1. ABRAHAM GULKOWITZ
abe@gulkowitz.com
917-402-9039
2017 issue 15August 15, 2017
Deviations, Standard
After aa amazing run in the markets, an expected languid start to August has been rattled by an escalating spat between North Korea and
the U.S. and several key allies in Asia. It has triggered some give back in market volatility. Small caps have had a bad week. US junk-rated
corporate bonds also suffered their deepest sell-off in months at the end of last week, as the risk premium investors demand to hold sub-
investment grade debt increased. Obviously the usual backdrop of thinner summer liquidity and the great run in markets till now could still
intensify any rise in volatility and selling across markets. Over the years, markets have tended to shrug off geo-political flare ups and have
proved much more vulnerable to economic and financial risks. Questions regarding the forthcoming economic trajectory, regulatory reform,
corporate results, Fed policy normalization, and the direction of oil prices will likely be more dominant in setting the tone in markets.
Japan labor shortage hits new extreme
Permanent job vacancies outnumber applicants for
first time on record
Rental vacancies rose over the past
couple of quarters, as the new supply of
multifamily housing (especially high-end
apartments) hits the market.
Credit-card losses are rising as more US consumers
fall behind on their bills, ending a six-year long
streak of declining write-offs for card issuers.
US Dollar eyes worst first 7-month start in 31 years
We are too complacent, central bankers warn markets
GM reported that July auto sales crashed by a
whopping 15%, and with GM mothballing
production across the country to catch up with
lagging demand, it still sold only 226,107 vehicles
as a result of double digits drops in several key
lines…
Some Insurers Seek ACA Premium
Increases of 30% and Higher
Companies say they are struggling to
make decisions as Congress and
White House wrangle over health care
Venezuela's money, the bolivar, is sinking faster and faster under an intensifying political and economic
crisis that has left citizens destitute and increasingly desperate. On one day recently, the bolivar slumped
nearly 15 percent on the black market, to be worth 19,000 to one US dollar. The currency is off more than
100% in a year.
U. S. Households’ Exposure to Stocks
Highest Since the Dot-Com Bubble
US automakers are under pressure again
The US retail sector credit situation continues to deteriorate
The Index of Small Business Optimism rose 1.6 points to 105.2, preserving
the surge in optimism that started the day after the election.
Oil prices hit 11-week high as
Opec raises demand forecast
Once you shower with entitlements
You cannot easily take it away…
No, we’re not talking about Obama healthcare
But easy Fed Policy…
Glo bal co n tainer vo lu m e gain
fo recast at fastest clip in six years
Rising demand and improving economies are
driving up world container throughput.
2. The PunchLine...
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August 15, 2017
In This Issue
Headlines and data appearing in The Punch Line came from widely available publications including
national and international newspapers, trade journals, economic and industrial bulletins and news websites.
• Alternative Facts (pg 6)
• Select U.S. Signals… (pg 7)
• Select U.S. Job Data… (pg 8)
• Households… (pg 9)
• Households… (pg 10)
• Dislocation, Dislocation (pg 11)
• The Future Ain’t … (pg 12)
• The Likelihood of Unlikely Events... (pg 13)
• The Market Roar (pg 14)
• Credit (pg 15)
• The DNA of Business… (pg 16)
• Real Estate and Construction… (pg 17)
• Other Real Estate and … (pg 18)
• Will Life Ever be the Same? (pg 19)
• Deviations, Standard…
After aa amazing run in the markets, an expected languid start to August has
been rattled by an escalating spat between North Korea and the U.S. and
several key allies in Asia. It has triggered some give back in market volatility.
Small caps have had a bad week. US junk-rated corporate bonds also
suffered their deepest sell-off in months at the end of last week, as the risk
premium investors demand to hold sub-investment grade debt increased.
Obviously the usual backdrop of thinner summer liquidity and the great run
in markets till now could still intensify any rise in volatility and selling across
markets. Over the years, markets have tended to shrug off geo-political flare
ups and have proved much more vulnerable to economic and financial risk.
