1.21-1.25 大事记 Foxconn is considering production in India Kion plans to expand production in the US Elliot and Starboard push eBay to split 1.28-2.1 大事记 Trump administration unveiled a set of charges against Huawei 2.18-2.22 大事记 Pinterest confidentially filed IPO 2.25-3.1 大事记 Trump would delay an increase in tariffs on Chinese goods Roche to buy biotech firm Spark for $4.8bn GE to sell its biotech business to Danaher for $21bn 3.11-3.15 大事记 Nvidia to acquire Mellanox for $6.9bn 3.18-3.22 大事记 FIS to acquire Worldpay for $35bn 4.15-4.19 大事记 Amazon is exiting China’s e-commerce market 4.22-4.26 大事记 Occi offered to buy Anadarko for $38bn 4.29-5.3 大事记 WeWork filed confidentially for an IPO 5.6-5.10 大事记 Uber priced its IPO at $45 a share Pemex to build a new refinery U.S. blocked China Mobile from using American networks Symantec’s CEO abruptly resigned 5.20-5.24 大事记 Google is halting some services for smartphones made by Huawei 5.27-5.31 大事记 Global Payments and TSYS will merge in a $21.5bn deal 6.3-6.7 大事记 Infineon would acquire Cypress for €9bn 6.10-6.14 大事记 United Technologies to merge with Raytheon in an all stock deal Salesforce.com to buy Tableau for $15bn 6.24-6.28 大事记 Abbvie to buy Allergan for $63bn 7.8-7.12 大事记 McAfee plans to return to public markets 11.4-11.8 大事记 Xerox is considering making a cash and stock offer for HP China sold bonds in euro for the first time in 15 years 12.2-12.6 大事记 Aramco prices its IPO at $1.7tn value 12.16-12.20 大事记 Broadcom is looking for a buyer for its RF business
4.9-4.13 大事记 Broadcom announced $12bn buybacks 4.16-4.20 大事记 U.S. Commerce Department to ban sales of American components to ZTE Chinese antitrust regulators warns blocking Qualcomm-NXP deal Home Depot to hire 1,000 tech employees 4.23-4.27 大事记 Tencent Music plans listing Didi Chuxing is holding discussions about IPO 4.30-5.4 大事记 T-Mobile U.S. to buy Sprint UK Sainsbury to buy Walmart’s Asda Group Marathon Petroleum yo buy Andeavor Apple announced a $100bn buyback Xiaomi opts for Hong Kong IPO 5.7-5.11 大事记 Takeda to buy Shire in a $62bn deal Walmart to spend $15bn for a 75% stake in Flipkart FedEx transfers $6bn pension to MetLife Vodafone to buy Liberty Global for $23bn 5.14-5.18 大事记 PayPal to buy iZettle for $2.2bn 5.21-5.25 大事记 SoftBank to sell its entire stake in Flipkart to Walmart 6.4-6.8 大事记 Microsoft to buy GitHub for $7.5bn Ant Financial raises $14bn private capital 6.11-6.15 大事记 Stryker attempts to acquire Boston Scientific The court clears AT&T-Time Warner deal Comcast bids for 21st Century Fox assets 6.18-6.22 大事记 Google is investing $550mm in JD.com 6.25-6.29 大事记 GE plans to spin off its health care business Amazon acquires PillPack for $1bn
1.1-1.5 大事记 CFIUS to block Ant-Moneygram deal 1.8-1.12 大事记 Dropbox files IPO Moneygram to work with Ripple Labs 1.15-1.19 大事记 Bitcoin plunged by 20% GE is considering breaking up 1.22-1.26 大事记 Meg Whitman to join WndrCo Saudi buys 25% stake in Clariant from activists 1.29-2.2 大事记 Keurig to buy Dr. Pepper Snapple for $19bn SAP acquires Callidus for $2.4bn Alibaba to acquire 33% in Ant Financial 2.5-2.9 大事记 Broadcom raises bid to $121bn 2.12-2.16 大事记 Baidu consider listing iQiyi in the U.S. Cisco to bring $67bn foreign cash back to the U.S. 2.19-2.23 大事记 Albertsons to buy Rite Aid 2.26-3.2 大事记 Microchip to buy Microsemi for $8.3bn Amazon acquires Ring for $1.1bn iQiyi files for IPO P&G slashed $200mm digital ad spend last year 3.5-3.9 大事记 Gary Cohn resigns Cigna to buy Express Scripts 3.12-3.16 大事记 Trump blocked Broadcom-Qualcomm deal 3.26-3.30 大事记 Arizona suspends Uber self-driving cars DocuSign files for IPO Walmart in early talks to buy Humana
Pfizer to buy biotech firm Medivation
Apple fined with $14.5bn tax by EC
Bayer raised its offer to Monsanto
Potash and Agrium to merge
Bayer raised offer again; Monsanto agreed
British government to proceed with Hinkley Point nuclear plant
Wells Fargo CEO’s hearing for the bank’s sales tactics
BoJ introduces zero interest rate
Microsoft plans a $40bn buyback
Lanxess purchased Chemtura
Pfizer will remain a single company
OPEC tentatively cut production
NJ Transit crashed Hoboken station
Telefonica forced to delay Telxius IPO
Deutsche stock dropped 9% a day, more than 50% this year
Samsung discontinues Note 7
John Stumpf to retire immediately
BAT acquires Reynolds for 47bn
Shell divests Canadian shale assets
AT&T to buy Time Warner for 85.6bn
Samsung bought Harman for 8bn
Snap plans for 20-25bn IPO
Former Valeant executive arrested
LendingClub CEO resigns
Staples-Office Depot merger collapse
Apple invests $1bn in Didi Chuxing
Bayer offers to buy Monsanto
An EgyptAir jet disappeared over Mediterranean Sea
HP Enterprise plans to split
Alibaba faces U.S. accounting inquiry
Hilary declared victory in Democrats race
Terrorist attack in Orlando
Microsoft to buy LinkedIn for $26.2bn
MSCI holds off adding Chinese stocks
Trump fired his campaign chief
UK voted to leave EU
Telefonica considers delay in O2 IPO
Nearly all US banks pass stress test
Boris Johnson decides not to run PM
Mondelez to buy Hershey
China’s claim to South China Sea rejected
Terror attack in Nice
Mike Pence as Trump’s running mate
按：新年的一大 resolution 就是要再多养成些日常的好习惯，譬如记录下每个星期发生的大新闻。于是，iPhone 的 Notes 里就多出来了这个版块，几乎每天都会去更新。当然，终究抵不过惰性，最后一次更新是四月初，然而现在已经五月有余了。作三休一，这是自然规律的一部分也说不定。不管怎样，就此画一个小分号，整装待发，从头再来。
MetLife decided to split
Shire acquired Baxalta
GE to move headquarter to Boston
Haier purchased GE Appliances
Leaders met in Davos
China’s GDP growth 6.9%
Crude oil dipped below $28
CFIUS blocked Philips Lumileds sale to China
Johnson Controls to merge with Tyco
AIG opts for streamlining
Bank of Japan introduces negative rates
Xerox breaks into two
ChemChina to buy Syngenta
Cruz trumped Trump in Iowa primary
LinkedIn down by 40%
Trump and Bernie led NH primary
Deutsche Bank plans to buy back its own debt
Apple refused to unlock phone for FBI
Hilary won Nevada; Trump led SC
London mayor backing “Brexit”; Sterling fell
Saudi oil minister said to prepare for a $20 oil
Trump won Nevada caucuses
SABMiller sold their stake in Snow
Trump and Hilary won Super Tuesday
Board fight in United Continental
China Anbang bidded for Starwood
Valeant plunging 50%
LSE merged with Deutsche Borse
Fed maintained rates unchanged
Marriott raised its offer
Sherwin-Williams to buy Valspar
Explosions in Brussels airport
Anbang withdrew the bid
MetLife to be removed from SIFI
Foxconn strikes deal for Sharp
U.S. Treasury to prevent inversion
Pfizer-Allergan deal broke
Seize the Day
For decades the big question about energy was whether the world could produce enough of it, in any form and at any cost. Now, suddenly, the challenge should be one of managing abundance.
- America still bans the export of oil and restricts exports of natural gas;
- Generous subsides for nuclear power and bio-fuels;
- Europe: billions have gone to wind and solar projects.
- The most straightforward piece – simply to remove all subsidies for producing or consuming fossil fuels (price of petrol has been held down due to encourage companies to search for oil): India and Indonesia have made the move, beginning to cut fuel subsidies, freeing up money to spend on hospitals and schools.
- Raise taxes on fossil fuels – higher taxes would encourage conservation. As fuel prices fall, a carbon tax is becoming less daunting.
