Ritesh Jain – Page 131 – WorldoutofWhack

These 4 companies are embracing, and finding value in, the circular economy

The circular economy – an economic model focused on designing and manufacturing products, components and materials for reuse, remanufacturing, and recycling – promises big opportunities for the private sector to drive new and better growth and accelerate innovation. Shifting to the circular economy could release $4.5 trillion in new economic potential by 2030, according to Accenture. But how do we take that vision of a circular economy – which imagines a world without waste – and translate that into profitable and scalable action?

Let’s take a look at some of the companies featured in the report.

Aramark: Reducing food waste

Food services provider Aramark has set a goal of reducing food waste by 50% by 2030 from its 2015 baseline, such as by setting standards for ordering, receiving, preparing, serving and tracking food production.

EILEEN FISHER: The path to 100% circularity

EILEEN FISHER’s take-back programme, in which employees and customers can bring back unwanted clothing for $5 store credit per piece, started in 2009 under the name Green Eileen. Funds raised from the programme are donated to organizations that support women, girls, and the environment

Intel: Finding value in waste material

Computer chip manufacturer Intel has set a goal to recycle 90% of its non-hazardous waste and divert 100% of its hazardous waste from landfills by 2020. Since 2008, Intel has recycled 75% of the total waste generated from its operations, such as through upcycling, recycling, recovery, and reuse.

Johnson Controls: Closing the automotive batteries loop

Johnson Controls has designed its conventional automotive batteries so that 99% of the materials can be reused. Customers can return old batteries that are collected by Johnson Controls and turned into new batteries. The company’s circular supply chain has pushed recycling rates for conventional batteries to 99% in North America, Brazil, and Europe in 2015, enabling Johnson Controls to produce batteries containing more than 80% recycled material

Credit Watching:Exter Inverted Pyramid at work

Lewis Johnson writes …..

Capital Flows in the Pyramid as the Cycle Changes

During an expansion, capital shuns the lower returns, greater liquidity, and safety of the pyramid’s apex to seek more profitable, but riskier, employment in less liquid markets up the pyramid. The longer the expansion continues, the more extended this pyramid becomes.

Once credit quality starts to worsen, however, this bloated structure pancakes back down upon itself in a flight to safety. The riskier, upper parts of the inverted pyramid become less liquid (harder to sell), and – if they can be sold at all – change hands at markedly lower prices as the once continuous flow of credit that had levitated those prices dries up

AFFORDABLE HOUSING ……….the panacea for growth?

Indian govt has already done a mini QE in the form of DBT and dismantling of APMC which is leading to money flowing to bottom of the pyramid instead of few middleman and this could will have a multiplier effect

on top of this … the expansion of the affordable housing market from under 0.1 per cent to nearly 5-10 per cent of the population means that India’s growth revival will be more broad based led by real estate and construction investments

R Jagannathan writes …The focus for builders has shifted from housing for the upper class to affordable housing.

Real estate has one of the biggest employment multipliers, since not only will construction workers get jobs, but a whole host of related industries – from furniture to household gadgets to interior decoration – will see higher demand. Not only that, rising real estate investment also means higher demand for steel, cement and building materials, all of which will improve overall growth.

Indian govt has already done a mini QE in the form of DBT and dismantling of APMC which is leading to money flowing to bottom of the pyramid instead of few middleman and this could have a

What I read this week

How did Maharashtra manage to de-risk farmers.

Maharashtra is a rich state where its farmers are poor. And it isn’t because they don’t get loan waivers. Farmers remain poor primarily because they’ve been exploited. Their poverty stems from the government’s inability to de-risk them, and to infuse vision and wealth. The state government hopes to change this and initial results are encouraging. Chief minister, Devendra Fadnavis, is focused on building ponds and dams to ensure there is water for villages all around the year. He then abolished APMCs, giving farmers direct access to markets. Maharashtra also entered into an agreement with NDDB (National Dairy Development Board) which is mandated to promote milk cooperatives across India. Over the past year, with the help of NDDB, the state has gone about building collection centres in Vidarbha and Marathawada. The opportunity was evident to anyone who cared to see. Maharashtra’s cooperatives offered farmers just around Rs.18 a litre of milk, compared to Rs.28-31 offered by Gujarat’s cooperatives. Since the entire milk collection and distribution network was owned by these cooperatives (as was the APMC), it was imperative to set up a parallel network. Instead of Rs.18, Mahadev Jankar state minister for animal husbandry, dairy and fisheries began offering farmers Rs.26 a litre for cow’s milk and Rs.33 for buffaloes’ milk. The result was electrifying. By last fortnight, as against the average collection by the state of just 90,000 litres a day some six months ago, current daily collection has climbed to 11 lakh litres. Jankar wants to go a step further. He wants to give rural communities other ways of earning money. The idea is to de-risk the farmer, he says. So if the crops fail, he still makes money from milk. If that does not work out well enough, there is poultry and pig and goat rearing.

