Boeing had a historically bad 2020. Its 737 Max was grounded for most of the year after two deadly crashes, the pandemic decimated its business, and the company announced plans to lay off 30,000 workers and reported a $12 billion loss. Nonetheless, its chief executive, David Calhoun, was rewarded with some $21.1 million in compensation. Norwegian Cruise Line barely survived the year. With the cruise industry at a standstill, the company lost $4 billion and furloughed 20 percent of its staff. That didn’t stop Norwegian from more than doubling the pay of Frank Del Rio, its chief executive, to $36.4 million. And at Hilton, where nearly a quarter of the corporate staff were laid off as hotels around the world sat empty and the company lost $720 million, it was a good year for the man in charge. Hilton reported in a securities filing that Chris Nassetta, its chief executive, received compensation worth $55.9 million in 2020.
The summary,
Chief executives of big companies now make, on average, 320 times as much as their typical worker, according to the Economic Policy Institute. In 1989, that ratio was 61 to 1. From 1978 to 2019, compensation grew 14 percent for typical workers. It rose 1,167 percent for C.E.O.s. The pandemic only compounded these disparities, as hundreds of companies awarded their leaders pay packages worth significantly more than most Americans will make in their entire lives.
2. When you've come to expect spinelessness from Indian sportsmen, Abhinav Bindra strikes a very rare voice of courage and caution, calling for aborting the IPL and concentrating resources and effort on the fight against Covid 19. For sure, IPL generates employment and keeps a small sliver of the economy going. But given the backdrop of a raging pandemic, with stretched resources and the massive human suffering, is it right to have it continue?
3. It will be interesting to probe into what Serum Institute of India (SII) has been doing with all the AMC money it has mobilised. Did it actually invest proportionately to ramp up capacity? Is its production capacity now as much as it should have been given the advance commitments made by governments? Given that it's a contract manufacturer of drugs and not a pharmaceuticals company, and therefore without the need for the large profits required to finance R&D, what's a fair price?
SII selling and setting the price for Covishield is something like Foxconn claiming ownership of iPhone and setting the price for it!
Sujatha Rao makes very valid points.
4. Akash Prakash makes the case for India to focus on chip design and not manufacturing.
This about the strategic importance of chips,
In the case of China, they import 50 per cent (by value) more IC’s than oil, and it is their single biggest import. China is the world’s largest consumer of chips and accounts for between 25 and 33 per cent of the global semiconductor demand.
Despite pouring hundreds of billions of dollars of grants into chip making, China has little to show,
Even today, if you look at the semiconductor value chain, China has a limited presence in the higher value parts of the chain. There is virtually no Chinese presence in the semiconductor capital equipment, software or materials like specialised chemicals ,wafers and gases, used to make chips. While China has a large chip manufacturing capacity, almost 20 per cent of global capacity, the majority of this is controlled by foreign firms like TSMC or Samsung. Foreign-owned firms account for more than 50 per cent of production volumes and more than 75 per cent of value. China-owned capacity is concentrated almost entirely in manufacturing older, less sophisticated chips. High volumes, but low value.
5. Important development in the digital advertising business as Apple, as part of its enhanced privacy features, makes taking consent of users mandatory for App makers to use digital trails from the browsing history of App users.
Until now, apps have been able to collect, and share with third parties such as data brokers, all sorts of personal information about you, including your location, what other apps you are using, when you logged into the app, an encrypted version of your email address, your phone number, and a unique number that identifies your iPhone, known as IDFA (Identifier for Advertisers)... As iPhone users move through apps, and surf the web, they leave crumbs of data behind each time, including a copy of their IDFA, allowing the online advertising industry to build a profile of their behaviour, which advertisers use to serve them supposedly relevant ads... Apple wants all apps to obtain explicit consent for this behaviour. If users opt out that very first time they get the notification, an app will be barred from accessing their IDFA forever. And Apple expects that apps will not share other data, including phone numbers or emails.
