- A big debate is going on about the tightness of labour markets in the US.
- This chart from Pantheon Macro is instructive – 5 million people are missing from the labour force.
- By Q3 factors holding individuals back will fade – enhanced unemployment benefit will expire (6th Sep) and all childcare/schools will likely be open.
- Near term however we have lots of evidence of tightness (signing bonuses, rising wages) and the Fed is taking notice.
Author: Snippet.Finance
Churn Rates by Industry
- Useful chart from the latest Mauboussin note showing churn rates in various industries.
- The piece itself is about valuing customer based businesses – interesting read.
Andreessen Interview
Apple Wearables
- Pretty stunning how far Apple is ahead in wearable technology.
- This was a good article discussing their lead.
- Start by watching the AssistiveTouch for Apple Watch video – truly science fiction come to life.
- The article attributes Apple’s success to (1) being early (2) voice controlled devices distracting competitors (3) wearables requiring hardware design expertise (4) ecosystem synergies (5) and no price umbrella.
Defensives vs. Cyclicals
- In the current environment – with PMIs at highs and economic surprise indices flirting with zero – it is worth keeping this chart in the back pocket.
- Source.
Production Bottlenecks
- Bottlenecks and supply chain disruptions are reaching extreme levels – is this temporary?
Carson Block
- Detailed and raw profile of the short selling legend behind Muddy Waters Research.
- Block named his research firm Muddy Waters after a Chinese proverb that translates as “muddy waters make it easy to catch fish”.
Impulse Buying
- How do you make online shopping conducive to impulse buying of gum and candy?
- Many food companies are trying to find creative solutions.
WeWork Resurrection Pt2
- We previously mentioned WeWork‘s resurrection.
- This was a really great bit of analysis which is positive on the stock ($BOWX).
- For one there is this chart from CBRE – flexible work could be the option for lots of companies post pandemic.
- WeWork could also pull off their turnaround ($2bn EBITDA targeted, implying EV/EBITDA of 5.8x vs. peer IWG on 9.5x)
- The market could also look at the company and its community once again as a platform. It has certainly completed the hype cycle.
- Interesting point also on incentives – Management don’t get paid until shares cross $25 and operating cash flow crosses $1.3bn.
- Usual caveats apply.
China Credit Impulse and Cyclicals
Hosking Partners on Value
- Interesting latest piece (page 15) from Hosking Partners on why the rotation into value stocks will persist.
- (1) They perform well at the end of recessions (2) stimulus favours value (3) Covid recovery will be long and is only getting underway now in some countries (4) fund managers are entrenched (5) Interesting ESG angle.
- There is also a full webcast that is worth listening to.
Fire Arms
- Everyone knows the US has the highest civilian gun ownership.
- Somewhat surprising to see which countries come next in the list.
- Source (h/t Big Picture).
Inflation Debate
- There is a considerable debate raging right now on the future level of inflation, exacerbated by the consensus busting April CPI print (here, here and here).
- This piece, written by economists, is worth reading.
- It proposes looking at median CPI to construct the Phillips curve, as it better reflects macroeconomic conditions.
- The resulting relationship is stable pre- and post-pandemic and suggests, under bullish unemployment scenarios, that implied core PCE could hit 1.8-2.3% by 2023, “broadly consistent with the Fed’s average inflation targeting strategy with inflation modestly overshooting its long-term level following a number of years of undershooting it.“
- They also don’t see, unlike others, temporary government spending causing an unanchored inflationary spiral given a better communication framework from the Fed and positive supply side effects of infrastructure spending.
Ecommerce Share
China Credit Impulse and Commodities
Third Point Q1 2021 Letter
- Striking how the latest letter has a total different feel to what they used to write about (here and here).
- A lot of their investments are now private and they participate in a lot of SPAC transactions.
- Part of it likely has to do with the change they made in Q2 2020 to invest in quality/compounders.
Big Oil and Renewables
- Low carbon businesses (renewable power, retail power and bioenergy) represent an estimated 7% of EU big oil enterprise value (EV) on aggregate with Repsol and Eni leading the pack.
- Investment in these areas has really accelerated in the last four years.
- This analysis excludes future technologies like hydrogen and electric vehicle charging, that are not material today but are a big part of the transition at these companies.
- This surge in investment has meant the energy sector is now a leading consumer of minerals.
iOS 14.5 App Tracking Opt-in Rate
- This site tracks daily the number of users* opting in for App Tracking with the new iOS 14.5 update.
- Useful for those invested in Facebook and other players in the mobile advertising industry.
- Here is the chart from May 14th for the World, the figure is 5% for the US.
- *they count app users not individuals users. So it is for every app.
- Good article on what participants are doing in the early days.
Energy Transition and Geopolitics
- Fascinating chart showing the shifting balance of geopolitics as the world transitions from fossil fuels to renewables.
- Interestingly, it is far more geographically concentrated.
- Source.
A Few Short Stories
- A brilliant set of short anecdotes each carrying an important lesson.
- An example – “When we condemn [the past] for slavery, or for Native American removal, or for denying women their full role in the life of the nation, we ought to pause and think: What injustices are we perpetuating even now that will one day face the harshest of verdicts by those who come after us?“