http://www.asiaconverge.com/2017/05/maharashtra-derisks-farmers/

ESPN and bursting of sports Bubble

When the cable TV sports giant ESPN announced 100 layoffs recently, including letting go a number of high-profile broadcasters, a lot of people took notice, and well they should: things no longer are business as usual in sports broadcasting, and we are not even at the beginning of the end, and maybe not even the end of the beginning .Like the slow crashing of the retail sector as online purchase firms like Amazon begin their domination, we are seeing a sea change in sports broadcasting and that is going to mean big changes are down the road not only for ESPN, but for all of the sports entities that depend upon the huge payouts that ESPN provides. To put it mildly, a lot of people are about to see their lives change drastically as consumer choices drive sports broadcasting in a new direction. ESPN is losing 10,000 subscribers every day so far in 2017. In the past six years they have lost 13 million subscribers and that subscriber loss is escalating each year. That’s billions of dollars in lost revenue. Every year for the next five years ESPN is spending more and bringing in less. You don’t have to be Warren Buffett to see that’s a business problem. To a certain extent, one can argue that both higher education and ESPN have benefited from “bubble” economies, and as consumer choice becomes directed elsewhere, the bubbles burst. As Carl Menger demonstrated, the bursting of the bubbles will mean that some factor owners will have to receive less pay in order to remain employed, while other factors will have to be transferred to other uses altogether or simply become unemployed. All soothing rhetoric aside, the world of sports broadcasting is going to see major changes in the next decade as consumers have their say.

https://mises.org/blog/espn-and-bursting-sports-bubble

Whatever Beijing May Say, But A Credit Downgrade Right After the OBOR Jamboree Is Embarrassing.

Moody’s downgraded China’s sovereign credit rating from Aa3 to A1 and upgraded its outlook for the rating to ‘stable’ from ‘negative’. That is, it does not expect to downgrade China again anytime soon. The fact is that this is the first China rating change by Moody’s in nearly thirty years. It does make people sit up and take notice. Second, China has just come off the One Belt One Road conference where it assembled many foreign leaders. It was almost an emperor’s durbar with the little chieftains in attendance. Hence, to have this happen within a week of that jamboree is a bit of an embarrassment that China could have done without. The downgrade, while being meaningfully negative for those borrowers that rely on the sovereign rating to price their own debt, may also make the Chinese government think a bit harder about the next round of debt-funded reflation once it gets bored or frightened of the current round of de-leveraging that it is supposedly pursuing .It is also possible that the scale of the estimates being touted for the ‘One Belt One Road’ initiative might have influenced Moody’s after all he number is variously estimated at 900 billion to 1 trillion US dollar in debt funding.

https://swarajyamag.com/economy/whatever-beijing-may-say-but-a-credit-downgrade-right-after-the-obor-jamboree-is-embarrassing

Life After NATO

For all intents and purposes, the North Atlantic Treaty Organization – the foundation for American security for the past seven decades – ceased existing on May 25, 2017.While attending a highly anticipated (some might say dreaded) meeting with NATO heads of state and government in Brussels, U.S. President Donald Trump delivered a speech railing against member-states who have failed to meet economic obligations to the defense pact, going so far as to indirectly abrogate the alliance’s cornerstone: the provisions for collective defense under Article V of the treaty. Peter Zeihan writes that We have not had large-scale regional – much less global – competition outside of the American-Soviet rivalry for 70 years expressly because the Americans took care of pretty much everything. But the Americans have been moving slow-motion in the general direction of disengagement from their Cold War alliance system since 1989. Today’s developments are not the final word on that disengagement, this is simply the end of the interim where people didn’t really know where the Americans stood. We are only now starting to understand the degree to which the Americans just are not going to be there. Remove the Americans and every country in the world – starting with the European nations – needs to figure out how to look after their own economic and physical security. Different countries will have different ideas of how to do that, and many of those ideas will be mutually exclusive. History is about to start moving again.

And history is bloody.

http://us11.campaign-archive2.com/?u=de2bc41f8324e6955ef65e0c9&id=4b5fd9c464

The crypto currency universe keeps expanding

BITCOIN’S RECORD YEAR IS JUST A PART OF THE BIG STORY

Bitcoin is the original cryptocurrency, and its meteoric rise has made it a mainstay of conversation for investors, media, and technologists alike.

In fact, the innovation of the blockchain is changing entire markets, while causing ripples with central banks and the financial industry. At time of publication, the bitcoin price now hovers near US$2,400, a massive increase from this time last year.

