WASHINGTON, D.C. (Project Syndicate) The emergence of COVID-19, a new coronavirus, is a tragic public-health emergency. The disease, one hopes, will be brought under control quickly, but the International Monetary Fund is already warning that economic growth in China may slow.

As we watch the situation unfold, three broader risks to the global economy are also becoming more apparent.

The first risk is obviously in China itself. While the precise origins of the disease remain unclear, it is hard to take a definite view on whether outbreaks of this kind could be avoided for example, by better control over hygiene in food markets. But it is painfully obvious that a lack of transparency in China has contributed to fear and even signs of panic around the world.

As financial markets demonstrated in 2007-2008, when the precise incidence of big risks is not well understood, people tend to assume the worst. Rapidly falling asset prices may not contain much information except that there is not much information to be had.

What is the exact mortality rate associated with COVID-19? Why does mortality, supposedly, vary significantly across localities? What explains the ease with which this virus seems, sometimes, to travel great distances? What are the precise effects of quarantining people in a building, a makeshift hospital or a city?

The Chinese authorities surely do not have all the answers at this point, but their inclination to suppress data and interpretation is tremendously unhelpful.

Read: Coronavirus fatality rates vary wildly depending on age, gender and medical history some patients fare much worse than others

Second, the lack of American leadership is more painfully apparent every day. The United States has the strongest medical-health system in the world, with capacity for research and development (government and private) that is second to none. Yet President Donald Trumps administration seems to be concerned primarily with playing down the risks, while keeping the virus out of the U.S. a nearly impossible task.

The private sector is working hard on a vaccine, and this is commendable. Unfortunately, over a longer period of time, the lack of a consistent market for such vaccines has undermined investment in this sector. By creating the worlds largest market for many drugs, the U.S. effectively supports research across a wide range of ailments but only those for which there is large and steady demand in the US.

Even the most fervent believer in Trumps America First must be willing to concede that it is not in Americas interest for the rest of the world to become sick. These are U.S. allies, friends, and customers. Also, like it or not, few diseases will stop at Americas borders. Indeed, the U.S. Centers for Disease Control and Prevention (CDC) has said that the question is not if, but rather when, COVID-19 spreads domestically.

The third risk is in emerging markets and developing countries. Poorer countries are ill-equipped to deal with this kind of disease, as seen in African countries refusal to airlift their citizens from China.

The news that the coronavirus has reached Italy has shaken world financial markets, but Italy is a relatively well-organized and rich country. A vibrant democracy ensures that people (inside and outside the country) will quickly understand if containment and treatment measures are working.

We should be much more concerned about other countries, where nutrition is worse, housing standards are weak and disease transmission can occur much more readily. If these countries health systems come under pressure, the U.S., Europe and others should step up quickly with technical assistance and essential supplies. But here, too, there is so far a worrying lack of leadership.

It seems unlikely that this disease will prove to be as deadly as some of those that our ancestors experienced. Medical practice and public health have advanced a great deal. The CDC is an outstanding organization, and the World Health Organization has a strong track record when the chips are down. Private-sector groups of dedicated doctors and nurses have performed extraordinarily well under the most difficult circumstances, such as dealing with Ebola, when they are given a chance. We are fortunate to live in an age that has so many heroic people.

More from Project Syndicate: The global economy is much more vulnerable to the coronavirus now than during the SARS epidemic

Still, this coronavirus is a warning. Societies neglect access to health-care systems and reduce investments in R&D at great peril. Diseases are always evolving, and we must continually increase our capacity to understand and fight newly emerging threats.

The best way forward is by strengthening science, training more scientists, and building more labs. Countries that are able to do this like the U.S. should share ideas and knowledge as widely as possible.

Investing more in science is an appealing economic proposition. Given very high rates of social return, basic research across a wide range of activities more than pays for itself.

But this is not about the economics. More likely than not, one day a scientist will save your life or the life of a loved one because his or her previous work produced a drug, treatment or just an idea that made a critical difference. We should invest in scientists to save ourselves and our neighbors. And we must remember that we have neighbors all over our deeply interconnected world.

Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan and an informal adviser to Sen. Elizabeth Warrens presidential campaign. He is the co-author, with Jonathan Gruber, of Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream.

This was first published on Project Syndicate Coronavirus and the Global Economy

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The other warning from coronavirus: Invest more in science - MarketWatch

Angus Taylor will use a speech on Friday to put some flesh on the bones of the Coalitions technology roadmap to reduce emissions by 2050. Photograph: Mike Bowers/The Guardian

The Morrison government will on Friday signal plans to shift investment from wind and solar to hydrogen, carbon capture and storage, lithium and advanced livestock feed supplements, as part of a bottom up strategy to reduce emissions by 2050.

Angus Taylor will use a speech to an economic thinktank to put some flesh on the bones of the Coalitions much-vaunted technology roadmap. The emissions reduction minister will also declare Australia will take a technology-based long-term emissions reduction strategy to the United Nations-led climate talks in Glasgow at the end of this year.

While not ruling out adopting a specific emissions reduction target, Taylor will contend the top down approach of countries proposing emissions reduction targets in the global climate framework has failed because countries are not delivering on their commitments.