Questions regarding the forthcoming economic trajectory, regulatory reform,
corporate results, Fed policy normalization, and the direction of oil prices will
likely be more dominant in setting the tone in markets. (pg 1)
• In This Issue (pg 2)
• Data Insights (pg 3)
• You Can’t Handle the Truth ! (pg 4)
• Engines of Growth
Despite a run of global statistics offering relief, confusing stress signals are
still emanating from around the globe . Uncertainties -- particularly from
terror and geopolitical concerns here and abroad, Brexit, dangerous issues
regarding N Korea, China, Iran and others - - continue to confound investors
and contribute to intermittent bouts of volatility. Despite extensive and
massive easing, most of the global economy still faces woefully inadequate
growth prospects and difficult policy options. The U.S. stands alone in its
ability to breakout of its growth doldrums, if only it can move forward on
reform… But let’s not forget that many of the challenges are not fleeting, and
many cannot be resolved easily or quickly…
(pg 5)
Contact information:
Abraham Gulkowitz
phone: 917-402-9039 email: abe@gulkowitz.com
3. The PunchLine...
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August 15, 2017
A Fuller View - - Data Insights
Why Doctors Feel Burned Out
Physicians are dealing with a host of new demands.
4. The PunchLine...
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August 15, 2017
You Can’t Handle the Truth…
Let'sTake the “Con” out of Economics
Executives are More Worried About
Amazon Than Dealings in DC
NOW WHAT?
Central banks have become the bond market
The easy money era could be unwinding, with the
Fed widely expected to announce plans for
unwinding its $4.5 trillion balance sheet and central
banks around the world talking about scaling back
stimulus.
Greenspan and others… the prolonged period of low
interest rates is about to end and, with it, a bull market in
fixed income that has lasted more than three decades
The agreement to withhold 2% of
global oil supply expires in March
► Eight months after a landmark deal to cut oil output to force prices up, big budget
obligations drive members to keep producing
► OPEC forecast higher demand for its oil in 2018 due to rising global consumption and
slower supply growth from rivals, although another jump in the group's output
suggested the market will remain in surplus despite efforts to rein in production.
The 14-country producer group also said its oil output in July came in above the demand forecast, led
by gains in Libya and Nigeria, two members exempt from the cuts aimed at eliminating excess supply.
In the report, OPEC said its oil output rose by 173,000 bpd in July to 32.87 million bpd, led by the
exempt producers plus top exporter Saudi Arabia. The figures mean OPEC has complied 86 percent
with its output-cutting pledge, according to a Reuters calculation, down from 96 percent initially
reported for June but still high by OPEC standards.
Oil prices have zigzagged since the coalition of OPEC and
non-OPEC producers hammered out final details in
December, with crude prices at first rallying by around 20%
only to fall into a bear market earlier this year. Prices have
stabilized in recent weeks. In an interview last week,
Russian Energy Minister Alexander Novak indicated his
country wasn’t planning to remain locked in this agreement
beyond March. Russia, the world’s largest crude-oil
producer, isn’t an OPEC member. But it has cooperated with
the cartel for the past seven months by cutting its output by
300,000 barrels a day. The deal between OPEC and non-
OPEC producers “is an instrument that can be used in the
future,” Mr. Novak said. “At the same time, we don’t
believe it should be used too often. Only in critical
situations.”
US natural gas prices plummeted on cooler weather in
the eastern part of the US as well as rising natural gas
production
German regional scandal raises pressure on SPD
Media reports highlight the close ties between Lower Saxony's
government and Volkswagen
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August 15, 2017
Engines of Growth…
GDP per head declines sharply in
United Arab Emirates
Slow growth and influx of foreign workers sends
Gulf state tumbling down league tables
The US economy expanded an annualized 2.6% in Q2,
following a downwardly revised 1.2% growth in Q1…
The growth was boosted by a rise in business equipment
investment, consumption, and federal government spending. In
contrast, residential fixed investment declined and both exports
and nonresidential fixed investment slowed. Some see a further
pickup in Q3.
