Craft beer saving neighborhoods across America | Associated Press (AP)
Breweries started popping up in dilapidated warehouses from Boston to Brooklyn, Cleveland to San Fran in the 1980s. Their success has engendered an urban renewal, with high wages gentrifying their hometowns.
Japan nears switching-on nuclear reactors in wake of TEPCO meltdown | Bloomberg
Regulators will accept applications for reactivation on July 8, after 48 nuclear reactors were idled in the wake of 2011’s earthquake & tsunami.
This will start reversing the $241B in oil & gas imports (+36% ttm y/y) used to displace the lost supply and resonate throughout global energy markets.
$CL_F $NG_F $XLE
Analysis of banks’ duration risk: Earnings power & book value effects from recent rising rates (2q13) | Barrons
Losses from rising rates are reflected on income statement’s accumulated other comprehensive income (AOCI) & balance sheet’s book value (BV) derivations.
Earnings power best- $JPM $PNC $USB; worst- $C (1% FX losses)
Rising rates best- $JPM & $C (both 2% tangible BV duration); worst- $WFC (5%) $BAC & $PNC (both 3%)
Fed (FRB) votes on Basel III capital requirements for banks | CNBC
Regulators voted to raise simple leverage ratio (capital/assets) minimums from 3% to 6% for TBTFs (over $10B in assets), a level exceeding the international standard of 4%.
For all banks, tier 1 capital/assets raised to 6% vs 4% Basel III; capital conservation buffer (tier 1 capital/risk weighted assets) increased to 4.5% vs 2%; total capital/risk weighted assets kept at 8%.
100 banks will have to raise $4.5B by 2019 to comply.
Colleges chase alumni & donors, but still awash in debt after building boom/bust | Bloomberg
The waning boom from federal research funding (1990s), rising tuition & investment returns has higher education scrambling for donations to finance its ambitious expansion plans, but while 2012 donations of $31B (+2.3% y/y) were just shy of 2008’s $31.6B alltime record, half of colleges reported y/y declines—an unsurprising deceleration trend since such gifts are hyper-economically sensitive.
Even after a 2009 building moratorium, Cornell continued to accumulate liabilities from legacy projects, budget deficits & misadventures with derivatives like $1B in busted interest rate swaps. The school now has $1.9B in debt & $5B endowment, having to balance austerity with growth after 2010’s $68B deficit ($2B budget) sent a wakeup call.
Japan’s margin levels reach historic highs | ZeroHedge
Having barely fallen towards the end of May/June’s equity correction, Japanese margin buy/sell ratio at 6.78x is above highs from 1994 & 1996 and has reached 2000’s alltime high; all occasions preceded major $TOPIX corrections.
Global Purchasing Managers Index (June 2013): Expansion continues despite Asian slowdown | Business Insider
Global PMI flat & still expanding (50.6 unch) with Asia contracting & Europe recovering:
Japan keeps expanding (51.5 to 52.3).
China’s official PMI slid again (50.8 to 50.1), but the unofficial manufacturing PMI really showed the stress of slowdown on small/mid-sized businesses (49.2 to 48.2); unsurprisingly, South Korea also plummeted (51.1 to 49.4) with exports mean reverting (+3.2% y/y to -0.9%, +0.1% exp).
Australia continues improvement from 1H collapse (43.8 to 49.6), now in 24th consecutive month of contraction.
European recovery continues (48.3 to 48.8) for everyone except Germany (49.6 to 48.4).
The UK had another strong acceleration (51.3 to 52.5).
US ISM beats big (49.0 to 50.9, 50.5 exp), with huge gains in inventories, new orders, production, exports & imports, but contraction in employment (50.1 to 48.7)–worst since 9/2009.
How Dragon Kings could trump Black Swans | MIT Technology Review
Draws on the work of Didier Sornette:
Traditional power law theories (e.g. Nassim Taleb) ignore outliers in log distributions’ tails: for example, most countries have many small cities, a few large ones & one behemoth; so the log distribution appears as a straight line with an outlier in the right tail that doesn’t fit the power law formula. Paris, France & London, England demonstrate this, which can be explained by positive feedback loops that generate super-exponential growth.
This theory also explains how capital markets can experience multiple “100-year floods” in close proximity.