Talks around Canada’s housing market have been surging – about its booming prices and about its looming risks.
The price side – directly shown by its pricing index from Statistics Canada – plotted below from Jan. 2006 – Oct. 2018.
Canada Housing Price Index | Source: Author, Statistics Canada
Toronto’ prices are the most wild in among Canada’s housing markets – nearly doubled in 39 month from Jan. 2014 to Apr. 2017.
Toronto home prices 2014 – 2017 | Source: Financial Post
The price itself is not actually something to worry about. But as FT argued, “House prices have raced ahead of wages for years, boosted by loose lending, low interest rates and lax controls on foreign money.” Similarly on Huffpost, “Toronto’s house price index doubled between 2011 and 2017, even as household incomes grew by single percentage points.”
And let’s take a look at the housing debt level – the risky side.
Bank of Canada said the two trillion dollars of debt is around 170% of disposable income.
and housing debt versus GDP – just passed 100% for 2017 Q2.
The regulator took actions to cool down the market.
The short-sellers/investors took theirs too.
Home Capital is at the center, Canada’s largest provider of home loans to the newly arrived and self-employed.
Home Capital Stock Price (C$) | Source: Bloomberg
In Jun. 2017, Warren Buffett’s investment vehicle Berkshire committed to acquire a 38.39% stake as part of a rescue package (C$2.4 billion, including C$400 million equity and C$2 billion credit line with 9% interest rate). The first tranche of equity investment acquired a 19.99% ownership.
However as the second tranche of equity investment wan’t approved, now in Dec. 2018, the updates came as Buffett would sell most of its stake and reduce ownership level to less than 10%.
Home Capital is under control and stabilized now.
A single crisis is easier to solve than a systematic problem between housing prices and local income.
Robinhood recently prepared to launch its stunning checking & saving offering for cash management with a 3% rate.
That is an astonishing number compared with regular checking accounts (and saving accounts). Industry average is 0.08 percent yield on U.S. checking accounts and the 0.1 percent average on savings accounts (find more about rates here on bankrate.com).
Comparison provided by Robinhood | Source: checking.robinhood.com cached by Google
However, the comparison didn’t last long… as Robinhood pulled back and slowed down it official launch. The center question is that “accounts look like bank accounts, (but) they aren’t.” Below is the description at the bottom of the website.
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance
It is not FDIC protected and it is reported that – “the head of the Securities Investor Protection Corp. (SIPC) told CNBC on Friday that the start-up didn’t contact his office ahead of the product launch, and to his knowledge Robinhood had not contacted the SEC, either.”
While regulation is an issue, another question is – whether 3% reasonable / doable?
Historical CD Interest Rates – 1984-2016 | Source: bankrate.com
US has been through years of low-interest environment; people are not familiar with 10% or 5% interest rate back then. But after Fed’s meeting this week, it is highly likely that there is another 25bp raise, pushing fed funds rate into a range of 2.25 to 2.50 percent.
I should say 3% in 2019 is not undoable. But the core difference is a marketing issue. Robinhood could invest in higher yield products.
But in consumers’ view, it is truly disrupting and may level up the playground for all players in this field.
The time of easy money is gone. The startups or new initiatives with better and sustainable solutions (usually tech-oriented) are attacking the incumbents. Robinhood may or may not be the one (and this may not be the exact right approach), but the industry needs to be prepared.