Real estate booms in China's small cities,
but construction outpaces demand
Luxury lakeside homes and high-rise condominiums
are coming up fast in China's sleepy inland town of
Bengbu, a clear sign that a home-buying frenzy
sweeping across the country's major metropolises and
provincial capitals has reached even its smaller cities
Boeing Co said it expects Indian airlines to order up to 2,100
new aircraft worth $290 billion over the next 20 years, calling
it the highest-ever forecast for Asia's third-largest economy.
India output slid following implementation of
goods and services tax
Toyota and Mazda said they would buy $455 million stakes
in one another and team up on a $1.6 billion U.S. factory.
The Japanese car makers aim to employ 4,000 workers
and produce around 300,000 vehicles a year.
Forecasting turning points in the face of strong momentum
Macron Takes On France’s Labor
Code, 100 Years in the Making
World growth has become more broad-based and trade-driven,
but many still question whether it can continue…
► German trade activity slowed abruptly in June, adding to signs that demand in
leading economies may be starting to flag just as central banks consider scaling
back years of stimulus.
► China's exports and imports grew much less than expected in July, raising
concerns over whether global demand is starting to cool even as major
Western central banks consider scaling back years of massive stimulus support.
► COMEX copper inventories have risen significantly lately. This suggests that
perhaps the copper market isn’t as robust as many thought…
European junk bonds yields in some cases
yield less than comparable-maturity 10Y
US Treasury securities
Corporate America is finding
China to be a reliable source
of profit growth this year
Whether they sell construction
equipment, semiconductors or coffee,
many major U.S. companies have
reported stronger second-quarter
earnings and revenue from their
Chinese operations in recent weeks.
They are benefiting from a Chinese
economy that is growing at almost 7
percent, several times the rate of U.S.
expansion, a Chinese housing boom,
and a slide in the U.S. dollar, which
makes American exports more
competitive and increases dollar
earnings once they are translated from
foreign currencies. Chinese President
Xi Jinping’s ambitious plan to build a
new Silk Road that will improve links
between China and dozens of
countries in Asia and Europe, and
includes many billions of dollars of
new roads, bridges, railways and
power plants – is also helping
American firms to sell heavy
equipment and other products.
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August 15, 2017
Alternative Facts- Careful Reading
Amazon.com Inc.'s shipping costs are rising
faster than its retail revenue, but that's unlikely to
change the e-commerce behemoth's strategy.
Amazon reported a $197 million second-quarter net
profit that was down sharply from a year ago, even
as sales jumped another 25% to $38 billion. The
sales growth is a big contrast with financial reports
from the big store-operating retailers, but Amazon
also saw the costs of getting those online orders
delivered soar. Shipping expenses rose 36% and
fulfillment costs jumped 41%, measures that reflect
both Amazon's growing share of the retail market
and its drive to control its own logistics and
shipping operations.
The retailer is plowing its cash back into product
development, warehouse building and delivery
infrastructure, as well as overseas expansion and
video content. The logistics investment will
continue as the company gets its fulfillment
operation aligned with sales for the fourth quarter
holiday rush, when Amazon's promises of faster
delivery times could push the company's spending
on shipping beyond $7 billion.
United Parcel Service Inc. expects retailers to get
behind higher shipping prices this fall , and the
package carrier's latest results suggest why UPS is
so confident. Revenue in the company's U.S.
domestic business picked up faster than even the
strong growth in parcel volumes
Era of Jumbo Jet Nears End as Airbus Slashes A380 Production
European plane maker follows Boeing in scaling back biggest jetliners
► Airlines have shied away from the big, expensive planes, worried about filling all the
seats. They have instead flocked to more efficient, twin-engine long-range jets such as
Airbus’s A350 and Boeing’s 787 Dreamliner and 777. Even demand for those big planes
has softened in recent months.
