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Alexandra Scaggs

Alexandra Scaggs

Alexandra Scaggs is a markets reporter for the Wall Street Journal in New York. She writes about the U.S. stock market and investment trends. She also covers the business of markets research, writing on the calls, personalities and moves of high-profile analysts and strategists. Ms. Scaggs graduated from Washington & Lee University with a degree in business journalism.

Articles by Alexandra Scaggs

Time for Warren Buffett to switch up his drink of choice?

2 days ago

Call it dietary diversification: PepsiCo could be the next target for Kraft-Heinz after its failed takeover of Unilever, says CreditSights.Half of Kraft-Heinz is owned by Warren Buffet and private equity firm 3G. Buffett says he drinks five Coca-Colas every day. (Not the diet kind, improbably.)Now, some reports have speculated that AB-Inbev — the megabrewer created by 3G — could buy Coca-Cola, in which Buffett has a roughly 9 per cent stake. But as far as large targets go, though, Coca-Cola is pretty pricey. From the CreditSights note:The numbers look much more doable at PEP… PEP has a lower multiple and operating margin than KO. The margin difference is due in part to the fact that KO operates as a pure-play beverage company, while PEP generates over 50% of its revenue from snacks.A large

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El Salado, the myth of Philomela, and “a universal spirit”

7 days ago

In Bogotá last month, two Colombian teenagers taught a classroom of educators (and one journalist) about a massacre in El Salado, a small rural town where paramilitary troops murdered at least 60 people in February 2000.It was mildly unnerving to watch teenagers calmly discuss mass murder, rape and soccer games played with severed heads. Especially because the 16-year-olds — who were both named Andrés, and said they were cousins — were not alive at the time of the violence, and gave the presentation in their second language.“How do you say ‘guerrillas’?” asked Andrés #1, a self-assured speaker who wore an earring. (The answer was, of course, “guerrillas”.) They later found out that “paramilitary” is an English cognate as well, which speaks to a bleak fact: Latin America has become so

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Morgan Stanley says we’re reaching peak Airbnb

13 days ago

Morgan Stanley has a note out today arguing that Airbnb is less of a threat to the lodging and travel industries than they thought just a year ago.Unfortunately for hoteliers, this news only amounts to an average 1-per-cent increase in their 2019 EBITDA estimates, and no change in current-year estimates. But, after a lengthy argument that the Airbnb Threat™ is receding and some finessing of timeframes, the analysts raise price targets for asset-light franchise hotels like Hilton and Marriott.They base their view on an online survey of 4,000 consumers from the US, UK, France and Germany, which found that 25 per cent of respondents used the service in the past 12 months. While use of Airbnb rose 3.3 percentage points from the previous year, that was a slowdown from the 7.9 percentage-point

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In the future everyone will be Microsoft Clippy

14 days ago

Snapchat wants to get into the “augmented reality” business — a trend that cropped up after the Pokemon Go craze, when companies realised they could sell things by putting a layer of digital smartphone marketing onto real-world locations and products.That seems reasonable enough, since it doesn’t look like hardware has worked out very well for them.Snap’s shares have dropped more than 15 per cent since it reported earnings, which included a $39.9m writeoff for excess inventory and cancelled purchase commitments for Spectacles. The report also included 1) lower-than-expected quarterly user growth (which calls to mind the competitive threat from Instagram Stories, owned by social-media juggernaut Facebook) and 2) news of an app redesign, meant to make the service easier to use. It also

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Like begets like — until the tax code changes

16 days ago

The “like-kind exchange” programme — a tax deferral that’s popular with auto rental and leasing companies — is on the chopping block under the Republicans’ new tax policy proposal.The programme, also known as LKE, allows companies to indefinitely defer paying capital-gains taxes on assets they sell, if the proceeds from the sale are used to buy similar — or like-kind — assets. (We’ll go through an example shortly.)If the Republicans’ bill passes, the popular deferral would be limited to real-estate transactions, a tax lawyer confirmed for us. That could raise the tax bill for rental-car companies and hurt the “hefty slice of auto demand” driven by LKE programmes, according to CreditSights.Now, it’s not certain that the tax bill will raise total tax costs for rental-car companies, the

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Education, trust and economic measurement

