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Daily Intelligence Briefing

Identifying Change-Driven Investment Themes

Monday, May 13, 2019

Each Daily Intelligence Briefing has five sections, explained here. Click the blue links to jump to the relevant section for more extensive coverage:

I. TODAY’S MARKET INSIGHT

A deep dive into a market driver with alpha generating potential.

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Here are the Firms Benefitting from the Convergence of Hotels and Home-Sharing →

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II. MARKET INSIGHT UPDATES

Follow-up analysis of key market drivers monitored by MRP.

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U.S. adults are spending big on video games →

Trump Says U.S. Will Purchase Crops to Offset China Losses →

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See Them All +

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III. JOE MAC'S VIEWPOINT

MRP Founder Joe McAlinden’s big-picture analyses of timely macro issues. More about him here.

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The Facts Changed (For Now) →

Time for Gold →

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See Them All +

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IV. ACTIVE THEMATIC IDEAS

MRP's active long and short themes, with an archive of follow-up reports.

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Long 3D Printing →

Short U.S. Housing →

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See Them All +

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V. MACROECONOMIC INDICATORS

Key data releases relevant to MRP's Active Thematic Ideas.

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US Inflation Rate Rises to 5-Month High →

US Budget Surplus Narrows Sharply in April →

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See Them All +

YOU ARE HERE

TODAY’S MARKET INSIGHT

MARKET INSIGHT UPDATES

JOE MAC'S VIEWPOINT

ACTIVE THEMATIC IDEAS

MACROECONOMIC INDICATORS

TODAY’S MARKET INSIGHT

Here are the Firms Benefitting from the Convergence of Hotels and Home-Sharing

The crossover between private accommodations and traditional hotels is raising the stakes for the hospitality lodgings industry.

The real estate industry is being completely upended these days. Online listing platforms such as Redfin and Zillow are pushing realtors aside to directly broker property sales themselves. Hotels such as Marriott are launching home-sharing platforms. And original home-sharing disruptors such as Airbnb are becoming hoteliers. Before we know it, all of these will converge again, creating an entirely new eco-system.

 

iBuying: Listing Platforms Converge into Real Estate Brokers

 

Property buyers and sellers have traditionally relied on live real estate agents to list and show a home, and to close the transaction. Now, power is shifting away from these old-school middlemen thanks to the proliferation of online and mobile real estate listing platforms. 

 

Redfin and Zillow are just two property listing sites that have decided to leverage mobility technology, big data, and digitization to become brokers themselves. Their listing platforms attract millions of consumer traffic daily, so they know who exactly is interested in buying or selling, and at what price. This generates tons of valuable market data that can be repurposed into bids & offers with the help of artificial intelligence.

 

The two listing giants are even going so far as to take on the role of market-maker or home-flipper, depending on what you want to call that activity. Zillow started an “instant offers” business last year, whereby the Seattle-based company makes an offer to a seller with the intent of taking on inventory. If the offer is accepted, Zillow buys the house, fixes it up, and resells it. For assuming that risk and facilitating a quick easy transaction for the seller, Zillow earns a fee. It hopefully also makes money off the spread between what it pays to purchase the property, and how much it sells the property for.

 

We’re still in the early days of this experiment. If the model works, it would be a win-win for both the consumer and the iBroker. Traditionally, buyer and seller agents split a 5% to 6% commission on the price of a home (which usually comes from the seller’s proceeds). In its iBuying business, Redfin takes a 2% cut for listing the property and facilitating the deal. Similarly, Zillow aims to make just 2% to 3% on transactions at maturity. Given the huge size of the potential market, Zillow expects to generate $20 billion annually from its iBuying business within three to five years. 

 

As noted in MRP’s DIBs report titled Proptech is Uberizing the Real Estate Industry, there several pure-play startups competing with Redfin and Zillow. These include US-based Opendoor, UK-based HouseSimple, Knock, Offerpad and Perch, among others. While the growing competitiveness of the space will pressure iBuying margins, Redfin and Zillow enjoy some sizable advantage as established Proptech market leaders.

 

Lodgings: Home-Sharing Moves into the Hotel Business

 

Meanwhile, Airbnb and Marriott International, the biggest names in their respective home-sharing and hotel industries, are each making waves with the former’s unveiling of a hotel-inspired type of accommodation and the latter’s launch of a vacation-rental platform.

