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Media worth consuming - October 2019

A monthly look at dozens of global media articles that often do not receive mainstream coverage in Australia.


S&P 500 companies are paying out over 100% of their free cashflow as dividends and buybacks, even though earnings growth has been flat for the last two quarters and is likely to be negative for the quarter just ended. On some measures, the US stock market isn’t bubbly at all. Insiders are selling their stock at the highest pace in 20 years. US rail freight levels are down 5% year on year and container shipping rates are down 43% year on year. Inflation, exports and imports are all negative in South Korea.

29% of US leveraged loans are rated B- and another 11% are rated CCC or below, which creates price jump risk for CLOs facing rating constraints. Standard and Poor’s sees a growing pile of “weakest link” corporates that will form a default wave in the next downturn. LBO companies rarely hit their EBITDA growth and debt reduction targets put forward at the time of borrowing. EBITDA adjustments in private equity transactions are at a record high, with adjustments nearly half of EBITDA for B rated companies.

Some “investment grade” bond funds are loading up on debt with split BBB/BB ratings to boost returns. Moody’s sub-investment grade downgrade to upgrade ratio has substantially deteriorated this year. Rating agencies are giving some big corporates several years of leeway to earn the rating they currently have. Defaults are jumping in the municipal bond market. The US Treasury Department is regularly approving reductions in pension benefits for defined benefit funds heading towards insolvency.

The Bank for International Settlements studied the impact of low interest rates and found that banks reduced lending and increased risk taking as a result. Smaller German banks are increasingly passing on negative interest rates to their retail clients with larger banks considering doing the same. Greece is selling short term debt at negative interest rates.

WeWork’s downfall is reminding investors to value the math rather than the magic. Softbank is going to spend $10 billion bailing out WeWork and its CEO. Tesla recorded a profitable quarter by cutting costs faster than revenues fell and has built a Chinese car factory in 168 days. Tesla owners are posting videos of their cars going wild after using the “smart summon” feature. This cycle’s tech bubble is running out of helium. Silicon Valley held a conference to express their hatred for IPOs, right after several large tech company founders enriched themselves by listing shares that subsequently crashed.

Indian lenders are caught in a liquidity crunch with property developers the worst impacted. Rating agencies in India are doing a poor job of predicting defaults. Residential property sales have fallen hard in Beijing and Shanghai with commercial office vacancy rates well above international peers and rising. China has stopped publishing industrial employment data with alternative sources pointing to employers heavily cutting back on hiring.

Asset allocators get fee cuts by threating to go passive, but they’d be better off switching to managers that deliver decent outperformance rather than sticking with mediocre managers. A review of academic studies over the last 20 years finds that active management has been judged too harshly. New research points to US equities outperforming bonds by only 1.7% over the last 220 years. Ken Fisher made another batch of offensive comments at a financial conference, leading to his firm losing $3 billion in assets in two weeks. South Korea’s largest hedge fund has frozen investors after a redemption run. Investors wanting ESG bond portfolios need to accept lower returns and concentrated holdings. A Reddit user bragged about turning $766 in $107,758 in a week by options trading. Virtue signalling CEOs are being cut down by their shareholders for underperformance.

Politics & Culture

Google is meddling in the US presidential election by supressing information about Tulsi Gabbard. Mitt Romney used a fake twitter account to say nice things about himself and lob criticisms at Donald Trump. The 10 most toxic donors, whose money has brought trouble onto those who received it. Trump’s properties gave different financial information to the government and their lenders. The allegations that groups are booking rooms at Trump’s hotels and never staying in order to curry favour. 

Where women see gender bias, men see a lack of women making the choices and sacrifices needed to get to the top. Voters in the all American stock research rankings are more likely to vote for women, even after adjusting for experience and performance. There are more men in STEM partly because men are so much worse at humanities than women. Several countries are allowing men to serve time in women’s prisons if they self-identify as female.

A US federal court judge has deemed legal Harvard’s blatantly racist admissions policies which include giving preference to kids that play expensive sports, dominated by wealthy white kids. Giving parents a choice of schools increases the quality of public and private schools. Technical/trade orientated high schools substantially increase the employment prospects and earnings of their students.

The NBA rejected Chinese bullying to fire a Houston Rockets employee for a pro-Hong Kong tweet. NBA fans mocked LeBron James for choosing Chinese money over free speech. China is spying on its citizens and feeding them propaganda through an app that is mandatory for government workers. A Chinese mayor was arrested after his home was raided and $660 million of gold was found. Chinese courts are denying divorce applications from women who are victims of domestic violence. Singapore has passed a law banning news the government doesn’t like with punishment of up to 10 years imprisonment and a $1 million fine.

