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Too busy during the week? Catch up with last week's readings:

Business

Great interview with Matt Rose (Link)

Short article discussing the decline of industrial conglomerates (Link)

Interesting read comparing China’s e-commerce revenue models to the US based e-commerce. (Link)

How Ray-Ban brought its brand back from the brink (Link)

Carbon emissions (Link)

In-N-Out Burger’s success in simplicity (Link)

Morgan Stanley’s top technology banker moonlights as a driver on his way to winning the Uber IPO mandate (Link)

The Golf Town turnaround story (Link)

Investing and markets

Jamie Dimon interview (Link)

Markets so dominated by ETFs have not been truly tested by a post-QE world (Link)

Charts

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In-N-Out Burger’s success in simplicity (Link)

This article examines In-N-Out Burger’s relentless focus on simplicity and quality which manifests itself in a variety of ways through the firm’s business and operating models.

Morgan Stanley’s top technology banker moonlights as a driver on his way to winning the Uber IPO mandate (Link)

“Some bankers have been known to go to extreme lengths to stand out from the competition. Most start with a mastery of the numbers and fluency with entrepreneurs’ vision, but some like Mr. Grimes have gone further--he rented an apartment close to one company and studied his daughter’s internet habits to get familiar with another.”

The Golf Town turnaround story (Link)

A good business comeback story – When Chad McKinnon assumed the helm of GolfTown in October 2016 he inherited a trainwreck.

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How Ray-Ban brought its brand back from the brink (Link)

This piece provides a brief case study summary of the re-emergence of Ray-Ban as a maker of premium eyewear.

Carbon emissions (Link)

The energy industry often gets a bad rap for being carbon emitting culprits. This piece discusses some of the non-obvious sources of carbon emissions and makes the case that few of us are blameless.

Market predictions

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Jamie Dimon interview (Link)

Jamie Dimon discusses the current market sell-off, the economy and trade relations.

Markets so dominated by ETFs have not been truly tested by a post-QE world (Link)

Since the GFC, global central banks — especially the Fed — have served as market liquidity providers, filling the gap as regulation-restrained big banks have retreated from their traditional market-making roles (WILTW May 24, 2018). Much of that liquidity support has already been stripped away as QT has progressed.

This is what happens in an internet minute

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Short article discussing the decline of industrial conglomerates (Link)

Well known industrial conglomerates like General Electric are now determined to shrink. Conglomerate giant 3M is also working hard to shake its conglomerate label.

Interesting read comparing China’s e-commerce revenue models to the US based e-commerce. (Link)

“Thinking about content consumption in a mobile-first way in China has enabled these new business models, which not only provide diversified revenue streams for businesses, but also allow users to make better, more flexible purchasing decisions.”

Corporate Profit margin vs. unemployment – US

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Stanley Druckenmiller comments on the wisdom of Fed tightening in this op-ed (Link)

Stanley Druckenmiller and Kevin Warsh argue the U.S. economy cannot afford a major policy error making now a good time for the Federal Reserve to pause their programme of monetary tightening.

Macro Tourist follow-up to Druckenmiller piece (Link)

Macro Tourist argues in favour of the Druckenmiller / Warsh perspective saying the days of relatively hawkish U.S. monetary policy are behind us.

The Golf Town turnaround story (Link)

A good business comeback story – When Chad McKinnon assumed the helm of GolfTown in October 2016 he inherited a trainwreck.

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The baijiu market is bigger than the rest of the global spirits market: 

Great interview with Matt Rose, BNSF Railway Chariman (Link) 

"We’ve always looked at the value proposition of the railroad as a three-legged stool. Shareholders are a very important leg of that stool because they provide the capital for us to make investments. The second leg of the stool is the employees. They provide the services that allow us to make the investments that allow us to make the returns to provide to the shareholders. And then finally, there are the customers. People are always asking, “What’s the most important?” Well, they’re all important. And if you think about a three-legged stool, if one of those legs gets a little out of whack, things don’t work very well."

