Market Cheat Sheet Oct. 18, 2018

Market Cheat Sheet

Track the Markets: Winners and Losers; Compare the performance of selected global stock indexes, bond ETFs, currencies and commodities (YTD and Current Quarter) – WSJ

“Current stretch of European underperformance is unprecedented both in length and magnitude; earnings recovery is coming back very strongly and Europe’s operational leverage is vastly underappreciated; discount to the US has never been this wide (39% vs. 24% average); macro data is still near two decade highs and indicates robust economic growth; Capex boom expected: Europe running close to peak capacity; support for the euro remains very strong and it’s actually increasing in Italy; significant outflows from the region tend to be a good contrarian indicator; there are impressive technology growth stories in Europe, they are just not captured by the index” – The Case for Europe – Myths vs. Reality

“Americans’ compensation is growing, but workers might not notice it in their regular pay…The cost of benefits for private-sector employers rose 3% in June from a year earlier, while the cost of wages and salaries advanced 2.7%. The benefit gain was driven by a nearly 12% increase in bonuses and other forms of supplemental pay. Paid leave, including vacation time, rose 4% in June from a year earlier. The improved perks point to a job market that has shifted in the workers’ favor. The unemployment rate, at 3.9% last month, is holding just above a 18-year low, employers have added jobs for 95-straight months and the number of job openings exceed the number of unemployed Americans actively looking for work.” – WSJ

“The SEC announced that Mr. Musk had settled the lawsuit that sought to ban him from running publicly traded companies. He agreed to step down as chairman and remain ineligible to be re-elected to that position for three years. Mr. Musk will remain on the Tesla board. Tesla has agreed to appoint two new independent board members, establish a new committee of directors and create controls to oversee Mr. Musk’s communications, according to the SEC. Mr. Musk and Tesla each agreed to pay a fine of $20 million…Tesla’s $20 million fine isn’t to settle allegations of fraud, but instead charges that it violated rules requiring companies to maintain systems that ensure disclosures to investors are accurate. The SEC had early in its investigation insisted Tesla was responsible for Mr. Musk’s tweets and that it could be charged with fraud, a person familiar with the matter said. The company’s lawyers at Cahill Gordon & Reindel LLP argued to shield Tesla from a fraud charge.” – WSJ

“Private-equity firms are on track to raise a record amount for infrastructure investing in 2018, as money managers bet on the growing need to upgrade and expand the world’s railroads, natural-gas pipelines and data centers. The firms collectively raised $68.2 billion in the first three quarters of the year, up 18% over the same period in 2017 and already surpassing the $66.2 billion they amassed in all of 2016, according to data from Preqin… In the U.S., privatizing public assets like toll roads, bridges and airports has long been difficult because of cheap funding alternatives such as municipal debt and the challenges of navigating local politics… Governments outside the U.S. are more open to private capital, giving firms such as GIP, Brookfield and KKR with global funds the opportunity to privatize assets there.” – WSJ

Five sources of sustainable competitive advantage: 1) Ability to learn faster than your competition; 2) Ability to empathize with customers more than your competition; 3) Ability to communicate more effectively than your competition; 4) Willingness to fail more than your competition; 5) Willingness to wait longer than your competition – Collaborative Fund

Why Facts Don’t Change Our Minds – James Clear

“An official with China’s foreign-exchange regulator is the lead candidate to become next investment chief of the largest U.S. public pension fund… The California Public Employees’ Retirement System has offered the job to Ben Meng of China’s State Administration of Foreign Exchange, one of these people said… The selection of Mr. Meng would place a familiar face in charge of $360 billion in assets managed for police officers, firefighters and other public workers across the state of California… Calpers earned 8.6% in fiscal 2018 but has underperformed median returns for peers tracked by Wilshire Trust Universe Comparison Service in the five, 10 and 20 years ended June 30. Its returns have exceeded the system’s 7% target rate during the past five years but not the past 10 and 20. It has just 71% assets on hand to pay for all future benefits owed to retirees and public employees. The funded ratio for the largest 100 U.S. public pension plans was 71% as of June 30… Mr. Meng had jobs at banks and investment firms before he worked for Calpers and the Chinese government. He was a bond trader at Morgan Stanley as well as a senior portfolio manager at Barclays Global Investors.” – WSJ