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In A World Of Bubbles, Tokyo’s ‘Skyscraper Curse’ May Be Scariest

It’s been a medal-caliber few years for Japan’s property developers. Not Olympic gold of the kind Tokyo will award athletes 12 months from now. But construction ahead of the 2020 Games, building that’s been a godsend for Japan’s property developers. That will happen when the cost of staging a few weeks of sporting events explode to $25 billion from the $7 billion Tokyo originally estimated.

What if, though, the 2020 construction boom spells trouble for the century ahead? The reference here is to the “Skyscraper Curse” that may be rearing its head in the third-biggest economy.

Building related to Tokyo 2020 turned the Japanese capital into a giant construction site. Even developers unattached to the August 2020 Olympics have used the excitement to build new office towers throughout the city. Office space that, frankly, might have a hard time renting out floors two years from now.

Multinational companies, after all, continue to favor Singapore and Hong Kong (for now, at least) for Asian headquarters. And it’s not Shinzo Abe’s seven-year reflation scheme is catalyzing a startup boom to fill all that office space once the five-ring Olympic circus leaves town.

Today In: Asia

Mori Building recently unveiled ambitious plans to construct Japan’s tallest skyscraper, a title suddenly held by Osaka. This epic redevelopment project that will include offices, residences, shops, restaurants, a hotel, and an international school will come at a cost of 580 billion yen ($5.45 billion), which surely has contractors and rivals salivating at the possibilities. But there’s reason for broader caution.

One can quibble with the wisdom of putting a 64-story, 330-meter edifice in the center of one of the world’s most seismically active metropolises. It’s economic risks, though, that Prime Minister Abe’s office should be considering.

History betrays an uncanny correlation between world’s-tallest-building projects and financial crises. Roll your eyes if you want, but I’ve been covering the phenomenon for two decades. Here’s a quick recap of the last 112 years.

The Panic of 1907, when the New York Stock Exchange lost 50%, occurred just as Manhattan celebrated the opening of the 47-story Singer Building and 50-story Metropolitan Life North Building. The Great Depression that began in 1929 coincided with the New York christenings of 40 Wall Street and the Chrysler Building. Despair and homelessness spoiled the party over the 1931 opening the Empire State Building.

Fast forward four decades to New York and Chicago, the hosts to the world-topping World Trade Center and Sears Tower projects. Both opened as the Bretton Woods monetary system was breaking down and stagflation was fueling fiscal crises.

In 1997, Kuala Lumpur was quaking amid regional market turbulence just as Malaysia’s Petronas Towers came online. In the early 2000s, Taipei opened the world’s biggest architectural marvel in time for political turmoil at home and growing tensions with China, which views Taiwan as a breakaway province. The 2008 completion of Dubai’s 828-metre Burj Khalifa Tower dovetailed with the city’s bust, cascading oil prices and the “Lehman shock” a world away.

This is just the last 100 or so years of the Skyscraper Curse. Spiritualists may track the phenomenon back to the biblical Tower of Babel. But coincidence or not, it’s hard to miss the overlap between history-making economic disruptions and new architectural Guinness World Records entries.

The common, and indisputable, thread is ultra-low interest rates fueling over-investment and froth. Developers are always looking to harness the newest engineering and technological advances. That impulse gets supercharged by excess monetary expansion. It’s not surprising, then, that tallest-building projects often get green-lighted near the top-ticks of speculative manias.

Again, not the most solidly scientific of arguments. Yet Asian developers still engage in serious real-estate one-upmanship. South Korea’s tallest building, the Lotte World Tower, opened in 2017 just in time for President Park Geun-hye’s impeachment and imprisonment on bribery charges. Also in 2017, Shenzhen toasted the opening of the Ping An Finance Center, the No. 4 tallest building globally, as U.S. President Donald Trump was telegraphing his China trade war.

In Melbourne, the ongoing Australia 108 project aims to become the Southern Hemisphere’s tallest residential tower. A coincidence, maybe, but many economists worry Australia is veering toward its first recession in more than 25 years.

What about Tokyo? Abe’s seven-year revival project has been 90% monetary easing and perhaps 10% structural reform (and that’s being generous). All that liquidity, coupled with the construction boondoggle that is Tokyo 2020, has revived land prices in an otherwise deflation-traumatized economy.

As of February, the Nikkei Financial Review reported, Tokyo property prices, as measured by new condos, approached late 1980s bubble-period levels. Yet inflation is advancing just 0.6% year-on-year, less than halfway to the 2% target. And ominously, real wages are down six straight months now as Trump’s China trade war slams Japan’s export engine.

