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HSBC Takes The Slow Boat To China

HSBC

Another year, another familiar-sounding strategic update at HSBC. The behemoth’s need to reiterate its pivot to Asia underlines what a slow, awkward process it is.

The London-headquartered, China-focused bank announced full-year results on Tuesday. As at peers, revenues were hit by lower interest rates globally and chunky allowances for pandemic-related loan losses. Unlike at investment-banking rivals, the bump in trading revenues from HSBC’s own trimmed-back business was a meagre offset. A much-anticipated new strategy amounted to more of the same—except for lowered shareholders returns.

The shares fell in early trading, extending a year of underperformance. For much of the past decade the stock has traded at a premium to most European peers because of HSBC’s strong business in Hong Kong and mainland China, both profitable, fast-growing markets. But that gap has narrowed considerably in the past year, likely for two main reasons: Investors want faster organizational change, and they are concerned that HSBC’s trademark business model of bridging East and West is getting more difficult.

The bank broadly delivered on its 2020 targets. However, return on tangible equity or ROTE fell to just 3.1% from 8.4% a year earlier, and dividends were suspended at the British regulator’s request. The pandemic seems a valid excuse. The real disappointment was in its guidance for future returns. Target ROTE has been reduced and delayed, even with an additional $1 billion in cost cuts. Dividend expectations were pared back too: The growing quarterly payment has been replaced with a 40% to 55% payout ratio, possibly topped up with buybacks or special dividends.

Strategically, the bank is still focused on shifting more assets from Europe and the U.S. into Asia, as well as increasing its wealth management business and making its operations more digital. The direction of travel makes sense, but the pace remains frustratingly sedate, particularly as competition in the region is picking up. Discussions continue about long-mooted exits from retail operations in France and the U.S.

The speed of change might accelerate under Chief Financial Officer Ewen Stevenson, who was put in charge of the new overhaul. A relative outsider, he joined HSBC in 2019 from RBS, now known as NatWest, where he led a far-reaching revamp of what was once the largest bank in the world by assets.

HSBC’s shares are also weighed down by geopolitics. Management says little on the topic of Sino-American relations, except to highlight a long history of successfully bridging international divides. That discretion may be the best way to juggle conflicting priorities, but does little to assuage investor concerns that its dual identity may eventually become untenable.

The bank has no good answers to geopolitical questions, giving it all the more reason to address organizational ones. For a company that makes much of its position in exciting high-growth Asian markets, HSBC’s expected returns are surprisingly modest. For its shares to regain their old lustre, that needs to change.

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Online Speech Is Now An Existential Question For Tech

Pixelated Facebook

Every public communication platform you can name—from Facebook, Twitter and YouTube to Parler, Pinterest and Discord—is wrestling with the same two questions:

How do we make sure we’re not facilitating misinformation, violence, fraud or hate speech?

At the same time, how do we ensure we’re not censoring users?

The more they moderate content, the more criticism they experience from those who think they’re over-moderating. At the same time, any statement on a fresh round of moderation provokes some to point out objectionable content that remains. Like any question of editorial or legal judgment, the results are guaranteed to displease someone, somewhere—including Congress, which this week called the chief executives of Facebook, Google and Twitter to a hearing on March 25 to discuss misinformation on their platforms.

For many services, this has gone beyond a matter of user experience, or growth rates, or even ad revenue. It’s become an existential crisis. While dialling up moderation won’t solve all of a platform’s problems, a look at the current winners and losers suggests that not moderating enough is a recipe for extinction.

Facebook is currently wrestling with whether it will continue its ban of former president Donald Trump. Pew Research says 78% of Republicans opposed the ban, which has contributed to the view of many in Congress that Facebook’s censorship of conservative speech justifies breaking up the company—something a decade of privacy scandals couldn’t do.

Parler, a haven for right-wing users who feel alienated by mainstream social media, was taken down by its cloud service provider, Amazon Web Services, after some of its users live-streamed the riot at the U.S. Capitol on Jan. 6. Amazon cited Parler’s apparent inability to police content that incites violence. While Parler is back online with a new service provider, it’s unclear if it has the infrastructure to serve a large audience.

During the weeks Parler was offline, the company implemented algorithmic filtering for a few content types, including threats and incitement, says a company spokesman. The company also has an automatic filter for “trolling” that detects such content, but it’s up to users whether to turn it on or not. In addition, those who choose to troll on Parler are not penalized in Parler’s algorithms for doing so, “in the spirit of First Amendment,” says the company’s guidelines for enforcement of its content moderation policies. Parler recently fired its CEO, who said he experienced resistance to his vision for the service, including how it should be moderated.

