Pour some coffee, and settle in for our hand-curated Sunday morning reads:
• Corporate Borrowing Now Flows To Shareholders, Not Productive Investment (IB Times)
• Texas shale boom town ‘hurting bad’ in oil slump (FT) see also Investors ask oil companies to disclose refineries’ risks from climate change (The Guardian)
• Negative interest rates are here to stay — so get used to them (Business Insider)
• Dalio’s Bridgewater Said To Start Artificial-Intelligence Team (FINalternatives)
• Private Equity’s Private Math (Creators)
• FCC votes for net neutrality, a ban on paid fast lanes, and Title II (Ars Technica) see also Push for Net Neutrality Arose From Lack of Choice (NY Times)
• Hyper-Luxury Cars Are Now Selling Faster Than Normal Ones (Bloomberg)
• The Secret to Love Is Just Kindness: Science says lasting relationships come down to—you guessed it—kindness and generosity. (The Atlantic) see also How to Perform the Ideal Caress (Slate)
• Scientists Are Wrong All the Time, and That’s Fantastic (Wired)
• Farewell Maximus (TBP) see also The Saddest Comic Ever (Ubertool)
What are you reading?
Flurry of Refis
Source: WSJ
U.S.-Israel ties fraying over Netanyahu’s planned Iran speech
http://www.reuters.com/article/2015/03/01/us-usa-israel-idUSKBN0LX13D20150301
Stay home Netanyahu. And stop building settlements.
Want to see the future. Here it is from the millennial’s perspective of likes and dislikes.
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/28/8-things-millennials-want-and-dont-want-basically-anything-their-parents-wanted/
This must make many big business’s very nervous. The ground is shifting under their feet. Of course the millennial’s will change when they grow up.
The Berkshire Hathaway annual report is out. Too bad every politician and leader in this country doesn’t read this thing. They might (if they are capable of learning) learn a lot. It is well worth the time. A trip to Omaha should be on everyone’s (yes I know most of the population could care less) bucket list. The size of the annual meeting is somewhat over whelming , used to be more intimate and friendly, but alas it is now a huge, crowded show.
http://www.berkshirehathaway.com/letters/2014ltr.pdf
Re: corporate borrowing
In my small brain that appears to be driven by the mantra of “providing shareholder value.”
That Jack Welch mindset seems to contributed to the gutting of the middle class by lack of care for employees and considering them cost items rather than assets. Either you are a highly paid high ranking executive or you are expendable.
With luck, with hope, Walmart may be taking the first step towards reversing the trend and realizing employees need to be paid and valued. Know nothing about the Walmart CEO. Maybe he read Pikkety. Maybe TBP. Maybe tea leaves. But if he starts a trend of ensuring employees can earn a good living wage and have a few bucks leftover, rather than a laser focus on shareholders, then that will be a good thing for the USA, imho.
I think he was simply responding to relatively poor Wal-Mart financial results. They probably raised their minimum wage with gritted teeth, but realized it was the only they were going to combat turnover that was impacting their ability to function. At a certain point, you can’t cost-cut anymore to increase profits and revenue.
Or perhaps their own internal number-crunching has revealed that their employees also represent a significant block of their customers, and as they are situated economics-wise such that they spend every dime they make, a large chunk of that pay raise immediately flows back into the company, along with the benefits of attracting and retaining more employees, reducing the costs of turnover. We might actually get to see the Ford Effect take place in the here-and-now of the 21st century.
I stumbled on this post recently. It is quite interesting and focused on software development but could be made to apply to other endeavors. Also, remember, it is the author’s own opinion.
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How Much Do You Cost?
* 29 October 2014
* modified on 30 January 2015
* Yegor Bugayenko
I’m getting a few emails every day from programmers interested in working with Teamed.io remotely. The first question I usually ask is “what is your rate?” (we pay by the hour). What surprises me is how often people incorrectly estimate themselves, in both directions.
I hear very different numbers, from $5 to $500 per hour. I never say no, but usually come up with my own hourly rate estimate. This article explains what factors I do and don’t take into account. These are my personal criteria; don’t take them as an industry standard. I do find them objective and logical, though — so let me explain.
Open Source Contribution
This is the first and the most important characteristic of a software developer. Do you contribute to open source projects? Do you have your own open source libraries that are used by some community? Do you write code that is publicly available and used?
If you have nothing to show here, I see three possible causes.
…
http://www.yegor256.com/2014/10/29/how-much-do-you-cost.html
The realization is beginning to dawn that the portion of the public that relies on Federal subsidies for Obamacare health insurance don’t understand how much better off they will be when their cost for health insurance goes up or they lose it all together. As a result, they may not be fully appreciative of how their state governments are helping them by backing the current lawsuit going in front of the Supreme Court.
http://www.washingtonpost.com/politics/gop-states-revisit-obamacare-as-supreme-court-weighs-subsidies/2015/02/27/3a0751dc-b92d-11e4-aa05-1ce812b3fdd2_story.html
Here are some kids that totally bombed their first Wall Street interview:
http://www.businessinsider.com/action-against-hunger-experiment-kids-sandwich-video-2015-3
re: corporate borrowing
Is this nothing more than an end run around the double taxation of dividends? It has that niggling flaw that one is not delivered their “dividend” in terms of spendable money, but if one is sufficiently high on the economic food chain, I suspect that several routes are available to convert some of that increased valuation into cash without actually cashing in the shares (although I confess that none of the ones I can think of do so in a tax-free manner). However, I am not a financial architect/engineer, as would personally prefer getting that bump in the form of a doubly-taxed dividend (that is taxed in favorable ways in both sides of the deal).
If this turns out to be the explanation, then I see nothing less than a wholesale melt-and-repour of the corporate (and perhaps individual as well) tax code before the “raison d’etre” for stock buybacks goes away.
In the interim (which is likely to be a VERY Long Time), investors need to be on the lookout for those companies that have debt-leveraged themselves well out onto the thin ice, and are only awaiting the next spell of depressed earnings for the thin ice to give way and plunge them into a sea of red ink. IBM springs to mind (http://www.ibtimes.com/corporate-borrowing-now-flows-shareholders-not-productive-investment-study-1829882) although I am certain there are others.