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C&B Notes

The purpose of C&B Notes is to pass along ideas, concepts, stories, and information that are informing and influencing our worldview and thought.

Forever a Country of the Future?
September 28, 2017

Brazil spends 2.5% of its GDP on infrastructure, less than 1/3 of what China deploys and 1/2 of what India outlays. And Brazil’s government has done a generally poor job prioritizing that spending and driving projects to completion. In the heart of Brazil, Highway BR-322 is a microcosm of the impact of poor infrastructure and the ripple effect it has on the country's economy.

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Democracy is Hard…
September 27, 2017

...but worth it. Kenya’s election results from late this summer were nullified by the country’s top courts – the first time ever on the African continent that the re-election of an incumbent has been overturned. While the election is far from a finished matter, this type of effective government functioning across branches, not to mention parties and candidates, is an encouraging sign. And it is a prerequisite for having stable political systems that will draw foreign capital and promote economic growth.

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Where is Tajikistan?
September 25, 2017

It’s probably not a good sign when the bond prospectus requires a map to locate the issuing country. Even then, we were perhaps most struck by the relative value rationale trotted out by some of the bond speculators. The abiding lesson is that an investor should never be required to swing the bat.

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The Power of the Printing Press
September 18, 2017

In 2009, European high yield debt offered fifteen percentage points of extra yield to entice investors to endure the additional risk of default. The relationship inverted this month. U.S. Treasuries offer a higher yield than a basket of junk bonds from corporate issuers in Europe.

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Y’all Come See Us!
September 5, 2017

The Wall Street Journal ran a nice article that suggests you take a long weekend to explore our hometown of Birmingham and its culinary delights. When you make the pilgrimage, drop by the office for a visit.

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Party First, Last, and Always
August 30, 2017

Mercantilism is alive and well in China - the ruling party wants capital to flow into China but not out. This arcane economic idea is amongst a mix of issues at play in China, from the Communist Party's overriding goal of stability to avoid uprisings, to the consolidation of power and fealty at the top of the Party, to the desire of the wealthy to get assets and currency outside of China, to favoritism of selected businesses and businessmen (Chinese Princelings = Russian Oligarchs), and on and on. China is a market of great interest to us and its impact on the global economy is enormous, but we struggle with how to deal with the political risks of the existing structure, including the ever-present real possibility of a revolution.

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The Next Billion
August 28, 2017

How consumers connect to and interact with technology continues to evolve quickly, with voice and video rising in popularity to account for a different type of user. In the developing world, where most of these users are found, service providers are responding to a new set of constraints – slow internet speeds and minimal hard drive storage on devices. On the hardware side, Android-based phones are thriving while Apple devices are lagging, a gap that may widen further given the lower incomes of this next billion users. India is a useful case study, and a large and lucrative market for the eventual winners.

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Death by Tax Compliance
August 25, 2017

Reminiscent of the reforms India is undertaking, Brazil is trying to streamline its tax system to promote business activity and reduce corruption. Corruption is the country’s biggest problem, but the current red-tape-on-steroids bureaucracy is not far behind. Brazil’s potential is huge, but will they ever take the steps necessary to encourage foreign and domestic investment?

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The Artificial Intelligence Race in China
August 18, 2017

Microsoft veteran Qi Lu left the company last year after a bicycling accident. Since recovering, he has become the COO at Baidu. This recent interview touches on a number of interesting things in technology and China. We were particularly interested in his comments on the coming impact of artificial intelligence and Baidu’s strategy for it.

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Trigonometry’s “New” History
August 14, 2017

Settled history is not always settled accurately.

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The Shepard Tone
August 8, 2017

In Dunkirk, the film’s director, Christopher Nolan, deployed an audio effect called a Shepard tone to help drive a feeling of ever-increasing intensity throughout the movie.

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Which Tops Are Popped Where
July 28, 2017

A look at the world’s most popular beers by country demonstrates just how much consumers are attached to their “local” label.

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High Yield + Cov-Lite = Madness
July 24, 2017

Covenant-lite loans, with their often significantly reduced creditor protections, have been an increasingly large part of one corner of the debt issuance market over the past several years. When these cov-lite loans are issued by high yield borrowers, yield-chasing buyers better beware.

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Resistance Grows in Turkey
July 23, 2017

Turkey’s drift towards authoritarianism and Erdogan’s consolidation of power have accelerated since last year’s coup attempt. Despite the rising personal costs for those opposed to Erdogan’s regime, resistance is growing.

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Red Tape Reduction in India
July 19, 2017

Quick update from one of last month’s Notes: the early returns are positive for India’s new streamlined goods and services tax, which aimed to reduce shipping time and to help businesses save on logistics costs. Prime Minister Narendra Modi is making fundamental reforms that could help transform India’s economy.

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Collective Computation
July 17, 2017

C4, a research group at the Santa Fe Institute, studies all levels of biological organization - from societies of cells to societies of individuals to machine-human hybrid societies - to better understand collective behavior, collective computation, and collective intelligence. The group has begun recently to extend its efforts into the complex adaptive systems that are financial markets.

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