An Ontario dental assistant lost his licence to practice after treating his wife. An Atlanta City Manager has shut down a preschool stall selling cheap vegetables in a poor neighbourhood for “zoning violations”. Swedish towns are requiring beggars to get a permit before hassling people for money. The German Parliament is considering jail sentences of up to 3 years for insulting the European Union anthem or flag. You can be fined up to $250,000 for using the term “illegal alien” in New York. US Police accused of stealing over $225,000 can't be sued after a bizarre court ruling.

A Spanish court has handed down long jail sentences to nine Catalan leaders for pursuing independence. Canada’s government tried to block independent journalists from reporting on the election. The Australian government completely bungled an Interpol notice resulting in a refugee being jailed for 77 days. An Australian University is suing a senior academic for damages after he reported its alleged misconduct. Britain should leave the EU and join NAFTA.

Dave Chappelle’s comedy special shows that ordinary people prioritise laughing whilst critics prioritise political correctness. An initial review of Stockton’s UBI experiment shows recipients could use financial counselling at least as much as the money. It’s odd that people like to wear t-shirts of the mass murderer Che Guevara. Behind San Francisco’s homelessness epidemic lies drug abuse, mental illness and a lack of enforcement of basic standards.

Economics & Work

The winners of the Nobel Prize for Economics this year broke new ground in designing and testing programs to alleviate poverty. One of the Nobel Prize winner’s idea to pay poorer countries to take refugees could ease the global refugee problem. 5 economists who were in contention for the Nobel Prize.

12 cutting quotes from Milton Friedman on government and freedom. Libertarians have gone on a cruise to share their disdain of Paul Krugman. Hungary, Poland and Serbia have railed against migrants but now need to import more to combat labour shortages. Americans with the lowest wages are seeing the biggest percentage wage gains.

Swiss Cantons are taking drastic action to avoid the sting of negative interest rates. Central bankers have self-assessed their use of unconventional monetary policy tools as a great success with minimal negative effects. The IMF has quietly admitted that easy monetary policy has provided the fuel for the next crisis. The increasing amount of debt creates a “bubble or nothing” economy, vulnerable to a long and deep recession. The argument over whether the latest batch of Federal Reserve bond buying counts as quantitative easing. Governments default regularly and we shouldn’t be surprised when they do.


US hospitals are detaining patients against their will and sticking them with the bill. US family healthcare premiums have surpassed $20,000 per year. When healthcare costs are included in the calculations, America looks like a European welfare state. Walmart is revolutionising healthcare by offering basic medical services at a 30-50% discount. An American private equity firm auctioned off its graduate doctor slots at a distressed hospital. Sheriffs in Alabama frequently release sick inmates so they don’t stuck with the cost of medical care.

Ultra-processed foods trick our brains into thinking we need more food. The average human skull is shrinking, which negatively impacts sleep, weight and development. 30% of men and 86% of women in the US Army are failing the combat fitness test. Sleep deprivation is the biggest issue for NBA players. 5.7 million children in the US have a parent with addiction issues, so Sesame Street is introducing a character to help children deal with it.

A Chinese family went through 23 weddings and divorces in a month to get a bigger share of a property development. Five Chinese men are going to jail after four of them each subcontracted a contract to kill and the fifth contacted the target and asked him to fake his death. China purged its internet of South Park content after an episode that mocks government censorship.

Celebrities that support action against climate change should jump on board the campaign to ban private jets. Climate activists gained infamy by botching their attempt to spray a government building red. London residents are fighting back against Extinction Rebellion protestors and the city has banned one of their protests.

Hydrogen has the potential to be the clean energy fuel of the future, with scientists becoming more efficient in using electricity to create hydrogen from water. Molten salt towers could be the cheap storage option that renewables are currently missing. Regenerating degraded soil could be a relatively cheap way to buy 20 years to address climate change. Wind and solar power are subject to very large swings in production on a daily and seasonal basis. The Sicilian Mafia is a big investor in wind farms.

Celebrating late bloomers; those who make a great impact in life after mediocrity early on. France offers its elderly citizens a low cost service for their postman to drop in and check on them. Granny flats are becoming the affordable housing solution. There are so many magazines about food, why not one about toilets? The ten deadliest foods in the world. Forbes is encouraging single women to travel to Taliban dominated parts of Pakistan. Qatar is working on outdoor air-conditioning in advance of hosting the Soccer World Cup. A New Zealand café is charging a $5 surcharge for “hipster allergies”. The man who makes public monuments dedicated to urban legends.


Written by Jonathan Rochford of Narrow Road Capital. Comments and criticisms are welcome below or can be sent to


This article has been prepared for educational purposes and is not a substitute for professional and tailored financial advice. It contains information derived and sourced from a broad list of third parties but the accuracy of this information cannot be verified in all cases. Narrow Road Capital advises on and invests in a wide range of securities, including securities linked to the performance of various companies and financial institutions.



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