Now, just about every site that hosts user-generated content is carefully weighing the costs and benefits of updating their content moderation systems, using a mix of human professionals, algorithms and users. Some are even building rules into their services to pre-empt the need for increasingly costly moderation.

The saga of gaming-focused messaging app Discord is instructive: In 2018, the service, which is aimed at children and young adults, was one of those used to plan the Charlottesville riots. A year later, the site was still taking what appeared to be a deliberately laissez-faire approach to content moderation.

By this January, however, spurred by reports of hate speech and lurking child predators, Discord had done a complete 180. It now has a team of machine-learning engineers building systems to scan the service for unacceptable uses, and has assigned 15% of its overall staff to trust and safety issues.

This newfound attention to content moderation helped keep Discord away from the controversy surrounding the Capitol riot, and caused it to briefly ban a chat group associated with WallStreetBets during the GameStop stock runup. Discord’s valuation doubled to $7 billion over roughly the same period, a validation that investors have confidence in its moderation strategy.

The prevalence problem

The challenge successful platforms face is moderating content “at scale,” across millions or billions of pieces of shared content.

Before any action can be taken, services must decide what should be taken down, an often slow and deliberative process.

Imagine, for example, that a grass-roots movement gains momentum in a country, and begins espousing extreme and potentially dangerous ideas on social media. While some language might be caught by algorithms immediately, a decision about whether discussion of a particular movement, like QAnon, should be banned completely, could take months on a service such as YouTube, says a Google spokesman.

One reason it can take so long is the global nature of these platforms. Google’s policy team might consult with experts in order to consider regional sensitivities before making a decision. After a policy decision is made, the platform has to train AI and write rules for human moderators to enforce it—then make sure both are carrying out the policies as intended, he adds.

While AI systems can be trained to catch individual pieces of problematic content, they’re often blind to the broader meaning of a body of posts, says Tracy Chou, founder of content-moderation startup Block Party and former tech lead at Pinterest.

Take the case of the “Stop the Steal” protest, which led to the deadly attack on the U.S. Capitol. Individual messages used to plan the attack, like “Let’s meet at location X,” would probably look innocent to a machine-learning system, says Ms Chou, but “the context is what’s key.” Facebook banned all content mentioning “Stop the Steal” after the riot.

Even after Facebook has identified a particular type of content as harmful, why does it seem constitutionally unable to keep it off its platform?

It’s the “prevalence problem.” On a truly gigantic service, even if only a tiny fraction of content is problematic, it can still reach millions of people. Facebook has started publishing a quarterly report on its community standards enforcement. During the last quarter of 2020, Facebook says users saw seven or eight pieces of hate speech out of every 10,000 views of content. That’s down from 10 or 11 pieces the previous quarter. The company said it will begin allowing third-party audits of these claims this year.

While Facebook has been leaning heavily on AI to moderate content, especially during the pandemic, it currently has about 15,000 human moderators. And since every new moderator comes with a fixed additional cost, the company has been seeking more efficient ways for its AI and existing humans to work together.

In the past, human moderators reviewed content flagged by machine learning algorithms in more or less chronological order. Content is now sorted by a number of factors, including how quickly it’s spreading on the site, says a Facebook spokesman. If the goal is to reduce the number of times people see harmful content, the most viral stuff should be top priority.

A content moderator in every pot

Companies that aren’t Facebook or Google often lack the resources to field their own teams of moderators and machine-learning engineers. They have to consider what’s within their budget, which includes outsourcing the technical parts of content moderation to companies such as San Francisco-based startup Spectrum Labs.

Through its cloud-based service, Spectrum Labs shares insights it gathers from any one of its clients with all of them—which include Pinterest and Riot Games, maker of League of Legends—in order to filter everything from bad words and human trafficking to hate speech and harassment, says CEO Justin Davis.

Mr Davis says Spectrum Labs doesn’t say what clients should and shouldn’t ban. Beyond illegal content, every company decides for itself what it deems acceptable, he adds.

Pinterest, for example, has a mission rooted in “inspiration,” and this helps it take a clear stance in prohibiting harmful or objectionable content that violates its policies and doesn’t fit its mission, says a company spokeswoman.