 

Airbnb, the home-sharing giant, has partnered with RXR Realty, the New York Realty giant, to convert part of 75 Rockefeller Plaza into a hotel scheduled to open in 2020.  The hotel will offer over 200 high-end apartment-style suites, each with a fully stocked kitchen. The target market is business travelers who want a home-style lodging with hotel-level service and without the uncertainty of renting someone else’s place.

 

Renters of these units will be able to book a stay only through Airbnb’s global platform. That allows Airbnb to upsell its growing “Experiences” platform which arranges cultural experiences such as history tours, local entertainment or shopping trips, just as a hotel concierge would, and sometimes even with celebrities. In 2017, actress Sarah Jessica Parker (SJP) hosted one of these Experiences. Playing on her character’s expensive shoe-shopping habit in the HBO show, Sex and the City, SJP took four guests shopping for shoes at Bloomingdales before sending them to the ballet. The booking fee for that Airbnb Experience (excluding cost of shoes) was $400 per guest, and proceeds were donated to the New York City Ballet.

 

Airbnb’s rationale for expanding into the hotel market is that its original client base, millennials, are becoming older and more affluent. Accordingly, they want better amenities and services, which the home-sharing company intends to give to them.

 

Lodgings: Hotels Tap into Home-Sharing

 

Over the past 10 years, Airbnb has grown into the world's largest online marketplace for lodgings. In that time, the company's listings have grown more than 100% a year—Airbnb now boasts six million listings in 81,000 cities worldwide—and that dramatically larger supply of accommodations has significantly affected hotels' room prices and revenues. A study found that a 1% increase in Airbnb's supply lowered hotel revenues between 0.02 and 0.04%. The lost revenues came mainly from economy and luxury hotel listings.

 

Now, Marriott International, a traditional hotelier, has decided to fight back by jumping into the home-rental market currently dominated by Airbnb. With the launch of Homes & Villas by Marriott International platform, the world’s biggest hotel operator plans to offer 2,000 premium and luxury homes spread across more than 100 destinations around the globe. Travelers can choose from a wide range of high-end lodgings such as a four-bedroom cottage in California wine country, a six-bedroom villa in Sorrento, Italy, or an oceanfront village complete with a butler and private beach in Anguilla.

 

The venture diverges from the traditional hotel business model in many ways. For example, Marriott is neither acquiring the properties, nor servicing or even cleaning them. Marriott is simply acting as a booking agent for property owners who have the assets, no different than booking platforms such as Expedia, Booking.com and Airbnb. 

 

The crossover between private accommodations and traditional hotels is only going to intensify. As one expert stated, "While I don't think that we'll ever see Airbnb and Marriott become one and the same, if you were to create a sort of Venn diagram of short-term rentals and hotels, the area of overlap just seems to expand with each new development on both sides."

 

Indeed, few niches within the short-term rental sector are growing as quickly as serviced apartment-hotels (aparthotels), with startups like Lyric, Sonder, WhyHotel and the Guild, attracting significant venture capital of late, including from the likes of Airbnb.

Lodging Stocks (MAR, H) vs Online Travel Agent (EXPE, BKNG)

vs Hospitality REIT (APLE) vs S&P 500 (SPY)

Source material for today's market insight...

Lodging

When Hotels Meet Short-Term Home Rentals


Marriott International dipped its toe into the burgeoning home-sharing business last year during a pilot program in Europe, under its Tribute Portfolio Homes brand. The company is now jumping in to the competitive short-term rental market in a much bigger way, as it launches Homes & Villas by Marriott International, offering 2,000 premium and luxury homes in more than 100 destinations around the globe, including the U.S.


Marriott’s entry into the home-sharing market comes as Airbnb expands its offerings including the March acquisition of HotelTonight, a hotel-booking platform aimed at last-minute trip options at boutique and independent hotels. Moreover, Airbnb recently expanded Airbnb for Work, its platform for supplying rental space to companies and professionals and also acquired Gaest.com, an online marketplace that provides meeting locations for short-term rentals.


Brian Ferdinand, managing partner of CorpHousing Group, a national short-term rental operator, compared Marriott’s launch of its home-rental initiative to booking platforms like Airbnb, Expedia and Booking.com. “They are not going out and acquiring real estate,” Ferdinand said of Marriott. “They are not actually servicing them. They are not actually cleaning them…They are acting as a booking agent for the people who do have the assets.”


