Tag: financial times

• Amazon might be buying Zoox

  This week the FT reported that Amazon is in “advanced talks” to acquire the self-driving startup Zoox. This would be Amazon’s first acquisition in the space, though it did lead a $530M funding round in Aurora in early 2019.

  Zoox last raised two years ago and was valued at $3.2 billion. Rumor has it that its valuation will be less than that today. Some of its investors, according to FT, include Breyer Capital and the Canadian Pension Plan Investment Board.

  The move seems reasonable. Amazon wants to build out its (driverless) logistics capabilities. It’s also in keeping with what we have been seeing from big tech. Companies that can are using this environment to be acquisitive, invest in the future and, hopefully, gain market share. It’s probably also inevitable that the self-driving space will see some consolidation going forward.

  If you go back to this post from earlier this year, Zoox and Aurora weren’t near the top in terms of R&D spending on autonomy. And it has become increasingly clear that this a giant problem/opportunity requiring giant funding capabilities. It’s going to take time.

  I recently heard Chamath Palihapitiya refer to Jeff Bezos as the greatest investor of our time — even more so than Warren Buffet. Why? Because he is consistently, and sometimes exclusively, investing in the future. Is this one of those moments?

  2020.05.27

• Jostling for space on the grass

  

  The talk this weekend in Toronto is about how everyone is jamming into downtown parks — like Trinity Bellwoods — to enjoy the beautiful weather and drink outside with friends.

  Some, including our mayor, are “extremely disappointed” by this selfish behavior. Others are chalking it up to those hipsters. And others, such as Richard Florida, are being highly sympathetic: these are young people who live in small urban spaces and they are clamoring for some green space. Let them be human.

  This, of course, is a debate that is playing out not just here in Toronto, but all around the world as we flirt our way into a reopening. Videos of the Lake of the Ozarks were making the rounds on Twitter when I last checked.

  I’m not here to pass judgement or predict a second wave (though a few waves are probably inevitable). I’ll leave that to the epidemiologists. The silver lining to all of this, I think, is that it is a clear demonstration of just how persistent urban life remains in the midst of this pandemic. The desire to be around other humans is a powerful force of attraction.

  Here is an excerpt from a recent FT Opinion by Ben Rogers called, Cities are not dead — they will get younger:

  Cities have always worked particularly well for young people. They flock to them to build up vital social and professional networks, meet their mates and learn how the world works. Around the world there is massive unmet demand for city homes and workspace. The idea that the centres of London, Paris and New York will turn into tumbleweed towns is fanciful. The age composition of these cities might change, but people and business will still be jostling for space near the centre.

  In Toronto this weekend, that jostling for space played out on the grass of Trinity Bellwoods Park.

  Photo by Adrien Olichon on Unsplash

  2020.05.24

• The global gym market and gyms per capita

  Many of us are now working out from home. The Financial Times just reported that Peloton experienced its highest level of participation last week. Some 23,000 people tuned in for one of its streamed classes. Naturally, anything that was possible to go online has gone online.

  I’ve never really been a class guy, but I’ve been a regular at a gym since high school and it’s one of the things I’m most looking forward to getting back to as things subside. For many, the gym is a kind of third place. Though I would imagine it’s not the best place to hangout during a pandemic.

  According to FT, the fitness industry was among the first to suffer in the UK (~£5.1bn industry), showing signs of decline even before any government lockdown. The UK also had one of the most profitable fitness industries in Europe. Here’s an interesting chart comparing gym penetration to revenue per club.

  

  It’s interesting to note some of the outliers. Latin America has low penetration and low average revenue per club. And parts of Asia — notably Hong Kong and China — have relatively high average revenue per club, but still have fairly low penetration percentages. Do only rich people go to the gym in Hong Kong?

  This chart maybe makes it seem like nobody in Latin America is working out. But if you, instead, look at the number of fitness clubs in each country, the data looks vastly different. In this case, there are two very clear outliers: the United States and Brazil. (The below chart is from Statista and is based on 2017 data.)

  

  But Brazil also happens to be the most populous country in Latin America with around 209 million people. So let’s consider this chart on a per capita basis against, oh I don’t know, the US (~328 million), the UK (~67 million), and Canada (~38 million). Once again, the ranking switches. Brazil and Canada now come out on top with around 16 fitness clubs per 100,000 people. (I guess we’re just as body conscious as the Brazilians.) This is in comparison to 12 per for the US and 10 per for the UK.

  So what does this all mean for our post-COVID-19 world? Who knows. But I’ll sure as hell be at the gym.

  2020.04.25

• How Europe is reopening

  

  Just over a month ago, as North America was beginning its lockdown, the Europeans were the ones showing us how to stay sane in quarantine through balcony orchestras and viral internet videos. Now we’re looking to them for how best to reopen the economy and minimize the number of fits and starts.