Services are also attempting to reduce the content-moderation load by reducing the incentives or opportunity for bad behaviour. Pinterest, for example, has from its earliest days minimized the size and significance of comments, says Ms Chou, the former Pinterest engineer, in part by putting them in a smaller typeface and making them harder to find. This made comments less appealing to trolls and spammers, she adds.

The dating app Bumble only allows women to reach out to men. Flipping the script of a typical dating app has arguably made Bumble more welcoming for women, says Mr Davis, of Spectrum Labs. Bumble has other features designed to pre-emptively reduce or eliminate harassment, says Chief Product Officer Miles Norris, including a “super block” feature that builds a comprehensive digital dossier on banned users. This means that if, for example, banned users attempt to create a new account with a fresh email address, they can be detected and blocked based on other identifying features.

The ‘supreme court of content’

Facebook CEO Mark Zuckerberg recently described Facebook as something between a newspaper and a telecommunications company. For it to continue being a global town square, it doesn’t have the luxury of narrowly defining the kinds of content and interactions it will allow. For its toughest content moderation decisions, it has created a higher power—a financially independent “oversight board” that includes a retired U.S. federal judge, a former prime minister of Denmark and a Nobel Peace Prize laureate.

In its first decision, the board overturned four of the five bans Facebook brought before it.

Facebook has said that it intends the decisions made by its “supreme court of content” to become part of how it makes everyday decisions about what to allow on the site. That is, even though the board will make only a handful of decisions a year, these rulings will also apply when the same content is shared in a similar way. Even with that mechanism in place, it’s hard to imagine the board can get to more than a tiny fraction of the types of situations content moderators and their AI assistants must decide every day.

But the oversight board might accomplish the goal of shifting the blame for Facebook’s most momentous moderation decisions. For example, if the board rules to reinstate the account of former President Trump, Facebook could deflect criticism of the decision by noting it was made independent of its own company politics.

Meanwhile, Parler is back up, but it’s still banned from the Apple and Google app stores. Without those essential routes to users—and without web services as reliable as its former provider, Amazon—it seems unlikely that Parler can grow anywhere close to the rate it otherwise might have. It’s not clear yet whether Parler’s new content filtering algorithms will satisfy Google and Apple. How the company balances its enhanced moderation with its stated mission of being a “viewpoint neutral” service will determine whether it grows to be a viable alternative to Twitter and Facebook or remains a shadow of what it could be with such moderation.

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WhatsApp Co-founder Jan Koum Pays $109 Million For Home Next Door

Malibu Mansion

Jan Koum, the co-founder of WhatsApp, is paying approx. $109 million for a Malibu, Calif. mansion right next door to one he already owns, according to two people familiar with the deal.

The transaction is the latest big-ticket deal for Mr Koum in the Los Angeles area. In 2019 he purchased the neighbouring Malibu property from entertainment executive Ron Meyer for around $126 million. Then last year Mr Koum spent approx. $157 million for the Beverly Hills estate of Quibi founder Jeffrey Katzenberg.

The seller in the latest transaction is Diana Jenkins, a Bosnia-born entrepreneur and philanthropist. Ms Jenkins, founder of health-drinks company Neuro Drinks, was previously married to British financier Roger Jenkins. Her home came on the market last May for US$125 million, The Wall Street Journal reported. It is on Malibu’s Paradise Cove, and its prior owners include Barry Diller and the late country singer Kenny Rogers.

Sitting on a cliff top, the property has its own funicular leading down to the ocean (Mr Rogers was slapped with a US$2 million fine by local authorities for installing it.). On nearly 3 acres, it includes a single-story, five-bedroom house with vaulted ceilings, herringbone floors and floor-to-ceiling windows that open onto the gardens. It also has a dance studio and a recording studio. On the grounds, there is a three-bedroom guesthouse, a swimming pool, a waterfall and koi pond, a sports court and a guard house.

The funicular leads an oceanfront cabana, which has retractable ceilings, a wet bar, a built-in barbecue and fire pit.

Mr Koum, 44 helped launch WhatsApp, an internet messaging service, in 2009. Following the service’s acquisition by Facebook in 2014, he remained as a Facebook director for several years before stepping down in 2018. The Bloomberg Billionaires Index pegs his net worth at $15.7 billion.

Chris Cortazzo of Compass has the listing. The buyer was represented by Kurt Rappaport of Westside Estate Agency.

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Bitcoin Mining Is Big in China. Why Investors Should Worry.