21 days ago

When James Kassaga Arinaitwe first started working in international development, he focussed on global health. The motivations behind that choice were very personal — six members of his family had died from disease by the time he was 10 years old.But in his native country of Uganda, he soon ran into problems that made him rethink his decision.“I realised the foundations of everything were broken, because of a broken education system,” said Kassaga, who started Teach for Uganda alongside Charlotte I Nsengiyumva. We spoke in Bogota, Colombia, at a conference hosted by Teach for All, a global education network started 10 years ago as a collaboration between Teach For America, Teach First UK, and entrepreneurs who wanted to start their own branches in other countries (India and Chile, for

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Global sharing-economy venture disrupted by US prosecutors

25 days ago

Or, from another perspective, New York City hotel-industry lobbying groups have scored a public-relations victory:Oh, and, elsewhere:Defendant PAPADOPOULOS claimed he met a certain female Russian national before he joined the Campaign and that their communications consisted of emails such as, ‘”Hi, how are you?”‘ In truth and in fact, however, defendant PAPADOPOULOS met the female Russian national on or about March 24, 2016, after he had become an adviser to the Campaign; he believed that she had connections to Russian government officials; and he sought to use her Russian connections over a period of months in an effort to arrange a meeting between the Campaign and Russian government officials.Related links: United States of America v Paul J Manafort Jr and Richard W Gates III — US

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No one said fighting tax evasion was easy…

October 24, 2017

As Colombia plans its ambitious development plan for its rural areas — part of its wide-ranging peace deal with FARC — it has told the IMF that it plans to get a funding boost by fighting tax evasion.Or, in other words, efforts to “strengthen tax administration”. From the IMF’s latest assessment report on Colombia, published in May:The [new tax policy] includes a comprehensive simplification of the tax code and measures to improve formalization and tax administration. Measures include a 3 percentage point increase in the VAT, and a reduction in the high corporate tax burden, a key business obstacle. Staff noted that achieving the 3 percent of GDP medium-term reform target yield is predicated on gradual gains in tax administration which might not fully materialize. In response, the

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Venmo’s peer-to-peer payments problem

October 20, 2017

PayPal executives are talking up plans to “monetise” Venmo, the peer-to-peer social payments network it bought years ago as part of its acquisition of Braintree.But it’s still unclear whether the app will have a significant effect on the company’s top line.There is one simple reason for this: PayPal doesn’t charge fees for peer-to-peer payments, so transactions don’t generate direct revenue! (Venmo’s business probably did end up juicing a couple of metrics in PayPal’s latest quarterly report, but we’ll get back to that later.)For the uninitiated, Venmo is an app that’s popular among young adults, who mostly use it to send money directly to their peers. The creepier side of the business is the social-media aspect, which gives its more prying customers the ability to look at payments made by

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Dealers loosen their grip on money markets (a little bit)

October 18, 2017

Money market funds have had a rough go of it lately, but those investing in Treasuries still get some perks.For years, they’ve been able to earn interest on cash in overnight repurchase agreements with the safest counterparty on the planet.Now they can purchase collateral from (or lend cash into) the centrally cleared pools for general collateral financing repurchase agreements — known as GCF repo — that were previously dominated by dealers. They had lent $16bn of cash into that pool at the end of September, up from nothing at the start of the year, according to the Office of Financial Research’s money market fund monitor.Now, money-market funds don’t get the full benefits of GCF repo, since the funds are currently only permitted to purchase collateral/lend cash. (GCF transactions are

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An un-discoverable Constellation?

October 18, 2017

So, we’ve had an update on Chinh Chu and Constellation Healthcare, the medical back-office roll-up company Chu’s family office purchased for about $300m at the end of 2016.But what about Paul Parmar — he of the highly publicised mega-mansion, and odd websites describing him as the/a “man of the world“?Those who have been following along since January will remember that Parmar faced a lawsuit from the trustees of an insurance receivership who claimed they owned shares in Constellation.That lawsuit has settled — but took some unusual twists and turns on the way, according to court documents.Here’s a review of the narrative that led to this litigation, pulled together using court documents from Delaware and South Carolina. (Warning: It’s a tangled web.)— Back in 2013, Parmar and Southport, a

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Ready for a SpaceX IPO?