According to a speech extract circulated in advance, Taylor will say the government intends to roll out a series of detailed pieces of work between now and the United Nations climate change conference in Glasgow, known at COP26, in November. Taylor will say Australia wants to lead the world on a new approach to laying out domestic abatement plans.

As well as the roadmap, the government is reviewing its much-criticised emissions reduction fund and the operation of the safeguard mechanism, and is working on an electric vehicles strategy, despite blasting Labor during last years election, claiming measures to drive the takeup of EVs were a war on the weekend.

Taylor will say the looming technology investment roadmap will form the cornerstone of the governments 2050 emissions reduction strategy, providing guidance to the public and the private sector on what future energy and emissions-reduction technologies the government will prioritise.

He will say the government has already invested $10.4bn into clean technology projects with a value of $35bn, but declare we are coming to an end of the value of these investments.

Wind and solar are economic as a source of pure energy at least, and the government should not crowd out private sector investment, the minister will say. We must move our investments to the next challenges hydrogen, carbon capture and storage, lithium and advanced livestock feed supplements to name a few.

Taylor will say the roadmap will include measurable economic goals for technology that will allow us to assess the cost curve for technologies and to give a clear signal for when a technology is commercial.

The government will be a player in investing in emerging technology as both a market signal and leader but the objective will be to generate significant private sector investment.

To be successful from both a portfolio and from a technology perspective we must track how much private sector and other investment in R and D and early deployment follows our own investment, Taylor will say.

To measure the success of the overall portfolio I think we should be aiming for a four or five time multiplier. That is for every dollar invested I want to see four or five dollars from the private sector following over the course of our investments.

It is unclear from the speech extract what policy mechanism will drive the new investments and who will administer the research and development, and it does not address why the government is looking at technology such as carbon capture and storage, or CCS.

Most low emissions scenarios for the future consider CCS a potentially important technology if the world is to keep global heating to 1.5C about pre-industrial levels, but only when used with biomass, not fossil fuels. The technology has not proved commercially viable with fossil fuel power generation despite being promised billions in taxpayer support through initiatives such as the CCS flagships program.

There are fewer than 20 CCS projects across the globe in the industrial sector. Chevron last year announced a $2.5bn CCS project at one of the countrys largest liquefied natural gas developments, in the Pilbara, had finally begun injecting carbon dioxide underground after three years of delays.

Taylors speech flags a consultation paper to inform the design of the roadmap.

The tone of the speech extract suggests the government is reluctant to adopt a target, having blasted Labor since the opposition adopted a net zero target by 2050 in its first major climate policy announcement since losing the 2019 election. But it is not definitive.

On Thursday, the Liberal MP Trent Zimmerman continued his call for the leadership to embrace net zero. I think it is a target we need to look at, the member for North Sydney told the ABC. We have a good target for 2030 but we need to look beyond that as we head into Glasgow.

Taylor will say on Friday: If I could stand up today announce a target and see the CO2 reduce then I would.

If setting a target today would lower emissions then today would be a short speech. I wouldnt have to outline our plan and I wouldnt have to outline all the work that has led to today.

Guardian Australia revealed on Thursday new analysis by ClimateWorks Australia suggesting Australia can achieve a transition to net zero emissions by 2050 with known technologies, but the deployment of low emissions options will need to be accelerated significantly.

The rest is here:
Angus Taylor to announce shift in climate investment away from wind and solar - The Guardian

The company said it is massively accelerating its investments to shape a fully climate-powered business model.

We believe that we have reached a tipping point where our brands will be incredibly stronger if climate is an ally and not an enemy, CEO Emmanuel Faber explained. This year is pivotal towards this shift.

Danones commitment to action on climate change is nothing new, Faber noted.We've been pioneering and making pretty bold commitments to transition to low-carbon economy for a long time.

In 2009, the company initiated work to improve the carbon profile of its business. It aligned with the 2015 Paris Climate Change agreement, signed up to the 2 degrees Science Based Targets in 2017 and then updated to the 1.5 degrees pledge. Danone also set the goal of becoming carbon neutral by 2050 with an ambition to reach peak carbon emissions by 2025.

The company revealed this week that it has already hit this target, five years ahead of schedule. Twenty-seven million tons is going to be our peak, that was last year, of carbon externalities, Faber reported.

Faber views this progress in the context of what Danone calls the food revolution, a shift in attitudes to the food system that is disrupting established operating models.

As part of its Danone 2020 strategy, launched in 2014, the group invested heavily in areas like improving trust (with a focus on brands becoming B Corp certified); efficiency and discipline; and the adoption of planetary diets as well as natural and local trends. Big moves in this space included the 2017 acquisition of WhiteWave Foods, which brought with it plant-based brands such as Alpro in Europe.

According to managements assessments, these efforts have paid off and Danone enters 2020 ahead of the new normal when it comes to trust and sustainable, natural diets. Investment behind these pillars will therefore remain level through to 2025, the company noted. Danone already has a very solid plan to invest a further 5bn in plant-based by 2025.

However, there are areas that Danone believes there is clear opportunity to do more to reduce its carbon footprint and align with consumer trends, particularly around packaging and digital innovation. And it is here that Danone will focus the bulk of its 2bn investment from 2020.