A carbon tax is a much better way to reduce emissions of greenhouse gases than subsidies for windmills and nuclear plants.
- Governments should encourage the growth of seamless global energy markets – America should approve Keystone XL and lifts its export restrictions
Heading for parity
Parity with the dollar is quite plausible this year.
- Greece: the risks of an accidental exit are uncomfortably real; even if it stays in, wary investors may decide to ditch their euro exposure, pushing the single currency down further.
- More importantly, fundamentals: there is no sign of boldness from politicians (to kickstart the single market or to boost investment) – all eyes are on the ECB and its willingness to create money to buy sovereign bonds
QE would be better than no QE … Everyone would gain if the euro area avoids a renewed descent into crisis. But if the euro falls even further, Europe would most likely come to rely ever more on exports for its growth … A weaker currency will help, but is far less good than a balanced European recovery based on health investment and spending at home.
Republicans in Charge
- Republicans now control both chambers in 30 state legislatures, while Democrats control 11 and eight are split. In 24 states Republican power is unchecked – meaning they control the legislature and the governorship. The party has not had this much clout in the states since the 1920s
Act on conservatism – cutting taxes, trimming welfare, and restricting abortion
- Scott Walker (Wisconsin): a hero for taking on the public-sector unions;
- Sam Brownback (Kansas): tax cuts.
The tide of conservative legislation may be ebbing – now a more moderate tone
- Walker: faced with a $2.2bn budget gap, the governor has largely abandoned talk of cutting taxes;
- Doug Ducey (Arizona): scaled back cutting income taxes;
- Gary Herbert (Utah), Bruce Rauner (Illinois) are following suit.
- Brownback: acknowledged that the state has economic problems, but claimed “the solutions are principally cultural and moral”.
- John Kasich (Ohio): more pragmatic – now wants to cut income taxes even more, by raising taxes on energy companies.
- Obamacare: more and more will “find some way to accept the extra cash and expand Medicaid.”
… on fiscal issues, at least, tight budgets restrain the radicals of the right.
Sheikhs v shale
- since July high of almost $115, now near 40% plunge;
- the main culprits – oilmen of North Dakota and Texas – has boosted American’s oil production by a third;
- positives: equivalent to a 2% pay rise, global GDP should rise, reduce already-low inflation, encourage central bankers towards looser monetary policy;
- losers: oil producers including Russia, Nigeria, and Venezuela;
- Saudi Arabia’s stand: let the price fall and put high-cost producers out of business;
- Different economics of shale: can be drilled as little as possible, thus being less vulnerable to shocks or manipulation
The whole business becomes a bit more like manufacturing drinks: whenever the world is thirsty, you crank up the bottling plant.
E.ON and E.OUT
- Germany’s Energiewende, or “Energy transition”, aims to shut down all nuclear plants by 2022; before, renewable energies are heavily subsidized;
- E.ON announced a spin-off between its nuclear business and fossil fuels – not necessarily a creation of “bad utility” (“looking for investors who haven’t read a newspaper since the Energiewende began”): the new firm will be born debt-free and have provisions to cover the exit from nuclear power and shareholders could expect respectable cash dividends;
- Hostile regulatory environment not the only reason: energy sector is becoming more decentralized and making more use of data – GE and Siemens are investing to make grids smarter;
- On the other end, Germany cannot quit nuclear power while making a pell-mell exit from fossil fuels;
In a bind
Saudi Arabia, the leading member of OPEC, has made it clear it will tolerate lower prices in order to do the shale firms’ finances what fracking does to rocks.
- Two generalizations: the industry’s economics are good at almost any price (big independent firms, operating costs were $10-20 per barrel); it is far less clear if the industry can profitably invest in new wells to maintain or boost production (at $60, investment could drop by as much as half);
- another vulnerability: weak balance sheet; invest more than they earn, and increasing leverage;
- adversity may make shale stronger – it will prompt a new round of innovation, from cutting drilling costs through standardization to new fracking techniques that increase output;
What are brands for?
- Three main components of brand equity: 1) consumers’ awareness; 2) the qualities associated with it; and 3) loyalty; the question is how important how each element is;
- one analysis shows that awareness matters more than loyalty – brands are “a shorthand for choice”; such “physical and mental availability” are achieved through traditional method of mass marketing, such as television advertising, packaging, and celebrity endorsements, rather through the fashionable targeted sort made possible by the internet;
- brands have “a reduced role as a quality signal” – now it is easier to find reviews;
Choosing the right pin: Popping property bubbles
- property valuations look high in many countries: Belgium, Finland, France, and Britain; based on the ratios of prices to rents, or prices to incomes;
- household debt is also hitting new records, America is now 105% of income after tax, while that of euro-zone is almost 110%;
- Monetary policies (e.g. in Sweden) turned out to be a bad solution; macroprudential tools, to discipline both banks and borrowers, help to curb the irrational exuberance;
- A good case study: Netherlands, vs. Belgium;
- Europe’s property booms tend to be concentrated in capital cities – that makes matters more difficult;
Essay: What China Wants
- Structural reason for China’s subsequent decline: 1) (Mark Elvin) “the high-level equilibrium trap”, cheap labor, efficient administration, easily matched supply and demand, left no incentive to invest in technological improvement; 2) (Kenneth Pomeranz) for Europe, access to cheap commodities, benefits from competition and trade between states;
- Deep identity crisis after Mao era, when Confucius became the enemy – equivalent of Europeans throwing out any vestiges of Roman law, Greek philosophy or Christian belief;
- (Lucian Pye) “a civilization pretending to be a state”: imperial view historically; now China has to see itself as a state among others;
- (Debroah Brautigam) China’s (African) influence / engagement is not imperial but transactional, like what Japanese companies did in the 1980s, “it’s all about perceptions.”
- Lack of engagement as a rising power – not unusual: it took a world war to draw America onto the world stage;
- What China wants in East Asia seems akin to a Monroe Doctrine: a decrease in the influence of external powers that would allow it untroubled regional dominance; also America defined an ambitious regional role a hundred years earlier than it actually took on the global role; the difference is – the 19th century America did not have any home-grown challengers, and most of its nations were quite content with the idea of keeping European great powers away;
Unequal before the law? Trust-bursting in China
- China’s rising antitrust activism, but not even-handed: local firms settled quietly and regulators have been extremely reluctant to take on the biggest state-owned enterprises;
- one bright spot – progress being made by China’s courts; private antitrust cases handeld by well-trained cadre of judges; (David Evans, U.Chicago) has seen judges in Europe with a weaker grasp of how markets work than those he deals with Chinese cases;
- final cause of concern – antitrust campaign confuses and conflates differing, and possibly conflicting, policy goals; techno-nationalism, price reductions, etc.
Fixed Rates: The foreign-exchange market
- FX market is so quiet, multinationals now opt to live with the risk, financial firms pared back, hedge funds left the market;
- This is largely because the world’s big central banks have replaced yo-yo-ing interest rates with a uniform near-zero level since the financial crisis;
- Volatility may come back, but probably not the once tidy profit for banks: tiny spreads (enabled by electronic trades); high-frequency traders, etc.
- The bigger worry: regulators.
Revisiting Ricardo: Why globalization is not reducing inequality within developing countries
- Ricardo, one of the founding fathers of globalization disciplines: comparative advantages, works well in the first wave of globalization in the 18th century;
- Eric Mankin, from Harvard University, proposed a “matching theory” to explain the contradictions to Ricardo’s prediction since 1980s – the least skilled cannot match with skilled workers in rich countries; worse, they have lost access to skilled workers in their own economies; the result is growing income inequality;
- some evidence: typical call-centre employees in India has a bachelor’s degree; Mexico export-oriented firms pay wages 60% higher than non-exporting ones; foreign-owned plants in Indonesia paid white-collar workers 70% more than locally owned firms;
The lessons of Ferguson: Race relations in America
Three things to ponder:
- The lines between military and local law enforcement have already been blurred;
- The color matters – it ought to be easier to shift officers between towns, bringing in fresh faces and retain the old hands to be more racially sensitive (background: Ferguson has shifted from 75% white in 1990 to 67% black in 2010);
- The Policing would be easier and race relations a little more cordial, if America legalized drugs.
Stop whining, I’m your friend (Barack Obama’s message to business)
Three-fold main complaints from business
- Mr Obama casts them as bad guys;
- [CEOs] find themselves accused of special pleading
Timing is everything (Presidents and growth)
Democrats presidents have consistently done better in growing the economy, buy primarily because of good luck
- too small to be significant in monetary and fiscal policies, even rates are usually declining in Republican terms;
- much of the growth under Democrats, has been due to private sector investment and increased consumption, and lowered oil prices;
David vs two Goliaths (Travel websites)
TripAdvisor could challenge the big two – Priceline and Expedia
- different business model: pass booking requests on others v.s. sell flights and rooms directly;
- a new app designing to book without leaving TripAdvisor, more tailoring to smartphone users, could be a potential threat to the big two;
- (Jeff Bussgang, HBS) TripAdvisor’s gross margin could be astonishingly 98%, since all reviews are free
More bang for your buck (Prostitution and the internet)
The hour rate is declining
- one reason is surely the downturn that followed the financial crisis;
- large-scale migration – immigrant workers have pressed the prices lower;
- the shift online
Background check has more to do with cops than customers
Screenings for cops is now the priority over screening for rapists, thieves, kidnappers.