China's auto sales are on track for their first annual decline since 1990s:

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Too busy during the week? Catch up with last week's readings:

Businesses

F.A.O Schwarz piano is back but with a different tune  $(Link)

Order a Whopper sandwich for a penny at McDonald's with the Burger King app (Link) 

Alternative banks $(Link)

Designing an unconventional ad agency (Link)

The CEO of Panera Bread stepped down to focus on a pet cause: warning the world about the danger of fixating on short-term profits as the cost of social stability (Link)

Doug McMillon, Wal-Mart CEO, keeps a list of the top 10 retailers over the decades to remind him you have to innovate and adapt constantly #OnlyTheParanoidSurvive (Link)

Satya Nadella, CEO of Microsoft, reveals how the company got its groove back (Link)

How the Starbucks app created so many reward-hungry obsessives (Link)

Investing

Corporate credit bond markets: To BBB or not to BBB? (Link)

BBBe careful (Link)

China

China helping build panopticon $(Link)

China underestimating its US$3 trillion dollar debt (Link) 

Charts

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Satya Nadella, CEO of Microsoft, reveals how the company got its groove back (Link)

"Signs of Nadella's progress are found everywhere. From a Microsoft voice assistant that integrates with Amazon’s Alexa to a deepening alliance with Samsung and, most crucially, in its financial statements. Revenue, at $110 billion, is growing at a double-digit percentage after slumping for most of the past decade, in large part because of the hard-charging—and high-margin—cloud suite the company has built around Office and Azure, Microsoft’s challenger to Amazon’s cloud juggernaut."

How the Starbucks app created so many reward-hungry obsessives (Link)

"The app allows users to scan and pay with it at checkout (or order in advance and skip checkout), but it also integrates the Starbucks’ Rewards program, a loyalty system through which users earn stars for every dollar spent. Hitting a certain number of stars earns them a free item. (When the star system was overhauled in 2016, it caused quite a bit of consternation among Starbucks fans: It switched its reward trigger from number of purchases to dollars spent. The previous system was the Senate; the new system is the House, is how one co-worker and app user put it to me, explaining that, as a casual user, she was previously “overrepresented” because she could get more stars with fewer and less-expensive purchases.)

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Designing an unconventional ad agency (Link)

Articulating his company’s culture and values would be key to differentiating Zulu from other agencies. “I wanted a free-spirited, collaborative environment where people were driven by the work,” said Mroueh. “I didn’t want to just chase growth for growth’s sake. After 10 years in business, we’ve learned the power of not chasing growth for growth’s sake. Zulu has turned down over $100 million in potential revenue since launching during the recession. Yes, we could be much bigger than we are. But by staying true to our values, we’ve grown on our own terms, with like-minded clients who value true partnership."

The CEO of Panera Bread stepped down to focus on a pet cause: warning the world about the danger of fixating on short-term profits as the cost of social stability (Link)

"He has been travelling the country, giving speeches and talking to business leaders and policymakers, about the urgent need to return to the tradition of investing for the future … We’ve ended up in a situation, to the detriment of all of us, where our public companies are not able to do the things we want in the economy. G.D.P. growth only comes from innovation and productivity increases. And innovation and productivity increases occur because people make commitments and they make transformative events.” 

Doug McMillon, Wal-Mart CEO, keeps a list of the top 10 retailers over the decades to remind him you have to innovate and adapt constantly. #OnlyTheParanoidSurvive (Link)

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Alternative banks $(Link)

“If you look ahead five years, there’s no way there will be a financial services industry that is charging consumers $30 billion a year in overdraft fees,” said Chris Britt, the chief executive of Chime. 'We aim to shake that up, and I think a lot of other consumer companies will be doing the same thing.'  Banking regulators recently signaled that they will give the first banking charter to a neo-bank — Varo, a San Francisco start-up that is offering fee-free checking accounts without any minimum balances."

China underestimating its US$3 trillion dollar debt (Link) 

"Traders, investors and their clients have in the past taken advantage of a lucrative spread between US and Chinese interest rates to borrow cheap dollar debt and convert it into higher yielding yuan-denominated assets. But in an effort to support lending and economic growth, the People's Bank of China has raised its rates only slightly in response to interest increases implemented by the US Fed. This has caused the differential between US and Chinese rates to narrow rapidly, to the point where it no longer offsets the cost of paying back the external dollar debt in ever-more-expensive US dollars."

SUVs: game changer for Porsche

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Corporate credit bond markets: To BBB or not to BBB? (Link)

"Some of the most levered BBBs are those associated with recent M&A transactions that expect to rely on continued M&A synergies and debt pay down to maintain their investment grade ratings. These bonds could be especially vulnerable during an economic slowdown that pressures cash flows and forces them to make tough choices to remain investment grade. 2018 YTD downgrades (from higher to lower ratings within investment grade) are outpacing upgrades by 2x according to J.P. Morgan, even amid healthy economic GDP/earnings growth."

BBBe careful (Link)

Order a Whopper sandwich for a penny at McDonald's with the Burger King app (Link) 

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F.A.O Schwarz piano is back but with a different tune  $(Link)

"To modernize the brand, the New York store will feature “Instagrammable moments” and soldiers’ uniforms designed by the supermodel Gigi Hadid. Other than its new flagship store in New York’s Rockefeller Center, many of the other locations will be owned and operated by other companies, while F.A.O. will collect franchising fees. The company wants its employees to bring a sense of “theater” when interacting with customers. Prospective hires, including cashiers and employees in charge of IT, had to audition for their jobs on stage at an Upper West Side theater earlier this fall."

