AM | @agumack
[1] Value of private companies hits $490bn. With Uber valued at $68bn and Airbnb at $30bn, the value of late-stage private companies in the US and Europe has soared above $490bn, according to an index created by Scenic Advisement, a San Francisco boutique investment bank (*).
(*) Leslie Hook: "Value of private companies hits high of $490bn as tech start-ups shun markets", Financial Times, 29 May 2017.
__________
[2] Zalando's business model. Zalando, Europe' biggest online fashion retailer, "is looking to transform itself from an online store into a digital platform where brands can transact directly with customers. Zalando then charges a commission on each purchase" (*). Two comments: (1) clearly, the company is changing its narrative, as Amazon Fashion lurks in the background; (2) I suspect that PE ratios for a 'digital platform' company are considerably higher than for online stores.
(*) Guy Chazan: "Zalando fashions a response to Amazon threat", Financial Times, 29 May 2017.
__________
[3] EM currencies and the carry trade. Some see danger ahead for those involved in the carry trade (buying high-yielding EM currencies with cheap EUR and USD funding). Harvard economist Jeffrey Frankel once likened carry trading to "picking up pennies in front of a steam roller" (*).
(*) Natasha Doff: "History says Emerging Markets carry trade can only end in tears", Bloomberg, 30 May 2017.
__________
[4] Equity Risk Premium. This is quite a story. In a letter published by the Financial Times, a Chicago-based portfolio manager argues that the decline in the Equity Risk Premium is mostly driven by a confusion: "The widespread adoption of passive investment in equities due to lower costs has increased the valuation of stocks because the investing public has confused low cost with low risk, thus decreasing the equity risk premium demanded by investors and driving up share prices".
(*) Daniel Mauro: "After correction comes the pain for low-cost investors", Financial Times, 2 May 2017. See also Prof. Damodaran' ERP calculations.
___________
