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Wall Street Journal

  • Good update on accelerating cord cutting trend with cable/satellite TV providers seeing an 8% decline in 2019 (5.5 million households after 3.2 million in 2018). Making the situation worse is they have had to raise prices to support the infrastructure and secure content.  Although there is growth in higher margin broadband subscribers.
  • While streaming services (Netflix, Hulu, Amazon Prime, Disney+) continue to grow and proliferate, and are also raising prices.
 
  • Interesting article that talks about a data analytics company that placed smart sensors in basketballs used by men's college teams in the Big West.
  • Each team in the league uses one of three balls: Nike, Wilson and Under Armor.
  • What they discovered is that teams that used the Nike balls early in the season had statistically lower shooting stats.  The article focuses on Utah St which plays with Nike basketballs.  With the Nike ball, the team shot 28% from behind the arc and 48% overall. In games played with any other brand of basketball, the team makes 35% of its 3-pointers and 54% of its shots.
  • Players complained that the Nike balls felt greasy and appeared to have shallower grooves that made them difficult to handle.
  • It should be noted that not every team shot worse with the Nike ball, for example San Diego St. shot one percentage point better. And, all teams that were impacted by the Nike ball began shooting better later in the season likely as the players got used to the ball.
       
  • Interesting article that runs down how 5G will impact working at home.
  • With its enhanced speed (up to 200x vs 4G) some basic key elements provided by 5G will be much faster downloads, no latency in general, enhanced security, and much higher quality video conferencing including 360 degree cameras, hopefully reducing the feeling of being a '2nd class citizen' for those who call in via video conference.
  • On the contrary, article talks about the rollout of 5G in the early stages being focused in high population cities.  Also, the writer comments that the cost of the equipment needed to support 5G may need to be shared by remote users.
  • Our view/conclusion, yes 5G will revolutionize working at home in many ways we don't know at this point.
  • After investing about $3 billion in both companies, after numerous growth related issues, investors are looking to improve profitability.
  • Safety concerns that the scooters could endanger riders continue.
  • Lime and Bird have spent much of the past year revamping global operations to cut costs. Lime announced they would lay off 14% of its workforce and pull out of a dozen markets in the U.S. and overseas. In October, Bird said it would turn its focus from growth to shoring up losses.
  • Supply chain issues and inability to forecast demand caused scooter and parts shortages.
  • From the outside, our view is that these businesses are severely challenged across many aspects of their business model.  Stay tuned.
  • Company missed estimates with sales in North America down 4% which management attributed to uncertainty surrounding the T-Mobile Sprint merger.
  • This weakness was offset to some extent by strength in Asia and the Middle East as operators ramp up their 5G infrastructure.
  • Company also said expects growing investment in new technology, but won't impact earnings. Street analysts disagree as consensus earnings will come down.
  • Ericsson said it now has 78 commercial 5G agreements with operators and 24 live 5G networks on four continents.
  • Finally, the CEO commented that worldwide deployment of 5G has actually slowed attributed to uncertainty surrounding Huawei.
  • Good article on the state of the institutional real estate funding market.
  • After 12 years of generally rising real estate values, this adjustment is healthy and good to see.  Hopefully, the slow down isn't years to late.  Time will tell.
  • With "only" $18 billion of capital raised for real estate dedicated funds in 4Q-19, this is the first quarterly drop since 2013.
  • Apparently investors who generally target high teens 19% IRRs are having more difficultly finding deals and are becoming more cautious.  As an aside, having gone through multiple real estate cycles, investors have been targeting about 20% "Pro Forma" IRRs for 30 years, including the years before each downturn. The key words being "Pro Forma".
  • Article cites that some execs think the fund flow will rebound with low interest rates and higher stock prices.
       
  • For those of us who lived through 9/11 while working on the Street, this is really great to see. As tech, advertising, media and information companies flow into lower Manhattan in search of lower cost space, the numbers are impressive.
  • New leases in 2019 totaled 7.3 million square feet, the largest since the late 90's dot com era with market rent rates moving up 13%.
  • Delta is an important bell weather which reported a strong quarter driven by low fuel prices and continued strong demand. Company also raised 1Q guidance.
  • Company also cited that demand was buoyed from competing airlines facing diminished capacity relating to the Boeing 737 MAX (American, United, Southwest).
  • Potential challenges include new labor deals and the effects of the trade war, particularly in Asia.
  • Stock up 3.2% which has pulled up most of the airline stocks.
  • After the market's huge 2019 with the S&P 500 up 29% on essentially flat earnings growth, article wisely points out that in 2020 stock gains will be largely reliant on earnings growth.
  • Currently analysts are projecting S&P earnings growth this year of 9.4%.
  • Underlying this growth is The World Bank projecting global economic growth of 2.5% in 2020 after 2.4% in 2019 with a key risks being the trade wars and the Boeing situation, although it's been noted that trade has had only a modest impact on U.S. economic growth.
  • We would also make the 2nd derivative argument as we lap the impact of the tariffs last year, the U.S. and world economies face "easy compares".
  • But, as noted in the article by Ascent Private Capital Management:  “To us, it looks like quite a bit of the rebound is priced in already,”
     
  • Liquidity issues last fall caused major price swings at the lower end of the junk bond and direct loan markets, before snapping back in December.
  • Broader issue is if these type of events continue to occur there is potential effect on buyers and their willingness to fund.
  • A measure of risk in triple rated bonds now exceeds levels seen during the financial crisis.