Opening Bell: 5.24.17

Moody’s Cuts Its China Rating for the First Time Since 1989 (WSJ)
“The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows,” Moody’s said in the statement. “While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government.”

Ford’s Outgoing CEO’s Spat With Trump Highlighted Troubles (WSJ)
A longtime Ford executive, Mr. Fields is seen as having unnecessarily put the iconic car company on President Donald Trump’s radar during last year’s campaign, according to a person familiar with the board’s thinking. As then-candidate Mr. Trump was railing on companies that make products in Mexico and ship them to U.S. stores, Mr. Fields boldly told shareholders about a plan to move production of the Ford Focus from Michigan to San Luis Potosí.

Magellan's Hamish Douglass says Uber is a 'Ponzi scheme' (Sydney Morning Herald)
"I see Uber as one of the stupidest businesses in history," Magellan Financial Group chief executive Hamish Douglass said. "The probability of this business not going bankrupt in a decade is like 1 per cent." Pointing to Uber's high-cost, owner-driver model and what he described as its almost "valueless" user base, Mr Douglass said the San Francisco-based business' capital-raising style was like a "Ponzi scheme".

A definitive breakdown of the gloomy state on Wall Street (BI)
While Wall Street bank revenues appeared to bounce back in the first quarter of 2017, with banks posting strong results in fixed income trading in particular, industry-wide revenues were still down on the same period from 2012 to 2015.

Dealer Balance Sheets and Corporate Bond Liquidity Provision (New York Fed)
We show that, after the crisis, institutions with higher leverage and higher trading revenues have lower overall transaction volume while, prior to the crisis these same institutions had higher overall trading volumes. This pattern reversal is consistent with more stringent leverage regulation and greater regulation of investment banks reducing institutions' ability to provide liquidity to the market overall.

When the Patient Is a Gold Mine: The Trouble With Rare-Disease Drugs (BBG)
In 2007, Wall Street analysts eagerly awaited a price tag for Soliris. Most expected it would cost more than $100,000. But Alexion factored in other things, such as the savings Soliris offered by cutting down trips to the hospital and blood transfusions. When the company set its initial price of $389,000 per year on a conference call, one analyst from Credit Suisse Group AG was so dumbfounded that when his turn to ask a question came around he said, “Sorry, I’m speechless right now. On that number, can you repeat that again?”

‘Moat’ Is the Latest Jargon Encircling Silicon Valley (BBG)
Jonah and Noah Goodhart said Buffett was the inspiration for the name of their digital analytics startup, called Moat. They started the company seven years ago after hearing the investor outline the concept at an annual Berkshire Hathaway meeting. "There's something pretty phenomenal about that word 'moat,'" Jonah Goodhart recalled telling his brother. "If we're going to build something, we should use that word." Last month, they sold Moat to Oracle Corp.

It Pays to Write Well (Harvard Law)
Overall, our evidence supports the notion that firms can meaningfully increase their market value by increasing the readability of their annual reports. By the same token, firms with poorly written annual reports are punished by investors and trade at a discount. Thus, while there are no official sanctions or fines associated with writing disclosure documents that are hard to read, it appears there are strong economic incentives to produce documents that are easy to read by the general investor population.

Bitcoin: Ponzi gone global (Macro Business)
You don’t have to be Einstein to see that a super-national currency like this fundamentally undermines the power of authoritarian states like China, not to mention liberal democracies as well. If you can tell me where that risk leads then you are Albert Einstein. Play it, own it, do what you like with it, but always remember that it is nothing more that an intrinsically worthless global pyramid scheme that could collapse at any moment.

Blind baseball announcer creates 'a theatre of the mind' with his colour commentary (CBC)
"When one listens to a game he [or she] can get pictures in her [or his] mind about what the commentator says about the vendors coming around hawking peanuts and hot dogs or of a foul ball hit into the stands and the mad scramble by small children to go chasing after that baseball," he said. "So it's really a theatre of the mind, and it's as if a book is opening up on the radio in front of you."