Feeling the pinch (Japan’s economy)
labor market remains tight
- population shrinking fast, from 127m today to under 90m by 2060;
real wages continue to fall despite lowered unemployment rate
- rising consumption tax, slightly higher inflation, and massive easing – not the biggest factor
- a deep-sated factor: regulated v.s. un-regulated workers (without annual contract negotiation, less protected, many are women);
Coming unstuck (Mergers and acquisitions)
Four giant deals failed
- 21st Century Fox v.s. Timer Warner – $70bn;
- Spring v.s. T-Mobile US – $30bn;
- Pfizer v.s. Astra Zeneca – $125bn;
- Publicis and Omincom – $165bn;
Company usually overstretch in two ways:
- the proposed combinations that annoys regulators (Sprint’s case);
- deals that test the limits of balance-sheets, and the patience of investors (21st Century Fox and Pfizer”s case)
Failed transactions often have lasting consequences:
- target has to meet the ambitious forecasts that have been cooked up – share buy-backs are one way to rent some loyalty;
- acquirer’s managers and coherence of its strategy are damaged – CEO usually left, as were the cases of GE, BHP Billiton;
If earnings are rising, investors, staff and clients will forgive almost anything.
Practice makes imperfect
The key to a long career in the mutual fund industry seems to be related more to avoiding underperformance than to achieving superior performance.
- successful performance in the first five years is not predicative of success in the following five years;
- now 95% are institutional investors, this makes it very difficult to perform better than the benchmark;
- blind optimism – pension funds among the most optimistic of all;
America’s lost oomph
Falling working force
- recession: only partly to blame, after some years of joblessness some people have given up looking for work;
- ageing of baby-boomers: they are now in their late 50s;
- policies: immigration system (getting into country has become much more difficult); Obamacare (helps people get health care without working); outdated social safety net (spent less on retraining jobless and helping them to find work);
Politicians have made matters worse
- reduce sky-high tax rate?
- start cutting the endless sprawl of job-destroying regulations?
- deterring Fed from raising interest rates too soon?
Thoughtful politicians have produce schemes for radical change in almost all of these areas, but their plans — like much else — have fallen victim to America’s polarised politics. The Republicans stand in the way of loosening immigration rules, while Democrats fear that supply-side reforms are a plot to hurt the average Joe. Both sides hoover up cash from special interests keen to anticompetitive regulations in place. Barack Obama, the least business-friendly president for decades, has devoted far too little attention to the problem.
The case for defense
Arm-makers are going through a lean period
- the Pentagon moved away from “cost-plus” contracts; squeezed in military spending;
- will not accept further consolidation (the same in Europe); big military contractors have to prepare and look at what else they can do to slash costs;
- find new, civilian markets – though only a small part of most arms companies’ business; also, may struggle to compete with nimbler Silicon Valley outfits;
- find customers abroad? but the market is highly fragmented, e.g. Brazil defense budget only 4% of the size of America’s; also the local manufacturing creates issues; some of them also prefer cheaper Russian and Chinese ones;
… the evidence is that an often unreliable, inefficient and over-rewarded industry is at last being forced to change its ways to survive.
An irresistible urge to merge
America’s 2nd and 3rd tobacco makers to merge
- the combined company also sells part of it to Imperial, bringing it back to U.S. market (but acquiring only brands, not liability-bearing legal entities);
- usually foreign companies kept their distance to America’s market partly due to the unpredictable payments to courts for sick patients;
- main holdout against tobacco globalisation is now China (40% of the cigarettes smoked): most of them sold by state-owned China Tobacco; they may someday acquire a big international firm – the last gasp in the round of tobacco globalisation
A new home for orphans
Abbvie buys Shire, not only for tax inversion
- “patent cliff”, too few new blockbusters and health insurers and governments become reluctant to pay a premium; M&A then becomes a solution to cutting costs;
- many firms redirect their attention to orphan drugs (for rare, severe conditions) since it is cheaper to bring to market (smaller clinical trials), and faster approval; Insurers tend to be more willing to pay more as well;
- Shire’s R&D drops 13% in 1Q14 compared to last year, and all its remaining is now concentrated on orphan diseases;
- might be good for long-term as well: thanks to genome sequencing, now “all diseases are turning into rare diseases“
- however, it is unclear how willing health insurer and governments will be to keep paying high prices for such drugs
Red Tape Blues: the best and worst states for small business
- Data source: Thumbtack;
- local tax rates actually matter little vs. the difficulty of complying with complex regulations was a strong predictor;
- problematic licensing rules, now 35% of workers required state licenses, vs. 5% in the 1950s;
- changes to regulation makes a difference in the long run: a stronger job growth;
- difficulty: no politician wants to be accused of compromising public safety.
Not Floating, but Flailing: the global monetary system
- gold standard: lubrication of global trade, “though the free flow of capital left currencies vulnerable, the system survived for decades thanks to governments’ iron commitment to gold.”
- first world war changed all this: gold reserves grew increasingly unbalanced; America could have expanded its money supply allowing prices to rise while refused to do so (due to domestic worries of Wall Street boom);
- then depression, by 1936 the gold standard was dead;
- another crack at a universal system, Bretton Woods – fixed values to the dollar, which was in turn pegged to gold;
- repeated collapse of fixed exchange-rate system, because of the tension between currency pegs and 1) capital controls and 2) lifted trade; big countries started to drop out;
- Euro’s recent crisis is a variation on an old theme;
- for developing countries, pegs hard to resist – encourage discipline, tame inflation, reduce borrowing costs; but too often pegs ended painfully – overindebted (debt binge), and forced devaluation in crises;
- aversion to floating is a puzzle: (Joseph Gagnon) economies with floating currencies did better in the global financial crisis and its aftermath;
- faced the rise of the emerging world, the prevailing currency alignment can survive?
China claims to be gradually freeing its capital account and encouraging trade denominated in yuan. That may finally bring down the curtain on the dollar era initiated by Bretton Woods. Yet in practice China is reluctant to give up the perceived safety of a managed exchange rate. Gold habits are hard to break.
If They Build It: corporate spending
- (S&P) capex in real terms fell 1% in 2013, and is expected to decline again this year;
- the emerging market shares of capex fell from 34% in 2011 to 27% last year;
- mining and energy firms, capex has slowed sharply;
- R&D seems more robust, but grew only 2.6% last year;
- reason: corporate revenue has not been growing very fast, for global non-financial companies, ratio of capex to revenues is close to its highest level in a decade;
Life at the Top: Tibetan genetics
- Tibetans found to carry genes from Denisovan;
- EPAS-1: help acclimatize to high altitude; for Tibetans, they are well acclimatized without having noticeably raised red-cell counts;
- 90% of Tibetans have this version of the gene, compared with fewer than 10% of their Han Chinese neighbors.
homo sapiens: 智人
Practice May Not Make Perfect: genetics and music
- (Miriam Mosing, Karolinska Institute, in Sweden) drew conclusion by studying twins – a time-honored way – between 1959 and1985;
- 1) measuring the lifetime practice;
- 2) measuring abilities to detect difference in pitch, melody, and rhythm;
- result: no apparent relationship between practice and musical ability of the sort she was measuring;
Misery Merchants: revenge porn
- legislators in many countries started to tackle revenge porn;
- (Randazza) may end up producing nothing more than “chicken-soup laws – they make everyone feel a little bit better but they don’t really do anything”
- (case in Israel, the one which has gone furthest) 37 of the 55 cases in the past four months are still being investigated – establishing beyond doubt who first disseminated an image is hard;
- difficulty (in U.S.): crafting laws that manage to criminalize at least the most egregious case without falling foul of the protections for free speech guaranteed by the constitution;
The Dedicated Followers of Fast Fashion: clothes retailing
- two Spain followers to Inditex (Zara) – Mango and Desigual;
- but they followed industry’s conventions – outsourced production in Asia; while Zara stitched together in Spain or nearby countries so it can react fast to changing trends, albeit cost more;
Capital Punishment: BNP Paribas
- the announcement raises a raft of questions about 1) the proportionality of penalties, 2) the responsibility of individuals in corporate crime, 3) the duties of firms dealing with objectionable regimes, and 4) the resonableness of America imposing its foreign policy via the international financial system and its dominant currency;
- the case has left people on both sides of the Atlantic unhappy: individuals getting off lightly vs. shareholders and customers bearing the burnt of misdeeds; discontent in Europe – an example of America throwing its financial weight around, using the threat of withholding access to its market and currency to force compliance with its own priorities;
“Bridging the Gap”
- New Jersey re-classfied Pulaski as part of Port of Authority (for funds for basic repairs)
The problem with the trust fund, is that it’s not funded and you can’t trust it.”