Read the full article from Commercial Property Executive +

Lodging

Homesharing is in Hyatt's rearview mirror


Homesharing has been top of mind following Marriott International's launch of a large-scale vacation rental platform earlier this week.


Hyatt had been active in the homesharing space, investing in short-term vacation rental startups Onefinestay and Oasis in 2015 and 2017, respectively. Both forays were short-lived, however, with Onefinestay being acquired by Accor in 2016 and Oasis joining the fold of vacation rental management company Vacasa last year.


While Hilton has eschewed homesharing, Hyatt does have a limited presence in the sector. The company currently has a small number of serviced apartments in India and the Middle East and also has a U.S. portfolio of professionally managed vacation rentals under its Destination Hotels umbrella, which Hyatt acquired as part of its takeover of Two Roads Hospitality late last year.


Hyatt reported systemwide revenue per available room (RevPAR) growth of 1.8% for the first quarter. U.S. RevPAR was down 0.3%, weighed down by softness in the select-service category. The group's total revenue increased 12% to $1.24 billion.


Read the full article from Travel Weekly +

Lodging

Startups and hospitality giants are embracing “apartment hotels”


The lines between home-sharing and traditional hospitality lodgings are blurring. Startups like Domio and major hospitality companies including Marriott International are ramping up professionally managed “apartment hotel” operations in residential and commercial buildings, according to the Wall Street Journal.


It’s an attempt to cater to guests who want a full apartment or apartment-style lodging, but don’t want to deal with the uncertainty of renting someone else’s place. Domio, along with others like Lyric and Sonder lease floors and then stock apartments with high-end furnishings and amenities. New York-based Domio is now renting out full apartments in New Orleans at around $149 per night. Those apartments have kitchens, washing machines, and access to a roof-top pool.


The industry is taking notice. Lyric recently closed a $160 million fundraising round led by Airbnb. The biggest player in the spacem Airbnb initially wanted Lyric to list exclusively on Airbnb’s website, but that was not part of the final deal. Airbnb itself partnered with RXR Realty to convert 10 floors at 75 Rockefeller Plaza in New York into short-term rentals. Marriott announced last week that it would operate 2,000 high-end homes in 100 markets across the Americas and Europe.


Read the full article from The Real Deal +

You'll find all of our recent Market Insight reports on the MRP website →

TODAY’S MARKET INSIGHT

YOU ARE HERE

MARKET INSIGHT UPDATES

JOE MAC'S VIEWPOINT

ACTIVE THEMATIC IDEAS

MACROECONOMIC INDICATORS

MARKET INSIGHT UPDATES

Markets →

Stocks

China State Funds Prop Up Stocks

Economics & Trade →

Brazil

Delays to Brazil’s Pension Overhaul Increase Economic Concerns

Monetary Policy →

Fed

China Tariffs May Change Fed’s Tune

Finance →

Mortgage Agencies

Fannie-Freddie May Be Released Without Congress

Construction & Real Estate →

Lodging

When Hotels Meet Short-Term Home Rentals

Lodging

Homesharing is in Hyatt's rearview mirror

Lodging

Startups and hospitality giants are embracing “apartment hotels”

US Housing THEME ALERT

Redfin Aims to Bring E-Commerce to Home Buying

Services →

Video Games THEME ALERT

U.S. adults are spending big on video games, playing mostly on smartphones

Manufacturing & Logistics →

Plastics

Fully Recyclable Plastics Breakthrough! This Could Change Everything

Technology →

3DP THEME ALERT

HP's new 3D printer gets serious, heads to high-volume factories

Transportation →

Autos THEME ALERT

U.S. Zeroes In on Europe's Cars in Battle to Fix Trade Deficit

Commodities →

Crops THEME ALERT

Trump Says U.S. Will Purchase Crops to Offset China Losses

Oil THEME ALERT

The Shale Boom Is About To Go Bust

Oil THEME ALERT

2018 was likely the most profitable year for U.S. oil producers since 2013

Endnote →

Oil THEME ALERT

Which Countries Have the Biggest Crude Oil Reserves?

