FAA gives Amazon clearance for drone delivery.
Monday, August 31, 2020
Sunday, August 30, 2020
Mick Mulvaney to Start Hedge Fund
Private Equity: Asset Class of the Decade With Room to Grow
Perhaps no industry has benefited more from 'lower for longer' than PE. Near zero interest rates are ideal for LBOs. And institutional investors desperate for higher returns have turned to PE as this FT article points out, which in turn draws from this MSIM tome.
Consider CalPers' required rate of return as representative of public pension funds (most of whom are similarly underfunded):
| Year | 30-Yr Tsys Yield | Required Return |
|---|---|---|
| 1981 | 15.0 | 6.5 |
| 1992 | 7.8 | 8.8 |
| 2021 | 1.2 | 7.0 |
Historically, PE has produced about 12% annual returns and outperformed US equities on average by 3% annually between 1980 and 2010, though returns have started to come down since 2006 as the industry has grown. Still, with US equities expected to generate 5%-6% annual returns over the 10 next years, PE looks very attractive by comparison. (Moreover, periodic and subjective marking of positions result in more smoothed returns than public equity. So, higher returns AND seemingly lower risk? Perfect!!)
The popularity of PE is evident in the industry's rapid growth. As McKinsey notes private markets AuM has grown by 170% and the number of funds has doubled in the last 10 years. And the SEC is now expanding retail investors' access to PE, potentially giving further boost to asset growth. All of which may pressure returns to the point PE sees the same return degradation as HFs. But as long as interest rates stay near zero it should all be fine for PE managers.
Saturday, August 29, 2020
Trump's Post-RNC Bounce
Early post-convention poll shows Biden lead slipping slightly from 52% (B):42% (T) to 50% (B):44% (T). Dems anxious, worried about hidden Trump support and election shenanigans.
Covid Vaccine Tracker: A Guide
There are 170 candidates, with 7 in large-scale Phase-3 trials. Governments and the pharmaceutical industry have moved with unprecedented speed and resources, but experts, including Dr. Fauci, warn of the dangers of rushing the process.
Being Lionel Messi
Friday, August 28, 2020
TV Ratings: DNC Beats RNC
RNCs from Reagan to Trump
Thursday, August 27, 2020
Wednesday, August 26, 2020
WFM: Changes Coming to Wall St?
JP Morgan is says bankers could be working from home, at least half the time, permanently. Goldman has been encouraging work-life balance for a while. These two firms could set the trend for the entire sector.
Monday, August 24, 2020
The RNC: All Trump All the Time
Sunday, August 23, 2020
Bayern Champions of Europe for 6th Time!
Politics Sunday Round-up
Recapping key moments from DNC Day 4. Biden promises no new taxes on the middle class and small businesses. Continues to lead in all major polls.
More Trump family drama. Barr asked Murdoch to sideline Fox legal analyst Napolitano for knocking Trump? And 57% of Republicans okay with US Covid-19 death toll (~$180k) vs just 10% of Democrats and 33% of Independents.
Saturday, August 22, 2020
A $2.5B Surprise!
Friday, August 21, 2020
DNC Day 4: Biden's Big Night
Joe Biden had a very good night with a stirring speech filled with hope and compassion. Even FOX News agrees! The DNC's final night had a lot of great segments that pointed to the Biden's decency and his ability to connect with ordinary people, including a truly inspiring moment from Brayden Harrington. It was big night with 25M people tuning in. Also 'Veep" Julia was on brand.
Krugman: Privatization is NOT Always the Answer
Krugman in good form highlighting conservatives' obsession with privatization and how it can sometimes lead to very bad outcomes. Also gives links to two great articles: (a) Economist Philippon's assertion that our free market is not that free and (b) a blast from the past: the cautionary tale of how retailer Montgomery Ward (with a cash hoard of $600M in the '50s!) went bankrupt predicting another Great Depression.
Thursday, August 20, 2020
UBI: Coming Soon to Europe?
DNC Day 3: Fight Night
Monday, August 17, 2020
Sunday, August 16, 2020
Relationship Status: It's Complicated
Joe Biden and Barack Obama appear to be somewhere between BFF and frenemies. Regardless, why is the Obama camp dishing to Politico now? At least Obama appears enthusiastic about Harris. Early, but she's already delivering for Biden.
Fascinating: Sitting Confuses Cellular Sensors into Thinking We are Lighter than We Are, Prompting the Body to Put on Weight
Years from now longitudinal studies will reveal exactly how bad desk jobs and Netflix were for our health. This study suggests that sitting for long hours can fool our bodies into thinking they weigh less than they do and disrupt the body's homeostatic reaction, since chairs support a portion of someone’s weight. Researchers found that when study participants wore weighted garments they shed a similar amount of weight. However, the impact of homeostasis was less impressive after controlling for the incremental burning of calories from moving around with the increased mass. Still, very interesting...maybe time to start sleeping with a weighted blanket.
Dalio on the Debt Cycle
Ray says monetization of debt needed to stave off deflation and a depression...but will eventually lead to inflation (hmm...what if we are Japan?). Depreciation of USD, good for stocks though. Video
Goldman Predicts 6% Equity Returns Over Next Decade
Pandemic, recessions, Fed-driven bubbles, inflation, deflation? Goldman Sachs is not really worried...expects S&P 500 to return 6%--the historical average. Video
Delicate Balance Between Health and Education
School re-openings are running into trouble in many states...as it becomes a new flash point in the ongoing culture wars. The CDC's head murmured something about the need for caution, but Redfield has little credibility left. The Times has a good interactive map of which places meet guidelines for reopening, but it's all very hard, even in safer places. That said, pediatricians stress the need to consider the development and emotional needs of kids. And Republicans warn us not to forget the economy.
Saturday, August 15, 2020
The Economic Benefits of Herd Immunity? Maybe Not So Much
Paul Krugman tweets the latest data from Europe
Howard Marks' Latest Memo Reviews the Market's Amazing Recovery and Asks if the Fed Can Keep it Going? (Ans: Maybe)
Bayern 8, Barca 2. The End.
Bayern Munich was the favorite coming in...but no one expected this result! Rory Smith at the NYT dissects the rot at Barcelona
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