October 13, 2017

Ha ha, just kidding, the company denied it had plans for an IPO back in May.But that hasn’t stopped Morgan Stanley’s Adam Jonas from sizing up SpaceX with a valuation.The company is planning some capital-intensive projects — a speedier pace of satellite launches, as reported by the WSJ — so “it seems reasonable to consider whether the company could look to … public markets,” he writes in a note.And why not?Public markets have a near-masochistic willingness to fund Elon Musk’s other company, Tesla. And unlike Tesla, SpaceX reportedly posted an operating profit several years in a row (from 2011-2014).Of course, before an IPO could happen, banks and investors would be tasked with trying to figure out how much the company is worth.And, well, this is a start, I guess:For this report, we built a

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Further reading

October 13, 2017

Elsewhere on Friday… — A rather long piece about the Very Short Introduction series.— Short-seller Marc Cohodes is bullish on Overstock. This is notable because back in 2005, Overstock CEO Patrick Byrne sued Cohodes and claimed that a cabal of short-sellers led by a “Sith Lord” were trying to take down his company.— The plan to save Europe requires Angela Merkel.— The Washington Post profiles economist Kevin Hassett, who is currently responsible for selling Trump’s tax plan to Congress and the public.— Alaska Fried Chicken.— For a while there, Equifax’s website was showing sketchy advertisements that prompted some users to download malware, reports Ars Technica. Naturally.— Eric Lonergan synthesises his critique of modern monetary theory, and offers an olive branch of sorts.— Ben Bernanke

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The Wire, psychological disorders and real-life Bad Guys

October 12, 2017

Harvey Weinstein is not a systemic problem, and he does not seem to be diagnosed with a mental illness.He is not the result of a relaxed environment in the workplace. He is not a product of capitalism, or Hollywood, or his generation, or “toxic” masculinity.Judging by the accounts of 13 women who spoke with Ronan Farrow, Harvey Weinstein is a predator. Three of the women interviewed described encounters with Weinstein as rapes. Numerous other actresses, journalists, and former employees have now come forward with claims of sexual assault as well.His defenders and friends have tried to divert blame toward amorphous social forces. Commentators should not indulge this. And these types of narrative distortions usually come in predictable formats.One glaring — and failed — attempt at

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Crypto-Apple dealer attempts to avoid US regulators

October 5, 2017

Noted crypto-securitisation shop LA Token says it won’t sell more tokens to US investors.The announcement is intriguingly timed, to say the least — just a few days after the SEC charged two ICOs with fraud!The regulator got an emergency court order to freeze the assets of Maksim Zaslavskiy, after it found he and his companies “have been selling unregistered securities, and the digital tokens or coins being peddled don’t really exist.” From the SEC’s release:Zaslavskiy allegedly touted REcoin as “The First Ever Cryptocurrency Backed by Real Estate.” Alleged misstatements to REcoin investors included that the company had a “team of lawyers, professionals, brokers, and accountants” that would invest REcoin’s ICO proceeds into real estate when in fact none had been hired or even consulted.LA

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Hey Facebook, you got a problem with New Jersey or what?

October 4, 2017

Last month, analyst Brian Wieser found out that Facebook claims to reach 33 per cent more Americans in the 18-to-34-year-old demographic than actually exist.On closer look, that’s also true for most individual states — except for New Jersey, home of The Boss, Chris Christie and the formerly imprisoned patriarch of the Kushner family.Facebook’s estimated reach with 18-to-34-year-old New Jerseyans is almost spot on, just 3 per cent above its estimated 2016 population, according the Census Bureau and the social network’s ad manager. (We based our analysis on this report from the Video Advertising Bureau, a television advertising trade group. But we replicated the dataset independently, since the VAB is also a Facebook competitor).This could give us a hint about how the social network measures

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Further reading

October 3, 2017

— A rare time when Betteridge’s Law does not apply: Is the gig economy the modern-day sweatshop?–“We have a very ambivalent relationship with alcohol and unfortunately not a very healthy one.”— Tim Duy’s latest Fed Watch.— Lessons from a fund manager who loves too share #wisdom with competitors: Never worry, it’s super easy to beat markets, just do whatever Bill Ackman does.— “Every young woman in Bollywood is made to walk on fire. It is patriarchal at every single level. You either co-operate or you are labelled a troublemaker.”— Imagine if inflation were driven solely by belief, not employment.— Why Trump humiliated Tillerson.— The CBO compares its forecasts’ accuracy to those of presidential administrations and blue-chip companies. None of them did well:CBO’s forecasting record is

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New “territorial” US tax policy would tax companies… globally?