- Fund shortfall everywhere and less advanced technology system
Most air-traffic control system are less advanced than the technology found in smartphones. Alaska’s Juneau airport, which is smothered by low-lying cloud, is an exception. Its airport introduced GPS navigation after there were threats to move the state capital to Anchorage because it was so hard to land.
- (Maryland congressman John Delaney) has proposed a bill that would give firms a tax break on repatriated foreign profits if parts of the money was spent on infrastructure bonds;
- Federal should spend less and let the states make more decisions
“The Battle for Japan”
- fiscal stimulus 10.3 trillion a month after Abe’s return to power;
- monetary easing, goal of 2% core inflation by the spring 2015 (now around 1.25%);
- the third arrow, tackle farming, medical services, and the labor market, all of which have provoked a public backlash
“A Golden Opportunity: Special Report on Poland”
- the only one big economy in Europe to avoid recession during the financial crisis;
- biggest recipients of EU funds;
- German-Polish ties, the second most important bilateral relationship in the EU;
- “Polaska A”, Warsaw and the western Poland; “Polaska B”, the poorer, less developed eastern Poland;
- biggest apple exporter, bypassing China last year;
- the most Catholic country in Europe: 95% are baptised Catholics;
- church was an island of freedom back in Communist rule, “the pope contributed at least 50% to the collapse of communism”
- missed the chance of using EU funds for structural reforms (i.e. Portugal)?
- middle-income gap, low investment (in specialized industry, i.e. specialist machinery) and high savings rate;
- productivity gap with western Europe;
- need to be more global (only one true global company, KGHM, copper and silver miners);
- agriculture remains highly fragmented, 3.4% of GDP yet 12.4% of employment
Business Opportunity (future after coal …)
- outsourcing, fast-growing in the region;
- subcontracting, thanks to the German supply chain;
- Like “Germany used some of its Marshall plan funds to build innovative, international companies after the second world war, Poland could be doing the same with EU funds.”
Despite the wounds of the past, Germany and Poland today are bound together by shared political and commercial interests.
Yet for most of the 20th century Poland was a playground rather than player in international politics.
With such a heroic past, the church found it hard to return to a more workaday role after communism had gone.
History has taught Poles to be pessimistic and full of self-doubt. For the half-millennium, whenever their country was enjoying a peaceful, prosperous period it soon seemed to come to a brutal end, often through foreign invasion.
“Estonia Takes the Plunge”
Some ideas never take off because too few people embrace them. And with just 1.3m residents, Estonia is a tiddler – even with the 10m satellite Estonians the government hope to add over the next decade.
The Scheme’s advantages for Estonia are multiple. It will help it shed the detested “ex-Soviet” tag and promote itself as a paragon of good government and innovation.
“Lenders of Little Resort”
Chinese unit of foreign bank:
- profits fell by 14% last year, while Chinese banks jumped by 15%;
- Roe was 5.6%, far behind Chinese banks’ 19.2%;
- HSBC, has the most branches of any foreign bank in China: 160 vs. Bank of Communications, which HSBC owns 19%, has 2,690;
- foreign investment banks, can buy only 49% of Chinese brokers;
- reporting requirements are onerous: 6,300 different reports annually for the Chinese unit vs. just 400 reports for its parents to its home regulator
- Infiltration to Eastern Ukraine; not quite invasion;
- Reasons why Russia might want to destabilize Ukraine: stop presidential elections? justify overt Russian intervention? civil conflict that destroys the authority of Kiev;
There is nothing wrong with federalism in principle, but this would be a formula for Russian domination.
《Boys from the Blackstuff》
- The occupations have shown how little authority Ukraine’s government has in the east;
- Moving military against Ukraine is costly for Putin: salaries, pensions, subsidizing coal mines, would cost twice as much for Donetsk as in Crimea;
- (Alexander Dugin, Russia’s most vocal imperial nationalist and anti-American ideologue) Maidan revolution in Kiev was an American plot to drag Ukraine into the EU and NATO; having failed to make this happen, America is now trying to provoke violent clashes to justify NATO military bases in Ukraine;
《Turning off the Taps》
- Start with finance, because of the pre-eminence of the dollar;
- Such sanctions have been used increasingly since the 1990s: helping nudge Pyongyang back to the negotiating table; helped soften Tehran’s stance over its nuclear program;
- The Treasury has been deliberately vague about how strong such links have to be:
If one bank or company stops doing business with an entity, so does everyone else. No one wants to be an outlier.
- Sanctions also invite countermeasures: hit Rosneft and you hurt BP, ExxonMobil as well; Russia could 1) choose to investigate foreign investors for tax “irregularities”; 2) enlist hackers to destabilize American banks and exchanges, as it proposed to China back in 2008;
《From Bad to Worse》
- Sanctions are pretty limited on paper, but they have created a “scare factor” that is magnifying their effect;
- … could also create openings for competitors (Chinese firms);
- Russian firms are casting around Asia and elsewhere for new customers: Rosneft is seeking to treble its exports of oil to China;
- Losing access to foreign loans – what it will mean for investment, productivity, and growth;
- Weak currency will be an advantage for local brands? Not actually, many Russian manufacturers depend on imports for inputs and equipment;
- (Analysys International) More than 90% of programmers and journalists and about 80% of food and service industry and marketing workers said they saw themselves as diaosi; civil servants least identified with being losers in the survey;
《Coming to a Beach near You》
- Next step: get visa easier; tailor language, products and services to the Chinese market – “They are very afraid of being treated as second-class”;
- “Authentic”, “limited edition” or “VIP” have always appealed to the Chinese;
- Getting noticed is the toughest step;
《The 50-Year Snooze》
- “The moment you land in Brazil you start wasting time.”
Few cultures offer a better recipe for enjoying life.
- TFP is lower now than it was in 1960; Brazil invests just 2.2% of its GDP in infrastructure; low quality education; badly managed companies; protectionism;
- Preferential tax treatment (for firms with turnovers of no more than $1.6m) discourages companies from growing;
- Two salutary examples: deregulated agriculture in 1990 and institutional reforms in financial services a few years later;
Social networks promised marketers a revolution, but what they have delivered is just boring traditional ads.
《Kidnapped by the Kremlin》
Giving in to kidnappers is always dangerous: those who fail to take a stand to start with often face graver trials later on.
- Kremlin has a duty to protect Russians and Russian-speakers wherever they may be – the logic that Hitler used when he seized parts of Europe in the 1930s.
- Many powers, not least Britain, France and the United States, have sometimes broken the international law. But Mr Putin has emptied the law of significance, by warping reality to mean whatever he chooses.
《The end of beginning?》
There was only one thing missing: enemy
- Ukrainian forces remain calm: Russia was hoping to follow the scenario of the Georgian war in 2008, when it managed to provoke the Georgians to fire first, it flopped;
Putin is “in another world”
- Influenced by Ivan Ilyin – in this world of view, Ukraine’s revolutionary bid to escape to the West is a betrayal of Slavic brotherhood, and Russia should attempt to “save”
- more likely, Putin intends to use it as a destablising factor and leverage for splitting Ukraine further, stop the country from moving towards the West;
《Sixes and sevens》
Mr Obama has a freer hand
- relatively tiny amount of trade that America does with Russia – ten times lower than that between Europe and Russia;
- indifference of American public
The opposite view taken but the doves
- led by Germany, owe quite a lot to the importance of trade relationship – about a third of gas and oil Germany imported last year came from Russia;
- Britain, shown no great enthusiasm for sanctions;
- future leaders of Ukraine will face even greater popular pressure to turn West;
- a NATO with a new sense of purpose
- and Russian stock market: its economy is now vulnerable to investor sentiment, a much quicker comeback than sanctions
《Let the sun shine》
For makers and users of solar power, the future looks bright.
- growing rapidly (albeit from a small base); and cost has fallen so quickly – photovoltaic installations are the future
- a biggest test will come in 2017, when the federal solar-investment tax credit drops from 30% to 10%;
Distributed solar power – generated from rooftop panels – undermines traditional centralized utility model
- in 2013, third-party-owned systems accounted for most solar installations in CA, AZ, CL and MA
- some utilities campaigned but were defeated;
- though makes utilities skittish, many have rushed to embrace it on the supply side; also, low installation and labour costs, clean power delivery at peak hours and a hedge against fuel-price volatility
《The burden of empire》
Xinjiang and Tibet (and Inner Mongolia) are still China’s colonies, their pacification under the Communist Party’s a continued imperial project. Were it not for the Dalai Lama’s restraining influence, violence in Tibet might be as bad as it is in Xinjiang.