All this means the Bank of Japan’s historic easing has Tokyo construction sites buzzing with activity. The rest of the nation’s slowing economic regions, not so much. All that building is stellar news for property developers, but it’s also creating a bull market in concerns that Japan’s latest building boom could be, well, cursed.

I am a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” My journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary.

Source: In A World Of Bubbles, Tokyo’s ‘Skyscraper Curse’ May Be Scariest

The one-year countdown to the 2020 Summer Olympics begins! As Tokyo gears up to host the games, NBC’s Keir Simmons takes us around the amazing venues in Japan’s capital city. » Subscribe to TODAY: http://on.today.com/SubscribeToTODAY » Watch the latest from TODAY: http://bit.ly/LatestTODAY About: TODAY brings you the latest headlines and expert tips on money, health and parenting. We wake up every morning to give you and your family all you need to start your day. If it matters to you, it matters to us. We are in the people business. Subscribe to our channel for exclusive TODAY archival footage & our original web series. Connect with TODAY Online! Visit TODAY’s Website: http://on.today.com/ReadTODAY Find TODAY on Facebook: http://on.today.com/LikeTODAY Follow TODAY on Twitter: http://on.today.com/FollowTODAY Follow TODAY on Instagram: http://on.today.com/InstaTODAY Follow TODAY on Pinterest: http://on.today.com/PinTODAY #SummerGames #TokyoOlympics #TodayShow 2020 Olympics 1 Year Out: How Tokyo Is Prepping For Summer Games | TODAY

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Shopify Cracks The E-Commerce Code, And Its Billionaire CEO’s Fortune Doubles In Just Six Months

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Tobi Lutke, the Canadian CEO and founder of e-commerce platform Shopify, has a net worth that’s doubled to $3.2 billion in just six months, thanks to his company’s skyrocketing stock.

  • The e-commerce platform’s stock, which trades on the New York Stock Exchange, has skyrocketed up 106% since mid February, when Forbes measured net worths for the 2019 list of billionaires. Shopify provides the online shopping engine for more than 800,000 customers, including Kylie Jenner’s beauty store Kylie Cosmetics.
  • Lutke, who was born in Germany, owns nearly 9% of the Ottawa-based company. He founded Shopify in 2004 after he and a friend had attempted to start an online snowboard shop out of Ontario and realized there were no efficient tools to help small business owners operate online. As winter ended and snowboard sales plummeted, Lutke told Forbes in a June 2018 interview that he decided to create Shopify.
  • Shoppers have spent over $100 billion on Shopify-powered sites since it began operating, according to the company.
  • Shopify had $1.1 billion in 2018 revenues, a 59% increase from the previous year.
  • Shopify’s $42.3 billion market capitalization is now larger than that of many big tech brands, including Twitter, Snap, Square and Lyft.
  • According to the Financial Times, Lutke prefers that his employees refrain from regularly checking Shopify’s stock price.

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Angel Au-Yeung has been a reporter on staff at Forbes Magazine since 2017. She covers the world’s wealthiest entrepreneurs and tracks how they use their money and power.

 

Source: https://www.forbes.com

Shopify COO Harley Finkelstein breaks down how the Canadian e-commerce platform creates economies of scale to give small businesses benefits that help entrepreneurs compete with giant retailers. » Subscribe to CNBC: http://cnb.cx/SubscribeCNBC » Watch more Mad Money here: http://bit.ly/WatchMadMoney » Read more about Shopify: https://cnb.cx/2vxmuPg “Mad Money” takes viewers inside the mind of one of Wall Street’s most respected and successful money managers. Jim Cramer is your personal guide through the confusing jungle of Wall Street investing, navigating through both opportunities and pitfalls with one goal in mind — to try to help you make money. About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Get More Mad Money! Read the latest news: http://madmoney.cnbc.com Watch full episodes: http://bit.ly/MadMoneyEpisodes Follow Mad Money on Twitter: http://bit.ly/MadMoneyTwitter Like Mad Money on Facebook: http://bit.ly/LikeMadMoney Follow Cramer on Twitter: http://bit.ly/FollowCramer Connect with CNBC News Online! Visit CNBC.com: http://www.cnbc.com/ Find CNBC News on Facebook: http://cnb.cx/LikeCNBC Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC Follow CNBC News on Google+: http://cnb.cx/PlusCNBC Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC Shopify COO: Servicing 820,000 Merchants | Mad Money | CNBC

