According to Gabriel Wildau writing for the FT, one Chinese debt analyst believes China's debt could be much higher than the government is reporting. Charlene Chu tells Wildau that the amount of bad debt in China could be $6.8 trillion more than the official figures. Wildau writes: “Everyone knows there’s a credit problem in China, but I find that people often forget about the scale. It’s important in global terms,” Ms Chu said in an interview by phone from New York. Ms Chu left Fitch in 2014 to help launch the Asia operation for Autonomous Research, which specialises in analysis of … [Read more...]
Archives for August 2017
Are State-Run Savings Plans a Good Idea?
Of course this sounds like a great idea, because saving early and often is the best way to secure a comfortable retirement. However, there are some drawbacks to a savings system with the government so closely involved. Anne Tergesen writes at The Wall Street Journal: Opponents—including some company owners, a trade group for small businesses and the main mutual-fund trade association—have lined up against the state initiatives. They argue that state-run programs may encourage companies to scrap 401(k) plans. They also say that lower-income workers who participate may wind up in worse … [Read more...]
Despite Retailer Slaughter, Sales Strong
Despite a year or retailers suffering or going bankrupt, consumers came out strong in July. Retail sales increased by 0.6% in the month. The takeaway is that Americans are feeling better about spending, but they're choosier about where they do it. At the Wall Street Journal, Josh Mitchell and Sarah Chaney write that internet sales drove the increase. Sales over the internet drove last month’s increase, with spending at nonstore retailers growing 1.3%, the most since December. One big factor: Amazon’s Prime Day, a popular day of discounts at the site. Other retailers also posted strong … [Read more...]
iHollywood: Are You Ready for Apple Shows?
Apple is gearing up to produce or acquire its own video content. The company is looking for around ten TV shows to finance. The $1 billion effort might seem small compared to the scale of Apple's market cap of over $830 billion, but the effort could have a big effect on competitors like Netflix, Amazon and HBO. The market for internet delivered original video content is still young, and a big new entrant like Apple could upend its balance. Tripp Mickle explains the effort by Apple, writing: The budget will be in the hands of Hollywood veterans Jamie Erlicht and Zack Van Amburg,poached … [Read more...]
How Will the World Handle Such Unprecedented Central Bank Balance Sheets?
Central banks around the world have employed untested emergency bond buying operations in an attempt to stabilize their markets or to encourage growth. Now those chickens are coming home to roost. The FT reports that leading central banks own a full fifth of their governments' debt. The six most active central banks, the Fed, the BOJ, the ECB, the BOE and the Swiss and Swedish central banks collectively own over $15 trillion in assets. Kate Allen and Keith Fray report: Of this, more than $9tn is government bonds — one dollar in every five of the $46tn total outstanding debt owed by their … [Read more...]
Can United Technologies Expand its Most Profitable Business?
United Technologies, the Connecticut based conglomerate that build elevators, jet engines, and HVAC systems, is attempting to purchase Rockwell Collins. Based in Iowa, Rockwell Collins an aerospace supplier producing cutting edge technologies like the F-35's new Gen III Helmet Mounted Display System (seen in the picture nearby) that would be a great bolt-on business addition to United Technologies' aerospace segment, its most profitable business. Dana Mattioli and Joann S. Lublin report for the Wall Street Journal: Rockwell specializes in cockpit displays and communications systems for … [Read more...]
Are Apple and Facebook Stock Finally Losing Their Luster?
For years now hedge funds, institutions, and retail investors have been loading up the shares of a very small sliver of the stock market. The shares I'm referring to are the so-called FAANG stocks, and others like them. FAANG stands for Facebook, Apple, Amazon, Netflix and Google (now known as Alphabet). As the valuations of these stocks have pushed their company market shares ever higher, they have become a disproportionately large slice of the various indices they are included in. (Read more here and here). But now it appears that some hedge funds have tired of buying the FAANGs and … [Read more...]
Is Active Management Finally Set to Outperform?
After what seems like every retail investor--including Warren Buffett's wife--has bought in to the index investing mania, it appears the tide may be turning once again in favor of active management. Attracta Mooney writes for the Financial Times: Assets managed in passive mutual funds grew 4.5 times faster than active in 2016 to reach $6.7tn, according to figures from Morningstar, the data provider. On the back of this rapid growth, Moody’s, the rating agency, predicted in February that passive would overtake active management by 2024 in the US at the latest, controlling half the market, … [Read more...]
Can You Pick the Massive Energy Winners and Losers?
Electric vehicles are poised to take over the roads as regulatory, innovation, and cost hurdles are surmounted. Here The Economist explains the prospects for electric vehicles. The shift from fuel and pistons to batteries and electric motors is unlikely to take that long. The first death rattles of the internal combustion engine are already reverberating around the world Roughly 85% of American workers commute by car. There are now about 1bn cars on the road, almost all powered by fossil fuels. But electrification has thrown the car industry into turmoil. Its best brands are founded … [Read more...]
Bond Market Warning Signs
Will last week's $1.8 billion financing of Tesla, a company with no profits, mark the pinnacle of this debt bubble? It's possible. But whether or not this is the peak, it's becoming harder to argue with the evidence of an unstable market in American securities. Bloomberg reports: “That Tesla could come to the market at a little over 5 percent yield for a low-single B rated company, is something of a sign of exuberance,” said Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle, with about $467 billion under management. “Elon Musk is a pretty cool guy but they haven’t figured … [Read more...]