► Airbus now loses money on every A380 built, though Mr. Enders said cost-cutting efforts
mean the impact on earnings is marginal.
Teva's stock slides after profit miss and slashed outlook
Thousands of jobs to go for leader in generic drugs
China’s steel rebar prices keep climbing on resilient
housing construction boom…
China’s narrow money supply growth suggests that
credit expansion has been steady despite the
deleveraging efforts.
The Israeli shekel rally is being reversed on weakness in
the stock market and the rise in political uncertainty.
The increasing concentration of market share among an emerging
“oligopoly” of major container shipping groups and alliances is
already reducing service standards for customers and could drive up
freight rates further, according to shipper representatives.
Canadian municipalities issued CAD 8.1 billion worth of building
permits in June of 2017, up 2.5 percent from May, following and
upwardly revised 10.7 percent gain in the previous month and better
than market expectations of a 2 percent fall. It is the second highest
value on record.
► Weaker US dollar boosts US growth momentum
► Euro’s momentum pushes sterling to within sight of
parity… Traders focus on currency cross as Brexit and interest rate
policy weigh on pound
► Mario Draghi faces easing dilemma as strong euro
sparks concern… ECB looks to scale back QE, one of the chief props
of eurozone recovery
7. The PunchLine...
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August 15, 2017
Select U.S. Signals
U.S. auto sales fell in July as
carmakers slash rental fleet sales
U.S. carmakers said they continued to slash low-margin sales to daily
rental fleets in July as General Motors Co , Ford Motor Co and Fiat Chrysler
Automobiles struggled to curb a slide in retail sales during the month
OBSTACLES TO GROWTH
Fabled for its willingness to relocate for opportunity, the
country is the least mobile since after World War II,
even in economically depressed rural locales.
US construction spending during June 2017 was estimated
at a seasonally adjusted annual rate of $1,205.8 billion, 1.3
percent below the revised May estimate of $1,221.6 billion.
The June figure is 1.6 percent above the June 2016 estimate
of $1,186.4 billion.
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August 15, 2017
Select US Job Data
Total US nonfarm payroll employment
increased by 209,000 in July, and the
unemployment rate was little changed at
4.3 percent, the U.S. Bureau of Labor
Statistics reported today. Employment
increased in food services and drinking
places, professional and business services,
and health care. The change in total
nonfarm payroll employment for May was
revised down from +152,000 to +145,000,
and the change for June was revised up from
+222,000 to +231,000. With these revisions,
employment gains in May and June
combined were 2,000 more than
previously reported. . One weak spot in
the jobs report was the persistently slow
wage growth – which seems to be stuck at
2.5% per year.. Over the year, average
hourly earnings have risen by 65 cents, or
only 2.5 percent., way off historical patterns
during low unemployment periods.
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August 15, 2017
Households – Brave New World
Americans' Income Growth Slumps
US disposable income growth has been subpar over the past
decade – registering near the lowest stats in recent history.
U.S. carmakers said they continued to slash low-margin sales to daily
rental fleets in July as General Motors Co , Ford Motor Co and Fiat
Chrysler Automobiles struggled to curb a slide in retail sales during the
month. GM sales dropped 15 percent from a year ago to 226,107
vehicles, as the company cut rental fleet sales more than 80 percent. The
automaker said inventories of unsold vehicles at month's end were 104
days, down from 105 days at the end of June. GM has promised investors
to reduce inventories to 70 days by year-end.
Automakers have used low-margin sales to rental fleets to avoid factory
shutdowns. With more flexible labor agreements, the Detroit automakers
have shifted course. They are quicker to idle factories to reduce supply, and
they are demanding higher prices, industry officials said. Fiat Chrysler has
killed several models it once sold to fleets. Big U.S. rental car companies
such as Hertz Global Holdings Inc (HTZ.N) and Avis Budget Car Rental
[CARXXB.UL] at the same time are restructuring their fleets as values
decline for rental cars they resell, and as ride services such as Uber
Technologies [UBER.UL] bite into their business.
