Thursday, November 30, 2017

Articles of interest

Auto lending
The Wall Street Journal reports that used-car prices have been resilient in 2017 despite a sharp increase in expiring leases.


China
Brad Setser critiques the popular argument that China's credit growth is losing its stimulative power.

The Wall Street Journal describes how HNA Group's international acquisition binge has faltered, writing that "Instead of targeting profitable companies, HNA sought assets with considerable revenues that would hasten its rise up the Fortune 500."

According to Dow Jones Newswires, Chinese house buyers are using consumer loans to get around restrictions on real-estate lending, with one researcher estimating that "at least one third of short-term consumer loans issued since March have gone toward property purchases."

Caixin Global speculates that Chinese microloans' risk of default is higher than it appears, noting that many borrowers are in the habit of repaying debts to one lender by borrowing from another.


Commodities
Reuters reports that a Chinese coal miner has amassed a $3bn long position in copper futures, presumably contributing to the metal's year-to-date price rise.


Crypto-currencies
Alpha Vulture argues that Bitcoin is overhyped and describes some of its inherent flaws.

Cole Frank of the Council on Foreign Relations states that while Chinese capital outflows might have contributed to Bitcoin's rising price in 2015-16, that has not been the case this year.


Emerging markets
Miguel Kiguel, a former Argentine government official, writes about the aftermath of Argentina's 2001 debt default.

Al-Monitor reports that many of Turkey's large infrastructure projects are earning poor economic returns.

In a two-part interview (part one and part two) Porter Erisman discusses his new book Six Billion Shoppers, offering his thoughts on how e-commerce has developed in emerging markets and how and why it differs from e-commerce in developed countries.


Incentives
Ockham's Notebook writes about Goodhart's Law and how it contributed to problems at American Realty Capital/VEREIT.


Investing strategy
The Wall Street Journal interviews Joel Tillinghast about his investing principles.

Giles Parkinson of Aviva offers some potential explanations for why American stocks have outperformed their foreign counterparts over the past thirty years.


Media
Vanity Fair reports that Amazon "is poised to spend around $4.5 billion on their video streaming this year... only $1.5 billion less than Netflix’s $6 billion budget for their 2017 content."

Similarly, Variety reports that the cost of producing streaming video programs has surged as an increasing number of deep-pocketed companies produce an increasing amount of streaming content.


Oil
John-Paul Burke of Horseman Capital argues that OPEC's actions are responsible for oil going into backwardation and that this will constrain shale production growth.


Retailing
IHL Group argues that news reports of a "retail apocalypse" overstate the problems retailers face.


Short selling
Russell Clark of Horseman Capital describes his short-selling strategy in a public presentation. I consider this a must-read because Clark's strategy is radically different from the ones that most short sellers use.


Valuation
Crescat Capital's latest investor letter includes a lot of sobering statistics about the stock market's valuation.

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