China Bitcoin Mining

Critics of the nearly ubiquitous digital currency Bitcoin often focus on its environmental consequences. After Tesla announced recently that it had bought roughly US$1.5 billion in Bitcoin, sending the cryptocurrency’s value skyrocketing, sustainability investors decried the “level of carbon dioxide emissions generated from Bitcoin mining.” Certainly, “mining”—the energy-intensive process by which computers solve complex algorithmic problems to verify blockchain transactions, for which they’re rewarded in digital currency—is an undeniable environmental offender.

But there is another worrying aspect of Bitcoin, one that should make investors think twice about including it as part of an ethical investing strategy.

A large amount of new Bitcoin comes from Xinjiang, the region in northwest China where more than a million Uighur Muslims and other minorities have been imprisoned in concentration camps. According to the Cambridge Bitcoin Electricity Consumption Index, as of April 2020, China was responsible for 65% of all Bitcoin mining. And of that, 36% takes place in Xinjiang, the largest regional component. Why? Cheap coal means cheap energy to power the machines that mine Bitcoin. Xinjiang has an abundant supply of coal, and the region’s relative remoteness means that it’s far cheaper to use the resource locally than move it to other parts of China. The issue is not that the Chinese government uses forced labour in Xinjiang coal mines—the reporting on that is inconclusive. Rather, because of the atrocities occurring in Xinjiang, any product produced there brings with it high ethical and regulatory risk.

In the camps—which Beijing calls “vocational educational and training centres”—guards try to “deradicalise” Uighurs for crimes such as wearing long dresses, abstaining from pork or alcohol, or praying. While the difficulty of reporting in the region means that concrete evidence is scarce, camp survivors have described systemic torture, forced sterilization, and rape. (Beijing denies committing atrocities.) In January, right before leaving office, Secretary of State Mike Pompeo declared that Beijing was committing “genocide” in the region. His successor, Antony Blinken, agrees.

To summarize: Roughly 20% of new Bitcoin is mined in Xinjiang, the site of some of the world’s most egregious human-rights abuses.

Today, Bitcoin’s association with Xinjiang is barely discussed. But that may change. For public-facing funds considering investing in the notoriously volatile asset, there are two other risks to consider. The first is that because of the concern among the American public about human-rights abuses in Xinjiang, holding assets tied to the region comes at the risk of a public relations disaster.

Already, activists have criticised Olympic sponsors for participating in the “genocide Olympics”—the 2022 Beijing Winter Games. Multiyear campaigns to hive Xinjiang off from the global supply chain are already well under way.

In July, more than 190 organizations, including the AFL-CIO, called for clothing brands to end all sourcing from Xinjiang within the next 12 months. (In 2020, roughly 20% of the world’s cotton came from Xinjiang.) It’s not hard to imagine Bitcoin becoming another frontier in their campaigns.

Investors should be alert for regulatory action. Bitcoin’s Xinjiang relationship gives ammunition to those in the U.S. government who may want to further monitor or restrict the transactions. Analysts expect the Biden administration to pay close attention to Bitcoin. In mid-February, Treasury Secretary Janet Yellen criticised the “misuse” of cryptocurrencies in laundering money or funding terrorism. At the same time, Bitcoin’s Xinjiang connection could put it on the radar of the various arms of the Commerce, State, and Defense departments that are seeking to reduce U.S. dependence on physical and digital Chinese goods. If this trend intensifies, the Treasury Department could sanction the Bitcoin mining firms that have large operations in Xinjiang, or issue advisories that it is “studying” Bitcoin’s links to the region—signalling to global financial institutions another risk of holding the cryptocurrency.

In January, U.S. Customs banned the imports of Xinjiang cotton and tomato products and told U.S. companies to get forced labour out of their supply chains. Extricating Bitcoin from Xinjiang could be far more difficult. Unlike, say, blood diamonds or Iranian crude oil, Bitcoins exist only digitally. While there is a public record of the billions of Bitcoin transactions, it’s exceedingly complicated to determine the geographic origin of a particular Bitcoin. That means all Bitcoin holders can deny any connection to human-rights abuses—but also risk being tarnished by the association.

It has long been ironic that Bitcoin, developed to decentralize power, is so dependent on China, a country ruled by a government obsessed with centralizing it. But depending on China is one thing. Depending on Xinjiang is another. There are many excellent ethical and regulatory reasons not to buy Bitcoin. Add Xinjiang to that list.

