outlook for the sector.”

Finance

WSJ – Harvard, Hawaii Gambled on Market Calm – Then Everything Changed – Gregory Zuckerman, Gunjan Banerji and Heather Gillers 2/14

  • “Harvard, Hawaii and others, pressed to improve returns, made risky bets that depended on low stock-market volatility.”

WSJ – Daily Shot: VIX index 2/14

  • “VIX has finally moved below 20 as the inflation/high-rates ‘bogeyman’ no longer looks as scary (for now).”

Insurance

FT – MetLife hires investigators in search for missing pensioners – Alistair Gray 2/14

  • “US insurer MetLife has hired investigators to track down thousands of pensioners as the company seeks to resolve a scandal over missing payouts that has wiped about $10bn off its market capitalization.”
  • “Executives on Wednesday said they were doing ‘everything humanly possible’ to locate almost 13,500 people — owed on average $20,000 each — after they acknowledged MetLife failed to make proper efforts find them over 25 years.”
  • “The failure arose because of practices dating back to the 1990s at MetLife’s pensions ‘risk transfer’ business, under which companies transfer their retirement liabilities to insurers.”
  • “MetLife sought to contact eligible pensioners only twice: when they turned 65, and again a few months after the age of 70. If these efforts were unsuccessful, the company presumed the individuals would never be found.”
  • “As a result, the insurer mistakenly released funds from reserves that support future annuity payouts.”

China

FT – Wanda’s hopes for global lifestyle empire fade as it beats retreat – Emily Feng 2/14

  • “Dalian Wanda, the company Mr. Wang (Wang Jianlin) founded and transformed from a small-town real estate company into the world’s largest owner of cinemas and one of China’s biggest private property developers, has been steadily offloading assets over the past nine months.”
  • “The latest divestment came on Wednesday, when Wanda announced it had agreed to sell its 17% stake in Spanish football club Atlético Madrid.”
  • “The group says it will ‘refocus’ on its core business, domestic commercial property, including a plan to build or license 1,000 malls in China.” 
  • “This is a reversal for a group that invested roughly $22bn in offshore trophy assets over the past five years, according to data from Dealogic, as part of a push to bring a western lifestyle to an ever more wealthy Chinese middle class.” 
  • “In June 2017, the China Banking Regulatory Commission asked banks to examine loans to four companies known for offshore trophy investments, including Wanda, as Beijing pushed back on investments it deemed frivolous, excessive and out of line with the government’s development goals.”
  • “Wanda has pivoted sharply since the June crackdown. The group has sold about $10.8bn of assets in the past nine months, according to data from Dealogic and an FT review of recent transactions.”
  • “Debt pressures on Wanda are prompting the group to review its foreign investments, as Beijing’s capital controls restrict groups’ abilities to service their overseas liabilities.”
  • “Wanda says it is in talks with the country’s foreign exchange regulator, which had approved offshore remittances to service its loans but suspended clearance after Beijing launched its probe into the companies’ liabilities.”
  • “’The company’s financial resources — including cash proceeds from sales and cash balance — should be able to fulfil its onshore obligations. But the key now is how they can remit any onshore cash to offshore,’ says Dennis Lee, an associate director at rating agency S&P Global.”
  • “Mr. Lee adds that the group’s need for offshore cash is prompting Wanda to consider its options, including the sale of overseas properties.”
  • “The group also needs to maintain the confidence of investors. Total liabilities for Wanda were $11.7bn at the end of 2016, according to the group.”
  • “The strategy may be less glamorous, but Wanda’s year-end numbers suggest that its asset-light strategy is paying off. Even as overall revenues for its main property subsidiary plummeted by more than a fifth to $17.8bn last year, its revenue from rental income grew by about a third to $4bn, according to its results in January.”
  • “Despite the recent divestments, the group still retains its biggest offshore assets and Mr. Wang remains extraordinarily rich — Hurun estimates the wealth of Mr. Wang and his family at $23bn. Wanda is preparing for a Shanghai relisting of DWCP once its offshore debt is cleared, and that promises to be a major funding event.”

India

FT – Punjab National Bank discovers $1.8bn fraud in Mumbai branch – Simon Mundy 2/14

  • “Scam resulted in money being advanced to a handful of accounts overseas.”

February 8, 2018

Perspective

FT – Super Bowl thriller watched by smallest audience since 2009 – Shannon Bond 2/5

  • “In spite of the upset which saw the Eagles beat the Patriots 41 to 33 in a hard-fought battle in Minneapolis that came down to the final seconds of play, the broadcast drew 7% fewer viewers to NBC with 103.4m watching, according to Nielsen.”
  • “When people who watched the game online were included, NBC counted a total audience of 106m and said it was the most-streamed Super Bowl ever. But this compares with the 111.3m people who tuned in to Fox’s broadcast last year.”
  • “While football remains the most popular programming on US television, the figures from Nielsen underscore the ratings decline that has been plaguing the National Football League for two seasons. Audiences for regular season games shrank 10% in 2017, an acceleration from 2016’s 8% decrease.”

Worthy Insights / Opinion Pieces / Advice

Bloomberg View – Don’t Mistake the Stock Market for the Economy – Robert Burgess 2/6

FT – Bitcoin freeloads on institutions’ trust, warns BIS – Martin Arnold 2/6

  • “Cryptocurrency is ‘a Ponzi scheme and an environmental disaster’ says Agustin Carstens.”