2018 年 6 月，有报道 Lyft 在寻求 $250 mn 收购 Motivate（旗下拥有纽约的 Citi Bike 和加州的 Ford GoBike 等）；uber 也尝试参与，竞价收购，最后 7 月初由 Lyft 拿下。
– Motivate 2017 rev. $100 mn, ~ half coming from sponsorship
– Motivate has ~30k bikes, operating in 8 US cities – Citi Bike (New York), Ford GoBike (San Francisco Bay area), Divvy (Chicago), Blue Bikes (Boston metro area), Capital Bikeshare (Washington, D.C. metro area), BIKETOWN (Portland metro area), CoGo (Columbus, Ohio), and Nice Ride (Minneapolis)
– 纽约的 Citi Bike 用户数约 15 万；For GoBike 17 年6 月与 Ford 达成合作正式 launch，截至 18 年 1 月用户数近 1 万
– Motivate has an advantage of exclusive deal terms with cities including NYC, SF, among others
– Motivate’s bikes are dock-based, which was an old model but fit with cities like NYC
– Unionized workers (~600) are a major issue, which was not included in the acquisition
Citi Bike | Source: citibikenyc.comCiti Bike Pricing Plan_Dec 2018 | Source: citibikenyc.com/pricing
在湾区，尽管开始时 Motivate 有 exclusive 合同，但由于纽约和 SF 有一个区别在于 SF 很多上下坡，在曼哈顿适用的自行车在 SF 的使用场景大幅缩减，电动助力自行车 (e-bike) 的需求凸显。这给了其它 bike-sharing 公司一个绝佳的机会，以 e-bike 的形式抢进 SF 市场，绕开 Motivate 的排他性条款，比如 Social Bicycles。随后 SF 与 Motivate 达成和解，基本算允许了其它电动自行车的试验，尽管有数量限制。
Ford GoBike @ SAP Center, San Jose | Source: fordgobike instagramFord GoBike Plus with pedal assist (电动助力)，服务 SF 市场，18 年 4 月 正式 launch，首批 250 辆 | Source: fordgobike.com/plusFord GoBike Pricing Plan_Dec 2018 | Source: fordgobike.com/pricing
Ohio is becoming the first state to accept crypto as tax payments on https://ohiocrypto.com/.
The move is made by Ohio State Treasurer Josh Mandel. Born in Sep. 1977, he had made several moves after being elected as Ohio State Treasurer in Dec. 2010, including OhioCheckbook.com that posts all state spending information on the internet for better government transparency.
The current cryptocurrency accepted is Bitcoin, with more to come. A third party cryptocurrency payment processor, BitPay, will serve between taxpayers and Ohio State Treasury, so that the former will pay crypto and the latter will receive dollar.
Although the State Treasurer himself is said to be an enthusiast of cryptocurrencies and blockchain, it might as well be seen as a state-level move to differentiate itself and embrace the future tech world. According to TechCrunch, Ohio has other moves to become tech-friendly including a technology hub forming in Columbus, home to one of the largest venture capital funds in the Midwest, Drive Capital. And Cleveland (the city once called “the mistake on the lake”) is trying to remake itself in cryptocurrency’s image with a new drive to rebrand the city as “Blockland”, etc. Columbus also reported last year that its Smart Columbus program had an expanded $417 million in resources to turn Columbus into the testing ground for intelligent-transportation systems.
Politics and future development is more interconnected than ever. Policy makers are becoming smarter and seeing/learning the tech future as others. “Policy infrastructure” played an important role in the past and will continue to do so. Each city/state may have a specialization and leveraging its hub effect. Blockchain is one of those “specializations” that many are going after. China and US are no different in terms of this strategy of development.
In wine’s history, we human began to enjoy/produce those fermented grape beverages some 6,000-9,000 years ago.
Cabernet Sauvignon Grape
The well-known classification system for Bordeaux wines started in 1855 by Napoleon III using their producers’ names. A château (a french house/castle) usually gives its name to the wine produced in its neighborhood. The system has five levels for red wine, with Premiers Crus being the best, which now includes 5 châteaux.
Château Lafite Rothschild
But after nearly 200 years, things have changed fundamentally, e.g. global warming among many others.
Wine is essentially a pre-industrial-age agricultural invention. Grapes are inherently affected by climate changes (including not only temperature, but also drought for example).
What we deemed best in 1850s should be different from those in today’s league table.
Source: Cooperative Institute for Climate and Satellites
Due to global warming, the best grape varieties and growing locations for wine can hardly stay the same by the end of 21st century. Some have predicted that average global temperature could rise by 11.5° F this century if no human interventions to mitigate the causes.