 

 

Private Sector GDP Growth is Kind of Anemic

Today’s GDP report got me curious about something: how does private sector GDP compare to total GDP? That is, if you pull out government contributions to GDP growth, what does purely private-sector growth look like? Here it is:

Private sector growth has been declining since the start of the expansion, and that decline has picked up speed over the past two years. It’s no wonder President Trump was so eager to agree to sizeable increases in the federal budget this week. He knows perfectly well that his tax cut has worn off and he needs all the help he can get from government spending to prop up an increasingly anemic private sector. For the next year, anyway.

Personal consumption was up a healthy 4.3 percent, but business investment plummeted -5.5 percent. Exports were down and imports were flat. Federal government spending added more than usual to GDP by about 0.4 percentage points. State government spending was also higher than average, by about 0.2 percentage points. If government spending had been at normal levels, GDP would have increased 1.5 percent instead of 2.1 percent. Inflation was higher than last quarter.

Overall, this is an OK but not great GDP report for the private sector, saved only by higher government spending.

The most remarkable thing about Donald Trump is how eerily stable his approval rating is. Here is 538’s chart over the past year:

After the Republican tax cut passed in late 2017, Trump’s approval rating rose to 41 percent and it’s stayed within two points of that ever since. I don’t know if this is good or bad—bad for Trump, I suppose, since that’s a tough re-elect number—or if there’s much Trump can do to improve it. But it’s definitely unusual. It sure looks like nearly everyone has their mind made up about Trump and isn’t likely to change it.

 

Source: Private sector GDP growth is kind of anemic

Here’s Why We Suddenly Stopped Hearing About A Recession

Topline: Economists—especially after the stock market took a dive in December—had been warning that a recession was coming, and possibly imminent. But a combination of low-interest rates and an improving labor market has quickly silenced those fears — and complicating the hopes of Donald Trump’s foes in 2020.

  • The risk of a recession decreased last week after the Federal Reserve declined to raise interest rates this year, said Brian Rose, senior Americas economist at UBS Global Wealth Management’s Chief Investment Office.
  • Combined with a stock market bounce-back and a growing economy, investors are now optimistic — a big shift from earlier this year.
  • Major economic predictors showing an increased threat of a recession have scaled back it’s predictions in recent weeks.
  • Asterisk: If President Donald Trump escalates the trade conflict with China by adding more tariffs on Chinese imports—particularly auto parts—the economy could suffer, increasing the chances of a recession, Rose said.

Earlier this year, half of economists surveyed by the National Association for Business Economics predicted a recession in 2020. Another poll of economists by the Wall Street Journal in January put the chances of a recession at 25 percent—the highest since 2011.

Coverage piled on (a few examples: “4 Signs Another Recession Is Coming―And What It Means For You,” “A recession is coming, but don’t flee markets yet,” “The Next Recession Is Coming. Now What?”), with many predicting bad news for Trump (Politico: “Trump advisers fear 2020 nightmare: A recession”). Some industries girded for the worst, like online lenders, who tightened its rules to lessen risk.

And then, suddenly, the panic eased. Now Goldman Sachs economists say there is only a 10 percent chance of a recession. What happened?

The biggest factor in that shift came when the Federal Reserve opted not to not raise interest rates, a pleasant surprise to economists. Rose said lower-than-expected inflation led the Fed to keep rates modest.

The economy, too, has grown, allaying recession fears. According to the latest job numbers, the U.S. has the lowest unemployment rate in 50 years.

“It is hard to have a recession when unemployment is this low and interest rates are this low,” Richmond Federal Reserve president Tom Barkin said on Wednesday.

The biggest risk of recession comes from Trump himself. If he increases tariffs on more goods than the $200 billion in Chinese imports he’s already promised, the risk of a recession increases, Rose said. As trade negotiations remain rocky, investors are increasingly concerned.

“Left on it’s own, there’s little risk to the economy,” he said. “The real risk of a recession comes from policy, particularly trade.”

Barring another recession, positive economic growth should mean good news for Trump in 2020. But as it stands, Trump is still relatively unpopular (his approval rating sits at 46 percent, although that is a high for him). And most forecasters agree the economy won’t grow as much as the White House says it will.

“A normal president with these economic numbers would have job approval somewhere in the vicinity of 60%,” Republican pollster Whit Ayres told the Los Angeles Times. “But Donald Trump is a nontraditional president, and he has, at least at this point, severed the traditional relationship between economic well-being and presidential job approval.”