TODAY’S MARKET INSIGHT

MARKET INSIGHT UPDATES

YOU ARE HERE

JOE MAC'S VIEWPOINT

ACTIVE THEMATIC IDEAS

MACROECONOMIC INDICATORS

JOE MAC'S VIEWPOINT

April 25, 2019

The Facts Changed (For Now) →

Between a slowdown in inflation, a sharp decline in treasury yields, and a short-lived bear market, investors have undoubtedly felt a huge swing in momentum; and they’re not alone, as the Federal Reserve now seems set in neutral until further notice. While some have had their own theories for why the FOMC voters, chiefly Chairman Jerome Powell, has such a radical and resolute change of heart, the answer may be just as simple as raw data.

Other Viewpoint Reports

March 29, 2019

Joe Mac's Market Viewpoint: Time for Gold →


February 28, 2019

Joe Mac's Market Viewpoint: After the Inflation Intermission →


January 31, 2019

Joe Mac's Market Viewpoint: Patience, Patience →


December 6, 2018

Joe Mac's Market Viewpoint: The Next Handle →

See all of Joe's Viewpoints on our website →

TODAY’S MARKET INSIGHT

MARKET INSIGHT UPDATES

JOE MAC'S VIEWPOINT

YOU ARE HERE

ACTIVE THEMATIC IDEAS

MACROECONOMIC INDICATORS

ACTIVE THEMATIC IDEAS

Select a theme to see when and why we added it. Also included is a link to all recent Market Insight reports we've written about that theme, allowing you to track its progress.

LONG

Agricultural Commodities

LONG

CRISPR

LONG

Industrials

LONG

Materials

LONG

Robotics & Automation

SHORT

U.S. Pharmaceuticals

LONG

ASEAN Markets

LONG

Electric Utilities

LONG

Lithium

LONG

Obesity

LONG

Solar

LONG

Value Over Growth

LONG

3D Printing

SHORT

Autos

LONG

Gold & Gold Miners

SHORT

Long-Dated U.S. Treasuries

LONG

Oil & U.S. Energy

SHORT

U.S. Housing

LONG

Video Gaming

TODAY’S MARKET INSIGHT

MARKET INSIGHT UPDATES

JOE MAC'S VIEWPOINT

ACTIVE THEMATIC IDEAS

YOU ARE HERE

MACROECONOMIC INDICATORS

MACROECONOMIC INDICATORS

1.

Week Ahead


This week the US will be publishing retail sales, industrial production, housing data and flash Michigan's consumer sentiment. Elsewhere, other important releases include: UK unemployment and wage growth; Eurozone industrial output and foreign trade; Germany Q1 GDP growth; China industrial production, retail sales and fixed asset investment; Japan housing starts and current account; and Australia employment figures, business and consumer morale.


Click here to access the data +

2.

US Inflation Rate Rises to 5-Month High


The US annual inflation rate rose to 2 percent in April 2019 from 1.9 percent in the previous month, just below forecasts of 2.1 percent. It was the highest rate since last November, led by a rebound in energy prices. The core inflation rate, which excludes volatile items such as food and energy, edged up to 2.1 percent from 2 percent in March, matching market expectations.


Click here to access the data +

3.

US Budget Surplus Narrows Sharply in April


The US government budget surplus narrowed to USD 160 billion in April 2019 from USD 214 billion in the same month last year and compared to market expectations of USD 165 billion. Federal spending surged 27 percent on the year while receipts were up 5 percent.


Click here to access the data +

4.

Soybeans Hits 10+1/2-year Low


Soybeans decreased to a 10+1/2-year low of 793 USd/Bu.


Click here to access the data +

TODAY’S MARKET INSIGHT

YOU ARE HERE

MARKET INSIGHT UPDATES

JOE MAC'S VIEWPOINT

ACTIVE THEMATIC IDEAS

MACROECONOMIC INDICATORS

MARKET INSIGHT UPDATES: SUMMARIES

Markets

Stocks

China State Funds Prop Up Stocks


Chinese state-backed funds were active in buying domestic equities on Friday after they had slumped in the wake of the Trump administration imposing the biggest hit yet to China’s exports to the U.S.


State funds jumped in after the lunch break, when the Shanghai Composite Index dropped 0.4% after being up as much as 2.6% in the morning session, according to two people familiar with the matter. That helps explain the sharp V in intraday trading, one of them said, asking not to be named discussing private information.


