Macroeconomics

Fed and Climate Change

  • An interesting and novel conference organised by the Fed on Climate Change Economics. Live stream available.
  • “It’s important for us from a monetary policy perspective to know what the potential growth rate of the economy is and if climate events or climate risk is going to shave that off, even if it’s over the long term,” San Fran Fed chief Mary Daly said earlier this week.
  • h/t SeekingAlpha
Macroeconomics

Global Fertility Crash

  • An interesting look from Bloomberg at global fertility rates.
  • In 1960 the global fertility rate was five live births per woman.
  • This is now 2.43, close to the level required to keep the world population stable.
  • Half of all countries are already below this level.
  • This has all sorts of implications for investments in the long run.
  • Each grey line is a country – try to guess which the worst is?
  • h/t FT Alphaville
Stocks

US online takeaway

  • We have posted Snippets about GrubHub before here and here.
  • This is another interesting and long article on how online takeout is turning out to be bad for restaurants as well.
  • The article is rather sensational (and we aren’t convinced the Online Travel analogy is apt).
  • Regardless it is full of interesting stats and analysis.
Stocks

Texas Instruments is the World

  • Texas Instruments, the semiconductor company, is very diverse (largest product is just 0.8% of revenue).
  • Their sales growth therefore largely follows global PMIs.
  • It makes them a great barometer of what is going on.
  • They have now experienced four quarters of revenue decline and are guiding for a fifth (typical semi-cycle is 4-5 quarters).
  • From their recent conference call:
  • “Revenue decreased 11% from a year ago and came in below the midpoint of our guidance as we saw most end markets continue to weaken further …  the weakness we’ve seen in the third quarter was broad-based across all markets and most sectors … We saw weakness across all major customers, regions and technologies … our sense is that customers are just far more cautious than they were certainly a year ago, but even 90 days ago.”
Misc

Biology

  • A fascinating piece from a16z, the US venture capital firm, on biology.
  • They run a $650m Bio fund and invest in many new technologies.
  • “Bio today is where information technology was 50 years ago: on the precipice of touching all of our lives. Just like software—and because of it—biology will one day become part of every industry.” 
  • Lots of links within to articles (written by a16z) on various aspects of how healthcare is transforming.
  • This piece is a shout out to the now famous 2011 article by a16z “Why Software is Eating the World”.
Stocks

Grubhub

  • Grub Investor Letter after their recent profit warning (and -43% fall in the shares) is worth a read.
  • We have previously pointed out how alternative data was suggesting competitors were beating Grub.
  • The letter points out how the online takeout market is getting a lot more competitive.
  • “Furthermore, we believe online diners are becoming more promiscuous … our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms … the easy wins in the market are disappearing a little more quickly than we thought.”
  • Well done Chanos on shorting the stock.
Stocks

Vodafone Idea in India

  • Indian supreme court, after 10 years deliberation, hands a real shocker for Vodafone’s merged entity in the country (Vodafone Idea).
  • Essentially the court is forcing all companies to pay levies for spectrum on total revenue (not just telecoms revenue).
  • Vodafone Idea are forced to pay $4bn.
  • This is likely to put Vodafone Idea under (It has net debt of $14bn or 20x Net Debt/EBITDA).
  • Hard to see in the share price chart but that last drop was 35%.
  • Upstart Jio, which has been waging the mother of all price wars (it gave services away for free!), is unscathed by this ruling.
Stocks

Third Point

  • Latest Investment Letter for Q3 from Third Point is out.
  • It contains their view on activism and their edge in this strategy.
  • They review of the successful Sotheby’s (BID) investment (acquired recently at a 61% premium).
  • It also has an analysis of their new big holding in EssilorLuxottica (EL) and why they like it (mostly the merger synergies).
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