China helping build panopticon $(Link)

"The company’s success is a marker for China’s race to build digital panopticons to keep watch over its 1.4 billion residents, with direct government support and fewer of the privacy concerns that tend to drive the debate around this kind of next-level surveillance."

Luxury consumption:

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Should America be run by Trader Joes? (Link)

"The quirky little grocery chain with California roots and German ownership has a lot to teach all of us about choice architecture, efficiency, frugality, collaboration and team spirit".

Canada is one pipeline away from having excess capacity for crude:

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OSC study reveals generation gap when it comes to optimism about retirement (Link)

"Key findings include that Canadians aged 18-34 are the most likely to believe their standard of living will increase in retirement, despite being the least likely to have started saving for retirement of any age group; seven per cent of Canadian adults currently own cannabis investments, with 1 in 4 cannabis investors spending $10,000 or more on their investments; and most Canadian adults with parents aged 45 or older say their parents have not talked to them about how they would like their finances managed if they were no longer able to do so."

Oil

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Panera Bread co-founder has stepped down as CEO and is dedicating his time to fight something he believes is ruining modern capitalism: short-term behavior  $(Link)

"He has been travelling the country, giving speeches and talking to business leaders and policymakers about the urgent need to return to the tradition of investing for the future. Some people are starting to listen. Tech titans including Reid Hoffman and Marc Andreessen have financially backed the creation of a new investment framework called the Long-Term Stock Exchange, which would give shareholders greater influence over a company the longer they hold shares. 'We all believe the system is bigger than us, and we can’t fix it, but, if we don’t take control of that system, it’s misserving us in powerful ways.”

Asia is dominating industrial robot adoption  (Link)

Sandro, our self-proclaimed Chief Culture Officer and Sayuri, our Chief Compliance Officer celebrate their 10th year anniversary at EdgePoint with Scaramouche cake

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Today's links:

Inside the pricey war to influence your Instagram feed (Link) 

Foreign direct investment restrictiveness in G7 countries:

 Mini ice age:

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Today's links:

Four things Leonardo da Vinci can teach us about investing (Link)

Welcome to the golden age of grocery shopping (Link)

As interest rates increase, the number of zombie companies is on the rise. These companies have interest payments that exceed their operating profits (Link)

Your weekend Edge:
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          ___________________________

Too busy during the week? Catch up with last week's readings:

Businesses

A tale of two film companies - Why Kodak died and Fujifilm thrived (Link)

How the American consumer got addicted to choice (Link)

This year Lunchables turn 30.  Some things don’t change, such as selling convenience to parents and fun to kids. (Link)

Health

20 Americans die each day waiting for organs. Can pigs save them? $(Link)

Economy 

Some good news to start the weekend - five economic reasons to be thankful (Link)

A short story about what happened to the U.S. economy since the end of World War II (Link)

Why the housing markets is struggling to keep pace with the booming economy $(Link)

How American household finances are changing (Link)

Well regarded venture capital firm Andreessen Horowitz’s presentation about the future -
some interesting insights into sectors to avoid (Link)

Investors

What investors want - an infographic explaining what investors want from advisers
and why they invest (Link)

This quarter, a number of companies have seen their share price decline after posting better than expected results.  Is this a function of consensus estimates having less relevance in today’s real-time data driven world?  (Link)

On the lighter side 

Santa dropped by our office on his way to the parade this weekend (Link)

A holiday gift for everyone...naughty or nice - Check out our EdgePointer's 2018 holiday
wish list (Link)

Charts 

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Today's links:

A holiday gift for everyone...naughty or nice - Check out our EdgePointer's 2018 holiday wish list (Link)

Well regarded venture capital firm Andreessen Horowitz’s presentation about the future - Some interesting insights into sectors to avoid (Link)

Friday charts:

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Today's links:

This year Lunchables turn 30.  Some things don’t change, such as selling convenience to parents and fun to kids. (Link)

"Lunchables currently has an 84 percent share of the market for kids’ 'combination lunches' and its dominance is sustained by its meat-cheese-and-cracker boxes, which remain the best-selling and longest-running Lunchables product." 

What investors want - an infographic explaining what investors want from advisers
and why they invest (Link)

This quarter, a number of companies have seen their share price decline after posting better than expected results.  Is this a function of consensus estimates having less relevance in today’s real-time data driven world?  (Link)

"Investors are saying, 'Forget about whether you beat earnings expectations last quarter. What's your outlook for next quarter, next year? What's your guidance. That's all we care about now."