September 28, 2017

Republicans say they’re going to switch to a “territorial” system to tax US companies. That usually means something specific: A government only taxes corporate profits earned within its borders.But this proposal is a bit more, err, complex.The Trump Administration and Republicans in Congress splashed the phrase “TERRITORIAL TAXATION” in all caps on the last page of their proposal, which describes their plan the following way:It will replace the existing, outdated worldwide tax system with a 100% exemption for dividends from foreign subsidiaries (in which the U.S. parent owns at least a 10% stake).OK sure, that sounds territorial. Right now, the US doesn’t tax profits earned by companies’ foreign subsidiaries until the subsidiaries repatriate those profits through dividends paid to the

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Where we’re going, we don’t need profits

September 19, 2017

Simply put, earnings no longer reliably reflect changes in corporate value and are thus an inadequate driver of investment analysis.– Profs Feng Gu and Baruch Lev, in a paper for the CFA Institute’s Financial Analysts JournalWell then!This idea challenges the very heart of traditional equity-market investment analysis. The authors point out that legendary stock-picker Benjamin Graham spent hundreds of pages of his 1962 book on analysing and predicting earnings and other quarterly metrics. Earnings prediction is still central to most sell-side analysis as well.But if profits, EBITDA or sales were truly central for corporate valuation, wouldn’t markets punish regular loss-makers like Tesla and Amazon more severely? And wouldn’t there be a stronger return to predicting profits?The returns to

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The Equifax hack could make the next hack worse

September 11, 2017

One of the reasons Equifax’s data breach is so bad is that it could make future cyber attacks far more effective.Last week, the credit monitoring agency announced that sensitive information about 143m Americans had been stolen, including addresses, dates of birth, driver’s license and social security numbers, along with credit-card information for 209,000 people. There were were only 189m Americans with credit scores in 2010, according to the CFPB’s estimate. Unsurprisingly, class-action lawsuits and regulator investigations have followed.It’s actually not that hard to manage the risk of identity theft, even if it’s not as easy as it should be. Basically, people can just put on a credit freeze and keep a close eye on their credit-card statements. But the main reason this breach was so

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De-fanging the fiduciary rule

September 8, 2017

Remember the US fiduciary rule, the controversial Obama-era regulation that gave investment advisers fiduciary responsibility over their clients’ money?If that doesn’t ring a bell, you might remember it as the subject of the other inflammatory rant from Anthony Scaramucci.Well, while we were occupied with crypto-scams and nuclear threats, the Labor Department (led by Trump pick Alexander Acosta) proposed delaying the implementation of the toughest rules by at least 18 months. It also hinted that investment funds could dodge some of the requirements entirely by switching to a new structure of shares with lower fees.The DOL published the details of the delay last week, and will accept comments on it until September 15. While the delay itself isn’t terribly controversial, George Michael

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Fed Vice Chairman Stan Fischer resigns

September 6, 2017

Put yet another Federal Reserve nomination on the Presidential to-do list: Vice Chairman Stan Fischer submitted his resignation today, and will step down around October 13 of this year.Fischer, who is 73, had only a year and a half left in his term as Fed governor, which was slated to end January 2020, though his term as vice chair was set to expire in June of next year. He cited “personal reasons” in his resignation letter.This will leave three or four confirmed members on the seven-person Board of Governors in coming months, depending on whether the Senate Banking Committee confirms Randal Quarles at a vote scheduled for Thursday. (Marvin Goodfriend is reported to be among the finalists for another spot.)In an interview with the FT’s Sam Fleming last month, Fischer described recent

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Westworld, cryptocurrency, and the gamification of women

September 6, 2017

I don’t think I had ever seen so many men before. The dock was packed with them: tall, ruddy-faced, broad-shouldered men mostly, all of them young or in their early prime, and in every conceivable kind of costume. There were miners in mukluks and mackinaws, jumpers and parkas, surveyors in neat khaki togs, Englishmen in riding britches… There were perhaps only a dozen women on the dock.– Laura Beatrice Berton, I Married the Klondike (1954)Women made up only 8 per cent of California’s population in 1850, after the gold rush brought a flood of men seeking fortune.The gender imbalance in today’s ICO mania is reportedly worse. While there’s no reliable census for crypto users, one recent estimate says women are just 3 per cent of the Bitcoin community, even though there’s no shortage of women

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Further reading

September 4, 2017

Elsewhere on Monday, — Joining the two dominant news items of the moment, here’s an interesting history of FEMA, the US federal disaster-response agency. These days it delivers aid after natural disasters, but it was formed during the Cold War, and it still handles some of its original responsibilities. It runs a massive nuclear bunker for Congress, and if there is an attack, it’s charged with finding the next living US official in the line of succession and naming him or her President.— Surgeon Paolo Macchiarini: celebrity doctor, possible psychopath, fraud.— Facial recognition technology in China is getting mighty creepy. The police used it to make dozens of arrests at a beer festival in Qingdao lsat month.— “These guys pay all their bills from one to two blue checks a month,” says a