By the close, the Shanghai Composite was back up 3.1%. By contrast, Japanese shares -- which had also risen in the Asian morning session -- closed down in the wake of the escalation in tensions between the world’s two largest economies.


Beijing vowed to take necessary “counter-measures” against the increase in American tariffs to 25% from 10% on more than $200 billion of Chinese goods, though officials have yet to detail the steps. Investors may also be looking for any broader policy response to cushion the country’s economy, all the more so after data on Thursday showed a slowdown in credit growth for April.


Read the full article from Bloomberg +

Economics & Trade

Brazil

Delays to Brazil’s Pension Overhaul Increase Economic Concerns


Brazilian President Jair Bolsonaro’s slow-moving effort to get a pension overhaul approved in Congress has left the country’s already struggling economy in limbo as businesses, consumers and markets wait to see when, and in what form, the proposal will finally be approved. Delays in getting the pension bill approved by lawmakers are fueling doubts about the administration’s ability to right the economic ship at a difficult moment for Latin America’s largest nation.


The only bright spot comes from Brazil’s central bank, which on Wednesday held its benchmark interest rate, known as the Selic rate, at the historic low of 6.5%, where it has been since March 2018. Even though lending rates for most businesses and individuals are much steeper than that, at least they are relatively stable thanks to the unchanged Selic, which was more than twice as high just three years ago.


The confluence of faster inflation, the outlook for tepid growth and the slow-moving effort to cut the pension system’s deficits are making it harder to predict where the economy will go over the next few months. “It’s all very confusing right now,” said André Perfeito, chief economist at brokerage firm Necton. “Pension reform is under attack in Congress, and the economy is fragile.”


Read the full article from The Wall Street Journal +

Monetary Policy

Fed

China Tariffs May Change Fed’s Tune


Low inflation is the biggest reason the Federal Reserve has for not raising interest rates. The U.S.-China trade impasse could take that reason away. Inflation was muted last month. The Labor Department on Friday reported that consumer prices rose 0.3% in April from March, putting them 2% above their year-earlier level. Prices excluding food and energy items, the so-called core economists examine to better understand inflation’s trend, were up 0.1% from March, and 2.1% on the year.


The data suggest the core of the Fed’s preferred inflation measure from the Commerce Department, which runs cooler than the Labor Department’s, remains below the central bank’s 2% target. This has been the focus of Fed officials who want prices to move higher so that too low inflation doesn’t become embedded in consumer expectations.


The Fed may soon get what it wants. Friday’s increase in tariffs on $200 billion of Chinese goods to 25% will, if it isn’t reversed, boost inflation. Absent any adjustments in China’s currency against the dollar, core inflation would increase by 0.4 percentage point, Deutsche Bank economists calculate.


To the extent that companies are able to find alternatives to imports from China, the effect on prices would be mitigated. Still, coupled with the passing of some transitory factors that have pushed it lower, inflation looks likely to get warmer.


Read the full article from The Wall Street Journal +

Finance

Mortgage Agencies

Fannie-Freddie May Be Released Without Congress


Fannie Mae and Freddie Mac’s new overseer said the mortgage giants can be freed from government control even if Congress doesn’t pass a housing-finance overhaul, while signaling that lawmakers will get “more than sufficient time” to come up with a plan of their own.


The comments by Federal Housing Finance Agency Director Mark Calabria in a Tuesday interview are a clear sign that regulators and President Donald Trump’s administration aren’t counting on a legislative solution after more than a decade of failures to address the biggest piece of unfinished business from the 2008 financial crisis.


Lawmakers will get “at least an entire Congress” to act before the companies are freed, said Calabria, who took over at FHFA last month. That would put the target date beyond the 2020 presidential election. Calabria’s comments reflect the determination of Trump and his appointed regulators to end the federal conservatorships of Fannie and Freddie, which have been in place since they were seized by regulators and bailed out by taxpayers more than a decade ago. Figuring out what to do with the companies, which dominate the nation’s mortgage market, has been labeled a top priority by officials including Treasury Secretary Steven Mnuchin.


Shares of Fannie Mae and Freddie Mac rose as much as 6 percent before retreating. Fannie was up 1.7 percent to $2.44 at 1:54 p.m. Freddie shared climbed 1.3 percent to $2.33.