6. Ruchir Sharma on the myth of retreating governments and rise of the markets.
7. Simon Kuper has a nice article on the generation of rich heirs and their downwardly mobile children.
On average, inheritances will be worth 9 per cent of household lifetime (non-inheritance) income for those born in the 1960s, rising to 16 per cent for those born in the 1980s,” projected the UK’s Institute for Fiscal Studies last week... No wonder many of today’s most compelling dramas revolve around inheritance: the Trump family saga, the Harry-and-Meghan story, the TV series Succession (loosely based on the Murdoch family) or Patrick Radden Keefe’s new book Empire of Pain, about the Sackler family, who made billions from the deadly painkiller OxyContin. This is a return to the storylines of the 19th century, another era when assets trumped wages: Balzac and Jane Austen dramatised inheritances, too, notes Piketty. The difference is that nowadays there are fewer big heirs and far more small ones — “petits rentiers”, Piketty calls them. For large swaths of the middle class, inheritance has downgraded salary to something of an afterthought. That’s especially true for younger people. Many millennials have made the terrible discovery that a bachelors degree is the new high-school diploma. Fifty years ago, a bank manager or teacher or lawyer was a big shot guaranteed a big house. Nowadays people in those jobs can find themselves living in their childhood bedrooms, struggling to please lesser-educated parents who control the pot of gold. Family wealth solidifies family hierarchies. And with life expectancy generally rising (except in the US), these hierarchies remain intact longer than in any previous era.
8. Business Standard has a good story on India's renewables/solar generation. The capacity addition has been declining for some time, making the realisation of the target of 100 GW by 2022 impossible.
Close to 80 per cent of India’s module exports are to the US, so because of these duty impositions exports might have gone up. That was short-lived, because the US subsequently imposed duty on Indian imports... The safeguard duty has also failed to steer India away from Chinese products. Even after duty barriers, China still accounts for 83 per cent of India's total solar imports. Meanwhile, other countries like Vietnam, Thailand and Singapore have become preferred destinations. Between FY18 and FY20, Chinese imports declined by 62 per cent, imports from Malaysia dipped 98 per cent. In contrast, solar imports from Vietnam grew 944 per cent, and Thailand had a staggering 1,485 per cent growth.
This about the competitiveness of India's manufacturers,
An analysis by the Centre for Energy Finance from August 2020 shows that Indian solar modules were 33% more expensive than the Chinese module. While labour, electricity, utilities, land and project finance cost made up 14% of the total cost in India, they just had an 8 per cent share in China.
The article is also instructive in that it blames government extensively for all the failures. What about the singular lack of entrepreneurship among Indian companies?
Data collected by the Financial Industry Regulatory Authority shows that total margin debt across Wall Street hit $822bn by the end of March — after Archegos had failed. That was almost double the $479bn level of this time last year and far more than the around $400bn peak that margin debt reached in 2007, just before the financial crisis. To put these numbers in context, ABP Invest, a London-based fund, calculates that during the 2000 dotcom and 2007 credit booms, US margin debt topped out at roughly 3 per cent of gross domestic product. Now it is nearly 4 per cent.
10. The rise and rise of Big Tech,
The combined revenue of Alphabet, Amazon, Apple, Facebook and Microsoft, which jumped 41 per cent in the first three months of this year, to $322bn. That points to a rapid acceleration in growth that the leading tech companies have not seen in years, even as they have become some of the world’s biggest companies. The other is the companies’ profit growth, which has been even more spectacular. After-tax earnings for the five soared by 105 per cent from the previous year, to $75bn. Profit margins rose strongly across the sector, as the biggest companies benefited from the economics of scale while keeping a wary eye on cost expansion during the pandemic.
11. Noah Smith comes out in support of the higher capital gains taxation plan of the Biden administration.
12. Analysing the finances of Adani Group,
The combined market capitalisation of six Adani group companies is up nearly 455 per cent since the end of March 2020 against an 80 per cent rise in the combined market capitalisation of the country’s top 1,000 listed firms. The Adani group companies now have a combined market capitalisation of around Rs 7.3 trillion, up from Rs 1.31 trillion at the end of March 20. The group accounted for 7.3 per cent of the incremental rise in the market capitalisation of all companies in the past year even though it had 1.2 per cent share in the overall market cap at the end of March last year... However, the stratospheric rise in the Adani companies’ market capitalisation has little to do with the companies’ financial performance; it’s more a bet on growth potential... The group is also among one of the country’s most indebted groups. Total borrowings were up 14.3 per cent year-on-year in the first half of FY21 to Rs 1.25 trillion, while all financial liabilities were up 18 per cent to Rs 1.41 trillion. This translated into gross debt to equity ratio of 1.8x for the group, up from 1.7x at the end of September 2019 (or H1FY20).
This about Adani Gas tells it all,
At Rs 1.28 trillion, Adani Total Gas market capitalisation is just a notch below the combined market capitalisation of the five biggest gas companies in India — Indraprastha Gas, Petronet LNG, Gujarat Gas, Mahanagar Gas and Gujarat State Petronet. However, Adani Total Gas net profits in FY20 was just 5 per cent of the combined net profit of these five companies. In August 2018, Adani Gas won rights to retail piped natural gas in 11 circles in the country — the most among all the bidders.
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