《Not so sunny》
China’s first domestic bond default
- Shanghai Chaori Solar Energy Science and Technology Co
- panic will be limited, since not backed by local government;
- (Fitch) “long-term positive for the market”
Rich-world firms with above-average exposure to emerging economies have lagged America’s storkmarket by about 40% over the past three years;
What went wrong?
- some did not take risks seriously enough
- bad management – too many overpaid for acquisitions;
A decade of low interest rates and rampant Chinese demand allowed all developing countries to grow at turbocharged rates – even those that were badly run. Now the global environment is less forgiving.
- should screen their portfolios for strategic relevance and financial returns
- borrowing in local markets, shift more production to the emerging world, consider acquisitions to boost market shares;
《Emerge, splurge, purge》
The companies suffering a slowdown profits come in three buckets:
- suffered a gentle weakening in demand and a currency drag: consumer firms;
- cyclical and capital-intensive industries face a sharper slowdown and those firms with mismatches (costs or debts in firm currencies but sales in depreciating ones);
- firms with idiosyncratic problems: China’s war on graft, Russia’s periodic crackdown on alcoholism;
The process accelerated dramatically by the mid-2000s, and subprime and euro crises made it irresistible;
A rule of thumb: half of the deal destroys value;
《One phone, many countries》
Brazil: the dearest in dollar terms, of the countries where Apple has stores (a 16G 5s costs $1,076)
- Brazil cost: the exorbitant cost of doing business in the country, largely due to tariffs and state and federal taxes on imports; also high labour costs and expensive commercial rents
Venezuela: huge gap between the official and unofficial exchange rates, goods that are imported at the black-market rate are out of reach to most;
Argentina: devices that are assembled in the Patagonian province benefit from a 60% reduction in excise taxes but Apple refused to play ball like Samsung and Blackberry;
Pacific Alliance – Chile, Columbia, Mexico and Peru – things are easier, but what’s lacking if purchasing power
Obtaining a smartphone contract in Peru similarly involves lots of queuing, lots of paperwork, and the waste of a few hours. The hassles do not end there. Customer service is poor and flaunting your new toy risks theft. That is true of other countries in the region, too. Diverse as it is, Latin America does have some things in common.
How the West can help
A MAN goes bankrupt, Ernest Hemingway wrote, gradually, then suddenly. Autocrats lose office the same way, as the fate of Viktor Yanukovych, Ukraine’s deposed president, dramatically illustrates.
Lessons from Orange revolution
- vital that the presidential election in May is clean (20024: an event that seemed to herald a democratic future, but instead merely reshuffled an entrenched elite);
- will need help and not just the financial kind – without a proper underpinning, emerging democracies can slip back into misrule;
Putin: he will doubtless do his best to stop the country becoming an independent democracy.
The February revolution
The revolution was not just about getting rid of one kleptocrat
- the post-Soviet order which prevailed in Ukraine has not been uprooted;
- the Maidan was not the only player in the revolution;
- worrying civil order and economic abyss;
- the two parts (east and south) complicates the future and the successive government failed to find a vision or narrative with which to unite the country;
- Putin’s take in Crimea;
But although Mr Yanukovych provided oligarchs and Maidan with a common enemy in the run up to the revolution, the allies could well turn into adversaries in the aftermath. The oligarchs and their political place-men are creatures of the dysfunctional state that Maiden rejects; some will surely seek to use the revolution to regain their lost interests and restore the pre-Yanukovych status quo.
A memo to Obama
America not a mobile place: a child born in the poorest fifth of society has only a 9% chance of making it to the top fifth;
The solutions: to incentivise work in other ways
- (Marco Rubio) wage subsidy, a reverse payroll tax that would strengthen the connection to work;
- minimum wage would cost around 500,000 jobs, can be counteracted through the EITC;
- intensive counselling and training to the long-term umemployed (as Britain experimented);
- Disability Insurance become more generous (number of beneficiaries from 1.5m in 1970 to 8.9m in 2013), key is to persuade them not to apply;
- spent only 0.1% of GDP on “active” labour-market programmes, compared to OECD average 0.6%;
- Better to concentrate the money on the smaller, younger, truly disadvantaged group of children.
One way no more
China’s currency has long been a source of controversy, but it is rarely a source of uncertainty;
“Carry trade”: speculators borrowed cheaply in dollars, then lent in yuan, eluding China’s capital controls in the hope of benefiting both from higher Chinese interest rates and the yuan’s appreciation;
These fundamentals (export earnings and foreign-direct investment) both suggest the yuan should rise again. But by wrongfooting the speculators, the authorities hope that the expectation of appreciation will not remain a cause of that appreciation.
Foe or frenemy?
online funds that are offering returns that are 15 times higher than conventional deposit accounts;
China’s cap on deposit rates is causing money to flood into shadow-banking products such as those offered by “trust;”
Alibaba launched Yu’e Bao, then Baidu and Tencent entered the fray;
- indeed hurting the banks: sucking away money – bank deposits fell by one trillion yuan in January;
- Not possible to lead to massive disruption of the sector: even if a tenth of bank deposits flee to online products (a heroic assumption), it might cut the net interest margin at banks by just 0.1%.
The prevalence of smoking is greater in countries like Austria and Russia;
starting to take notice of the problem – Mao Zedong smoked like a chimney but it is rare to see a senior leader smoking in public now;
restrictions on smoking in indoor public places – has hardly kicked the habit
- In fact, the revenues of the Chinese cigarette-manufacturing industry shot up from 285 billion yuan in 2005, to 757 billion yuan in 2012;
The most powerful measure is tax
- this approach works in both South Africa and France;
- Chinese cigarettes are taxed so lightly (cheapest pack in rural areas sell for just two yuan, five yuan in cities);
Another great obstacle is tobacco lobby
- In 2012, the tobacco industry turned in 6% of official revenue – as big in Beijing politics as petroleum and property;
Now or Naver
almost 80% of Korean search market, making the country one of just three where Google is not top (the other two are Russia and China);
still rising – online advertising sales grew by 7.7% last year;
has began to exhibit some of the least attractive traits of the chaebol (industrial conglomerate)
- buying up smaller potential rivals;
- using its market power to stop other portals getting access to content;
South Koreans now spent more on KakaoTalk than they do on Naver;
real strength abroad – its decade of experience in the portal business
- “doing everything” from games to shopping to online newspapers;
- Line: makes 70% of money from games and electronic “stickers”
- “Kiev is one of the few European cities where the European Union is synonymous with good government and the rule of law.”
- Virtually all of Ukraine’s established politicians have discredited themselves: the protesters have no clear champion – one reason the violence may prove difficult to stop;
《Europe’s new battlefield》
- Ukraine’s elites understood independence as right to pillage their country;
- compounding the problem: Russian-speaking, industrialized east of the country and Crimea, and the nationalist-minded western Ukraine – the core of the protesters;
- an issue of a free-trade agreement with the EU or a customs union with Russia suddenly becomes an existential choice between a corrupt and authoritarian post-Soviet system of governance and a European one;
- Russia has long coveted Crimea.
《How to make the world $600 billion poorer》
- Mr Obama now appears to be surrendering to protectionists within his own party
- Congress must approve the trade agreements, however, a fast-track vote before November seems unlikely;
- Tea Party Republicans: loth to grant Mr Obama the authority to do anything;
- Democrats: the idea that they will not do much to help the economy; brand themselves as the anti-inequality party;
- Mr Obama could have explained more … mentioning that cheap imports help reduce inequality of consumption;
- “America cannot turn inward,” the Obama of 2008 said in Berlin. The Obama of 2014 is now responding:” Yes we can.”
《Taking aim at imports》
- America’s continent-spanning economy is more self-contained than many people realize – imports and exports amounts to 23% of GDP, compared with 26% for the EU or 46% for China;
- last time was in 2002, even so, 183 Democrats voting no, and moreover, the deal was small;
- Compared to mid-1990s NAFTA, the level of scepticism is probably higher – citing NAFTA as the lessons;
- Opponents requires more policy-making transparency – 1,150 meetings on the Asia deal alone is apparently insufficient;
- a large group that likes the trade in theory but not in practice – “recent presidents have seized Congress’s constitutional trade authority” and ask for it to be returned;
- It is hard to oppose greater transparency without sounding sinister.