Read the full article from National Real Estate Investor +

Construction & Real Estate

Lodging

When Hotels Meet Short-Term Home Rentals


Marriott International dipped its toe into the burgeoning home-sharing business last year during a pilot program in Europe, under its Tribute Portfolio Homes brand. The company is now jumping in to the competitive short-term rental market in a much bigger way, as it launches Homes & Villas by Marriott International, offering 2,000 premium and luxury homes in more than 100 destinations around the globe, including the U.S.


Marriott’s entry into the home-sharing market comes as Airbnb expands its offerings including the March acquisition of HotelTonight, a hotel-booking platform aimed at last-minute trip options at boutique and independent hotels. Moreover, Airbnb recently expanded Airbnb for Work, its platform for supplying rental space to companies and professionals and also acquired Gaest.com, an online marketplace that provides meeting locations for short-term rentals.


Brian Ferdinand, managing partner of CorpHousing Group, a national short-term rental operator, compared Marriott’s launch of its home-rental initiative to booking platforms like Airbnb, Expedia and Booking.com. “They are not going out and acquiring real estate,” Ferdinand said of Marriott. “They are not actually servicing them. They are not actually cleaning them…They are acting as a booking agent for the people who do have the assets.”


Read the full article from Commercial Property Executive +

Lodging

Homesharing is in Hyatt's rearview mirror


Homesharing has been top of mind following Marriott International's launch of a large-scale vacation rental platform earlier this week.


Hyatt had been active in the homesharing space, investing in short-term vacation rental startups Onefinestay and Oasis in 2015 and 2017, respectively. Both forays were short-lived, however, with Onefinestay being acquired by Accor in 2016 and Oasis joining the fold of vacation rental management company Vacasa last year.


While Hilton has eschewed homesharing, Hyatt does have a limited presence in the sector. The company currently has a small number of serviced apartments in India and the Middle East and also has a U.S. portfolio of professionally managed vacation rentals under its Destination Hotels umbrella, which Hyatt acquired as part of its takeover of Two Roads Hospitality late last year.


Hyatt reported systemwide revenue per available room (RevPAR) growth of 1.8% for the first quarter. U.S. RevPAR was down 0.3%, weighed down by softness in the select-service category. The group's total revenue increased 12% to $1.24 billion.


Read the full article from Travel Weekly +

Lodging

Startups and hospitality giants are embracing “apartment hotels”


The lines between home-sharing and traditional hospitality lodgings are blurring. Startups like Domio and major hospitality companies including Marriott International are ramping up professionally managed “apartment hotel” operations in residential and commercial buildings, according to the Wall Street Journal.


It’s an attempt to cater to guests who want a full apartment or apartment-style lodging, but don’t want to deal with the uncertainty of renting someone else’s place. Domio, along with others like Lyric and Sonder lease floors and then stock apartments with high-end furnishings and amenities. New York-based Domio is now renting out full apartments in New Orleans at around $149 per night. Those apartments have kitchens, washing machines, and access to a roof-top pool.


The industry is taking notice. Lyric recently closed a $160 million fundraising round led by Airbnb. The biggest player in the spacem Airbnb initially wanted Lyric to list exclusively on Airbnb’s website, but that was not part of the final deal. Airbnb itself partnered with RXR Realty to convert 10 floors at 75 Rockefeller Plaza in New York into short-term rentals. Marriott announced last week that it would operate 2,000 high-end homes in 100 markets across the Americas and Europe.


Read the full article from The Real Deal +

US Housing

Redfin Aims to Bring E-Commerce to Home Buying


Redfin, the Seattle-based real estate brokerage, is starting a program that lets house hunters bid on properties directly through its website. The move aims to bring online shopping to a business dominated by attending weekend open houses and driving around with agents.


The company recently tested the program in Boston and now plans to extend it in stages across the country. It is the latest sign that technology companies are encroaching on the decidedly low-tech world of real estate sales.


Web-focused operations like Redfin, Zillow, Opendoor and Offerpad — along with brokerage giants like Realogy, which owns Coldwell Banker and other brands — have been building out “instant buying” programs that allow home sellers to solicit direct offers from the company. The Redfin program, Redfin Direct, is an effort to bring the approach to the other side of the transaction.