US Credit-Card Losses Hit a Four-Year High
The charge-off rate, the percentage of balances that card
issuers write off as a loss, hit the highest level in four
years during the second quarter. Could this be a warning
sign for the markets and broader economy?
US Consumer Credit Rises Less Than Expected
Consumer credit in the US rose by $12.40 billion in June,
following a revised $18.28 billion gain in May and missing
market expectations of $15.30 billion. Revolving credit
increased by $4.13 billion and nonrevolving credit went up by
$8.27 billion.
The number of distressed retail firms
is at the levels last seen during the
Great Recession.
Hi risk drinking is growing as a problem…
On a monthly basis, US retail sales increased 0.6 percent
from June to July (seasonally adjusted), and sales were up 4.2
percent from July 2016. The increase in July was above
expectations, and sales in May and June were revised up.
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August 15, 2017
The Future Ain’t What It Used To Be
India’s fuel consumption growth
is picking up, just as China’s slows
Driven by burgeoning freight tonnage and shipment volume,
less-than-truckload (LTL) carriers in the US are knocking down
terminals walls, adding dock space and doors, and building
new facilities at the fastest pace in more than a decade.
In the first seven months of the year, BRAZIL
new vehicle registrations increased 3.4 percent
compared with the same period of 2016.
13. The PunchLine...
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August 15, 2017
The Likelihood of Unlikely Events
Global Disorder
Pakistan’s Prime Minister, Toppled by Corruption Case
World Grows More Dangerous
Venezuela Breaks Down
VENEZUELA CRUSHES MILITARY REBELLION
UK construction growth eases to 11-month low
in July amid weakness in commercial building
Corruption Probes Around Globe
Brexit Could Lead to the Significant Job Losses and Income Slide…
► Up to 17,000 investment banking jobs could leave the U.K. soon after
Brexit, according to the latest estimates from Oliver Wyman.
► Supermarket Wars: As customers face pressure on their disposable
income, two German supermarkets with a reputation for low prices are
winning market share in Britain.
Rio violence exposes Brazil’s missed chance
A year after the Olympics, crime is up, the economy down and
corruption rife
Will absurd Canada home prices implode?
The Toronto Real Estate Board reported that July home prices in Canada’s largest
city suffered their biggest monthly drop on record amid government efforts to cool
the market and the near-collapse of Home Capital Group spooked speculators.
The benchmark Toronto property price, while higher 18% Y/Y, plunged 4.6% to
C$773,000 ($613,000) from June. That was biggest monthly drop since records for
the price index began in 2000, according to Bloomberg calculations, and brought
prices down in the metro area to March levels.
China's Foreign Ministry said India has been building up
troops and repairing roads along its side of the border
amid an increasingly tense stand-off in a remote frontier
region beside the Himalayan kingdom of Bhutan. The
stand-off on a plateau next to the mountainous Indian state of
Sikkim, which borders China, has ratcheted up tension between
the neighbors, who share a 3,500-km (2,175-mile) frontier, large
parts of which are disputed.
Saudi Arabia is facing a credit contraction
as bank liquidity growth slows sharply
Fannie Mae and Freddie Mac could need a taxpayer bailout of as much as $99.6 billion
if a severe economic downturn gripped the U.S., their regulator said Monday. The
Federal Housing Finance Agency released the results of a stress test that examined
how the mortgage finance companies would perform in what’s called a “severely
adverse scenario.” The stress test was mandated by the post-financial-crisis Dodd-Frank
Act and the specifics of the scenario were devised by the Federal Reserve.