《The politics of little bricks》
- fits the old stereotype of Hollywood peddling anti-capitalist propaganda to kids, but hold on, the film is also an hour-and-a-half-long commercial for costly toys made by a multinational, a commercial that people must pay to see;
《Bridging the fiscal chasm》
- at the end of 2013, liabilities of local governments: $1.8 trillion, one third of China’s GDP;
- Guizhou, biggest fiscal chasm, liabilities 80% of its GDP;
- some of the backing is implicit: if these guarantees are booked at their expected cost, Gansu’s debt burden falls from 44% to 19% of GDP;
- debts look heavy compared with taxes: Yunnan and Qinghai, 260% and 370% of their budget revenues; however, China’s provinces do not have to rely on revenues, other funds – transferred from central government, land sales;
《Getting the messages》
- Two profound trends that are transforming the technology landscape: rapid growth of web-connected smartphones and dramatic decline in the cost of building start-ups;
《Here, there and everywhere》
- Dutch advantage: balance power between management, the board and shareholders, no meeting required to approve resolutions, few requirements on compensation – Europe’s Delaware; ability to issue “loyalty” shares;
- British advantage: tax.
《The parable of Argentina》
- Embraced Washington consensus in the 1990s but the crunch in 2001 left it permanently suspicious of liberal reform
- Argentina’s decline has been largely self-inflicted: protectionism, prefer quick-fix rather than thorough reform of the country’s schools
《A century of decline》
Three deep-lying explanations:
- Rich but not modern 100 years ago: low literacy rates, lowest secondary-school attendance;
- Being out of sync with the rest of the world, trading policy: the divide between farmers and workers;
- Not evolving political apparatus, short-termism;
《The petrostate of America》
- Franking: should have added 2-4% to American GDP;
- Oil boom, owed less to geological luck than enterprise, ready finance, and dazzling technology;
- Foreign policy might not change, but energy policy should: lift the oil export ban, getting permits of gas export more easily; generating cash to pay foreign policy dividends; also might cause domestic gas prices to rise a little;
- Turn America into a swing producer; make both dollar and the economy less sensitive to oil prices;
- Back to stabilizing role it played in the 1960s;
- Crude-oil could start more or less straight away; but the political debate is only in its infancy;
- Advocating of consolidation: more power to negotiate with content companies; margins only 50% compared to broadband 100%;
- Financial discipline, better control cost than conventional Hollywood boss;
- “Not the best at innovating, but the best at scaling others’ innovations”
《Fixing forward guidance》
- Specific threshold of Fed and BoE: 6.5% and 7%; they are muddying them now;
- Fed downplayed; BoE scrapped the unemployment threshold – a clearer message;
《Closing the gap》
- Gap between actual and potential output, hard to discern; three different indicators tell different stories;
《The growth paradox》
- No link between economy growth per capita and stock market returns: “value” effect; stock market not a perfect representation of the domestic economy (real dividend growth more slowly than the economy);
《No profits, we promise》
- JD is pursuing an “asset-heavy” model that puts scale and market-share above short-term profits;
- Two big questions: logistic infrastructure and local rivals (Tencent and Alibaba)
《A number of great import》
- Current account surplus narrowed to only 2% of GDP last year; but by far the largest services deficit in the world (already helped by less competitive yuan, which rose over 7% last year);
《The worldwide wobble》
- Necessary correction of market
- More like a wobble than a tumble
- No reason to expect a sudden spending slump
- Slowing rather than slumping china
- More easing on Europe and Japan
《Goldilocks and the bears》
- Increase in short rates far from imminent
- The worst-hits have been those with specific problems
- As money flows back to US, let exchange rate slide and risk inflation, or increase interest rates and risk a recession?
- No sign of problems in corporate results yet
- Equities look expensive, positive for government bonds
《My country is right or righter》
- NHK seek to follow the government’s line
- For Abe and LDP, rebooting the media is a strategic priority
- Pacifism still remains popular at home
- How link works: Google Shopping scored 36.7% of clicks, against 5% for rivals;
- Now it will show links to rivals alongside;
《News you can lose》
- CNN: no glory in the role of unbiased “referee” between partisan networks (left-leaning MSNBC, and conservative Fox News); “Nobody goes to the game to see the ref.”
- More people turning to the internet: “there is a ‘ceiling’ to how many people are getting their news from television today.”
- what works today is entertainment;
- CNN’s costs are also high: it has more bureaus than MSNBC and Fox News; “in produce business,” “News comes and goes so quickly.”
- Fed’s shift to less expansionary monetary policy is only half the story: Central bank in Euro area and Japan are still moving in the opposite direction – “not conducting synchronized tightening”;
- “If Japan is confronting the ghost of deflation past, the euro zone is spooked by deflation yet to come.”
- BOJ started asset purchase $70bn a month, far greater relative to Japan’s economy – pushed up headline inflation to 1.6%, with core inflation (energy and food) entering into positive territory and rising at fastest pace since 1998;
- Abe’s resuscitation plan – encourage hiring and raise wages;
- Turmoil from EM: as global investors seek refuge in financial havens, the yen has started to appreciate again – make Abe nervous about raising the consumption tax;
- Euro zone: core inflation only 0.8%, one notch up from the record low 0.7% at the end of 2013;
《Down to 1.4 and 17》
- 20% of performance fees and 2% of management fees down to 17% and 1.4%;
- Hedge funds as a whole undershot just about any benchmark in recent years;
- Another factor: rush of new investors (pension funds, endowments, sovereign funds), greater negotiating power
《The Triumph of Vladimir Putin》
- Good year: protests seen off; Syria; NATO frustrating in Afghanistan;
- Ukraine matters much to Putin
《Sochi or Bust》
- Most expensive in history – corruption, inefficiencies；
- Tight security;
- As vulnerable as 1980s: oil & gas rent – use them to consolidate power; problem is excess of money and lack institutions; repression or democratization? Widespread dissatisfaction and discontent among elites.
《Too Big to Fail, But in a Good Way》
Koc and Sabanci: more than a quarter of Turkish market cap;
- Short positions in FX provide hedge;
- Untrammeled access to a market in EU;
- Despite of conglomerate discount, global indexes prefer to own holding company;
- Resist the vanity of owning news media and out of public facilities, governments have left them to get on with doing business – “long may that continue.”
《Deal or No Deal?》
- Polarization of two parties, obama’s promise to bypass legislature – things are getting better;
- Several deals are possible: minimum wage vs income tax credit; immigration; promoting free trade.
《The Odd Couple》
New Komeito and LDP – relations hit a low point:
- Conflict in Yasukuni shrine;
- Self defense constitution;
- Nuclear reactors;
- China policy;
Votes: bind this odd couple together – 8m members of Buddhist, Soka Gakkai.
《Physician, Heal Thyself》
- A system that inflates the cost of medicine;
- Public hospital is actually not public, doctor underpaid & higher than OECD spending on medicine;
- Kickbacks account for more than 20% of final retail price
- Promoting generic brands is difficult in China – Provincial bidding system, squeezes margins of drug companies, they would rather not make or supply the drugs
《Less Amazing than Amazon》
- Walmart New CEO, an inflection point: open more smaller stores, step up its counterattack on Amazon – But it is chasing a fast-moving target;
- Aims to – build up the market ecosystem that pulls together shops, warehouses, delivery, fleets, and technology.
《Fixing a Flat》
The departure of Lanxess CEO
- One quarter of revenues from types and auto parts;
- Oversupply when doing well causes fall in prices;
- It needs a disciplined manager to cut costs (New CEO from Merck);
- One solution: produce abroad or keep pushing those high-end products
- Most EM are far less vulnerable than they were in 1997.
- Risk factors: rising rates in America; slower growth in China.
- Policy makers used market turmoil to push through more reform;
- Yet not wholly in control, the flow of capital has more to do with what happens beyond their borders.
《Locus of Extremity》
- Rising rate impact on the Fragile Five: reducing demand for EM assets;
- As group, EM actually net exporters of capital: smoked the foreign currency but did not inhale, while some of them breath deep
- Countermeasures: ban imports, taxed luxuries, let currencies fall;
- Anticipating a more normal world – pension funds can meet their obligations and investors more reluctant to venture into anything exciting abroad.
《The Coin Has Two Faces》
- Currency traders have had little to get their teeth into;
- Policy dampens fluctuations;
- Long term investors shifted to dollar buyers;
- Last period of dollar strength was late 1990s – Internet booms, now linked to potential of shale gas;
- Negative consequence: EM struggled to peg, difficult for American exporters, and for commodity importers;
- Good news: US bonds more attractive
《The Price of Getting Back to Work》
America recovered quickly but lower in employment rate, reversed trends in UK;
- Falling productivity cushioned against job losses in recession, while resulted in high inflation;
- Declining productivity is consequence of falling real wages: lower real wages encouraged firms to use more labors and less capital, causing productivity to fall but popping up employment;
- In US, milder inflation, discourages hiring, leading to rising productivity and weak employment growth.