We see 2020 as the moment where we need to interrupt the fifth year and final year of our 2020 plan, because the industry is undermined, our categories are undermined, by either visible or invisible challenges. - Faber

Faber said opportunities for Danone are related in one way or another to climate and the perception of climate in social norms. We need to really anticipate, to fully meet these opportunities and stay ahead of the curve in 2025.

While it was on the radar, packaging was less of a priority for Danones 2020 strategy. Clearly here, we are caught off guard - as I think frankly everybody else was, Faber conceded.

Around half of Danones investment in climate innovation will be focused on packaging innovation, souring and value chain to enhance the groups value proposition and deliver superior competitiveness.

According to Danones assessment, packaging is a hot topic in markets like France, Germany and the UK and this is putting a strain on its brands. People don't want to be seen with a plastic bottle anymore, Feber observed.

For its water business, the group aims to move away from virgin PET by 2025, switching to rPET in Europe. In April, rPET water bottles will be rolled out across most formats in France, the full range in Germany and all on-the-go Evian formats in the UK.

The Evian and Volvic brands will both become climate neutral this year.

Other innovations include the introduction of metal bottles and cans for brands like Evian and Bonafont and a switch to tetra for Volvics kids range.

Home and new on-the-go models are poised to completely change the paradigm of water packaging, Faber predicted.

While the groups water business might be a high profile plastic user, Danones boldest commitment can be seen in yogurts where it aims to move to zero polystyrene packaging by 2025 globally and by 2024 in Europe.

The shift will see Danone move to PET and rPET as soon as possible, with sourcing of polylactic acid or polylactide (PLA) and other bio-sourced materials starting in 2020.

And progress is already under way. Faber elaborated: Les 2 Vaches, [our] leading organic yogurt brand in France has already bio-sourced starch-based polymer packaging.

In the UK, the company will launch its first ever reusable glass pot as part of the Loop programme.

By 2021, the plant-based Alpro brand will move out of PS to paper cups and plant-based drinks cartons.

We believe that we will reaccelerate our brand competitiveness on packaging, which becomes a clear factor of choice for consumers.

To drive further progress, Danone also announced the creation of a packaging transformation accelerator with the intent of investing up to 200m by 2025 in co-designed new business models, new materials and recycling solutions.

Elsewhere, Danone plans to invest in digital innovations that it believes will strengthen its omnichannel reach and end-to-end value chain.

On omnichannel, Faber said that the companys ability to compete everywhere is not there yet. Danone has set itself the task of doubling e-commerce sales by 2020. It is a matter of execution, processes and systems. Likewise, Faber continued, on the end-to-end value chain we are not there yet either.

There's clearly a need for acceleration, he suggested, adding that the company needs to get much more radical on its use of digital and data technologies.

Danone is therefore kicking off a big project that will but data are the core of its business model, end-to-end sourcing and omnichannel. Fundamental to that is the pursuit of our sourcing model in climate-efficient sourcing for planetary diets and regenerative agriculture We need to be much better in terms of our climate resilience and overall execution in the business model, end-to-end value chain and omnichannel. And this will be enabled by the fact that we are starting a big project on putting data at the core of what we do.

Danone will drive a transformation of its value chain that will allow it to be more flexible and precise in demand planning, cost reduction, waste reduction and climate reduction, Faber elaborated.

Danone has digitalised its baby food factory in Opole, Poland. The facility has seen investment in new technologies that have enabled it to go 100% paper-free.

The move has delivered a 10% increase in cost efficiency, a 12% reduction in CO2 emissions, and a 6% increase in batch size flexibility.

Danone believes there is an opportunity to leverage its factory footprint in dairy by creating hybrid capabilities where plant-based products are manufactured in the same facility.

It is also rolling out next level integrated business services powered by data and AI. Over 3-4 years, the company believes the investment will enable it to move to a lower cost base.

If Danone is to successfully drive down its carbon footprint, the group will have to maintain its focus on agricultural efficiency. Currently, 95% of its carbon emissions fall into scope 2 and 3 emissions, which are indirect activities. Agriculture along accounts for 60%.

When we speak about regenerative agriculture, we're really talking about the core of what is at stake for the future of our business in terms of both financial business and values.

Carbon in agriculture is not an externality for us. It's not about the planet, it's not about the next generation, it's really about our business.

However, Faber said this does not mean there will be a meaningful acceleration in regenerative agricultural investment because the company has already put a lot of the building blocks in place to drive change.

Danone has identified soil erosion due to an over-reliance of chemical pesticides and fertilisers as a core issue. You cannot have healthy soils which will support the agriculture of tomorrow, if we do not put carbon back into the soil through regenerative practices, Faber argued.

The company says it has identified solutions that both reduce the immediate and longer-term costs linked to degraded soils.

The availability of water is another concern that the agricultural sector will have to adapt to.

Looking to the domestic market, Faber provided an example: In France there will not be a possibility to continue to farm corn in the south part of France, where it is today because there won't be water enough anymore which corn relies a lot on and temperatures will be too high. So that's a challenge. It means that that part of agriculture has got to change.