CHINA DEBT BOMB…
China will push on with achieving better results in getting its corporate sector to cut
excessive borrowings even though it has made initial progress in lowering debt levels as
firms' are still overleveraged, the state planner said. Policymakers have been trying to
rein in debt risks and property bubbles amid fears that such problems could derail the
world's second-largest economy if not handled properly… But excessively high leverage
ratios of Chinese companies have not been fundamentally reversed, with non-financial
Chinese firms' leverage ratios still the highest among the world's top economies.
Chinese economy ‘kidnapped’ by property bubble
Beijing attempts to curb real estate prices as tycoons’ wealth soars
Risks of US Fiscal Mishap Rise as Debt and Budget Deadlines Loom
Record ETF inflows fuel price bubble fears
Growing numbers of investors moving into low-cost vehicles that track an index
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August 15, 2017
The Market Roar…
History May Not Repeat, But It Often Rhymes
History Receipts Itself
The FAANG basket (Facebook, Amazon, Apple, Netflix,
Google) outperformance has widened further.
Stock markets around the world
also see volatility compression.
Every few years , the global markets relive some form of boom bust…
In the late 1960s the mania was for the “nifty 50” American companies
like Disney and McDonald’s, which had been the “go-go” stocks of that
decade. In the late 1970s it was for natural resources, from gold to oil.
In the late 1980s it was stocks in Japan, and in the late 1990s it was the
dot-com boom. We saw investors flock to mortgage-backed securities
and big emerging markets from Brazil to Russia. In every case, many
partygoers were still in the market when the crash came. Today, tech
mania is resurgent.
Why Tesla Motors Is Fueling Up on Debt
Forced to choose between issuing a bit more of Tesla’s
turbocharged stock or tapping the overheated junk-bond
market to finance the Model 3 ramp-up, Mr. Musk, the
company’s founder, opted for the latter. It raises execution risk
for the $60 billion electric-car maker, but not by enough to
persuade the chief executive to loosen his grip on the wheel.
Tesla has just over $3 billion in cash, but it is burning through
roughly $1 billion a quarter as it embarks on one of the most
daunting gambits in automotive history: taking production of
its mass-market vehicle from zero to 400,000 or more a year in
just 18 months. Fortunately for Mr. Musk, investors can’t
seem to shower his ambitions with too much money. Tesla’s
stock has risen by 67 percent this year. The company is valued
at some 27 times 2020 earnings, implying the kind of growth
that even the most bullish of analysts don’t expect, according
to Reuters Breakingviews calculations.
The European Central Bank scrambled to
head off a potential financial crisis on
Thursday by pumping an emergency €94.8bn
($131bn) into the region’s banking system
after liquidity in the interbank market started
to dry up, threatening banks’ access to short-
term funds.
The cash injection was the biggest in the
ECB’s history, exceeding the €69bn provided
the day after the terrorist attacks of
September 11 2001. The ECB also made an
unprecedented one-day pledge to meet 100
per cent of all funding requests from
financial institutions.
The ECB action followed a sharp increase in
the rate at which banks are prepared to lend
overnight to each other. It was designed to
ensure that money markets continued to
function.
15. The PunchLine...
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August 15, 2017
Credit Matters - Know Risk
Many Excel in Strategy, Few in the Management of Risk
Toshiba Bankruptcy Filing Pushed
by Some Involved in Workout
Libor’s long and wild ride is coming to an end
Regulator sounds a death knell for controversial lending rate
U.S. mutual funds that held onto Puerto Rican debt as its
economy crept toward collapse could get drawn into battles that
pit their own investors against each other, as the island
navigates the biggest government bankruptcy in U.S. history.
Brazil’s debt-to-GDP ratio has come in worse than
expected. For now, the rating agencies see this measure
stabilizing as growth hopefully returns. Perhaps…
Argentine peso selloff has been relentless
Outlook darkens for UK debt collateral
Moody’s stance turns negative on loans bundled into asset-
backed securities
Switzerland’s First-World Problem: What to Do With $750 Billion
The Swiss central bank keeps its massive reserves in foreign assets. Some want
a piece of that kept home
Venezuelan Default Fears Rise With
Billions in Debt Coming Due Soon
Investors have been bracing for a Venezuela debt default for more than a year, but
fallout from the country’s widely criticized election last weekend could prove to be
the tipping point
Venezuela’s stock market has gone vertical again. It’s the only liquid asset where
the nation’s residents can legally attempt to preserve some of their capital
Germany continues to make money issuing debt at
negative rates. This is particularly true given the
results of the nation’s 2-year note auctions.