Real estate agents’ groups will be watching to see whether Redfin’s competitors introduce similar programs. At stake is the roughly $110 billion a year in commissions generated by home sales.


Read the full article from The New York Times +

Services

Video Games

U.S. adults are spending big on video games, playing mostly on smartphones


The average American video gamer is 33 years old, prefers to play on their smartphone and is spending big on content — 20 percent more than a year ago and 85 percent more than in 2015, a report showed on Thursday.


The $43.4 billion spent in 2018 was mostly on content, as opposed to hardware and accessories. Of pay-to-play games, “Call of Duty: Black Ops III”, “Red Dead Redemption II” and “NBA 2K19” took the top spots for most units sold but the list did not include free games such as “Fortnite.”


Nearly 65 percent of U.S. adults, or more than 164 million people, play games. The most popular genre is casual games, with 60 percent of players gaming on their smartphones, though about half also play on personal computers and specialized consoles.


And Americans will soon have even more ways to play video games. Apple Inc is launching a game subscription service and Alphabet Inc’s Google announced a video game streaming service late this year. The new services will present challenges to established video game developers like Electronic Arts Inc, maker of “Apex Legends”; Tencent Holdings Ltd’s Riot Games, maker of “League of Legends”; Valve Corp, owner of “Counter-Strike” and the Steam distribution platform; and Activision Blizzard Inc, owner of “Call of Duty” and “Candy Crush.”


Read the full article from Reuters +

Manufacturing & Logistics

Plastics

Fully Recyclable Plastics Breakthrough! This Could Change Everything


Plastics are both a boon and a bane to all humanity. One the one hand, they are strong, light, and flexible. On the other hand, they take centuries to break down, which has created an environmental catastrophe of unimaginable proportions. Some would argue that plastics have played an important role in powering the robust world economy that has thrived since the end of World War II.


Scientists at the Lawrence Berkeley National Laboratory say they may have a solution. They have created a recyclable plastic that can be disassembled into its constituent parts at the molecular level. It can then be reassembled into a different shape, texture, and color again and again without loss of performance or quality.


“Most plastics were never made to be recycled,” says lead author Peter Christensen, a postdoctoral researcher at Berkeley Lab’s Molecular Foundry. “But we have discovered a new way to assemble plastics that takes recycling into consideration from a molecular perspective.”


The researchers next plan to develop PDK plastics with a wide range of thermal and mechanical properties for applications as diverse as textiles, 3D printing, and foams. In addition, they are looking to expand the formulations by incorporating plant-based materials and other sustainable sources.


Read the full article from Clean Technica +

Technology

3DP

HP's new 3D printer gets serious, heads to high-volume factories


You can't print a new lung or Stradivarius violin yet, but a new HP 3D printer announced Thursday takes a big step toward making the technology more useful.


The Jet Fusion 5200 is designed for high-volume manufacturing. That's a market with more potential for profound change than the more common 3D printers used to build prototypes or, like HP's earlier Jet Fusion 4200, for small-scale production. HP, a giant in more conventional printing on paper and increasingly other materials, too, didn't disclose prices.


So far you can't push a button and get something as complex as a car engine or running shoe, but gradually more components of such products can be 3D printed. It's a vision grand enough that fans call it the fourth industrial revolution.


Another development that'll help bring that about is a partnership with BASF that'll let customers 3D print with the flexible plastic called thermoplastic polyurethane (TPU) with the HP Jet Fusion 5200. One customer: wind turbine maker Vestas, which will use it for impact-absorbing clamps. HP also showed off a helmet made using the material internally.


Read the full article from CNET +

Transportation

Autos

U.S. Zeroes In on Europe's Cars in Battle to Fix Trade Deficit


Commerce Secretary Wilbur Ross said autos share equal blame with China for the U.S. trade deficit, an indication that European carmakers like Volkswagen AG and BMW AG could soon be hit with tariffs.


“The reason autos are very important to our trade picture is about half of our trade deficit comes from the single product, automotive, and about the other half of our trade deficit comes from a geographic area and that’s called China,” Ross said at a press conference in Luxembourg on Friday.


The Commerce Department sent Donald Trump its findings of a probe into the national-security risks of auto imports in February. Ross said he expects the U.S. president to rule on tariffs by May 18. Levies on cars and parts imported to the U.S. would especially hit Germany, and the European Union has vowed to retaliate.


