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Other Takes and Opinions

‘Techlash’ Hits College Campuses

  • Well done article that goes through the shifting views the past ten years of 20 and 30 year old somethings towards working for big tech compared amid the growing ethical issues of privacy violations, sexual harassment, etc., and in the case of Palantir providing tech services to ICE.
  • Great lines from article equates working for big tech is like working in "investment banking but worse" and the acceptance rate of job offers at Facebook have dropped to 40% (disputed by FB).
  • It will be interesting to track these types of trends when the economy moves into the next recession.

Why Wall Street Wants to Price Pollution

  • Interesting article that discusses the use of carbon credits in an exchange system/market mechanism to deal with and manage the world's carbon emissions problem.
  • From JP Morgan: “Policymakers are under tremendous pressure to design and implement policies that will accelerate the pace of decarbonization that will impact all sectors.”
  • There are many challenges designing a complex carbon market place, with policy makers so far unable to define a set of policy guidelines. After mixed success in Paris, it is hope that the meeting later this year in Glasgow will generate more definitive guidelines.

GrubHub Management Now Says Company Not For Sale

  • This comes after media reports earlier this week that the company was exploring strategic alternatives.
  • Stock down 7% today.

Notable Retail News

  • Bed, Bath and Beyond missed 3Q revenue and EPS estimates as all aspects of operations are under pressure.  Results were impacted by a calendar shift in the Thanksgiving holiday. The company withdrew 2020 guidance as the newly appointed CEO continues to assess company operations.  Stock down 19% today.
  • Kohls reported a weak comp of +.2 ans now expects results to be at low end of prior FY 2019 guidance.  Strength in digital, children's, active and beauty was more than offset by weakness in women's.   Stock off 9.4% today.
  • L Brands reported holiday sales comp of -3% and lowered Q4 guidance.  Performance at Victoria's Secret (which Jefferies analyst said is becoming irrelevant) and Pink continue to be dismal. Stock is flat today.

World Bank Expects Global Growth of 2.5% this Year …

  • As investment and trade recover from significant weakness last year.  Although downward risks persist.

Taco Bell Offering $100,000 Salary Amid Mounting Worker Shortage

  • YUM testing the higher manager salary for restaurant managers at some stores in the midwest and east.  Sign me up!
  • The fact that wage inflation has been so muted for so long remains baffling.  Continue to attribute it to the impact of technology, more efficient global labor markets and continuing residual impact from the financial/economic crisis.

U.S. Oil Company Confirms Big Find in Mexico

  • Houston based Talos Energy is first U.S. based company in 80 years to discovery oil in Mexico.  Assuming no political related delays, production should begin in three years of the 670 billion barrels of recoverable oil.
  • After its oil industry was nationalized in 1938, Mexico opened up oil exploration to foreign companies in 2014 with a goal of improving its oil production efforts.
  • Then President Andrés Manuel López Obrador put a freeze on new licenses one year after being elected, although so far prior projects have been grandfathered.
  • The Zama field lies adjacent to a Pemex/Mexico field with the reserves estimated at a split of 60/40.
  • People are watching to see which company will get the production contract with industry experts hoping that it is Talos for sake of efficiencies etc. Should be interesting to track.

Student Housing Party on Wall Street May Be Over

  • This is interesting as the student loan housing sector was considered bullet proof in institutional real estate circles with its stable demand.
  • But, 60 day late loan delinquencies have increased to 3.9% vs 2.8% last year and vs. .46% across the commercial property sector. Rent growth is also declining.
  • Key issues are new supply/increased competition, higher land prices and flat to declining university enrollment levels.
  • Recommendations are to invest near large growing and prominent universities and bypass 2nd tier markets with smaller universities with declining enrollment levels.  All very obvious at this point.

Taiwan Semiconductor (TWS): Digi Times Reports Lead Times on 7mm Chip Reported to Extended

  • Lead times on 7mm chip reportedly extended to 6 months from 2 months due to strong demand.
  • Stock has been on big run in part anticipating increasing demand from 5G rollout next year.