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Noted produce seller shuts down after Amazon enters industry

September 1, 2017

Ah, Juicero.In normal times, its machines would have been $350 cheaper and sold on late-night television. Or it would have been used by Gwyneth Paltrow and no one else.But these are not normal times.Low interest rates and venture capitalist zeal for membership-club business models came together to create a high valuation to match its high prices. That attracted the attention of journalists, who cannot afford the machine — but who can afford to buy packets and squeeze them with their bare hands.Now, we’re not saying Amazon killed Juicero, which managed to invent a juice-squeezing product that was redundant to the process of juice-squeezing.But… Juicero did announce it was shutting down operations and seeking a buyer just four days after Amazon completed its acquisition of Whole Foods and

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The problem with networking, New America edition

August 31, 2017

New America’s high-profile network and connections — and the money they bring — have just damaged its reputation for producing uncompromised, independent work. This is not unusual among prominent think tanks.But what’s the point of hiring all the smartest people if you won’t defend their space to do independent research?New America fired Barry Lynn, head of its Open Markets team, after he published a press release praising the European Commission for fining Google on anti-trust violations. In that release, Lynn also called for US antitrust investigators to take a tougher approach against the so-called network monopolies:US enforcers should apply the traditional American approach to network monopoly, which is to cleanly separate ownership of the network from ownership of the products and

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Sick puppies, short selling and Pet Med

August 30, 2017

Online pet pharmacy PetMed Express said last week that it was “shocked” to hear a short seller’s claims that it advertises painkillers to humans.Now, any short-seller report should be taken with some scepticism, since the whole purpose is to push a stock lower. This one, from an anonymous firm called Aurelius Value, alleges PetMed’s ads showed up in response to some pretty bad queries on Google, without offering any evidence that company chose those phrases.“We do not specifically target those types of keyword searches, no legitimate business would,” said Bruce Rosenbloom, PetMed’s chief financial officer. He reiterated a company statement that two drugs named in the report made up just 0.4 per cent of total sales in the six months ended in June.PetMed also said sales of the drugs have

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Because penny-stock promoters won’t miss out on a good bubble…

August 29, 2017

Here’s a handy reminder from the SEC that you should probably not buy a stock just because it puts the word “Bitcoin” in its company name:Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include “pump-and-dump” and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.This is useful to remember, of course. If it was a bad idea to invest in Generic Mining Company Inc or Generic Telecom Company Inc, it is still a bad idea to invest if the companies change their names to Generic Bitcoin Company Inc.Still, the SEC warning about crypto-related “pump and dump” schemes in the stock market is like a firefighter arriving at a house fire

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Further reading

August 28, 2017

Elsewhere on Monday:— Emanuel Derman has a blog! So far, he has written about the relationship between time and money, and researchers’ desire to be known.— An excerpt from Nassim Nicholas Taleb, who is very, very, very known.— How Star Wars helps us understand politics: both Brexit and The Phantom Menace were bad.— Facebook found Kashmir Hill’s long-lost great aunt, and wouldn’t tell her how.— A history of Friedrich Hayek and the market algorithm.— Uber whistleblower Susan Fowler is going after employment-contract waivers that prevent employees from joining class-action lawsuits.— A tweetstorm from the Phoenix New Times about Joe Arpaio, who is just the worst.— Tropical Storm Harvey could be in Houston until Thursday, bringing with it “historic, devastating rainfall.” The weather has

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Of crypto-Apples and other fantastical fruit…

August 23, 2017

The complete avoidance of banking systems — and the governments that manage them — seems very important to tech vendors aiming to get a piece of the $1.8bn ICO frenzy.There are two reasons a cryptocurrency holder would want to stay out of the banking system entirely, an independent crypto-consultant says: (1) They are ideologically opposed to banking, or (2) They hope to avoid regulators and law enforcement. In his telling, the industry view is that governments have a tougher time policing a platform if it doesn’t use banks or currencies for its “on-ramps” and “off-ramps”.Take ShapeShift, an “exchange” that generates wallet deposit addresses for its users so they can trade out of one cryptocurrency into another. It says the following:Users do not have to create accounts, deposit funds, or

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