  • This morning Spain recorded its lowest daily death rate from the coronavirus. It is beginning to prepare for a phased relaxation of its lockdown rules. Things will not return to normal overnight. [Financial Times]
  • Spain allowed construction activity and manufacturing to resume this past week. As a reminder, Spain’s strict lockdown started on March 14. [New York Times]
  • Bookstores are open in Venice, but that’s about it. Customers have to enter one at a time, or schedule an appointment. Hotels, restaurants, and cafes remain shuttered. It is believed that at least 1/6th of all Italian restaurants and bars will not survive. Reopening is not happening uniformly across Italy’s 20 regions. [Wall Street Journal]
  • Last week, Denmark became the first country in the Western world to reopen elementary schools. The desks are far apart and teaching outside is being maximized, but some/many are concerned that this is too soon. Are we prioritizing the economy (i.e. free up the parents) over the health of our children? [New York Times]
  • The Czech Republic currently has one of the lowest number of cases on the continent. But hardware stores and bike shops are some of the only nonessential businesses that are allowed to be open. The Easter weekend saw an over 60% increase in year-over-year sales. Biking is something to do right now. [Wall Street Journal]
  • On Monday, the lockdown will be further relaxed by the Czech government. Weddings of up to 10 people will start to be allowed. Gyms are expected to open on May 11, but their change rooms will remain closed. (I’m surprised by this one.) Malls, hotels, and indoor restaurants aren’t expected to reopen until June 8 at the earliest. Should the number of new daily cases exceed 400 going forward, the government has said it will reimpose a lockdown. [Wall Street Journal]
  • The UK is not yet considering a relaxation of its lockdown. As of Sunday, the situation remains “deeply worrying.” The UK currently has the 5th highest national death toll. [Globe and Mail]
  • On April 13, Emmanuel Macron announced that France would begin a phased reopening of its economy — schools and some businesses — starting on May 11. This is a unique approach. He gave a firm date, well into the future. What if this doesn’t make sense when the time comes? Clearly the government felt that the psychological benefits of a firm date outweighed the potential risks. Minimize uncertainty during an uncertain time. [Le Monde]
  • Lots of discussion around the porosity of borders. Logically, there’s a view that unless there’s a common strategy, it’s better to keep borders closed. But what are the economic implications of doing that? [New York Times]

  Photo by Grant Lemons on Unsplash

  2020.04.19

• COVID-19 in the developing world

  One of the things that Bill Gates mentions in his recent TED talk about the coronavirus is that we need to be aware of what might be coming in developing countries, particularly in the southern hemisphere with winter about to arrive. (There’s some evidence of a relationship with temperature.)

  So far, countries like Brazil have been criticized for taking a laid-back approach to fighting the coronavirus. But the same could be said for many, or perhaps most, countries around the world at the outset.

  However, in the case of densely populated slums — like Brazil’s favelas — the problem is expected to be more severe. Without the ability to socially isolate and without proper services, it is questionable whether they will be able to “flatten the curve” in the same way that some developed countries have. There’s also a lack of government oversight in these communities.

  Incidentally, the Financial Times is reporting that organized crime has started to step in to fill this void — and it is happening over WhatsApp. Here is an excerpt from the above article: “Whoever is caught on the street will learn how to respect the measure. We want the best for the population. If the government is unable to manage, organised crime resolves,” read one message sent to residents of a Rio de Janeiro slum.

  One hope is that rich countries will be largely through their outbreaks by the summer and that a vaccine will be well on its way.

  (On a related note, here is an excellent slide deck from the London Business School on the economics of this pandemic. It’s very comprehensive and worth a read.)

  2020.03.29

• The latest coronavirus figures

  The Financial Times has some of the best charts/graphics that I have seen on the coronavirus and its impact. They’re also free and regularly updated. Below is the cumulative number of deaths, by number of days since the 10th death (last updated March 23 at 21:00 GMT). I prefer this to the number of cases because it is more precise, though impacted by things like demographics. The number of cases is impacted by how good you are at testing. Some countries have been far better than others. And what we are continuing to learn is that lots of people were and are completely asymptomatic.

  Seeing China (and Iran?) continue to flatten out is encouraging. (Note the logarithmic scale.)

  

  Here has been the impact to the Chinese economy. It’s slowing coming back.

  

  And here are traffic volumes around the world. This chart was published on Sunday, March 22. At that time, Tokyo looked to be largely business as usual.

  

  2020.03.23

• How temperature impacts the transmission of COVID-19

  The Financial Times published the following chart last night. It shows the cumulative number of COVID-19 cases around the world, across the number of days since the 100th case in that particular country. The message here is that most western countries appear to be on a similar trajectory. (The grey dotted line represents a 33% daily increase.) Whereas in Asia, and in particular Hong Kong and Singapore, they have seemingly managed to slow the spread.

