1. Fascinating article by Sandeep Goyal on the retromania in sneakers, where Addidas is raking in the moolah with its Samba and Gazelle retros. This is interesting about Nike Air Jordans
The Nike Jordans were so popular for so long because they were hard to get. You couldn’t walk into a store and pick one up at the retail price, so your only option was to go to a reseller who would sell the shoes at a premium. Nike figured this out early, and for a long time, they would only produce a limited number of the new Jordan shoes to make sure demand outpaced supply. In the last couple of years, Nike got too greedy and produced too many shoes at too high a price point. It was a kiss of death for Nike’s Jordan.
2. On a possible reason for the mystery of India's low female labour force participation rate,
“Once you run out of men, you have to employ some women,” said Alice Evans, a senior lecturer at King’s College London. “But those labor shortages never materialized in India.” Economists say a boom in jobs could help overcome the social stigma that remains a barrier to more women working. Japan and South Korea both had female labor participation rates below 50% before their economies began to take off in the 1970s and ’80s. China’s rise, too, was bolstered by women who joined its labor force. As millions of women flocked to factories in the cities, its female participation rate soared to over 70% by the early 1980s, according to data from the United Nations’ International Labor Organization... Bangladesh had a female labor-force participation rate of 38% last year, up from 28% in 2000.
3. Ireland should be called a rogue economy whose tax policies impose serious negative externalities. This graphic, which highlights how Ireland steals other countries (mostly US) tax returns is stunning.
There have been wild swings in Ireland's industrial production data
While a double-digit percentage move in industrial production is rare for most countries, Ireland has recorded 14 of them in the past 24 months.
4. NYT and FT have articles on mispricing of climate risks. The former has an article which describes the consequences of an increase in the pricing of climate risks by reinsurers.
Reinsurers’ increased prices have accelerated changes in an industry grappling with a new sense of uncertainty. The world is warming; storms are getting more intense; inflation has increased the cost of rebuilding after a disaster; and a global increase in interest rates is making money itself more expensive. Since the beginning of the year, insurance companies have paid out $40 billion to U.S. customers, putting them on track for another record in yearly losses. At every level, the costs of guarding against risk are rising and everyone... Prices for reinsurance rose as much as 40 percent on Jan. 1 from a year earlier...The price increases jolted insurers, who then made changes to where and for what they offered coverage... State Farm announced in May that it would stop accepting new applications for certain policies in California... Allstate... paused some of its activities in California. Last month, reinsurers specializing in agriculture insurance announced that they were pulling out of Iowa, where, three years ago, a severe windstorm caused nearly $4 billion in damage. As a result of rising reinsurance costs, insurers also raised prices where regulations allowed. The cost of insuring big new developments of stick-frame housing... skyrocketed... Severe thunderstorms in the United States have caused nearly 70 percent of the losses that insurance companies around the world have incurred this year from natural disasters.
The FT article talks about a possible 'Minsky Moment' for asset values as they get repriced downwards as climate risks become increasingly apparent. It points to a recent study that explored how a portfolio of 60% of global equities and 40% of bonds would fare over the next 40 years under different climate policies compared to the baseline returns (without assuming these climate risks).
Morgan Stanley estimated in a report last year that at least 44 per cent of wheat, 43 per cent of rice, 32 per cent of maize and 17 per cent of soyabean production comes from at-risk areas. Climate change-induced disasters could put at least $314bn of annual production in jeopardy... Unilever estimates that extreme weather events could increase palm oil prices by 12-18 per cent by 2050, depending on the extent to which rising temperatures can be limited, and other food and commodities ingredients by 14-21 per cent...Recently published research suggested that US residential properties exposed to flood risk are overvalued by between $121bn and $237bn... insurance premiums for wildfire protection were just $1.5bn in 2021; damages were six times bigger. A move by insurers to close that gap could result in a drop of up to $495bn in property values... One cubic metre of desalinated water can cost between 40 cents and $1 compared with 10-25 cents for the same measure of normal tap water... For southern Europe, intolerable summer temperatures will force writedowns of hotels and resorts in countries including Spain, Italy, Cyprus, Portugal, France and Greece.