The inclusion of loans to bricks-and-mortar retailers in commercial
mortgage-backed securities has halved since 2010, as investors cool over
providing financing for an industry under siege from ecommerce. The
retail sector has accounted for an average of just over 24 per cent of the
loans underlying newly issued CMBS assessed by the credit rating agency
Fitch. That is down from 31.4 per cent last year and 51.5 per cent in 2010.
Figures from S&P Global, another rating agency, illustrate the same trend.
The drop reflects an assessment that retail mortgages within CMBS have
lost their allure for investors, including asset managers and hedge funds, as
the rise of ecommerce and shifting consumer spending habits have
upended traditional retailers. That has put the focus on the creditworthiness
of the US’s ailing regional malls, which suffer a loss of rental income when
big name tenants depart.
US haul from credit crisis bank fines hits $150bn
Reckoning continues 10 years after housing downturn became
market meltdown
MetLife’s $7.9bn spin-off tests interest rate outlook
Brighthouse Financial set to launch on Nasdaq after extensive
regulatory scrutiny
Middle market M&A multiples reached
a new high this year on the back of
the frothy public markets
Oilfield service creditors have been hit harder this year by
bankruptcy court filings than during all of 2016, according to law
firm Haynes and Boone, a sign of the oil industry's uneven recovery
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August 15, 2017
The DNA of Business
Reconfiguring Industries to Define Growth
NETFLIX HELPS REMAKE THE WORLD
But it’s way in debt…
The global streaming giant today boasts some impressive stats: 104
million subscribers worldwide, up 25% from last year and almost
quadruple from five years ago. Its series and movies account for more
than a third of all prime-time download Internet traffic in North America.
Its more than 50 original shows garnered 91 Emmy Award nominations
this year, second only to premium cable service HBO. But there’s
another set of numbers that could spell trouble for the company’s
breakneck growth. Netflix has accumulated a hefty $20.54 billion in
long- and short-term debt in its effort to produce more original content.
The Los Gatos, Calif.-based company hopes more new shows will
capture more subscribers, its primary revenue driver. It’s also under
pressure to keep spending on new shows as streaming rivals such as
Amazon and Hulu expand their own slates of original programming.
RV SECTOR IS BOOMING
Sometimes bigger and bigger is not better…
The recreational vehicle industry has figured
that out and it has led to record-breaking
growth. This year, RV shipments are
expected to hit their highest level ever,
according to the Recreation Vehicle Industry
Association, marking the industry's eighth
consecutive year of gains.
TV TRANSFORMED
Cable Tie-Up Unites Parents of HGTV and
Animal Planet
Discovery Communications Inc is
acquiring Scripps Networks Interactive
for $14.6 billion in a deal that is expected
to boost the combined company's
negotiating leverage with pay TV
operators at a time when more people
watch video online, the companies said
Supermarkets Face a Growing Problem: Too Much Space
A massive build-out by retailers has left the country piled up with
grocery shelves as consumers shift from big weekly shopping trips
to more snacking and to-go meals.
The expansion in groceries sector has extended across a large array
of retailers in recent years. Part of the expansion comes from
grocers, who accelerated their store openings as a way to drive sales
growth after the 2008 recession. At the same time, club chains,
dollar stores, pharmacies—and even gas stations—increased their
fresh food offerings to drive traffic and boost profits. Brick-and-
mortar supermarket locations also compete for consumers choosing
to shop online.