But on the contrary, the temperature elevation is also creating opportunities. For instance, we've been able to start programs with our cattle raisers in Normandy for our dairy products and brands here, where they are growing soy locally, so we are producing in Normandy, instead of importing soy from Brazil.

Supporting regenerative agriculture, and being transparent about its efforts, is already paying dividends for Danones brands, Faber contended.

In France, the group invested 40m over the last two years a spend that Faber said has allowed its baby food brand Bledina to regain consumer preference. In just two-and-a-half years the brand has become a close number two, nearly number one in the French organic baby food segment, which is growing at 35%.

This is thanks to the program of regenerative agriculture transparency. The 5% of sales on this product range that are being invested every year in regenerative agriculture [are] driving consumer preference.

Read more here:
Danone's 2bn climate-smart innovation investment: 'Our brands will be stronger if climate is an ally - FoodNavigator.com

Inaugural cohort of female-led companies to have access to an expert Strategic Mentor Network comprised of industry leaders and seasoned entrepreneurs that will enable a more equitable tech sector and reduce unconscious bias

MARKHAM, ON, Feb. 27, 2020 /CNW/ - Today, ventureLAB, a leading technology hub in Markham, York Region, announced its inaugural cohort of companies and Strategic Mentor Network for Tech Undivided, a new initiative aimed at supporting women and underrepresented persons working in tech founders and industry leaders alike. Tech Undivided bridges inclusivity gaps by creating gender-balanced networks with diverse representation, and works with founders, investors, and companies to prepare them for business and investment success by reducing unconscious bias. The Government of Canada supported the Tech Undivided program in August 2019 with a $1.7-million investment through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) as part of the Women Entrepreneurship Strategy (WES).

Since 2011, ventureLAB has supported over 100 female-led tech companies that have raised over $6 million in investment and generated over $17 million in revenue.

Tech Undivided Inaugural Cohort

In fall 2019, ventureLAB issued a call for female-led tech companies with breakthrough products that have the potential to significantly impact society to participate in Tech Undivided. The seven selected companies, listed below, will work with industry experts, investors, and seasoned entrepreneurs to prepare them for Seed or Series A funding.

Tech Undivided Strategic Mentorship Network

The Strategic Mentorship Network is a diverse and curated list of high-caliber business leaders, seasoned entrepreneurs, academic professionals, investors and industry experts who have committed their knowledge, resources and time to supporting the growth of the Tech Undivided companies. The mentorship network is gender-balanced and diverse, and brings together leaders with broad expertise.

Tech Undivided Launch EventPlease join us for the launch of Tech Undivided on Tuesday, March 3, at ventureLAB from 9:30AM - 12:00PM. Hear from the team that made Tech Undivided a reality, the inaugural cohort, the strategic mentor network, and local dignitaries, followed by hors d'oeuvres and refreshments.

Date: Tuesday, March 3, 2020 Time: 9:30am-12:00pm Location: ventureLAB, 3600 Steeles Ave E., Markham, ON *Media interviews will be made upon request.

To learn more about Tech Undivided, visit http://www.venturelab.ca/tech-undivided.

Quotes"Our goal with Tech Undivided is to ensure all founders and people working in tech receive the same opportunities for funding, success, and advancement in the workplace. Tech Undivided goes beyond supporting women working in tech, but aims to remove unconscious bias in the industry and beyond. ventureLAB is located in the City of Markham, Canada's most diverse city, making it an ideal location for this initiative. We look forward to pushing the boundaries towards a more equitable tech sector and workforce." Melissa Chee, President and CEO, ventureLAB

"We recognize the importance and the wide-reaching benefits of supporting women entrepreneurs. That's why we are so pleased to support ventureLAB to help provide access to financing, advice and networks for women entrepreneurs in Ontario. With this investment, through the Women Entrepreneurship Strategy, we are taking another step toward breaking down barriers to success, and doubling the number of women-lead businesses in this country. We look forward to seeing more and more women entrepreneurs thrive with this support." - The Honourable Mlanie Joly, Minister of Economic Development and Official Languages

"Supporting women in business is not just the right thing to do, but it is good for the bottom line. We have witnessed the accomplishments that ventureLAB has had on this community and look forward to the success that Tech Undivided will bring to women entrepreneurs in and across the York region." The Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade

About ventureLABventureLAB is a leading technology hub located in Markham in York Region, Canada's second largest tech cluster. Through its programs focused on capital, talent, technology, and customers, ventureLAB has supported over 2,000 tech companies and entrepreneurs, including 100 companies that have raised over $100 million and created 3,500 jobs. ventureLAB's innovation hub is a 50,000 square foot facility that is home to over 45 tech companies and partners that employ more than 300 people. At ventureLAB, we grow globally competitive tech titans that build-to-scale in Canada. http://www.venturelab.ca

About TECH UNDIVIDEDTech Undivided's vision is to build an inclusive tech ecosystem that is not biased or divided by gender. By focusing on and supporting diverse and underrepresented women-led tech companies while working with women and allys, Tech Undivided removes unconscious bias faced by women and underrepresented persons.

