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

    China, Unhampered by Rules, Races Ahead in Gene-Editing Trials

    This article by Preetika Rana, Amy Dockser Marcus and Wenxin Fan for the Wall Street Journal may be of interest to subscribers. Here is a section:

    In a quirk of the globalized technology arena, Dr. Wu can forge ahead with the tool because he faces few regulatory hurdles to testing it on humans. His hospital’s review board took just an afternoon to sign off on his trial. He didn’t need national regulators’ approval and has few reporting requirements.

    Dr. Wu’s team at Hangzhou Cancer Hospital has been drawing blood from esophageal-cancer patients, shipping it by high-speed rail to a lab that modifies disease-fighting cells using Crispr-Cas9 by deleting a gene that interferes with the immune system’s ability to fight cancer. His team then infuses the cells back into the patients, hoping the reprogrammed DNA will destroy the disease.

    In contrast, what’s expected to be the first human Crispr trial outside China has yet to begin. The University of Pennsylvania has spent nearly two years addressing federal and other requirements, including numerous safety checks designed to minimize risks to patients. While Penn hasn’t received final federal clearance to proceed, “we hope to get clearance soon,” a Penn spokeswoman said.

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    Email of the day on how to invest in African frontier markets

    Very good weekly video last Friday, Eoin. Your comment that Africa could be the next India in 20 years was very interesting: I agree given the demographics, but am sure it will be a bumpy ride, with different countries as winners and losers. Can you recommend some good Africa funds / ETFs for a UK based investor?

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    This Rare Bear Who Called the Crash Warns Housing Is Too Hot Again

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

    If we see mortgage rates at more historical levels, house prices can’t stay where they are,” Stack said. Corp

    A rate rise from 4 to 5 percent for a 30-year loan would drive up monthly mortgage costs by 12 percent. For buyers, that’s on top of the annual median price gain -- 7 percent for existing homes in November, according to CoreLogic. By comparison, disposable income, or earnings adjusted for taxes and inflation, increased just 1.9 percent, according to data from the Bureau of Economic Analysis.

    Bill McBride, who runs the Calculated Risk blog and also called the crash, doesn’t think home prices are inflated this time around. Unlike in 2005, lenders are acting responsibly and the Wild West of real estate speculation hasn’t returned, he said. There is less to speculate on, too. Compared with the overbuilding that preceded the bust, today’s pace of construction isn’t fast enough, he said.

    “Lending standards are still pretty good,” McBride said, and he doesn’t expect mortgage rates to “take off” in the short term.

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    Speculation Grows That OPEC Will End Cuts Early as Prices Rise

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

    "I don’t think the deal per se will end" as inventories near the five-year average, said Bjarne Schieldrop, chief commodity analyst at SEB AB. The Declaration of Cooperation -- the 2016 accord that first established the group of 24 oil producers-- will still stand, but be modified to allow for production cuts to gradually unwind from mid-2018, he said.

    Giovanni Staunovo, commodity analyst at UBS Group AG, expects a similar outcome. Citigroup Inc., whose data show that global oil stockpiles are already back in line with the five- year average, predicts a summer agreement to ramp up production.

    The oil producers themselves say they’re sticking to the plan. While Russia’s Energy Minister Alexander Novak told reporters on Jan. 12 that the meeting in Oman could include discussion of mechanisms for gradually exiting the cuts, four days later he affirmed that the pact should continue. Ministers from the United Arab Emirates, Iraq and Kuwait also insisted there’s no need to change tack.

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    Ambani's Jio Posts First Profit as Interconnection Fees Drop

    This article by Bhuma Shrivastava for Bloomberg may be of interest to subscribers. Here it is in full: 

    The upstart Indian mobile carrier backed by the country’s richest person posted its first quarterly profit almost 16 months after storming into the market with free calling and data at no charge on an introductory basis.

    Net income at Mukesh Ambani’s Reliance Jio Infocomm Ltd. was 5.04 billion rupees ($79 million) for the three months through December, the company said Friday. It posted operating revenue of 68.79 billion rupees and had 160.1 million subscribers at the end of the quarter.

    Jio’s ability to add subscribers and hold down costs suggests its gains on rivals including No. 1 carrier Bharti Airtel Ltd., which reported Thursday that profit fell for a seventh straight quarter, may be sustainable. After starting a price war that forced some smaller providers out of the industry, Jio is acquiring spectrum, tower and fiber assets from debt-laden Reliance Communications Ltd., controlled by billionaire sibling, Anil Ambani.

    That deal puts Mukesh Ambani back in control of assets he handed to Anil Ambani in 2005 as part of an agreement to settle a family dispute.

    Jio, now the country’s fourth-largest carrier, is also getting a tailwind from declines in its costs for interconnection fees. The Telecom Regulatory Authority of India reduced interconnect charges by 57 percent to 0.06 rupees a minute from October last year and plans to cut them to zero starting Jan. 1, 2020.

    Jio spent 10.8 billion rupees on access charges in the third quarter, compared with 21.4 billion rupees it had spent in the three months through September, the company said.

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    Imaginary Taxes Can Have Real Consequences

    This article by Matt Levine at Bloomberg does a good job of explaining the different impact on various companies of the tax changes. Here is a section:

    Deemed repatriation is significantly less fictional than remeasurement of deferred tax assets. Under the old tax system, U.S. companies were taxed on all of the income they earned everywhere, but only when they brought it back to the U.S.; they could defer taxes on foreign income by keeping it offshore. The new tax system is mostly territorial -- U.S. companies pay U.S. taxes on U.S. income and foreign taxes on foreign income -- but there is a one-time "toll tax" on foreign income previously earned abroad. That tax is at a much lower rate than the old (or new) corporate tax rate -- 8 or 15.5 percent instead of 35 (or 21) percent -- but it has to be paid over the next eight years, whether or not the money is actually brought back onshore. So, for companies that were planning to keep their foreign profits offshore forever, this is an actual new cost. (For companies like Apple Inc. that had already accounted for the cost of bringing the money back at 35 percent, though, it creates an accounting profit.) American Express really will have to pay that $2 billion of taxes over the next eight years. Perhaps it would have ended up paying more than that anyway under the old regime, if it had brought the money back, but it will definitely pay that much under the new regime. So, it needs to find $2 billion, and that is money that it cannot pay out to shareholders.

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    Gold ETF Holdings at new recovery high

    This note from Bloomberg may be of interest to subscribers. Here is a section: 

    Global holdings in gold exchange-traded funds soared to the highest level since 2013 as investors got behind a rally in the metal. Most of the inflows were into SPDR Gold Shares, a U.S.-based ETF favored by money managers with a short-term view for its relatively high liquidity and narrow bid-offer spread. Gold has jumped 2.4 percent this year, touching the highest price in four months, as the dollar fell, Chinese consumers stocked up for the Lunar New Year and signs of global inflation picked up.

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