But the true impact of Bitcoin is actually far more reaching than this – it’s actually helped to birth new markets for over 800 other cryptocurrencies and assets that are available for online trading. And while the market for bitcoins is worth nearly $40 billion itself, the rest of these cryptocurrencies are actually worth even more in combination.

THE ALTCOIN UNIVERSE

For the first time since Bitcoin was founded, it now makes up the minority of the entire cryptocurrency market at about 47.9% of all coins and assets.

Bitcoin as a Percentage of Crypto Market

So what are the other altcoins that make up the rest of this universe, and where did they come from?

Litecoin
Litecoin is one of the first altcoins, and it is nearly identical to Bitcoin after being “forked” in 2011. Litecoin aims to process blocks 4x faster than Bitcoin to speed up transaction confirmation time, though this creates several other challenges as well. At time of writing, Litecoin’s market capitalization is worth $1.3 billion.

Ethereum
Ethereum, launched in 2015, is the largest coin by market capitalization aside from Bitcoin. However, it is also quite different. While Bitcoin is designed to be a payments protocol first, Ethereum enables developers to build and deploy decentralized applications, while also enabling smart contracts. The tokens used to power the network are called Ether, but they can also be traded online. At time of writing, Ethereum’s market capitalization is $15.4 billion.

Also interesting: the Ethereum network actually split into two in 2016. It’s a complicated situation, but read about it here. There is now a separate Ethereum, based on the original Ethereum blockchain, trading as “Ethereum Classic” with its own market capitalization of $1.4 billion.

Ripple
Ripple (XRP) is the native currency of the Ripple Protocol – a broader catch-all for an open-source, global exchange. It’s already being used by banks such as Santander, Bank of America Merrill Lynch, UBS, and RBC. It solves a different problem than Bitcoin, allowing for settling payments between different currencies and even different payment systems. Today, Ripple’s native coin (XRP) has a market cap of $10.9 billion.

why bad economic theories remain popular

Steve writes in his Blog……Ludwig von Mises and Friedrich Hayek, the most prominent “Austrian” economists of the time, anticipated the 1929 stock market crash and correctly predicted the dire consequences of government attempts to artificially stimulate economic growth in the aftermath of the crash. John Maynard Keynes, on the other hand, was totally blindsided by the stock market crash and the economic disaster of the early 1930s. And yet, Keynes’s theories gained enormous popularity during the 1930s whereas the work of Mises and Hayek was largely ignored. Why was it so?

Keynes became popular because he told the politically powerful what they wanted to hear. In particular, he provided power-hungry politicians with intellectual support for the schemes they not only already had in mind, but in many cases were already putting into practice. Despite being riddled with errors, Keynes’ theories also appealed to many economists because the implementation of these theories would confer a lot more influence upon the economics fraternity. The fact is that in a free economy there wouldn’t be much for an economist to do other than teach economics. He/she would certainly never have the opportunity to be involved in the ‘management’ of the economy.

Emerging Markets Are Not All Created Equal

For most investors, targeting foreign countries where there are high expectations for growth is a useful strategy.

After all, in the United States, Canada, and Europe, economies are mostly growing at about 2% or less per year. And while these developed markets are less risky to invest in, finding value can be tricky.

That’s why for many decades, investors have been allured by the fast growth of far-off economies. In the 1950s and 1960s, Japan’s economy regularly expanded at a 10%+ clip, and who can forget the “Four Asian Tigers” that followed in Japan’s footsteps? In the 2000s, the focus shifted to the BRICS (Brazil, Russia, India, China, South Africa) – and more recently, attention has been on countries like Indonesia, Nigeria, Colombia, and Turkey.

DIFFERENT RISKS IN EMERGING MARKETS

Although emerging markets are similar in that they have high expectations for growth, it’s important to remember that these countries have very unique and different sets of risks.

Paul Mylchreest on Natural Law, China ,Dollar and Equities

Paul Mylchreest writes …..We suspect that every strategist and active fund manager has bet against this mega equity bull market at some point during the last eight years. Buy and hold/buy the dip have triumphed. In contrast, directional changes in many so-called “fundamentals”, e.g. credit spreads, inflation/deflation, Fed policy and earnings, have often had limited predictive power.We could have delved even deeper into fundamental analysis, but questioned whether that would add much value for active portfolio managers. Many are questioning the value of
sellside research, and often their own convictions, in very tough industry conditions.There’s a case for the buyside and sellside to find different analytical approaches at this point.With that mindset, we analysed repeating patterns of peak-to-peak and trough-to-trough cycles in the Dow Jones index. The interference of many individual cycles creates a complex waveform in aggregate.
The analysis (for what it’s worth) suggested two things. Firstly, US equity prices have surprisingly behaved almost perfectly in terms of the trend since 2009, although we suspect that central bank policies significantly exaggerated price movements to the upside. Secondly, the next cyclical peak for US equities could occur in the final week of November 2017 (+/- one month)