About FedDev OntarioFor more than 10 years, FedDev Ontario has actively worked to advance and diversify the southern Ontario economy through funding opportunities and business services that support innovation and growth in Canada's most populous region. The Agency has delivered impressive results, which can be seen in southern Ontario businesses that are creating innovative technologies, improving their productivity, growing their revenues, and in the economic advancement of communities across the region. Read more about the impacts the Agency is having in southern Ontario.

SOURCE ventureLAB

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ventureLAB's Tech Undivided Initiative Prepares Emerging Tech Companies to be Investment-ready in Six Months - Benzinga

American Express' 2019 fourth-quarter earnings, announced late last month, beat Wall Street expectations.

With the company's adjusted annual profit coming in 12% higher in 2019 than in 2018, that was good news for the company and for shareholders.

If you invested $1,000 in the financial institution 10 years ago, your investment would be worth more than $4,000 as of Feb. 18, for a total return of 301%, according to CNBC calculations. By comparison, in the same time frame, the S&P 500 had a total return of just over 275%. American Express' current share price was slightly above $129 on Monday, down more than 4% in morning trading amid growing fears of the economic effects of coronavirus.

While American Express' shares have done well over the years, past performance is no sign of future results.

CNBC: American Express' stock as of February 2020.

American Express dates to 1850, when it started as a freight shipping company. The company began introducing financial products and services and by the 1950s, Amex launched its first consumer charge card.

In 1966, it put forth a corporate card program for businesses, and in 1991, created its first loyalty program, now called Membership Rewards. The program serves to incentivize users with benefits and encourage member loyalty.

Since then, American Express has continued to reiterate its financial offerings by introducing lines of debit and credit cards as well as banking services. Today, it's one of the world's largest financial corporations with more than 63 million cardholders.

Through the years, American Express stock gone up and down.

Like many financial institutions, the company saw its stock sink around the time of the 2008 recession. By February 2009, its share price landed at just over $11.

In February 2015, the market value of American Express fell by around $8 billion within 48 hours after it announced the loss of a lucrative contract with Costco, which was set to expire in March 2016. The contract termination had shareholders worried about how much revenue Amex would lose and how it would impact their investments.

In October 2017, it was also announced that Kenneth Chenault, chairman and CEO for 17 years, would step down in February 2018 as American Express struggled to find its place in a modern market.

Despite the problems, Amex stock returned 5.4% annually under Chenault's tenure. That's close to double the 2.6% annual return of the financial sector during that period.

American Express attributed its Q4 success to the "well-balanced mix" it's been able to strike between spending and fee and lending revenues. The card issuer reported that nearly 70% of new card members in 2019 went for fee-based products, which helped to grow card fee revenue by 17% last year.

Millennials are also big fans of Amex. In January, CNBC's Jim Cramer credited young people with helping the company reach its better-than-expected quarter. "Millennials are really signing up, 50% of the new cards. That business is great," Cramer said during a "Mad Money" lightning round.

This month, Amex also announced a new reservation booking tool for Platinum and Centurion members. The feature will allow cardholders to browse, book and manage reservations all in one place using their mobile device. And eligible users can make multiple reservations per day at over 10,000 restaurants worldwide.

If you are considering getting into investing, experts, including Warren Buffett, often advise starting with index funds, which hold a basket of companies. Because index funds aren't tied to the performance of a single business, they're less risky than individual stocks, making them a safer choice for beginners.

Here's a snapshot of how the markets look now.

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If you invested $1,000 in American Express 10 years ago, here's how much you'd have now - CNBC

27th February, 2020 by Philip Staveley

This years range is +45% to -30% which is a colossal spread of 7,500 basis points. In essence it is a bit of fun with the winner earning something nice and bubbly from Liv-ex.

We are all on much firmer ground looking at the performance of the 2010s as they reach their first decade, and there will be a series of reviews this year reminding everyone of how fabulous they are. That they are fabulous on the palate has never been in dispute; but how fabulous are they now from an investment perspective?

Not only have the 2010s in Bordeaux performed poorly since release with nearly half of the Liv-ex 500s 50 constituents trading below their release price according to a brief note released recently by Liv-ex, but the first growths in particular have declined.

Right Bank first growth equivalents like Cheval Blanc and Ausone feature among the fallers (the elevation of Pavie and Angelus to Grand Cru Class A since release of their 2010s guarantees their position amongst the risers), as does La Mission Haut-Brion.

What we find very interesting is that Le Pin has outstripped all to a price rise of 95%. Why might this be? Did Pin release at a more respectable price than the others? Nope. Not at all. Like nearly everyone it released ex-chteau at a 10% hike on 2009 levels. The difference, we believe, is entirely due to the consequence of volume, and the mechanics of the market place.

The 2010s were priced en primeur in the late spring of 2011, only a month or so before the market correction. As a point of comparison, 600 cases of Le Pin 2010 had been priced at the top of the market, as against about 16,000 cases of Lafite. The question we must now explore is where they all went, and what has become of them now?

In the case of Le Pin the answer is likely to be that the 2010s went in much the same direction as the 2009s and the 2008s before them. These had long been collectors items, so irrespective of the ill that was to befall the market by the summer, it is unlikely that too much will have found their way back into the market either then or when they became physical in 2013.