FT – Poland’s death camp law is designed to falsify history – Jan Gross 2/6

  • “The rule barring debate of the country’s role in the Holocaust is a policy disaster.”

WSJ – Samsung Saga Shows Korea Reform Is Going Nowhere – Jacky Wong 2/5

  • “The release of the conglomerate’s de facto leader will do little to allay investors’ concerns about the country’s corporate governance standards.”
  • Mr. Lee (Lee Jae-yong) walked free on Monday after appealing the five-year prison term handed to him in August when he was convicted on bribery and embezzlement charges: He received a reduced and suspended sentence instead. The next stage could see the case go to South Korea’s Supreme Court.”

WSJ – The Stock Market Didn’t Get Tested – You Did – Jason Zweig 2/5

Markets / Economy

FT – China smartphone sales down for first time since 2009 – Louise Lucas, Edward White, Nic Fildes 2/6

  • “Sales of smartphones in China — the world’s biggest market, responsible for about one in every three shipments — fell last year for the first time since 2009, raising fresh concerns about the strength of the global handset market.”
  • “Data from IDC, the research company, showed that smartphone sales slumped 4.9% in 2017 from the previous year as the local market, a growth engine for the global mobile phone industry, contracted.”
  • “Analysts pointed to the fact that Chinese consumers were waiting longer to replace their smartphones than they have in the past, mirroring a similar trend in other markets including the UK.”
  • “IDC’s numbers come just days after data provider IHS Markit said global smartphone sales had dropped 4.5% in the last quarter of 2017, with only Xiaomi and Lenovo’s Motorola experiencing any growth in shipments.”
  • “Apple took the biggest hit in China last year according to IDC, with unit sales down 8.3% year on year, although the company continued to dominate the premium market for phones that cost more than $600.”
  • “In terms of overall value, the China mobile market grew 11% in 2017 — from $120bn in 2016 to $134bn.”

FT – M&A boom heightens fear of credit cycle nearing peak – Eric Platt 2/4

Finance

WSJ – How the Bull Market’s Greatest Trade Went Bust – Spencer Jakab 2/6

  • “Only very rarely has a trade gone from being so good to being so bad so quickly.”
  • “Among the most profitable trades during the bull market has been to short volatility, essentially betting the market would get calmer and stay calm. An exchange-traded instrument, the VelocityShares Daily Inverse VIX Short-Term exchange-traded note, grew to $2 billion by harnessing futures on the Cboe Volatility Index.”
  • “The note, with the symbol XIV, had a 46% compound annual return from its inception in 2010 to two weeks ago. Late on Monday, though, the combined value of the note fell 95% to less than $15 million as trading was halted early Tuesday. Sponsor Credit Suisse says the last day of trading will be later this month.”
  • “The lesson in the trade’s collapse isn’t that volatility is a flawed asset class. Instead, it is one as old as markets—crowded, ‘can’t lose’ trades often end in stampedes.”

Cryptocurrency

Bloomberg Quint – Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says – Kana Nishizawa 2/7

  • “Are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors…. At the same time, it probably does mean that most, if not all, will never see their recent peaks again.” – Steve Strongin, Goldman Sachs

NYT – Here Are the World’s Virtual Currency Billionaires (or at Least They Were) – Nathaniel Popper 2/7

China

Bloomberg – China’s Next Debt Bomb Is an Aging Population – Yinan Zhao and Jing Zhao 2/5

FT – China developers retreat from Hong Kong property market – Ben Bland 2/6

  • “Chinese property developers have retreated sharply from Hong Kong’s booming land market, becoming the latest industry to be dented by Beijing’s capital controls and intensified scrutiny of outbound transactions.”
  • “Chinese developers won 11% of bids by value in Hong Kong government land auctions since April, down from about 50% in the preceding two years, according to an analysis of official data by Standard & Poor’s, the debt rating agency.” 
  • “Esther Liu, an analyst at S&P, said the main reason for the pullback by Chinese developers was the clampdown on outbound investment by the Chinese government, which began in late-2016. Beijing has since intensified the crackdown as it seeks to stem capital outflows and discipline companies such as HNA that borrowed heavily to fund a flurry of overseas deals.”
  • “Ms. Liu said that Chinese developers were also deterred by the longer development cycle in Hong Kong, compared with mainland China.” 
  • “She said it typically took six to nine months in China for developers to progress from buying land to launching their first off-plan sales. In Hong Kong, by contrast, it can take several years to plan the development of the site and obtain the required permissions.”
  • “Despite the retreat of the mainland developers, analysts forecast that Hong Kong property prices will continue to rise.”

FT – Chinese tycoon sues local government for $640m – Tom Hancock and Xinning Liu 2/5

  • “One of China’s richest men has revealed an attempt to sue a municipal government for Rmb4bn ($640m) over a suspended project to build a new city, the biggest case of its kind brought by an entrepreneur against the state.”
  • “Yan Jiehe said the company he founded, China Pacific Construction Group, had not been paid for its work on Lanzhou New City, a settlement once billed as ‘Las Vegas in the Gobi’, where diggers flattened dozens of hills before officials suspended the project in 2013.”

WSJ – Chinese Police Add Facial-Recognition Glasses to Surveillance Arsenal – Josh Chin 2/7

India

Bloomberg Quint – Jio’s First Profit Is ‘Too Good to Believe’ for Bernstein – Bhuma Shrivastava and Saket Sundria 2/7