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International economic week in review for Sept. 28-Oct.2; Japan flashing yellow, edition
Capital Markets
<p>For the fourth consecutive week, a major institution issued a negative report regarding global growth.This time it was the IMF, who, in a report titled, “Rise in Emerging Market Corporate Debt Driven by Global Factors,” noted the large build-up in emerging market debt may careen out of control as EM currencies decline and trade slows. Nonfinancial company debt in emerging economies increased from $4 trillion to $18 trillion between 2004 and 2014. Chinese raw material demand, low interest rates in developed countries and rising commodity prices spurred the trend. But as all three trends reverse course, companies that issued the debt face a potential triple whammy of declining home country currency values, declining revenue and increasing developed market interest rates negatively impacting their respective balance sheets. It’s possible this situation has started as some sovereign EM debt is already trading at higher levels seen in 2013’s “taper tantrum”.<br /> In a recent speech, Bank of Japan Governor Kuroda offered the following positive view of the Japanese economy:<br /> Japan's economy has continued to recover moderately with a virtuous cycle from income to spending operating in both the corporate and household sectors, although exports and production are affected by the slowdown in emerging economies. That is, in the corporate sector, profits have marked a record high and firms' fixed investment stance has been positive. In the household sector, wages have been growing -- as seen in the rise in base pay for two consecutive years in a situation where the unemployment rate has declined to the level that can be regarded as almost corresponding to "full employment" -- and private consumption has been resilient.<br /> His analysis is more hopeful than current statistics warrant. Governor Kuroda’s optimism is based on the Tankan survey:</p> <p>While these readings are positive, they are prospective, not commitment of funds. In fact, machinery orders are down in the 1H15:</p> <p>And although corporate profits are high, actual investment is not as strong as indicated:</p> <p>In the latest reading, large and medium/small non-manufacturers saw capital investment decreases of -3.1% and -5% respectively. The respective numbers for large and medium/small manufactures were -2.5% and +5.4%. And both data sets are far below pre-recession levels. As for consumers, although wages increased in the latest quarterly reading, consumption expenditures sharply decreased in the 2Q15:</p> <p>And the Governor’s statements stand in stark contrast to those of Etsuro Honda, a top aide to Prime Minister Abe, who stated Japan needed additional fiscal stimulus to insulate the country from China’s slowdown. This statement</p>
David Einhorn Greenlight historical investment returns
Hedge Funds
<p>&nbsp;</p> <p>David Einhorn Greenlight historical investment returns - rough yr - more on that topic here</p> <p>This story originally appeared in ValueWalk.<br /> Photo: Insider Monkey</p>
A fee war could be brewing for A-Shares ETFs
Asset Management
<p>Alright, let's not get too carried away, but one issuer did lower the annual expense ratio on its U.S.-listed China A-shares exchange traded fund. On Thursday, the CSOP FTSE China A50 ETF AFTY 2.6% saw its expense ratio chopped to 0.7 percent per year from 0.99 percent.</p> <p>Translation: Investors planning on making the CSOP FTSE China A50 ETF a long-term holding will now pay $70 for every $10,000 invested per year, down from $99 a year per $10,000 invested. Hong Kong-based CSOP Asset Management, AFTY's issuer, is the largest renminbi qualified institutional investor (RQFII) in the world.</p> <p>The fee cut for AFTY makes the ETF less expensive than the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF ASHR 2.49%, the largest U.S.-listed A-shares, by 10 basis points per year. ASHR is home to nearly $400 million in assets under management.</p> <p>Read more at Benzinga, here.<br /> Photo: U.S. Department of Defense Current Photos<br /> &nbsp;</p>
Bonus idea #8: Charter Rupert Murdoch’s yacht
Lifestyle, 4:01
<p>Expecting a fat paycheck this bonus season? Great, here’s one way to spend it.</p> <p>Reportedly owned by the real world’s answer to Bond villains – Rupert Murdoch – the magnificent, 67.2 meter sailing yacht Vertigo is currently available for charter at Y.Co.</p> <p>It boasts sleek, “loft-like” interiors designed by Wendy Deng’s favorite designer, Christian Liaigre, and has enough room for 12 guests looking for a bit of fun on the high seas.</p> <p>On deck, the yacht has a gym, an open-air cinema, a 10-person Jacuzzi with retractable sun pads, and a long list of toys fit enough for your typical multi-billionaire media mogul.</p> <p>It also comes with a crew of 11, all aching to cater to your every whim. Check it out:</p> <p>Prices start at €225,000 a week for summer cruises in the Mediterranean, and according to this website, €225,000 a week for winter sailing along Asia.<br /> Photo: Yacht Rent</p>
NexAsia Week Ahead: Fed minutes; BOJ rates coming up
Capital Markets