  

  Now, there are a number of possible explanations for the outliers; everything from stricter quarantine rules to more rigorous testing. There’s also an argument that Hong Kong and Singapore were better prepared as a result of the SARS outbreak in 2002. (More on these explanations, here.) But the other factor at play seems to be climate.

  A recent study (by Jingyuan Wang, Ke Tang, Kai Feng, and Weifeng Lv) has concluded that, like the flu, the transmission of COVID-19 appears to be significantly impacted by both air temperature and relative humidity. In their research, they looked at the reproductive number (R), or the severity of infectiousness, for all Chinese cities with more than 40 cases between January 21 to 23, 2020. (Large-scale government interventions began on January 24, 2020 and would have therefore skewed the numbers.)

  

  What they found was that for every one degree Celsius increase in temperature and every one degree Celsius increase in relative humidity, the reproductive numbers drop by 0.0383 and 0.0224, respectively. Air temperature, in other words, has more of a positive impact on containing spread than relative humidity — which feels right. That is also apparent when you look at the above charts. Take note of Korea, Iran, and Italy near the top left corner of the temperature chart.

  If you’d like to download a full copy of the research paper, click here.

  2020.03.16

• Economies of agglomeration in London

  The media tends to describe agglomeration economies — one of the benefits of big urban areas — as being entirely serendipitous. Minimize travel. Maximize chance encounters at the local coffee shop. And then all of a sudden patents will go up and new startups will emerge. That does that happen, I’m sure, but there’s a bit more structure to a lot of these encounters. Economies of agglomeration is not just about serendipity. It is about the benefits of and the decision to concentrate economic activity.

  

  Last week, a think tank in the North of England (IPPR North) published a report outlining, among other things, job creation and productivity across England. Based on these metrics, London and the South East dominate, with “productivity” in London being by far the highest. Almost half of England’s new jobs over the last decade were in these two regions. Above is a chart from the Financial Times. The trade-off is wealth and income inequality. And the report does look to how the government could address this centralization of power and wealth.

  Like Singapore’s low fertility rate, this is an instance of leaning into the wind.

  2020.02.23

• Berlin apartment rent freeze has frozen capital expenditures

  

  Last year, the city of Berlin agreed to a five year rent freeze for some 1.5 million flats constructed before 2014. The way it was initially approved is that it would freeze rents at mid-2019 levels and allow for only 1.3% inflationary increases. All of this is being challenged in the courts, but the Financial Times is suggesting that it could still come into force by March 2020. Here is an excerpt from a recent article. (Guy Chazan isn’t holding back about the kind of people that he believes Berlin attracts.)

  The legislation, which should come into force by March this year, is City Hall’s response to a lingering housing crisis that shows no sign of easing. Packed out with Brexit refugees, international party people and wannabe tech entrepreneurs, Berlin is in expansion mode, its population growing by 40,000 a year. Yet affordable housing remains scarce. Rents have doubled over the past decade, as new residential construction fails to keep up with soaring demand.

  As I mentioned before on the blog, these policies are not intended to apply to new buildings. That would surely choke off new construction, which would only exacerbate the underlying supply issue that Berlin is facing. But not surprisingly, this move has also put a freeze on capital expenditures, according to the same FT article. Local trades are complaining that, “It’s as if someone’s just turned out the lights.”

  Photo by Gilly on Unsplash

  2020.01.12

• A crisis of regional imbalance

  Last week’s general election in the UK was yet another example of the urban-rural divide that we are all seeing emerge around the world. Taking a look at this chart from the Centre for Towns, it’s pretty clear that the type of community someone lives in (i.e. how urban), says a lot about the way in which they probably voted. In big cities, the vote share was 49% Labour. And in villages, communities, and small towns, the vote share was about 48-58% Conservative.

  But what does this stem from? According to John Burns Murdoch of the Financial Times, the biggest predictor (for constituencies) of a swing vote over to the Conservatives during this last election was the share of the population in a blue collar job. Here is a graph from John’s article. Circles with a black outline are constituencies that changed hands last week. Note Great Grimsby, which I wrote about here, in the top right corner.

  

  These facts probably aren’t all that surprising to most of you. But it is an important reminder of how concentrated the new economy is becoming in big — or perhaps I should say, certain — cities. The Brookings Institution recently referred to this as “a crisis of regional imbalance.” Because it’s not just a case of urban vs. rural. Brookings found that from 2005 to 2017, more than 90% of innovation sector growth in the US could be traced back to just five metro areas. (You’ll be able to guess most of the five. Only one stood out for me.)

  This is the world we live in.

  2019.12.15