A very high proportion of manufacturers of various kinds are exposed to climate change.
5. Services "shrinkflation" in Japan as the country grapples with labour shortages.
6. Some facts about the global Lithium ion battery market. About a third of the cost of an EV is in the battery,
Invented in the 1970s by US-based scientists and commercialised in 1991 by Japan’s Sony to power its Handycam video cameras, lithium-ion cells pack far more punch in smaller and lighter units than the lead acid or nickel cadmium units that previously dominated the rechargeable battery market. Having helped give birth to the portable electronics industry, lithium-ion batteries have fought off competing technologies to become the dominant force in electric cars after a 90 per cent drop in cost over the past decade. Total global deployment of the technology could top 1 terawatt-hours this year, equivalent to 17mn average-sized electric cars, according to London-based battery consultancy Rho Motion... Global lithium ion battery revenues will grow to $700bn a year by 2035, according to consultancy Benchmark Mineral Intelligence, by which time $730bn will have to be poured into battery plants, mines and processing facilities to meet the need not just for lithium but for other ingredients including nickel and cobalt.
7. The end of Yevgeni Prigozhin and the putsch within the Russian military leadership has been swift and chilling.
8. Profile of Jackson Lake Lodge, 30 miles from Jackson town in Wyoming, built by John D Rockefeller Jr on the land he donated to the Grand Teton National Park, which has since 1982 been the site of the Kansas City Fed's annual conference. The Conference is today popularly known as the Jackson Hole meeting of central bank leaders and economists.
The town was once so remote that it was a go-to hideaway for outlaws. In 1920, when Jackson’s population was about 300, The New York Times harked back to a not-so-distant era when “whenever a serious crime was committed between the Mississippi River and the Pacific Coast, it was pretty safe to guess that the man responsible for it was either headed for Jackson’s Hole or already had reached it”... High on its list of charms, the Jackson Lake Lodge was close to excellent fly fishing — a surefire way to appeal to the Fed chair at the time, Paul A. Volcker. He came, and between the A-list attendees and the location’s natural beauty, Jackson Hole quickly became the Fed event of the year...Teton County, home to Jackson (now a bustling town of 11,000) and Jackson Hole, hosts more millionaires than criminal cowboys these days. It has become the most unequal place in America by several measures, with gaping wealth and income divides. The event, billed as rustic, now struggles to pretend that its backdrop isn’t posh. And the Fed gathering itself has gained more and more cachet. Alan Greenspan delivered the opening speech at the conference in Jackson Hole in 1991, when he was Fed chair, and then kept up that tradition for 14 summers until he stepped down. His successors have mostly followed suit.
9. Interesting snippet about ISRO
What draws broad support for ISRO’s missions — with Wednesday’s landing welcomed with prayers, music and special screenings in schools across the country — is a culture of humility, teamwork and efficiency... India has a number of large and famed state-funded technology institutes, whose graduates dominate Silicon Valley. But many of the leaders of the lunar mission are graduates of smaller, more modest engineering schools. The leaders, in their humble tucked-in shirts and plain saris, and the hundreds of scientists clapping for them at the moment of touchdown made for an image that middle-class India could easily relate to... After the successful landing, Indian television channels broadcast emotional images from inside the simple home of P. Veeramuthuvel, the project director. His father, P. Palanivel, a former railway employee, sat in front of his television set wiping tears of joy before visitors came with sweets.
10. Subway, the family owned sandwich chain with more than 37,000 stores, has agreed to sell itself to the US PE group Roark Capital for more than $9 billion in upfront payment and $600 million over the next three years. The sale marks the end of more than 50 years of family ownership of the company, a pioneer in the use of franchised stores to grow quickly with minimal capital costs.