《China Loses Its Allure》
Things getting harder for foreign companies:
- Government’s restrictions;
- Competition – local firms joining the fray;
- Some companies leaving; some struggling;
- Sino-dependent firms worse than peers;
- Enhance productivity;
- Improve governance – Chinese consumers more active;
- Respond to local tastes.
《Doing It Their Way》
World shaped by china’s rush to consumerism:
- stated goal;
- increasing in absolute terms;
- skewed to expensive;
- online from the start: heavily reliance on peer reviews
- brand switching: first – mover becomes old-fashioned;
- go abroad;
- creative marketing and advertising.
《In Three Parts》
Chinese economy: three forms of growth – supply, demand, and credit;
- Supply: demographic turning point;
- Demand: Not overheating;
- Credit: in three categories: (1) adds to both supply and demand; (2) add nothing to capacity but to demand; (3) adds little to economic growth;
Chinese pattern of investment remains a worry, but at least enjoys a re-balancing of incomes and production, also the shift in production – more in services than industry.
Internets giants engage in breathtaking tax gymnastics:
- France: buzzing with Internet-tax proposals; culture tax;
- Italy, pass law to curb profit-shifting;
- Chile: tech giants’ clients are in taxman’s crosshairs.
- Fragile five – BRL, INR, IDR, ZAR, TRY; Brazil most overheated, while Turkey and South Africa are running more current-account deficits, and much smaller FX reserves;
- In 2014, demand commodities likely to remain restrained, affecting AUD and CAD.
《Fighting the system》
- Lionsgate: lean, bolder, freer to pursue opportunities, keep looking for new franchises.
Sept 15, 2013 – Home-Sales Frenzy Eases
- meaured by Credit Suisse, home-buyer traffic fell in August to its lowest level since December 2011;
- (Dow Jones Newswires) pace of sales fell to 5.24 million annual rate, down 3% from July;
- New home sales declined 4% in August;
- Mortgage rates climbed from 3.6% in May to around 4.8% last week;
- (some agents) the biggest problem in the market is “selling greed” – seller pricing too high;
- share of investors buying homes down from 20% (one year earlier) to 18% in July – appears to have lost interest;
Sept 16, 2013 – China Telecom Cuts iPhone Subsidies
- iPhone 5S 2398 yuan compared to 1888 yuan for the iPhone 5 for a two-year data plan;
- subsidies for iPhone from U.S. carriers make it comparable to other top-end phones, in China it usually remains more expensive;
- cutbacks comes in part because China Telecom is trying to increase its profitability;
Sept 16, 2013 – Summers’s Withdrawl Cheers Markets
- a sign of continued easy-money policies;
- Summers seen as the most hawkish of the candidates for the Fed;
- scaling bond purchases leading to an outflow of capital from emerging markets; pushing their currencies down and forcing authorities to tighten monetary policy to attract funds.
Sept 16, 2013 – Fed Faces Tough Sell on Low-Rate Strategy
- Fed trying to shift from bond buying to the low-rate pledge – both are meant to stimulate higher risk tolerance in financial markets, and encourage borrowing, spending, investing, and economic growth;
- Fed’s guidance on future short-term rate has a substantial influence on where markets move today’s long-term rate (such as those for mortgages, car loans and business borrowing);
- inconsistency: neutral fed funds rate should be around 4% but latest official projections expect it to be about 1%;
- simple explanation: lingering effects of the 2008 and 2009 financial crisis, requiring the continued support of interest rate below the level.
Sept 19, 2013 – Home Sales Hit Highest Level Since 2007
- buyers rushed to lock in deals before mortgage rates increased further;
- August, existing-home sales rose 1.7%, best since February 2007;
- slower pace of sales of new homes – buyers can’t lock in a mortgage rate on a home that is under construction;
- inventories of previously owned homes remain tight; down 6% from a year ago;
Sept 19, 2013 – Investors Now Left Wondering
- though sending U.S. stock indexes to records, in the longer term, less positive: if Fed are right, that could presage disappointments in 3Q earnings; and Fed still expected to reducing stimulus at some time this year – sending more uncertainty and confusion to markets;
- worry that U.S. stocks are overpriced and too dependent on government support; should think about moving some money into European and developing-country stocks;
- $85 billion-a-month bond buying: goes to bank, finds its way into the riskier stocks and bonds investors think will get the best short-term pop; bond not benefit the most since investors still think the Fed will cut back later in the year, and thus channel the liquidity into riskier, faster-rising investments;
Sept 19, 2013 – Companies Seize on Rate Reprieve to Issue Bonds
- Companies took advantage of the Fed’s surprise decision – selling debt;
- tapering, most likely to occur at the December meeting, given not much time for officials to consider new economic data;
- Vesizon’s $49 billion bond deal last week, among companies that sold debt ahead of the Fed decision – lower than the trading price of the company’s existing debt, potentially costing more than it needed – still make sense;
- opportunity to buy IG corporate bonds: threat of rising interest rates – which decrease the prices of outstanding bonds – has passed at least for now.
Aug 26, 2013 – Debt Drags on China’s Growth
- Outstanding borrowing by businesses and households rose to 170% of GDP at the end of 2012 from 117% in 2008 (2012 figure for U.S. was 157%);
- Interest and principal payments currently absorb a third of GDP; was 21% for U.S at the end of 2007 and broadly unchanged at the end of 2012;
- few signs of imminent crisis: low bad debt levels; high savings rate; tightly controlled capital accounts; lenders and borrowers are both state-owned in many cases;
- … still threaten to choke growth (indebted companies and governments), banks might have to slow lending if bad debts mount, and a higher interest rates would add to the pressure – 1% increase in rate would add 2% of GDP to the annual burden of repayment;
- Kunming Transport Investment Co. – example of many projects since 2008 generating little returns – had taken on 37.9 billion yuan in debt, more than the city’s entire tax revenue.
Aug 27, 2013 – Gold Nears Three-Month High
- Gold futures touching $1,423 an ounce, highest level since June 6;
- “U.S. Treasurys, gold and crude oil are the things you want to be buying if there’s talk of war.”
- … also from renewed concerns about debt borrowing limit in mid-October – investors seek out the safety of the hard asset when they worry that fixcal or monetary policy decision could erode the value of paper money.
Sept 3, 2013 – Microsoft-Nokia: The Death of Hardware and Software
- Scale in distribution and in skills (software is hardware, hardware is software, everything is everything) now matter more: interestingly, neither has proved adept at hardware or software;
- Samsung, trying to create its own operating system with Intel, called Tizen;
- China-based Huawei, now the world’s third-largest smartphone share;
- software developers continued to lose leverage – have little choice but to commit to the two ascendant platforms – a matter of scale that Microsoft knows too well from Windows;
- THE WINNER IS THE NETWORK – barriers to entry for building wireless networks remain very high: in a world where everything is everything, the distinctions between good hardware and good software won’t matter much to the middleman.
Sept 3, 2013 – Microsoft and Nokia Send a Weak Signal
- Android powered 75% of smartphones worldwide, iOS grabbing a 17% share; Windows Phone had just 3%;
- chicken/egg problem – needing market share to attract (app) developers but needing developers to build market share;
- (the deal) also further complicates Microsoft’s business model – historically relied on outside hardware makers to deliver its highly profitable software; “the added twist is that, despite this, Microsoft’s weak position in mobile meant it had little choice but to do it anyway.”
Sept 4, 2013 – Stocks Notch Broad Gains
- Intel led gains in 26 of 30 blue-chip stocks – unveiled new data-center processors;
- U.S. economy grew at a “modest to moderate” pace in July and August;
- expect Fed to wind down bond buying program;
- Strength in spending on cars, seen by Ford reporting its best retail-sales month in seven years;
Sept 4, 2013 – U.S. Trade Deficit Widens as Imports Rise
- From June to July, U.S. imports rose 1.6% while exports fell 0.6%; trade deficit expanded by 13.3% to $39.15 billion;
- rebound in imports: strengthening in consumer spending, which rose 0.1% in July;
- decline in exports: reminder that global growth remains weak; partially reversed the strong gains of June。
Source: Wall Street Journal.
- yield on the Vanguard REIT exchange-traded fund: 3.2% or 2.7% in yen terms; while the largest Japanese REIT fund, the Shinko U.S.-REIT Open Fund, sports a yield of 17.5%;
- They distribute not just the dividends their REIT holdings generate, they also base payouts on what can be unrealized capital gains in the REIT shares; So if U.S. REIT shares rise, the Japanese funds pay out all or some of those gains to investors, even though they may not have sold their holdings.