<p>(Note: all times HKT)<br /> Good morning everyone. Earnings season kicks off in the U.S. this week, giving investors a quick respite from the constant Fed watching that prevailed the past few weeks. I should emphasize quick though, since the FOMC minutes is set to come out on Friday, and traders are probably itching to dissect that thing for any insights of an upcoming rate hike. The RBA, the BOJ, and BOE meanwhile are all scheduled to reveal their respective interest rate decisions. While they’re all likely to keep rates unchanged, the Bank of Japan’s concurrent easing decision should be of particular note given that deflation reared its ugly, chud-like head again. Here’s what else you should look out for:</p> <p>Monday:</p> <p>6:30 am – Australia September AIG Services Index – Forecast: 53.31 from 55.6</p> <p>9:35 am – Japan September Nikkei Services PMI – Forecast: 51.99 from 53.7</p> <p>3:00 pm – Turkey September YoY inflation rate – Forecast: 7.9% from 7.14%</p> <p>4:30 pm – U.K. September CIPS Services PMI – Forecast: 55.31 from 55.6</p> <p>10:00 pm – U.S. September ISM Non-manufacturing PMI – Forecast: 58 from 59</p> <p>Tuesday:</p> <p>8:30 am – Australia August balance of trade</p> <p>10:30 am – Hong Kong September Nikkei Manufacturing PMI – Forecast: 49.52 from 44.4</p> <p>11:30 am – Reserve Bank of Australia interest rate decision – Forecast: unchanged at 2%</p> <p>1:00 pm – India September Nikkei Services PMI – Forecast: 50.82 from 51.8</p> <p>2:00 pm – Germany August MoM factory orders – Forecast: 0.7% from -1.4%</p> <p>8:30 pm – Canada August balance of trade</p> <p>8:30 pm – U.S. August balance of trade</p> <p>Wednesday:</p> <p>1:00 am – ECB president Mario Draghi speaks</p> <p>11:30 am – Bank of Japan interest rate decision – Forecast: unchanged at 0%</p> <p>2:00 pm – Germany August YoY industrial production – Forecast: 1.02% from 0.5%</p> <p>4:30 pm – U.K. August YoY manufacturing production – Forecast: -0.18% from -0.5%</p> <p>4:30 pm – U.K. August MoM manufacturing production – Forecast: 0.2% from -0.8%</p> <p>8:00 pm – Brazil September YoY inflation rate – Forecast: 9.57% from 9.53%</p> <p>8:30 pm – Canada August MoM building permits – Forecast: -0.2% from -0.6%</p> <p>Thursday:</p> <p>7:50 am – Japan September MoM machinery orders – Forecast: -0.38% from -3.6%</p> <p>7:50 am – Japan August current account</p> <p>1:45 pm – Switzerland September unemployment rate – Forecast: 3.3% from 3.2%</p> <p>2:00 pm – Germany balance of trade</p> <p>7:00 pm – Bank of England interest rate decision – Forecast: unchanged at 0.5%</p> <p>7:00 pm – Bank of England MPC minutes</p> <p>8:30 pm – U.S. Oct/3 initial jobless claims – Forecast: 273L from 277K</p> <p>9:30 pm – St. Louis Fed president James Bullard speaks</p> <p>Friday:</p> <p>2:00 am – FOMC minutes</p> <p>3:30 am – San Francisco Fed president John Williams speaks</p> <p>8:30 am – Australia August MoM home loans</p> <p>4:30 pm – U.K. August balance of trade</p> <p>4:30 pm – U.K. August YoY construction output – Forecast: 2.05% from-0.7%</p> <p>8:30 pm – Canada September unemployment rate – Forecast: 6.9% from 7%</p> <p>8:30 pm – Canada September employment change – Forecast: 20K from 12K</p> <p>Saturday:</p> <p>9:00 am – China September new yuan loans<br /> Photo: Moyan Brenn</p>
Learn from those who brew beer how to be a better financial advisor
FinTech
<p>Wherever large enclaves of European immigrants settled in America, it would not take long for a handful of breweries to open for business in the local community. These breweries distributed their fermented concoctions to the local taverns and clubs within close proximity to where the beer was produced. Unlike the Internet companies of today, brewing beer for most of the 19th century was not a scalable business model. Unpasteurized beer with active yeast has to be consumed within a short period of time after the fermentation process is completed. Otherwise, these liquid bread products become moldy and give off a rank odor.  Nobody likes to drink stinky beer pumped out of vintage kegs that have been stored for who knows how long.</p> <p>After a large wave of German immigrants settled into Saint Louis in the mid-1800s, brewing beer became a major local industry. Determined to expand his distribution base outside of the local community, Adolphus Busch in the 1870s incorporated several technological innovations at his Saint Louis brewing plant. Busch was the first American brewer to pasteurize beer, which enabled the suds to have a longer shelf life than did most of the local fare consumed within a short distance around the Saint Louis area. Busch also introduced refrigerated rail car technology. Temperature-controlled rail cars enabled beer to be transported over longer distances without sacrificing a significant loss in quality upon arriving at its final destination. Both the pasteurization and refrigeration technologies enabled Budweiser to grow into a national beer brand, giving Anheuser-Busch the right to call itself the “King of Beers.”