My Posts (11-17 August, 2024)

"How to Stay Sane When Markets Get Wild" is a good reminder when the market gets rough. FX can have an impact on investment returns, the two charts from The Daily Shot was a good example. ?"Late cycle financial innovation: Are private credit funds the new MBS CDOs?" was a great article on CDOs, highly recommended.

I came across 4 articles. all long and interesting, on African nations; #djibouti, #Morocco, #mauritania, and #ethiopia. The article by dieSPIEGEL on Mauritania was very interesting.

From Japan, there were a few articles more on the cultural front; games, anime, climbing Mt. Fuji and an old method to make cast iron cookware.

Last but not least, the last article on this list is an insightful analysis on the magazine industry.

Wishing you a wonderful week ahead. ?

Investment

Equity Markets

How to Stay Sane When Markets Get Wild (WSJ): "[T]he more implausible an event feels, the more the human mind seems to crave a plausible explanation for it.

What’s the harm in that? A believable story might lead you to think you know exactly what’s coming next and to trade on that belief, when it’s probably nothing but a delusion. Or a compelling narrative might prompt you to believe the teller saw the whole thing coming, when that wasn’t the case."

Wall Street’s Trash Contains Buried Treasure (WSJ): A "fallen angel" concept ("fallen angels" are bonds that are downgraded to high yield from investment grade) for stocks. Intuitively, I think it makes sense.

Two reasons to be bullish Japanese equities (Yardeni Research): ?

Cumulative purchase via NISA (Nikkei Asia): The recent Japanese stock market rally was attributed to the new "Nippon Individual Savings Account (NISA)” with expanded benefits and foreign investors. Household cash and savings in Japan is around USD 7 trillion. Investing via NISA is slowly but steadily amassing.

Indian Stock Market (Yardeni Research): ?3 Charts.

DM Market Move in USD and Local Currency (The Daily Shot): Nikkei was down last week in JPY terms. MSCI Japan was up in USD terms. Currency had impact.

Fixed Income/ Debt

The Price of Time (Amazon): Interest, like price, communicates an important information to the market participants. When it is suppressed for political reasons, the market gets distorted and bubbles are created and they eventually bursts. Chapter 18 is about current day China. It was written a few years ago but provides a good background on what is happening there today.

Late cycle financial innovation: Are private credit funds the new MBS CDOs? (Synthetic Assets): “These then are my questions: Are the LPs being set up to be the bagholders in a private equity downcycle? Have they been paying attention? Do they understand how the risks of their ‘equity’ investments are being concentrated by fund borrowing? Do they understand that private credit funds may end up behaving like MBS CDOs – just like the senior creditors in the underlying MBS were the only ones who were not wiped out, it may be that only the senior creditors in the underlying portfolio companies will be left with a valuable claim?”

Global Debt Hits A New High Of $315 Trillion (Zero Hedge): “In America, hashtag#debt servicing costs are now more than hashtag#defense spending, and the interest bill is set to rise further.” Debt servicing costs is peaceful, but what about defense spending…? Maybe a better way to spend money?

Africa

How Djibouti became region's internet hub (The East African): “A new World Bank report cites a study by the International Telecommunication Union (ITU) that shows Djibouti had the highest internet connectivity in the region at the end of last year, with 69 percent of the population online.”

Water Highways: A Blueprint For Morocco’s Water Security (Eurasia Review): “The project was preceded by extensive technical studies to ensure that only excess water—resources that would otherwise be lost to the sea—was transferred from Sebou to Bouregreg. This careful consideration was necessary to avoid the hashtag#ecological pitfalls often associated with such large-scale interventions. The average annual volume of water lost to the sea after all uses is nearly 800 million cubic meters.”

Mauritania's Secret to Stability (Die Spiegel):Long and interesting article on Mauritania. It meshes an on the ground reporting, a birds view and historical background.

Why Ethiopia Ended Half a Century of Currency Control (Bloomberg): “The decision (to liberalize the Ethiopian Birr), which followed similar moves by Egypt and Nigeria, allowed the Horn of Africa nation to clinch $3.4 billion from the International Monetary Fund and a further $16.6 billion from The World Bank. It also opened the door to talks with creditors on restructuring at least half of its $28.9 billion in external debt.”

Japan?(other than investing)

Super Mario Is Winning the Console Wars (WSJ): An analysis on Nintendo by The Wall Street Journal. The successor of Switch is expected early next year.

Japan's anime exports poised to match chips and steel (Nikkei Asia): I think the ecosystem of anime in Japan is pretty close to the VC ecosystem in Silicon Valley. With the specific know how, supporting companies and talent, it is a strength for Japan. Like IT startups, there’s lots of manga artists with creative ideas behind the scenes.

How to climb Mount Fuji (FT): "The trek, which is on average around 14km (depending on the trail), is surprisingly manageable, though it takes about five to seven hours to reach the summit and three to four hours for the descent. There are a few steep, challenging sections, but nothing that will prevent the average healthy person from getting to the top."

172-year-old Japanese factory preserves traditional way of making cast iron cookware (AP): “The fifth president of the family-owned company, founded in 1852 in Iwate prefecture near the iron-rich Kitakami Mountains in northeastern Japan, decided to bring back the tegome method after talking to a retired craftsman who still knew how to do it. The area is famous for cast iron products, with its techniques believed to have been introduced over 900 years ago.”

Official website: https://lnkd.in/gSARbqqi

China

Chinese Infrastructure REITs (NLI Research Institute): NLI Research Institute, an affiliate of Nippon Life, issued a summary on Chinese infrastructure reits. The Chinese government is expanding assets that can be included in REITs, such as hotels, homes, offices and elderly care. They are also relaxing operational rules.

German investment in China soars despite Berlin’s diversification drive (FT): Do the companies have no option but to reinvest half of the profits?

Food (and Wine)?

FAO Food Price Index (FAO): Food price, according to FAO hasn't changed much on a real price basis. In spite of the increase in global population, it appears that production has matched. Although there are occasional spikes, overall, the long-term price is stable. Isn't this an achievement?

Australia’s wine sector suffers as drinkers shun lower-end brands (FT): The fact that there are buyers of wineries means that the buyers see value.

Science and Technology

Inside Scientists’ Quest to Find the Secrets of Life in Four Grams of Asteroid Dust (Smithsonian Magazine): This implies that, contrary to what we are taught, the origin of life was not based solely on things happening on this planet. Very interesting.

Solar panels over highways could significantly cut emissions and boost road safety (Solar Daily): Sounds like a good idea.

Which College Won the Olympics? (WSJ): Stanford University's students and alumni won 39 Olympic medals in Paris. That is as high as Italy's 40 and Japan's 45. Mostly coming from the swimming team.

Miscellaneous

The low-tax countries wooing the world’s wealthy (FT): "'Historically people would stay in their own country and stash their money abroad in tax havens,' says Pascal Saint-Amans, a former head of tax at the OECD - OCDE. 'But the end of banking secrecy and the increase in the exchange of information?... has meant if you don’t want to be taxed in a country, you leave the country.'"

The Death of the Magazine (The Honest Broker): Honest article on magazine journalism.