KKR announced a $1.4 billion take private of
PharMerica Corp, which operates 96
institutional pharmacies, 20 specialty home
infusion pharmacies and 5 specialty oncology
pharmacies in 45 states. Walgreens Boots
Alliance Inc will have a minority stake.
Struggling Chinese Firm Rushes to Delever…
Wanda’s $6.5 billion sale of 13 theme parks to
Sunac includes vast real estate projects in various
stages of development. The properties, when
completed, will comprise 635 million square feet of
floor space. By comparison, all of Manhattan has
500 million square feet of office space.
Seed funding slows in Silicon Valley
The bloom is off seed funding, the business of
providing money to brand-new startups, as investors
take a more measured approach to financing
emerging U.S. technology companies. Seed-stage
financing has been sliding for the last two years,
with the number of transactions down about 40
percent since the peak in mid-2015, data show.
Dollar investments in fledgling companies have also
declined, although less dramatically, dropping more
than 24 percent over the same period. The
slowdown comes despite an explosion of interest by
wealthy individuals and foreign investors looking to
park money in the next big thing.
Qatar Airways said it is abandoning its controversial plan to take a stake of up to 10%
in American Airlines Group, ending a brash attempt by the government-owned
Middle East carrier to push into the U.S. amid political upheaval at home.
Amazon.com Inc is quickly ramping up the billions of dollars a year it spends on creating and
licensing TV shows and films, signaling the retailer plans to be in show business for the long haul.
The issue came to the forefront of investors' attention last week, when Amazon said a step up in its
spending on video projects could be one of several reasons it might report a loss this quarter, even as
it expects more than $39 billion in overall sales. The company's shares, though up 33 percent this
year, have dipped 5 percent since that warning. Wall Street analysts estimate Amazon's spending
on content will have tripled to more than $4.5 billion by the end of this year from 2014. Catching
customers' attention with video now represents one of the company's biggest investments, people
familiar with the matter said. Amazon does not break out spending figures, and it declined comment
on the subject.
Blackstone, CVC Clinch Paysafe in
Latest Online-Payments Deal
Sector is undergoing growth as consumers increasingly
use mobile devices to pay for goods, services
AMID a slow recovery in the sector, South Korea’s container
shipping companies are banding together to present a united
front in the face of an increasingly competitive global market
and in light of Hanjin Shipping’s demise. According to a
statement from the Korea Shipowners Association, the nation’s
14 boxship owners are scheduled to ink a memorandum of
understanding as they seek to form a national shipping
consortium, named Korea Shipping Partnership. The
companies are Hyundai Merchant Marine, CK Line, Dongjin
Shipping, Don Woo Shipping, Dong Young Shipping, Hansung
Line, Heueng-A Shipping, KMTC, Namsung Shipping, Pan
Continental Shipping, Pan Ocean, Sinokor Shipping, SM Line
and Tai Young Shipping, according to an HMM official
Target Buys Startup Grand Junction
to Boost Same-Day Delivery Firepower
18. The PunchLine...
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August 15, 2017
Select Real Estate Reference Points…
US shopping mall woes underline retail challenges
Struggle to make commercial properties more relevant
after losing anchor tenants
A new report predicts New York City apartment
vacancy rates will soar to more than 11% by
the end of next year. The scenario, which some
local housing analysts rejected, would mean a grim
reckoning for landlords. Reis has issued its own
forecast for New York, predicting a rise in vacancy
rates too, but only to 6.1% in 2018. It projected
rent growth would stay low, but not decline.
► Office vacancies ended Q2 at 16.0%, down slightly
year-over-year
► Asking and effective rents grew by 0.4% and 0.3% in
the quarter. New construction has been minimal
► Tepid demand and tepid supply has created a slow
equilibrium of progress
US home rental giant created in $20bn deal
Merger of Blackstone and Starwood units covers 82,000
houses after buying foreclosed properties
Mega-Mansion craze cooling
19. The PunchLine...
19
August 15, 2017
Will Life Ever Be the Same?
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