A relatively extreme prediction in a 2013 study claims that wines from Burgundy, Napa Valley and other premium regions, will disappear within the next 50 years (and blue regions are future suitable areas to grow grapes).
Global change in viticulture suitability | Source: PNAS
However, wine to some extent is like art works. Values of wine aren’t mostly depending on how it tastes; many other factors such as traditions or experience are making it a more complex industry.
While similar to other industries that the established or incumbents are not willing to/refuse to change, new opportunities will rely on new vineyards/newcomers and those choose to expand or create new brands.
Wall Street Journey took an new initiatives to rank the 20 largest US airports by a basket of measurements, including 14 factors and 1 survey.
Here is the link to the WSJ post and a screenshot of top 10 candidates.
Source: WSJ
Some interesting metrics used include Yelp ratings for food, Wifi speed, UberX fare to convention center, etc..
The WSJ’s new ranking is also interesting itself.
Thought 1: Useless (for travelers)
No one travels just because there is a convenient/cheap airport.
People travel when they know where they need to be. Then it doesn’t matter if the wifi speed is slow or not. Gonna be there anyway.
Thought 2: Informative for new business/conference
When a new conference is planned, lots of research need to be done. The airport could be one of the important factors. UberX fare between airport and convention center should be used to choose new venue of events/conferences/assemblies.
But not the other way around.
thought 3: educational for airport operators
The rank might be useful for airport operators to learn how to improve their travelers’ overall experience.
It could be used as KPI for its employees or management team.
It could also be seen as a COMPLAINT.
For example, JFK and Newark airport have a reliability score of 16.5 and 9.5 respectively – out of 100 (Phoenix airport is the highest in reliability with 80.5); Newark airport has a value score of 13.5 out of 100 versus Orlando’s 77.
The writer/reporter or the team behind the rank must be very upset/disappointed with New York’s airports – Newark, JFK and LaGuardia have the three lowest overall score… among 20 airports.
Lobster industry was a nautical gold rush. Two generations ago, the entire New England coast had a thriving lobster industry.
Today, lobster catches have collapsed in southern New England, and the only state with a significant harvest is north in Maine, where the seafood practically synonymous with the state has exploded.
Now lobsters keep running to the north and going deeper in the water. Maine might be in trouble after another 5-15 years.
Rising temperatures along the bottom of the Atlantic Ocean will force American lobsters (H. americanus) farther offshore and into more northern waters, a new study finds. Credit: Natalie Renier, Woods Hole Oceanographic Institution
That’s happening not only to lobster, but literally to all marine species.
In the U.S. North Atlantic, fisheries data show that at least 85 percent of the nearly 70 federally tracked species have shifted north or deeper, or both, in recent years when compared to the norm over the past half-century. And the most dramatic of species shifts have occurred in the last 10 or 15 years.
Summer flounder’s center of species | Source: NOOA/Oceanadapt, Rugster U., Reuters
Similar findings in a map of predicted migration – marine species are moving northward to colder waters.
Starbucks posted a stellar earnings result today, with net revenue at record level of $6.3bn, beating expectations in many aspects.
Starbucks up after hours with earnings beats | Source: CNBC
While a single beat doesn’t indicate a new stage of growth, in the long run there are three issues I think matter the most and should be watched closely.
1 | Problem: Frappuccino’s decline
It was an problem Starbucks facing over the years. People are leaning towards healthier products (at least a very obvious trend in Cali), which usually means less sugar and less calories. That’s a problem for Starbucks’ Frappuccino, as explicitly mentioned in CEO’s presentation in June.
How did/will Starbucks address this? Product Mix & Innovation
Strategy a) Big push for healthier product lines – Nitro Cold Brew & Refresher series etc.