Still, a recent CNN poll found that 56 percent of Americans approve of Trump’s handling of the economy. And while many Democrats haven’t focused on the latest job numbers, Senator Amy Klobuchar (D-MN), who is running for president, tried spinning the numbers a different way during an appearance on CNN, crediting President Obama with job growth.

I’m a San Francisco-based reporter covering breaking news at Forbes. Previously, I’ve reported for USA Today, Business Insider,

Source: Here’s Why We Suddenly Stopped Hearing About A Recession

Investor Kathy Xu Rockets To 2019 Midas List Top Ten As Power Of Chinese Startups Grows

Kathy Xu, founding partner of Capital Today, debuted in the Midas List top ten.

Kathy Xu, founding partner of Capital Today, made a bold Midas List debut. Photo courtesy of Capital Today

Capital Today founding partner Kathy Xu laughs when she talks about her career-making early investment in Chinese e-commerce company JD.com, which began with a late-night meeting with founder Richard Qiangdong in 2006:

“We met at 10 p.m. and we talked until 2 a.m.!” she tells Forbes. “I gave him five times the amount of money that he asked for — I was so worried that otherwise he’d meet with other investors.”

Capital Today managed to become the startup’s sole Series A investor and Xu’s check — $18 million USD — paid off royally as JD swelled into an ecommerce giant, with Xu working closely with Qiangdong along the way, advising him on key hires and company branding. Two years after JD went public in 2015, her firm cashed out returns of $2.9 billion.

A couple years and a handful of new deals later, Xu is making her bold debut on the Forbes 2019 Midas List, ranking in the top 10 venture capitalists in the world in her first year of inclusion (her work has previously been highlighted on Forbes China’s list of top 25 women venture capitalists in China).

This year’s list features 21 investors who are either of Chinese nationality or work for a firm based in China, the largest number ever on the list and a tribute to the growing power of China’s startup and venture capital ecosystems.

Xu says that Capital Today, which manages approximately $2.5 billion, focuses all its energy on companies based in and serving China and has zero interest in looking outside the country.

“It’s a big enough market, the economy is doing well, the entrepreneurship is great, and we’re starting to see real innovation booming for the first time,” she says. “It’s a lucrative market to focus on.”

Xu says that her team disciplines itself to only five or six deals a year in business-to-consumer companies and spends a lot of time with founders that it invests in.

“There’s more and more money here now, so building a connection with the entrepreneur and spending a lot of time with them is more important than ever,” she says, citing proximity as an advantage over out-of-country investors who only make occasional business trips.

Beyond JD.com, other Capital Today portfolio highlights include Chinese gaming company NetEase, discount e-commerce site Meituan-Dianping, classified listings site Ganji.com (which merged with 58.com in 2015), Yifeng Pharmacy, which went public in 2015, and hot snack company Three Squirrels Snack Food.

Other Chinese investors who made this year’s Midas list are Sequoia China partner Neil Shen, who topped the rankings for the second year running, Qiming Venture Partners’ managing partner J.P. Gan, No. 5, and Hans Tung from GGV Capital, No. 7.

See the full list of Chinese investors here.

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I’m a San Francisco-based staff writer for Forbes reporting on Google and the rest of the Alphabet universe, as well as artificial intelligence more broadly. Previously

Source: Investor Kathy Xu Rockets To 2019 Midas List Top Ten As Power Of Chinese Startups Grows

The prominent economist Nouriel Roubini

The prominent economist Nouriel Roubini stated that the entire crypto industry consists of assets that are neither money nor currency. He stressed that cryptocurrencies are neither stable in terms of bring a store of value, nor a scalable means of payment. https://www.pivot.one/share/post/5c82a7acad59e73fc0881efd?uid=5bd49f297d5fe7538e6111b6&invite_code=JTOJYV

Is a Recession Coming – Brooke Crothers

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In December 2007, Larry Kudlow, then a talking head for the business network CNBC, proclaimed, “There’s no recession coming. It’s not going to happen.” That same month, the economy plunged into the worst economic downturn since the Great Depression. This week, Larry Kudlow, now the director of the National Economic Council, stood on the White House lawn and struck a familiar note: “I’m reading some of the weirdest stuff [about] how a recession is right around the corner. Nonsense,” he said. “Recession is so far in the distance, I can’t see it……….

 

 

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