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Today's links:

Contrarian hire or wrong hire? Japan's new cyber-security minister is the person
tasked with ensuring the digital safety of the 2020 Olympic Games in Tokyo and
says he's never used a computer (Link)

Check out this graph showing the amount of gigabits of data (at 4G LTE speeds) you can get today for the equivalent of €30 a month in various markets around the world

How American household finances are changing (Link)

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Today's links:

How the American consumer got addicted to choice (Link)

"At a meeting with the CEO of a digital jukebox company, he learned the average digital music player offers around 10,000 different albums. The CEO asked him what percentage of the 10,000 albums sold at least one track per quarter. Using the 80/20 rule where 80% of sales tend to come from 20% of the products, you would assume the number is fairly small. Astonishingly, the answer was 98%!"


Why the housing markets is struggling to keep pace with the booming economy $(Link)

"It seems that sellers are unhappily realizing that they aren’t going to get what they thought their house was worth six months ago, and buyers still think homes are too expensive.That helps explain why transaction volume, especially for new houses, has fallen substantially while prices haven’t (at least yet). It’s a standoff. And the outcome of the standoff will, in the aggregate, play a role in shaping the future of the economy."


20 Americans die each day waiting for organs. Can pigs save them? $(Link)

"After years of setbacks, the past two years have seen a cascade of record-breaking xenotransplants using primate models, and researchers are working with regulators to prepare for clinical trials with humans. The first pig-to-human skin graft using live cells is set to take place this month in Boston". 

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Today's links:

Santa dropped by our office on his way to the parade this weekend (Link)

A short story about what happened to the U.S. economy since the end of World War II (Link)

A tale of two film companies - Why Kodak died and Fujifilm thrived (Link)

Your weekend Edge:
Click here to view an archive of interesting reads, fundamental investment topics, insights and more
          ___________________________

Too busy during the week? Catch up with last week's readings:


Businesses

Biosimiliars to slash drug costs in rich countries ($) (Link)

Growth of microbrands threatens consumer-goods giants ($) (Link)

Daniel Schwartz, who took over Burger King at 32, explains how to find and develop
young talent*  (Link)

Apple's strategy after iPhone's peak (Link)

TripAdvisor’s move away from paid advertising on Google to TV advertising (Link)
          ___________________________

Investing

Things you see during every market correction (Link)

A few simple charts highlighting how some of our prosperity could be an illusion (Link)

Indices: There are now 3.7 million published indices $ (Link)

The illegal sports gambling market has grown to $150 billion annually.  Much of that money
will now shift to legitimate entities. (Link)

Debt investing in emerging markets - Payment in Ham  $(Link)
          ___________________________

Health 

Dark-roast coffee may prevent Alzheimer's and Parkinson's (Link)

Bill Gates on why the world deserves a better toilet (Link)

Worldwide 
          ___________________________

More than a fifth of China's homes are vacant & third-home purchases at record high (Link)


Canada is a lot smaller than  you think - maps show Canada and Russia taking up 25%
of Earth's surface when in reality they occupy closer to 5% (Link) 
          ___________________________

Charts

Opportunity set increasing in fixed income:

How about that multiple compression?

S&P 500 Index's Price to Earning Ratio changes year over year.  The P/E ratio is a price multiple which shows how much investors are willing to pay per dollar of earnings. The S&P 500 Index is a broad-based market-capitalization-weighted index of 500 of the largest and most widely held U.S. stocks. 

* EdgePoint Investment Group Inc. owns a stake in Restaurant Brands International and may be buying or selling positions in the security.  

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Today's links:

The illegal sports gambling market has grown to $150 billion annually.  Much of that money
will now shift to legitimate entities.  (Link)
           __________________________

Debt investing in emerging markets - Payment in Ham  (Link)

"A Chinese company has come up with an innovative way to placate creditors - as long as they like ham. Chuying Agro-Pastoral Group Co. said holders of 271 million yuan ($39 million) of its debt have agreed to take ham or pork gift packages instead of interest payments, according to a filing on the Shenzhen Stock Exchange on Thursday. The Zhengzhou-based pork producer failed to repay 500 million yuan of local bonds due this week amid a cash crunch caused by the spread of African swine fever. “Payment in kind becomes PIH (Pay In Ham)," said Owen Gallimore, head of credit strategy from Australia & New Zealand Banking Group. For Judy Kwok-Cheung, director of fixed income research at Bank of Singapore, these cases illustrate the liquidity concern facing small and medium enterprises in China."

        __________________________

TripAdvisor’s move away from paid advertising on Google to TV advertising (Link)

         __________________________


Friday Humour