This, in fact, is what happened to the price of Le Pin 2010 when they became physical, and subsequently:

What happened here is that Robert Parker upgraded from an in barrel score of 96-98 to a perfect 100 when it went into bottle, so you have the combination of tightly held supply and a healthy upgrade. So what of a wine in greater supply with a perfect score?

Here is La Mission Haut-Brion 2009:

Mission is hardly produced in prodigious quantities, making around 7,000 cases a year, but there is a huge difference between 600 and 7,500 cases in terms of where it ends up. Quite frankly, any producer making thousands of cases is more concerned with getting it off the balance sheet, than where it goes, and the same goes for the ngociants.

All this means that for most producers in Bordeaux there was no control over where the wine went, which made the market prey to the speculative element from Asia which we know had become highly significant by this time. And the consequence of this is simply that if you get caught re-selling a bottle of DRC it is woe betide as regards getting an allocation next year, for larger producers it is out of their control entirely.

This brings us back to the 2010s. How long does it take for speculators to offload excess supply? Unfortunately the wine market lacks statistical evidence to allow for an accurate answer to that question, so its pretty much guesswork. This is the price chart for Chteau Lafite 2010:

Have all the loose holders been shaken out? Lafite makes between 15-20,000 cases per annum. Thats a lot by the standards of Le Pin and even of La Mission Haut-Brion, but in seven years you would think there would not be much left in the wrong hands. The price chart suggests that by 2016 much of this selling had been done, but by our algorithmic measurements Lafite 2010 has been good value for a while, so there has clearly been an after-effect.

We await a catalyst to light the blue touch paper under wines such as this, and maybe the reviews of this great vintage will provide just such a spark.

Philip Staveley is head of research atAmphora Portfolio Management. After a career in the City running emerging markets businesses for such investment banks as Merrill Lynch and Deutsche Bank he now heads up thefine wine investmentresearch proposition with Amphora.

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Fine wine investment: Lighting the spark - The Drinks Business

The Georgia Senate has passed a bill that would allow the $78.9 billion Teachers Retirement System of Georgia to invest in alternative investments, despite criticism from some state lawmakers that the move would be too risky.

Georgia Senate Bill 294 would amend provisions relating to investments under the states public retirement systems standards law. It would change the definition of eligible large retirement system to remove the exclusion for the Teachers Retirement System. According to state law, alternative investments by an eligible large retirement system cant exceed 5% of the retirement systems assets at any time. The law defines eligible large retirement system as any state pension with more than $100 million in assets.

If the proposed bill becomes law, it would allow the system to invest, in aggregate, as much as $4 billion in a range of alternative investments, including leveraged buyout funds, mezzanine funds, workout funds, debt funds, merchant banking funds, funds of funds, and secondary funds.

However some state senators, such as Democratic Minority Leader Steve Henson, have said that now is not a good time to add the possibility of risk to the pension fund, as some economic forecasters have warned of a possible economic downturn in the near future.

I think the conservative path is to stay the course we have, Henson said, according to Capitol Beat News Service. I dont think now is the time to jump into a riskier market.

The bill is sponsored by Republican state Sen. Ellis Black, who said the pension funds investment managers could help the portfolio earn higher returns by adding alternatives to their investment strategy. Black said concerns about the bill were unfounded.

Youve got a whole spectrum of risk involved, Black said, according to Capitol Beat. A wise investor is going to have a balanced portfolio.

TRS manages the retirement accounts of 262,000 active members and pays a monthly benefit to 128,000 retired members and survivors. As of June 30, the pensions asset allocation was 52.9% in domestic equities, 23.2% in US treasuries, 17.3% in international equities, 6.1% in corporate and other bonds, and 0.5% in international obligations, corporates.

Having passed the state Senate, the bill will now be sent to the Georgia House of Representatives for consideration.

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Tags: alternatives, Bill, Ellis Black, equity, investment fund, Steve Henson, Teachers Retirement System of Georgia

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Georgia Senate Passes Bill to Allow Teachers' Pension to Invest in Alts - Chief Investment Officer

Have individual investors missed out by not having access to private equity? In weeks like these, when publicly traded stocks are getting clobbered, it might seem so.

Were about to find out the answer, courtesy of Vanguard Groups recent decision to create a private-equity fund. Though the fund initially will be available only to institutions such as college endowments and nonprofit foundations, Vanguard says it eventually will be made available to individuals as well.

Private equity, of course, refers to equity investments in companies that arent publicly traded. Because these investments usually are sizable, their holding period can be many years, and the risk of failure isnt insignificant. They typically are made by private-equity firms that pool the resources of wealthy and well-connected individuals and institutions. There usually is a very high minimum to invest in these firms, which charge hefty fees, typically 2% of assets under management and 20% of profits.

Even after taking such hefty fees, however, many PE funds have delivered outsize returns to their investors and helped to cement the reputations of many investing gurus. One that many investors are familiar with is David Swenson, who has managed Yale Universitys endowment since 1985 and been a strong proponent of alternative investments generally and private equity in particular. According to Yale, Swenson has produced a return that is unequalled among institutional investors.