Over the past decade, Roark has spent more than $10bn to buy restaurant chains including Arby’s, Buffalo Wild Wings and the parent company of Dunkin’ Donuts, among others. The privately held investment group, which is controlled by Neal Aronson, has $37bn in assets under management. It is named after Howard Roark, the protagonist of Ayn Rand’s libertarian novel The Fountainhead, and is known for turnaround efforts that focus on the use of franchises for expansion. The private equity group also owns Driven Brands, a conglomeration of recognisable auto service brands such as Maaco, Meineke and 1-800 Radiator. In addition, it has invested in gyms, fitness centres and petcare clinics that rely on franchises. Roark emerged the winner from a process that included several other private equity bids after Subway hired JPMorgan earlier this year to manage a sale process... Roark will consider options such as securitising some of Subway’s stores after the takeover closes.
Watch this space on the fortunes of Subway going forward.
11. FT long read on three initiatives of Xi Jinping government to build an alternative world order. They are the Global Development,
The key to China’s blueprint is to steadily institutionalise its leadership over the developing world by creating, expanding and funding a raft of China-led groupings of countries, according to Chinese officials and commentators. They add that the aims of this strategy are largely two-fold: to ensure that a broad swath of the world remains open to Chinese trade and investment and to use the voting power of developing countries at the UN and in other forums to project Chinese power and values... Global Development Initiative, which is now gaining recognition as a foundation stone in China’s blueprint for an alternative world order to challenge that of the US-led west... is a Chinese-led multilateral programme to promote development, alleviate poverty and improve health in the developing world... along with two follow-up initiatives also announced by Xi — the Global Security Initiative and the Global Civilisation Initiative — it represents China’s boldest move yet to enlist the support of the “global south” to amplify Beijing’s voice on the world stage and build up China’s profile in the UN, Chinese officials and commentators say...A study by AidData, a US-based research lab, shows that the 20 countries... have displayed impressive loyalty to China in the form of votes at the UN. Between 2013 and 2020, each of them have voted with China on at least 75 per cent of occasions in the UN General Assembly, the main policymaking body which issues recommendations on global crises, manages internal UN appointments and oversees the UN’s budget... In the case of Cambodia, Pakistan, Tajikistan, Uzbekistan and Zimbabwe — all of which owe hefty debts to China — their voting alignment with China in the UN General Assembly registered at 80 per cent or above... The correlation between increased lending and greater voting fealty was consistent across the sample. “When countries vote with China in the UN General Assembly, they are richly rewarded,” says Bradley Parks, executive director of AidData. “Beijing is dusting off an old playbook and using its largesse to purchase foreign policy favours. “On average, a 10 per cent increase in voting alignment with China in the UN General Assembly yields a 276 per cent increase in aid and credit from Beijing,” he adds, quoting research on voting patterns from a new book by Axel Dreher and colleagues called Banking on Beijing.
12. Fascinating graphics from John Burn-Murdoch on transportation infrastructure construction costs across countries
If phase 1 of HS2, the high-speed rail project connecting Britain’s capital to its second-largest city, is ever finished, it will be the world’s most expensive such scheme, coming in at a cool £396mn for each mile of track... When neighbouring France opened a new 188-mile stretch of its high-speed network in 2017, it cost £46mn per mile in today’s money, just over a tenth as much, and took 12 years to deliver from the start of planning to the first passenger-carrying train, half the anticipated 23 years for the initial phase of HS2... Averaged over a dozen recent major rail projects, and adjusted for inflation, British schemes cost £262mn per mile, compared with £145mn per mile for Japan’s bullet train network, £92mn in Sweden, £74mn in Italy, £42mn in France, and £34mn in Germany. And it’s a similar picture for roads, where new motorway bridges in the UK cost more than three times as much per lane mile than in France, Denmark or Norway, and additional lanes on existing British roads are twice as expensive as in Germany. In both cases, only the US faces even higher costs.On the coverage of mass transit services across large cities
Sam Dumitriu and Ben Hopkinson have a blog post explaining in detail why it costs much more to build infrastructure in the UK.
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