Things I learned This Week – December 3rd, 2017

Article 1: Lifting the Lid on Regional Banks, Barron’s

On Nov. 13th, members of the Senate Banking Committee announced an agreement that calls for raising the threshold for being considered a Systemically Important Financial Institution (SIFI) from $50 billion to $250 billion.  In the Barron’s article – Lifting the Lid on Regional Banks – the author discusses the impact of this decision on regional banks. Goldman Sachs analysts have estimated that banks of that size have more than $18 billion of excess capital that could be freed up.

Banks with $50 billion to $250 billion in assets have a common-equity Tier-1 capital ratio of 11.5%. This may be well above the 9% that is more appropriate for long-term target for the group.  Tier 1 capital is the core cash and stock that could allow a bank to withstand a financial shock.

The money freed up at the regional banks can be used for more lending, share buybacks or mergers.  Banks cited in the article are CIT Group, Comerica, Zions Bancorp.

Article 2: Buy the Stock From This Salesforce, Barron’s

In the article titled – Buy the Stock From This Salesforce – the author discusses the ways in which Saleforce has expanded its total addressable market (TAM). It’s namesake product Sales Cloud now brings in only about third of subscription revenue.  Newer products – Service Cloud, Marketing Cloud and App Cloud – are growing even faster.

I had published a couple of articles on Salesforce in Seeking Alpha:

The important question to be answered is:

Can Salesforce continue growing at a double-digit pace given the intense competition? 

Article 3: Vanguard Launches New Factor-based ETF, Barron’s

Vanguard has launched new ETFs that invest based on various factors:

  • Vanguard U.S. Minimum Volatility ETF
  • Vanguard U.S. Momentum Factor ETF
  • Vanguard U.S. Value Factor ETF
  • Vanguard U.S. Liquidity Factor ETF
  • Vanguard U.S. Quality Factor ETF
  • Vanguard U.S. Multifactor ETF

Article 4: Africanisation of the World Population – The Coming Baby Boom in Africa, The World in 2018, The Economist

In 2018, Asia will produce more than half of the world’s babies, but only just. The continent is losing its status as the dominant global nursery to sub-Saharan Africa.  In 1990, 19% of the babies were born in Africa; in 2018, 31% of them will be. By 2050, there will be more Nigerian newborns than Chinese ones

India’s birth rate has collapsed and is already hovering around its replacement fertility level. The author says that the migration corridor to watch is the one that leads from increasingly  baby filled African countries to rapidly ageing Asian ones.  But, there will be lot of pressure on Europe’s borders too.

It’s in everybody’s best interest to see a prosperous and peaceful Africa.  Can they get their governance right? Can they be prosperous?

Article 5: Israel – Innovation Nation By Binyamin Netanyahu, The World in 2018 – The Economist

Prime Minster Binyamin Netanyahu has written an excellent piece promoting the technological prowess of Israel. A country with just 8.5 million people has more companies listed on NASDAQ than almost any other country outside of North America. It ranks third in the World Economic Forum’s ranking of most innovative economies.

Israel’s startups receive nearly 20% of global private investment in cyber-security. Israel recycles 87% of its water and its cows produce more milk per animal than any other country.

Israel has become a technology and innovation powerhouse with little regulation and bureaucracy.

Article 6: Geoengineering is in the debate for combating climate change, The World in 2018, The Economist

The chief goal of the Paris Agreement is to keep the earth’s temperature from increasing by 2° C. In the article Sunshine policy, Oliver Morton argues that climate engineering technologies should be considered to combat the effects of global warming. He also states that those technologies should be regulated globally to ensure certain countries do use those technologies for their own benefit to the detriment of others.

Some of the geoengineering technologies being considered are:

  • Pull carbon dioxide directly from the air
    • Two companies, one in Canada and the other in Switzerland, have built pilot plants.
  • Cool the planet by increasing the amount of sunlight that is reflected back into space.
    • This is done by brightening particular sorts of cloud or injecting into the stratosphere a think layer of particles similar to those seen after volcanic eruptions.

 

 

 

 

 

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