David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Free Money: The Surprising Effects of a Basic Income Supplied by Government

    This article from Wired.com may be of interest to subscribers. Here is a section:

    Hughes is no basic income purist. He believes, for instance, that for this economic moonshot to be politically palatable, it would have to be tied to work. “Not just because it seems more intuitive for people,” he says, “but because work is a key source of purpose in our lives.” But the changing nature of work, particularly among top tech employers, is still a critical problem for the American workforce. One illuminating New York Times article illustrated how the men and women who scrub toilets and do other low-skilled work for companies like Apple are hired from contracting companies which set the terms of their employment. Those workers are cut off from the benefits and upward mobility that the company’s engineers and marketers enjoy. Because the workers are contractors, the big tech companies feel no pressure to raise their wages, and aren’t responsible for offering health-care coverage. In 2015, Facebook’s bus drivers voted to unionize in order to secure themselves the kind of worker protections that the social networking giant refused to provide.

    Looked at in this light, the tech-led efforts to push a basic income can appear hypocritical. In a new economy that mints billionaires overnight, giving millions of dollars away for experimentation is the easy part. It’s taxpayers, after all, not individual tech companies, who would have to pay for a basic income should one ever come to pass.


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    Breakfast with Dave November 13th 2017

    Thanks to a subscriber for this report by David Rosenberg for Gluskin Sheff. Here is a section:

    Indeed. And what we’re referring to is the High Yield bond market which tends to lead equities. Junk bond spreads have widened out to a two-month high of 380 basis points. That is over a 40 basis point widening in barely more than two weeks (and the selling have been taking place on rising volume too…to nearly a two-year high in junk bond ETFs. 

    As the weekend WSJ aptly pointed out, the bubble hit its peak a couple of months ago when “money losing” Tesla offered up an eight year $1.8 billion with a puny 5.3% yield – which was so oversubscribed in an income starved world that the issue was boosted by $300 million. We are talking about a B3 rated company here. And now in a classic signpost of late cycle behavior, these bonds are trading at 94 cents on the dollar (from par in August). 

    For the first time in years, planned bond sales are being pulled. And we also are seeing some big redemptions - $2.5billion have withdrawn in the past month. 


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    Nickel Plunges in Metals Selloff as Mood Turns Sour in Shanghai

    This note by Mark Burton for Bloomberg may be of interest to subscribers. Here it is in full:

    Nickel slumped by the most in almost two months as a late-night selloff in Chinese metals spilled over to the London Metal Exchange.

    Prices dropped as much as 5.9 percent to $11,755 a metric ton, the biggest drop since September. A slump that big has happened only a handful of times in the past five years.

    Nickel bore the brunt of selling in metals, with volumes traded electronically surpassing aluminum, usually the LME’s most liquid contract. The slump came after data showing weaker Chinese industrial production and fixed-asset investment.


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    Ubisoft's Microtransaction Revenue Just Beat Digital Sales for the First Time

    This article from Extreme Tech may be of interest to subscribers. Here is a section: 

    Microtransactions have been hotly debated since they began debuting in mobile games almost ten years ago. While they’d been used sporadically in various games for years, the rise of mobile games and their extremely low-to-free pricing made them a functional necessity for developers working in Android or iOS. The AAA PC gaming industry quickly took notice of this, and began offering games with microtransaction options. There’s been a great deal of pushback from the community at various points (Dead Space 3 got hosed for it, as did Bethesda and its horse armor), but microtransactions are clearly here to say. Ubisoft just reported that it took in more money in microtransaction sales than it did in game sales for the first time ever.

    Over the past few years, Ubisoft has seen a notable shift in its earnings for various titles, SeekingAlpha reports. Game sales were buoyed this year by South Park: The Fractured But Whole and Assassin’s Creed: Origins, but microtransactions shot up even further, growing 1.83x in 12 months compared to 1.57x for game sales. Ubisoft also got a boost from the Switch, but even with Nintendo’s new platform, microtransactions brought home the bacon.


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    From Lost Decade to Golden Years: Euro-Area Economy Picks Up

    This article by Jana Randow for Bloomberg may be of interest to subscribers. Here is a section:

    In a report on Monday, the International Monetary Fund said growth across the European region -- which includes the euro area as well as developing economies in central and eastern Europe -- is having a positive spillover effect on the rest of the world. It also said those brighter prospects accounted for the bulk of the upward revision to its global outlook in October.

    For the euro area, economists surveyed by Bloomberg have raised their growth forecasts eight times this year. Data due Tuesday is predicted to show the region gained more momentum in the third quarter by expanding 0.6 percent, faster than the long-term trend, according to Bloomberg Economics.

    “More than four years into the current expansion, most indicators signal the euro-zone economy is still somewhere around mid-cycle,” Talavera said. “Absent an unexpected shock, we should see several more years of economic growth.”


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    Theresa May's Tories Are Engaged in Open Warfare

    This article by Flavia Krause-Jackson for Bloomberg may be of interest to subscribers. Here is a section:

    “In every negotiation, each side tries to control the timetable,” Brexit Secretary David Davis said on Sunday. “The real deadline on this, of course, is December.” That’s when EU leaders will meet to decide whether the U.K. has made sufficient progress to move on to the next stage of talks. The EU wants May to improve her offer on the divorce bill by the end of the month.

    The twists and turns of the Brexit legislation only serve to magnify May’s difficulties and provide an opportunity for her political enemies to make trouble for her -- not just those in her own party.

    The main opposition is seeking a route to power with polls showing Labour ahead. Exploiting Tory divisions on Brexit and testing May’s slim working majority is one way for Labour leader Jeremy Corbyn to score political points.


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    Saudi Arabia Is Putinizing, Not Modernizing

    This article by Leonid Bershidsky for Bloomberg may be of interest to subscribers. Here is a section:

    There's a strong temptation for Western commentators, especially U.S. ones, to portray MbS as a reformist trying to bring the House of Saud into the modern world and Putin as a retrograde dictator taking Russia into the past. But the only reason this temptation to differentiate exists is that Saudi Arabia is a traditional U.S. ally, and the enemy of an old enemy -- Iran. In reality, there are far more similarities than differences between the world's two most important oil dictatorships. Their interests align on their most important market. Together, they've talked up oil prices to a level that allows them to maintain spending on defense and mega-projects. Their geopolitical interests don't align today, but that won't stand in the way of their natural mutual attraction.

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