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Thursday, 14 November 2019

Weekend Reading - Some interesting stuff


1) The economic future of negative interest rates
A great article on how negative interest rates are affecting global economy.
Denmark was the first country to adopt negative interest rates (July 2012), but it was Japan, which had been wrestling with the fallout from the twin forces of an aging population and a credit bubble since 1989, that became the petri dish in which financial alchemy was tested. Quantitative and Qualitative Easing (QQE) followed, allowing the Bank of Japan (BoJ) to buy corporate bonds and even equities. Negative–interest rate policy followed in January 2016.
For finance ministries, zero interest rates on government bonds are a blessing and a curse. For the first time in history, they can raise capital for nothing or even receive an interest payment for their trouble. 
The effect that an artificially low interest rate has on an economy is pernicious. Asset markets are supported, and it raises the point at which they clear, but it also reduces the need for companies to improve internal efficiency. For corporates, borrowing becomes preferable to issuing equity. Firms become more leveraged. The managers of these businesses have an incentive to improve profitability per share by issuing debt and retiring equity capital. They are deterred from raising new capital for other purposes; stock buybacks are safer than speculative projects, especially when you cannot divine what discount rate to use in order to assess the potential of a project.

2) Shopify is fighting Amazon! And doing a good job!
Anyone who has been following my weekend reads would know that I follow Amazon very closely. So, found this article very insightful.
Shopify’s ascent corresponds to the rise of direct-to-consumer brands, and the shift of [small businesses] to online storefronts. Stores want to maintain a direct relationship with their customers; they want to create unique branding experiences versus shipping Amazon-cloaked boxes; and businesses worry that Amazon will one day create lower-priced knockoffs of their products.
Last month, Shopify took another big step toward becoming a viable alternative to Amazon. It unveiled the Shopify Fulfillment Network, which will give merchants the ability to offer timely deliveries under their own branding, along with affordable shipping rates.

3) Aha! Cola-Cola's new product!
At a time when consumers are increasingly looking for healthier alternatives to sugary soft drinks, AHA won't have calories or sodium. But its citrus and green tea, and black cherry and coffee flavor combinations will contain 30 mg of caffeine.
Coca-Cola mixed and matched 50 pairs of flavors before coming up with the eight that will be on store shelves. They include orange and grapefruit, blueberry and pomegranate, and peach and honey.

4) Screen time slows down cognitive development in children
The scans revealed that kids who spent more time in front of screens had what the authors call lower “white matter integrity.” White matter can be roughly thought of as the brain’s internal communications network. The integrity of that structure is associated with cognitive function, and it develops as kids learn language. There’s a clear link between higher screen use and lower white matter integrity in the children. That structural change appears to be reflected in the results of the cognitive test the kids took as well, which showed high screen time associated with lower levels of language and literacy skills. 

5) Goa village to charge tourists for clicking photos. [I wish they did this for selfies!! :-) ]
Tourists visiting North Goa's Parra village will now be charged for taking photographs of its picturesque landscape. Parra Village, which is the birth place of late Goa Chief Minister Manohar Parrikar, has introduced 'Swachhta tax' for the tourists. The fee for clicking pictures of Parra's landscape ranges from Rs 100 to Rs 500.
The incumbent sarpanch of Parra village, Delilah Lobo said the tourists create a mess on the coconut-lined road. Levying tax would cut town nuisance created by tourists in the village. "Indian mentality only understands fines. Therefore we have imposed a fine to cut down on this nuisance caused by tourists," Lobo added.

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