Until now, about the only investment options for individuals wanting to get exposure to private equity were the stocks of those few PE firms that are publicly traded, such as KKR (ticker: KKR) and Blackstone Group (BX). Another option has been those exchange-traded funds that invest in a basket of such publicly traded PE firms, such as Invesco Global Listed Private Equity (PSP), with a 1.78% expense ratio, and ProShares Global Listed Private Equity (PEX), with a 3.13% expense ratio.

Many of the details of Vanguards new fund have yet to be made public, such as when the fund will become available, the minimum investment amount, the fees that would be charged, and how long investors would be required to tie up their assets. Vanguard declined a request to provide those details. The new fund will be run via a partnership with HarbourVest, a private-equity firm.

Here are some considerations to keep in mind if and when you are given the chance to invest in Vanguards new fund.

Fees. Ludovic Phalippou, a professor of financial economics at Oxford University, told Barrons that hes worried about the layers of fees that potentially could be charged by this new fundas many as three, in fact: From the PE funds in which HarbourVest invests, from HarbourVest itself, and by Vanguard.

With that many layers of fees, he adds, this new fund would be a nail in Vanguards purpose coffin, since the firm was founded by Jack Bogle with the goal of minimizing fees.

Does private equity beat public stock markets? The answer to this question may very well be no, says Erik Stafford, a professor of business administration at Harvard Business School. He bases his skepticism on the disappointing performance of the largest category of PE funds, so-called buyout funds, which purchase publicly traded companies and take them private.

To be sure, he says, the average PE buyout fund has outperformed the S&P 500 index. But thats an inappropriate comparison, since the typical PE buyout firm invests in companies that are in the so-called small-value category. These are stocks of companies with small market caps that trade for low ratios of price to earnings, book value, return on equity, cash flow, and so forth. Such stocks are at the opposite ends of the size and growth-value spectra from the S&P 500.

According to Stafford, the average PE buyout fund has lagged an index of small value stocks. Oxfords Phillapou said that his research has reached the same conclusion.

Take a look at the accompanying chart, courtesy of data from Nicolas Rabener, founder of the London-based firm FactorResearch. Over the past three decades, private equity has significantly outperformed the S&P 500, but it has significantly lagged a hypothetical index fund of small-cap value stocks. (For private equitys performance, Rabener relied on the Cambridge Associates U.S. Private Equity Index, which is compiled from more than 1,500 institutional-quality buyout, growth equity, private equity energy, and subordinated capital funds formed between 1986 and 2019.)

To be sure, not all researchers agree. Greg Brown, a finance professor at the University of North Carolina at Chapel Hill and director of its Frank Hawkins Kenan Institute of Private Enterprise, told Barrons that his and others research has found that, on an apples-to-apples comparison basis, PE beats public equities by an annualized margin, or alpha, of about 3%.

Though you neednt take sides in this disagreement, its very existence should give you pause. If PEs much-vaunted alpha is so dependent on methodological complexities in its measurement, then perhaps it isnt something you should be so eager to pursue.

Does private equity really have a low correlation with the stock market? Even if PEs alpha is zero, it still could play a valuable role in a diversified portfolioprovided its returns are uncorrelated with those of publicly traded equities.

In that case, a stock portfolio divided between public and private equities should produce long-term performance that is just as high as public market equities alone, but with less volatility or risk. That would enable a risk-averse investor to allocate more to equities than he or she would otherwise be comfortable with.

At first blush, as you can see from the accompanying chart, PE certainly appears to be uncorrelated with public equities. Unfortunately, appearances can be deceiving: The apparently low correlation is largely an artifact of the illiquid securities in which PE funds invest. Those funds have a lot of discretion in deciding how to value them each month or quarter, and the inevitable result, according to Rabener, is that their returns appear to be smoother over time than they really are. He says hes confident that, if there were any way to value PE funds as frequently as publicly traded firms, they would be just as volatile (if not more so).

Is there a illiquidity premium? Some argue that, according to investment theory alone, PE funds should outperform public equities because of their illiquidity. These theorists are referring to the lengthy lockup period that PE funds place on assets invested in them. Investors should receive a higher return as compensation for not having instant access to their assetsan illiquidity premium, if you will.

Or so the theory goes.

But Cliff Asness, founding principal at AQR, argues its possible that not only is there no such premium but there actually may be an illiquidity discount. His argument is that investors are willing to accept a lower return in PE because its high volatility is hidden from plain view. Publicly traded equities, in contrast, smack you in the face with their day-to-day volatility, so they are the ones deserving of the higher return.

In a recent blog post, Asness mused: What if many investors actually realize that...illiquid, very infrequently and inaccurately priced investments made them better investors as essentially it allows them to ignore such investments given low measured volatility and very modest paper drawdowns?...What if investors are simply smart enough to know that they can take on a lot more risk (true long-term risk) if its simply not shoved in their face every day (or multi-year period!)?

Professor Stafford agrees. He said that PEs illiquidity premium, which has been much ballyhooed by PEs cheerleaders, is actually zero or even negative.

The bottom line: A completely rational, unemotional investor might very well choose to invest in a portfolio of publicly traded small-cap value stocks rather than in PE. But if you are unable to live with this portfolios volatility and downside losses, and therefore are the kind of investor who ends up throwing in the towel at the bottom of bear markets, you may end up worse off than if you instead invested in a statistically inferior PE fund whose volatility is hidden and with which you can actually live through thick and thin.