Capital Manufacturing Capital by Victor Shvets

Capital manufacturing capital
‘New Ideas, more than savings or investment or education, are the key to prosperity, both to private fortunes… and to the wealth of nations’ – David Warsh; ‘Alex Poyarkov, a former goldmedal winner of the Mathematical Olympiad’ was the subject of a ‘bidding war among hedgefund heavyweights Renaissance, Citadel and TGS’ – Wall Street Journal, May 22nd, 2017

Victor Shvets writes

The key to current macro-economic and investment climate is that we are residing in a world that can be best described as the age of ‘declining returns on humans and eroding returns on incremental capital’. As the Third Industrial Revolution (or Information Age) picks up pace, it is not labour hours, demographics or conventional capital investment that generate productivity, but rather a far more oblique concept of knowledge and social capital.
The key challenge is that even though neither labour nor capital spending are any longer the key drivers, we are busily creating fresh capital to maintain and lubricate global liquidity and avoid any sustained de-leveraging. If we define capital holistically (anything from repo and derivative markets to equities and bonds), the ‘fireball cloud of finance’ is getting ever larger. However, most of the incremental capital cannot find productive deployment on the ‘ground’ in real economy and hence it is incessantly looking for allocation within the ‘cloud of finance’ itself. As it gets bigger, the ‘cloud’ presents an ever greater danger to a small underlying real economy below, forcing CBs and the public sector to act aggressively to control and corral it, so that the cloud does not collapse on itself.

In the world that is drowning in excess capital, cost of capital can never increase. In the world where ‘fireball of financial instruments’ must continue to expand (otherwise it is always in danger of collapsing on itself), there is limited tolerance for any volatility. Neither CBs nor investors can be confident that volatility in one segment however small) will not suddenly impact completely unrelated asset classes. This type of ‘butterfly effect’ could cause an explosion in the sky’. Hence, Central Banks and other public sector instrumentalities are likely to continue to ‘corral and direct’ financial markets, and if needs be, public sector might resort to outright nationalizations. It is all for our own good, as ‘financial cloud’ is now at least 4x-5x the size of real economy, and any disturbance in that cloud would unquestionably have devastating consequences on the ‘ground’.
We are essentially describing a world of no discernible business or capital market cycles and the world where ‘financial cloud’ must remain disconnected from fundamentals. While eventually the time of reckoning would arrive and the two spheres would need to (once again) converge, it is far from clear how this will occur.

Victor concludes by saying that it as the fight between Olympians (representing technology and overfinancialization) and Titans (representing political reaction against globalization and deflation, in favour of localization and reflation). While Olympians are ultimately going to win this fight, some rounds could go the Titans’ way (primarily when the US and China are on the same page) and it could take some time, before Titans are finally exiled.

In our view, disinflation remains the ‘beating heart’ of the investment landscape.

Rusell Napier Interview BUY THE DOLLAR

Rusell Has been ahead of curve , Market historian who got most of his calls right but not the timing

Rusell Napier comments ….. how money is actually created.

“Money is created by an extension of commercial, by balance sheets. It’s not ultimately created by the federal reserve, the federal reserve has long sort of controlled those commercial banks, and by controlling commercial banks the way one would control a team of horses, manages the supply of money. But when that is too high, there is at least a portion of the population, probably not people in private equities but homeowners who consider it prudent to begin to reduce their leverage and that begins to get more true the older we get, and we have this baby boom bulge going through the system, and we have a conundrum in the global economy, if I could quote from the maestro, and the conundrum is ‘how do we create money without creating debt? Or if we’re not going to create debt, because so many portions of the system or over-averaged and want to de-gear and if banks find it very difficult to grow the banks sheets because so many of their customers want to reduce their debts, how to we grow money?’ And it’s a question that’s not really been answered, so what I see every day on my screen, I see lots of evidence of more debt, primarily outside the banking system through the bond market, but not a lot of credit being created by the banks and therefore not a lot of money. And if you constantly add in more debt without the money that inevitably stimulates or is necessary for economic growth, in a modicum or a reasonable rate of inflation, you’re gonna get yourself into a real problem, and I think that’s the real problem that’s shaping up. In terms of the time of that, it’s incredibly difficult, but this inability of the banking system to grow, which I think is the man-driven not supply-driven, is something that the authorities, I think, have not paid enough attention to”

Fantastic Interview from my favourite Analyst Rusell Napier who covers the following topic in detailIs

1.US Dollar bull market over?
2.Secular treasury bond bull market
3.The coming pension crisis
4.Inflation expectations
5.Outlook for precious metals
6.European exit contagion