- The danger is that, if the music stops playing, the Japanese funds could be in a precarious position: Say prices of the U.S. REITs stop rising, and the yen stabilizes. Then the Japanese funds will no longer be able to pay such generous dividends without selling off some of their holdings. This could depress some U.S. REIT shares. And that could provoke more sales in following months as the Japanese funds sought to continue the dividend payouts.
- Example of Pandora: quarter sale $16m, $12.7m via mobile services (mostly through Apple); Apple keeps $3m – not a lot;
- total amount paid to developers since the July 2008 opening of the App Store was $8 billion;
- Apple’s cut before paying that amount to developers would amount to around $3.4 billion;
- While Iphone sales last quarter was $31 billion.
- First quarter 2013: year-on-year 7.7%;
- weak global demand is a factor;
- wasn’t all bad news: consumption contributed 4.3%, more than 2.3% from investments — long-awaited rebalancing towards domestic consumption;
- considering what’s going on elsewhere, doesn’t look shabby: U.S., lowest job creastion in March since June 2012; Europe, crisis isn’t over; Japan, embarked on a high-risk course of monetary and fiscal expansion;
- question now: whether China’s new leaders will move aggressively following the latest GDP data? should not accelerate, “In the global economic beauty pageant, China’s still the least ugly.”
- just above $1,360 an ounce;
- confirmation that Cyprus is considering selling some of its gold reserves to reduce its debt burden has triggered fears other euro-zone countries with larger reserves;
- Gold’s problem is that it yields no interest, making it inherently difficult to value. That leaves it reliant on sentiment;
- 也绕不开对经济发展模式的讨论：若房价真的下跌，地方政府债务首先吃不消；土地抵押 – 从银行借贷 – 房价上涨 – 通过土地财政予以覆盖；2009至2012年，只要房价稍微有下降的意味，个地方政府便出台政策救市；
- 与国际上其他城市相比，北京的汽车保有量不算太多；北京的拥堵与城市布局有一定关系；纽约的街道密度远大于北京（25% vs 7%）；
- Paul Volcker, came after Janet Yellen saying that she doesn’t see any reason to right now curtail bond-buying programs;
- Volcker said, low inflation supports current Fed policy; but central bankers must decide how and when to retreat;
- historically, Dow has not been a bad measure of stock-market performance;
- some vitally important aspects of the market that Dow and other measures miss: impact of inflation (if adjusted, only be around 12,900 instead of the new high 14,253); but offset by not considering the dividends reinvested (if considered, 16,600);
- “when equity markets do well, people love to ignore the risks.” “people need to be more vigilant about the risks.”
- since Oct 2007, high-grade bonds have delivered 48% total return, annualized gain of 7.6%; “junk” bonds have delivered 63%, annualized gain 9.5%; while Dow’s return, with dividends, has return more than 16%, annualized gain 2.8%;
- the average coupon on a new corporate bond was about 3%, down from 6% in 2007; the average life is increasing as companies take advantage of low rates by issuing bonds with longer terms — that make corporate bonds sensitive to increase in interest rates;
- tough for advertisers to determine the value of a “like” — for online media, how to demonstrate that banner ads can be valuable even if Web surfers don’y click on them;
- that is a big reason Google does so well — Google is often the last place people go just before they make a decision to buy a product online;
- Facebook last week’s deal to buy Atlas from Microsoft, a online ad technology company; give Facebook a more expansive view of online ads that users see and sales that occur across the Web;
- Google owns Doubleclick, which serve more ads than anyone;
- Facebook partnership with ad-measurement firm Datalogix — view of offline sales impact of its online ads;
- Facebook other advantage: more specific data, name, age, gender, information on other interests;
- government spending will shoulder more burden of growth; a turnaround from the easy monetary policy;
- only timid step to line up public finances behind the objective of raising household income and consumption: spending on healthcare, education and social welfare targeted 9.6% increase in 2012, below the growth rate of the economy, if considering inflation;
- IPO审批制的危害：扭曲供求关系，导致市盈率长期处于高位，破坏证券市场优化资源配置的功能；高市盈率造成套利空间 — 造假上市的冲动；少数人的特权，腐败的温床；边缘化证监会监管的只能；
- 2007到2011年，全国土地出让收入中，征地和拆迁的比重占到41% — 靠征地推进城镇化的成本非常高；
Arthur Brooks: Republicans and their faulty moral arithmetic
- Arthur Brooks, president of the American Enterprise Institute and author of “The Road to Freedom”
- (YouGov.com polls) only 33% of Americans said that Mitt Romney “cares about people like me.”
- (NYU) Jonathan Haidt: “The Righteous Mind: Why Good People Are Divided by Politics and Religion” — citizens across the political spectrum place a great importance on taking care of those in need and avoiding harm to the weak;
- (the anti-poverty) achievement is not the result of philanthropy or foreign aid. It occurred because billions of souls have been able to pull themselves out of poverty thanks to global free trade, property rights, the rule of law and entrepreneurship.
- “Some say the solution for conservatives is either to redouble the attacks on big government per se, or give up and try to build a better welfare state. Neither path is correct.”
- “Instead, the answer is to make improving the lives of vulnerable people the primary focus of authentically conservative policies.”
- Only 19 percent of the 463 financial advisers surveyed by Aite Group said they found social media to be useful to their businesses. LinkedIn was up 10% since 2009 but Facebook and Twitter dropped 10% and 8%;
- LinkedIn: 9 out of 10 financial advisors who use social media use LinkedIn;
- Twitter: listening might be useful; follow the major journalists;
- LinkedIn found that 87 percent of investors use social media, but only 4 percent of them were interacting with advisers through a social media platform. Of the small percentage that did interact, 54 percent said they found value in doing so;
- “Twitter is where the news is made.”
- they will strictly enforce a capital-gains tax of 20% on profits from home sales.
- China Vanke, China’s largest developer by volume, was one of several property stocks to plunge the daily 10% trading limit Monday;
- a weaker property market will hit demand for everything from steel to furniture and a car to park in the garage. Commodity exporters like Australia and Brazil, which feed China’s steel mills, could also suffer.
Janet Yellen: Benefits of Fed policy outweigh risks
- Janet Yellen, vice chairwoman of the Fed board of governors
- Ms. Yellen emphasized that ending the Fed’s bond-buying programs prematurely carries its own risks and made clear that she supports keeping policy easy for the foreseeable future;
- (repeated the point Ben Bernanke made last week) Fed favors continuing its bond-buying programs “to keep monetary policy highly accommodative until well into the recovery;” (in pushing down long-term interest rate);
- other factors: household belt-tightening following the trauma of the 2008 financial crisis; slowdown in the global economy, particularly in Europe, has hurt global sales;
- Douglas Elmendorf, director of Cogressional Budget Office
- “Putting the debt on a sustainable path will ultimately require increases in taxes or cuts in government benefits or services for people who consider themselves to be in the middle class.”
- (the tax increases and the sequester) will reduce U.S. gross domestic product growth by 1.5 percentage point in 2013, the CBO estimates. The sequester alone will be about a 0.6-point drag;
- at the end of 2012, average priced app in Apple store is $3.18 for iPhone and $4.44 on iPad; $3.06 in Google play store, and $2.84 in Amazon app store;
- Apple app store and Google Play store represent 87% of the market;
- In general, Android device owners are less likely than iOS users to spend money on apps, including for downloads as well as in-app purchases — due in part to the greater availability of low-end Android smartphones and tablets, which tend to attract lower-income people compared with iPhone and iPad users.
- the South Korean company sells about 40% of the gadgets that use Google’s Android software;
- Samsung’s growing might—it shipped nearly 200 million more Android smartphones last year than the next-biggest Android-device maker—has boosted Google’s mobile-ad revenue;
- Google fears that Samsung will demand a greater share of the online-advertising revenue that Google generates from its Web-search engine;
- Google has said it wouldn’t show favoritism toward Motorola over other manufacturers;
- Samsung is spreading its bets by making devices powered by Microsoft Corp.’s Windows mobile software, as well as with Tizen, an operating system that is being co-developed by Samsung and microprocessor maker Intel Corp;
- Google has hopes for some new Android entrants such as H-P;
- focus on debt-to-GDP: between 1960s and the onset of crisis, federal debt averages less than 40% of GDP; replenishing this fiscal capacity will give future Congresses and Administrations greater scope to deal with unforeseen events.
- if 40% should be the long-run goal? “If we could bring it down from here some it would be helpful.”
- composite 20-city home price index, up 6.8% in December from a year earlier; 0.2% from the previous month amid winter season;
- 19 of the 20 cities posted annual increases in December. Just New York notched an annual decline;
- (Dan Greenhaus) Since most people have their wealth tied up in their home, rising home prices makes consumers more confident, more credit worthy and more willing to spend acquired income.