Ross made it clear that the country’s trade balance is the driving motive behind the focus on the auto industry. “In order to reduce our trade deficit -- one of the big objectives of this administration -- we need to deal with China as an entity, and we need to deal with automotives as a product line,” he said.


Read the full article from Bloomberg +

Commodities

Crops

Trump Says U.S. Will Purchase Crops to Offset China Losses


President Donald Trump said that the U.S. will boost its purchases of domestic farm products for humanitarian aid in an effort to offset lost demand from China as trade tensions flare between the nations.


Trump said on Twitter on Friday that the U.S. will use its money from the tariffs to buy American agricultural products “in larger amounts than China ever did” and send it to “poor & starving countries” for humanitarian aid. The president indicated potential purchases of $15 billion from farmers. Soybean and grain futures held mostly steady after the announcements, while industry groups opposed Trump’s additional U.S. tariffs on China.


“In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!” Trump said on Twitter. “Our farmers will do better, faster and starving nations can now be helped.”


Soybean and grain futures plunged this week as U.S. trade talks faltered with China, the world’s top oilseed buyer, and the Asian nation vowed retaliation as the U.S. boosted tariffs on $200 billion in goods. “These additional tariffs will continue to put a strain on our export markets and threaten many decades worth of market development,” Ben Scholz, a Texas wheat farmer and president of the wheat group, said in a statement.


Read the full article from Bloomberg +

Oil

The Shale Boom Is About To Go Bust


A suite of drilling techniques “have lowered costs and allowed the resource to be extracted with fewer wells, but have not significantly increased the ultimate recoverable resource,” J. David Hughes, an earth scientist, and author of the Post Carbon report, warned. Technological improvements “don’t change the fundamental characteristics of shale production, they only speed up the boom-to-bust life cycle,” he said.


There are already examples of this scenario unfolding. The Eagle Ford and Bakken, for instance, are both “mature plays,” Hughes argues, in which the best acreage has been picked over. Better technology and an intensification of drilling techniques have arrested decline, and even led to a renewed increase in production. But ultimate recovery won’t be any higher; drilling techniques merely allow “the play to be drained with fewer wells,” Hughes said.


The story is not all that different in the Permian, save for the much higher levels of spending and drilling. Post Carbon estimates that it the Permian requires 2,121 new wells each year just to keep production flat, and in 2018 the industry drilled 4,133 wells, leading to a big jump in output. At such frenzied levels of drilling, the Permian could continue to see production growth in the years ahead, but the steady increase in water and frac sand “have reached their limits.” As a result, “declining well productivity as sweet-spots are exhausted will require higher drilling rates and expenditures in the future to maintain growth and offset field decline,” Hughes warned.


Read the full article from Oil Price +

Oil

2018 was likely the most profitable year for U.S. oil producers since 2013


Net income for 43 U.S. oil producers totaled $28 billion in 2018, a five-year high. Based on net income, 2018 was the most profitable year for these U.S. oil producers since 2013, despite crude oil prices that were lower in 2018 than in 2013 on an annual average basis. Lower production costs per barrel of oil equivalent (BOE) and increased production levels contributed to a higher return on equity for these companies for the fourth quarter of 2018 than in any quarter from 2013 through 2018.


The aggregated income statements for these 43 companies reveal a trend of relatively low increases in expenses directly related to upstream production in 2018. Although these upstream production expenses per barrel typically correlate with crude oil prices, the magnitude of these increases in 2018 was small compared with the increase in prices.


The annual average West Texas Intermediate (WTI) crude oil price increased 28% from 2017 to average $65 per barrel (b) in 2018, but expenses directly related to upstream production activities increased 16% between 2017 and 2018 to $24/BOE. When including depreciation, impairments, and other costs not directly related to upstream production, expenses for these 43 companies averaged $48/BOE in 2018, the lowest amount from 2013 to 2018.


In contrast to production expenses, between 2017 and 2018, upstream revenue for these 43 companies increased 31% to average $48/BOE in 2018, mainly because of the increases in average energy prices and production. As crude oil prices fell in late 2018, their upstream revenue declined 11% between the third and fourth quarters of 2018.


Read the full article from The U.S. Energy Information Administration +

Endnote

Oil

Which Countries Have the Biggest Crude Oil Reserves?


Read the full article from howmuch.net +

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