A brilliant article on the business of scientific publishing from the early roots and the story of Robert Maxwell to the rise of the internet and the present day.
“Scientists are not as price-conscious as other professionals, mainly because they are not spending their own money,” he [Robert Maxwell] told his publication Global Business in a 1988 interview. And since there was no way to swap one journal for another, cheaper one, the result was, Maxwell continued, “a perpetual financing machine”. Librarians were locked into a series of thousands of tiny monopolies. There were now more than a million scientific articles being published a year, and they had to buy all of them at whatever price the publishers wanted.
In response to the internet Elsevier bundled – Elsevier created a switch that fused Maxwell’s thousands of tiny monopolies into one so large that, like a basic resource – say water, or power – it was impossible for universities to do without.“
China has over time displaced the weight of vulnerable economies in the Emerging Markets (EM) Index, the latter itself falling due to improving macroeconomic fundamentals.
* Vulnerable economies are defined as countries with poor external balances and reliant on foreign savings. Vulnerable countries are South Africa, Chile, Colombia, Argentina, Egypt, and Pakistan.
Sourced from GMO, read on for more reasons to own EM.
A compelling chart sourced from JPM research on Covid.
On the x-axis is a measure of “collectivism vs. individualism” – a concept developed by Geert Hofstede in 1970s.
“The individualism vs. collectivism dimension considers the degree to which societies are integrated into groups and their perceived obligations and dependence on groups. Individualism indicates that there is a greater importance placed on attaining personal goals.“
On the y-axis a measure of Covid infection rates per capita.
“A standard cluster analysis shows a high degree of significance when thinking about COVID within a collectivism/individualism dimension.“
The model has a good hit rate – “Mr Norpoth told the outlet that his model, which he curated in 1996, would have correctly predicted the outcome for 25 of the 27 elections since 1912, when primaries were introduced.“
It is also dismissive of early polls, which currently give Biden a 9 percentage point lead, as seen in this chart – “The terrain of presidential contests is littered with nominees who saw a poll lead in the spring turn to dust in the fall. The list is long and discouraging for early frontrunners.“
The Cleveland Fed has been maintaining a survey of consumers for their views on how they are responding to COVID-19.
“Consumers continue to see a long road ahead, with nearly two-thirds expecting that the coronavirus outbreak will last either one or two years …
However, we are starting to see some changes in behavior, as fewer consumers report storing more food supplies than had been the case earlier …
And the impact of the coronavirus on GDP over the next twelve months looks to be decreasing in size, from -20% in late March to -10% in late April and -5% in late May.”
Nice slide from JPM Q2 2020 Results showing activity measures across their lines of business.
“We saw record levels of debt and equity issuance in the quarter as clients bought to pay down the majority of the revolver draws“
“as markets rebounded to pre-COVID levels, May and June together were our two busiest months for equity issuance ever“
“More recently, we’ve seen the improvement in overall sales growth across the country flatten out, notably in both states with increasing cases and states with decreasing cases.”
“In Auto, April saw the lowest level of loan and lease originations since the financial crisis. But activity rebounded sharply in May and June. And in fact, June ended up the best month for auto originations in our history.“
“And in home lending, retail purchase applications, after reaching a low in April, recovered to well above pre-COVID levels in June due to a strong and broad market recovery.”
The Department of Labor (DOL) has proposed a rule that might ban the ability of corporate sponsored retirement accounts (e.g. 401(k)s) from holding ESG Funds.
“Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia. “Rather, ERISA plans should be managed with unwavering focus on a single, very important social goal: providing for the retirement security of American workers.”
Comovement represents the absolute number of stocks in the S&P 500 which move on the same direction on any day (either up or down).
If half the stocks move up and half move down, comovement would equal zero. If 100% of the stocks move up, comovement would slightly exceed 500 (there are currently 505 stocks in the S&P 500).
Holding volatility relatively constant the rise of index funds has led to a marked increase in the comovement of stocks since the 1990s.
This along with volatility selling and illiquidity creates a market structure that has serious implications for investing.
CMA have published an in-depth report on competition in online platforms and digital advertising in the UK.
The dominance of these platforms is clear – as the chart shows Google has market power in the entire vertical chain which takes 35p for every £1 of advertising spend.
Lots of interesting charts inside – some to come in future snippets.
Since 1958, it has been a driving force in the creation of weather satellites, GPS, personal computers, modern robotics, the Internet, autonomous cars, and voice interfaces, to name a few.
This fascinating and thorough article, or more precisely a self describe “collection of atomic notes”, attempts to explain why DARPA works in search of creating a private sector funded “ARPA”.
The section on program managers is worth a look as the characteristics described there are also those that make good investment analysts.
A chart that is one possible explanation for Tesla’s dominance.
When compared to direct competitors like Jaguar, Mercedes, Audi and Porsche, Tesla models 3 and S have almost 2x the efficiency which translates directly into savings.
Insightful FT Alphaville post on short reports (“activist short selling”).
It builds on a recent paper where “two academics studied corporate responses to 351 short-reports published on US-listed companies between 1996 to 2018 in an attempt to discover if a company’s reaction is as important as the market’s when a report is released.”
It seems that companies that launch internal investigations as a response have the worst outcomes – 383% higher chance it is a fraud.