</p> <p>These disruptive technologies in the beer making industry would seem to be a force majeure for the smaller craft breweries forced to compete against it. It is counterintuitive to imagine a rinky-dink microbrewery remaining in business against a fermented tide of technological brewing innovation located wherever beer is produced in large quantities. Despite the increased efficiencies of a national brewery due to its economies of scale, microbreweries are opening at a faster rate than ever. Creative Biermeisters are experimenting with different flavors and hops, selling their fermented creations to evermore hipster patrons eager to escape the bland, watered-down alcohol products sold by evil multinational corporations. Fancy refrigeration and pasteurization technologies be damned. Brewing large quantities of beer in oversized Lauder Tubs and shipping the swill cross-country from a centralized location isn’t going to cut it for this finicky subset of hop-heads who frequent their local microbrew joint.</p> <p>In the Internet era, where scalable business models disrupt entire industries, the gurus experimenting with different fermented potions in the dungeons of their local brewpubs have found a way to not only compete against but also thrive in the midst of scalable technology. These smaller establishments have found a niche, avoiding being tapped-out even if drones in the future can drop sanitized kegs of cheap corporate beer on the back porch of a college frat house at breakneck prices.</p> <p>Those in the investment advisory business can learn a thing or two from these small microbrewers. With robo-advisors gaining a foothold in the investment advisory space, embracing a niche form of investing may be one route that financial advisors can embrace in order to compete against cloud-based scalable Internet technology. In a previous blog, I wrote about the challenges that a robo-advisor faces in an expensive stock market (see Benjamin Graham’s Value Investing versus the Robo-Advisor). One way in which a human f</p>
A visual breakdown of VC activity in 3Q 2015
Venture Capital
<p>Venture capital invested globally increased for a second straight quarter, from $25.6 billion in 1Q to $30.1 billion in 3Q, while deal count fell for a second straight quarter, including a major drop from 2Q to 3Q (down 24%). Exit activity also continues to decline. Quarter-over-quarter, completed exits slipped by 22% in 3Q, while capital exited dropped by 37%. Valuations, of course, are flying high; but not just at the late stage. The median Series B valuation in 3Q—$58.6 million—jumped 65% from the same quarter last year. For a breakdown of global VC activity in 3Q, check out the datagraphic below.</p> <p>&nbsp;</p> <p>This article was originally published by ValueWalk. <br /> Photo: frankieleon <br /> &nbsp;</p>
These are the greatest tips Paul Tudor Jones can give
Lifestyle, 4:01
<p>These are the greatest tips Paul Tudor Jones can give.</p> <p>This was originally published by ValueWalk. </p>
Video: Warren Buffett on philanthropy
Lifestyle, 4:01
<p>Warren Buffett, despite dedicating most of his adult life to compounding his wealth, is absolutely no stranger to philanthropy. In June alone, the man donated $2.8 billion worth of Berkshire Hathaway shares to the Bill and Melinda Gates Foundation and to four other family charities – that’s more than what Bill Ackman’s worth at the moment.</p> <p>Here he is talking to the Financial Times about The Giving Pledge – the campaign he and Bill Gates launched in 2010 – and the act of giving itself. He apparently wants Silicon Valley’s young billionaires to join him and Gates in their crusade, though he does have some reservations:<br /> “When I wound up my partnership in 1970, I had $25m and if I’d given away a large portion of that then there would be far less to give now.”</p> <p>Photo: Fortune Live Media</p>
What we’re reading: Silvio, the Fed, and a woman screaming 'bear don’t eat my kayak'
Capital Markets
<p>From Silvio and Vladi sitting in a tree, to Bronte Capital’s views on Sun Edison, here are some great reads for you this weekend.</p> <p>Silvio Berlusconi and Vladimir Putin: the odd couple. A great look into the relationship between the fallen Italian president and his powerful Russian counterpart. Is it all business, or do they actually share something more? Financial Times</p> <p>Should U.S. monetary policy have a ternary mandate? Joe Peek, Geoffrey M.B. Tootell, and Boston Fed president Eric Rosengren apparently set out to examine “the role of financial instability concerns in setting monetary policy.” They did this by identifying buzzwords “related to financial instability appearing in FOMC meeting transcripts” and used their word counts to see how they impacted Fed policy. The results are astounding. Boston Fed (pdf)</p> <p>Lagarde-ian of the Galaxy. Guardians of the Galaxy reference aside, here’s a great interview with the IMF’s Christine Lagarde, where she shares her thoughts on Greece, the refugee crisis, and noisy Americans. Huffington Post</p> <p>Sun Edison - some comments and a way forward. Sun Edison’s recent fall took down more than few a big-named fund managers with it. Here’s John Hempton on why he took a long position on it. Bronte Capital</p> <p>Watch woman yell “bear don’t eat my kayak” as bear eats kayak. A riveting tale featuring a kayak, a bear, and a woman who pepper sprays it in the face. The Verge<br /> Photo: European People's Party</p>