So the absence of an illiquidity premium isnt an automatic reason to avoid private equity. But if thats why investors are favoring PE funds, Asness argues, they should be open-eyed about what they are doing.

Mark Hulbert is a regular contributor to Barrons. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.

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Think Twice Before You Invest in a Private-Equity Fund - Barron's

If this stock market reversal is due exclusively to the virus, then why is United Healthcare down far more than SPX? Why is healthcare as a sector broadly not outperforming? Answer to these questions: the market is digesting a better than 50% chance of Bernie getting the nomination.

Thats DoubleLine Capital Jeffrey Gundlach explaining in an email to CNBC why he believes the stock market has taken such a bruising this week.

The S&P 500 dropped more than 6% over the course of Monday and Tuesday before mounting a slight comeback in Wednesdays trading session.

Maybe this is the dark side of momentum investing, Gundlach wrote. The market goes down in a knee jerk way on the Bernie rise, but the market going down makes Bernies polls go up on his rejection of a market based economy. Which makes the market go down another leg. Rinse and repeat.

This isnt the first time that Gundlach has warned of what a Sanders presidency could ultimately do to the stock market.

If people get more worried about Bernie Sanders and they start to price in his spending programs, then you could really start to see trouble in both bonds and stocks, which could really be on a rough ride, he said earlier this year.

At last check, the Dow Jones Industrial Average DJIA, -4.42% , S&P 500 SPX, -4.42% and Nasdaq Composite COMP, -4.61% were all in positive territory, but were well off their highs for Wednesdays session.

In the latest Real Clear Politics poll for the presidential election coming up in November, Democratic presidential candidate Bernie Sanders beats incumbent President Donald Trump by a margin of 47% to 44%.

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Bond King says were experiencing the dark side of momentum investing and its not because of the coronavirus - MarketWatch

Space-based broadband internet for the masses is being built over at Elon Musk's SpaceX, with the initial launch of the service -- dubbed Starlink -- expected by the end of 2020. The company's forward-thinking mentality on the commercialization of the final frontier is partially responsible for the surge in interest in investing in the movement. Problem is, SpaceX isn't a publicly traded company, leaving just a few names like Virgin Galactic (NYSE:SPCE) for investors to choose from when it comes to innovation in the burgeoning space economy.

But there's another possibility: Iridium Communications (NASDAQ:IRDM), which just completed its first year operating its own broadband-speed service with global coverage. The company has yet to reach peak operational efficiency with its new satellite constellation, but solid progress is being made.

Image source: Getty Images.

When I first bought in on Iridium a few years ago, it was all on the promise of the company being able to deploy its NEXT satellite constellation, a broadband-speed communications service with 100% coverage of the globe. The company already provided services -- primarily to government organizations, and the maritime and aviation industries -- but high-speed data services were something else entirely.

Fast-forward a few years (and some 220% in share price advance), and NEXT is up and running. The service has helped Iridium reignite growth with new global Internet of Things connectivity capabilities and broadband internet for industries operating in remote locations (like aviation, maritime, mining, and government entities). A new air traffic control system based on the satellites, called Aireon, is also just getting going. With the first year of next-gen operations in the books, 18% total growth in billable subscribers led to a 10% increase in service revenues.

Service

End of 2019 Billable Subscribers

End of 2018 Billable Subscribers

% Growth

Commercial voice and data

363,000

361,000

1%

Commercial IoT

802,000

647,000

24%

Government voice and data

57,000

54,000

6%

Government IoT

78,000

59,000

32%

Data source: Iridium Communications.

For 2020, management said to expect another 6% to 8% increase in service revenue to $474 million to $483 million, and operational earnings before interest, tax, depreciation, and amortization (EBITDA) to increase 7% to 10% to $355 million to $365 million. Not too shabby.

More importantly, though, is that with the NEXT satellites now in orbit and Iridium having recently restructured its debt associated with getting the constellation in orbit, free cash flow (what's left after cash operating and capital expenses are paid for) ran at positive $80.3 million in 2019. Management expects free cash flow should increase somewhere in the 20% ballpark in 2020.

But what about that new SpaceX Starlink service coming online? Iridium CEO Matthew Desch had this to say on the last earnings call:

I would say that they're mostly focused on what I would call the commodity broadband space, trying to provide services that compete almost -- more with existing [very small aperture terminal (VSAT)] and fixed satellite services space, but even going beyond that to someone like StarLink or maybe someday Amazon Web Services, I would say that they're even going after what I would call the core fixed market, particularly consumer kind of markets that maybe are served by Hughes and ViaSat today or even by fiber and other kinds of solutions. Those are completely different markets from what Iridium is interested in or has been addressing. We've stayed away from those.

Desch said he and the rest of Iridium are rooting on the progress of Starlink and others because it's good for the space industry and complementary to the service Iridium already provides -- namely, commercial and government broadband versus consumer broadband. That should put a potential investor's mind at ease for now about future disruption. For the time being, though, Iridium Communications looks like one of the better ways to invest in the growing space economy.

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Looking to Invest in SpaceX? This Public Company Already Generates Revenue From Its Next-Gen Satellite Constellation - The Motley Fool