Starbucks Nitro Cold Brew | Source: Starbucks
– Nitro Cold Brew “is expected to be available in nearly 1,500 stores in 26 markets by the end of 2017″ (SBUX Jul. 2017 Press Release) -> “[Starbucks is] accelerating this platform to more than 2,800 stores by the close of fiscal year 2018, up to more than 6,000 stores by year-end fiscal year 2019″ (SBUX Q3 Earnings Call Transcript). A 4x availability expansion for cold brew in 3 years.
– Several new products in the Refresher category were introduced, e.g. “Dragonfruit” introduced Jun. 2018, “Pink Drink” introduced last year, etc.
Dragon Fruit | Source: StarbucksPink Drink | Source: Starbucks
Strategy b) Instagramable & limited edition within the Frappuccino category
– Unicorn Frappuccino (Apr. 19-23, 2017), Zombie Frappuccino (Oct. 26-31, 2017), Christmas Tree Frappuccino (Dec. 7 – 11, 2017), Crystal Ball Frappuccino (Mar. 22-26, 2018), Witch’s Brew Frappuccino (starting Oct. 25 for a limited time while supplies last)… among many others.
– Plus, Starbucks’ new Frappucino recipe has fewer calories and less sugar, part of its efforts to reduce sugar by 25% by 2020.
Starbucks Rewards could serve a similar role as Amazon Prime. In past last 3 month, loyalty program accounts for 14% of all transactions and US loyalty members contributed 40% of US sales. That’s what happened in the Amazon case, where its Prime members out-spend non-members significantly.
Digital relationship makes it easier to incentivize purchases, market new products/initiatives, bring in more collaborations (e.g. Spotify, Pokémon GO), expand membership offerings and more.
Starbuck’s push for afternoon consumptions is also facilitated by the digitalized promotions.
The room to grow digital relationships is still large – currently 15.3 million global active members, only representing ~22% of its 70 million global customers base. “Additionally, drive-thru, out-the-window and Mobile Order and Pay combined grew to more than 50% of the way customers are ordering, up more than 10 percentage points in just two years” according to COO.
3 | Opportunity – China Growth
It’s more debatable on Starbucks’ China future. Just want to highlight a few sure things.
Starbucks took full ownership in China East & opened flagship Roastery in Shanghai in 2017 – definitely the right moves here.
China’s coffee consumption will explode, even considering major cities alone. Younger generations will consume more coffee and they will represent an increasing proportion of the overall urban population.
China coffee consumption potential | Source: Starbucks 6/19 Presentation
Coffee even has a role to play in China’s GDP growth by boosting workers’ average productivity and the “culture” of working overtime.
Herding effect is stronger in China and “Instagramable & Limited” strategy may provide better outcomes if properly implemented.
Other things worth noticing – Starbucks’ food, packaged goods with Nestlé, next-generation store design, coffee supplies, SKU outside the Starbucks’ core products, etc…
Social network platforms such as Twitter and Weibo, are where we post our words/expressions, and is taking an essential role in todays’ Modern Communication.
Interestingly, but not surprisingly, they are also providing a feedback loop to change our ways of communication (and our thinking – but that’s another different story). After all, we are one of those animals with natural herding inclinations.
Taking a very simple example – as Twitter was becoming more popular, people started to lean heavily towards the use of new abbreviations, partially due to its 140-word limit. (Similarly, when Blackberries were popular, certain abbreviations were created, used and spread among professionals in texts & emails)
In 2017, Twitter officially made its “140-word limit” a history [Weibo ended the limit in 2016] and doubled the character limit to 280. One resulting impact is that people are spelling out abbreviations and acronyms more often, according to Twitter’s report.
Source: TwitterData
TwitterData also touted that “people are saying ‘please’ (+54%) and ‘thank you’ (+22%) more.” in the first year of doubling limit.
[Something worth noting on the data – 1) need to consider the difference in total number of tweets 2) need to consider other ways of saying ‘please’ and ‘thank you’…]
It is really nice that people could be more friendly and polite (not excessively tho). It would be even nicer if people could inherit their concise and efficient use of language in the 140-word era & all the other positive impacts Modern Communication made on us.