Isaac Stone Fish is the CEO and founder of Strategy Risks, a firm that quantifies corporate exposure to China.>

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Smarter Ways To Wake Up

Smart Alarm

Let’s face it, getting out of bed, especially during these times, can take the power of a forklift to pry most of us from all that cocooning comfort to face the day. But maybe, if the wakeup method itself were a little more enticing rather than a shrill jolt, the process would be much less painful. Enter smart alarm clocks, which come with capabilities that rival house managers in real life as well as state-of-the-art entertainment systems that kick off your day in a more energized way.

While they don’t include robotic arms to physically lift you out of your lair, they do have some serious functionality that might inspire you to, in fact, get up.

Here are four of the latest models on the market.

Lenovo Smart Clock Essential

Lenovo

Part clock, part digital detox, the Lenovo Smart Clock isn’t just designed to tell you the time and wake you up. Thanks to a screen that gradually dims and brightens, it can help you fall asleep and get up less abruptly—so you can slide into your day in a more organic way. It works with Google Assistant, so all you have to do is ask it for things like news briefs, weather reports or updates on the traffic and you shall receive.

Set good nightly routines by telling it to dim the lights and lock the doors—and have it turn on the lights, play energizing music or start the coffee maker in the morning. If that’s not enough, when the screen is not in use, it displays the time on customizable clock faces.

The Lenovo Smart Clock Essential is available for around $79. lenovo.com

LaMetric Time

LaMetric Time

As clocks go, LaMetric Time takes the prize for coolest retro vibes. The Wi-Fi-connected timepiece lets you choose the clock face (from tons of adorable designs) that come to life in pixelated fashion. Program it to play your favourite tracks through Spotify or online radio, or you can stream tunes from Apple music—so you’ll wake up on the sunnier side of the bed instead of being scared out of a deep sleep.

The intelligent clock also has countdown capabilities, which can measure how much time you spend on daily tasks like cooking, fitness or other activities. Send notifications from your phone straight to your clock and it will display reminders right on screen. Like any good smart device, it also connects to other home functions—like lighting, appliances and temperature control.

The LaMetric Time is available for $199. lametric.com

 

Amazon Echo Dot

Amazon

The perfect companion for your nightstand, Amazon Echo Dot with its LED clock works with Amazon Alexa, so you can ask it just about anything—for a joke, to play music, to answer questions, to play the news or check the weather and set alarms. Before bed, program it to put on your favourite ambient sounds or audiobook, and then tell it to set a sleep timer, so it turns off while you turn in.

Controlling your smart home using your voice to do everything from turning the lights on and off to adjusting thermostats and locking doors is undoubtedly impressive, but this device’s most noteworthy feature is its capacity to set and store alarms—and a lot of them, 100 to be exact. Ask it to set single, one-off alarms or even repeating alarms on different days. Basically, you’ll never forget anything ever again.

The Amazon Echo Dot is available for $59.99. amazon.com.au

Reason ONE Smart Alarm Clock

Reason ONE Smart Alarm Clock

In terms of utility, Reason ONE Smart Alarm Clock makes no mistake on time. Its large digital time display is easy-to-read. And it automatically adjusts brightness based on ambient light. Paired with Amazon Alexa, you can set timers, check the weather or news and play music, podcasts or audiobooks. The accompanying Reason Home app lets you take the controls, so you can use it to manage any smart home device. And if you set it to night mode before bed, it eliminates the clock display entirely, which means you won’t have to cover it (or your head) to get the room pitch black.

The Reason ONE Smart Alarm Clock is available for around $30. thereasonclock.com

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One Sydney Harbour ‘Skyhomes’ Unveiled

One Sydney Harbour

The shimmering One Sydney Harbour development has today unveiled its latest ‘Skyhome’ penthouses.

The luxurious three-tower Lendlease project – designed by Pritzker award-winning architect Renzo Piano and which informs the city’s rapidly expanding Barangaroo precinct – is already home to the country’s most expensive residence,  last year’s $140-million-plus sale of the premiere OSH penthouse not only smashing sales records but ultimately setting a new luxury agenda.

Now, two further penthouses – so-called Skyhomes – have hit the market, occupying the top two floors of the 68-storey Residences Two.

Spanning a full floor each and ranging from 540 to 670 square metres with 3-metre high ceilings throughout, each boasts private lift and rooftop terrace (80 – 100 sqm) with entertaining space, swimming pool and panoramic views across Sydney and its various architectural icons, as well as to the Blue Mountains in the west.

One Sydney Harbour Skyhomes

“All places have a story to tell, you just have to listen to that story and I think Sydney has a great story to tell,” offers Piano.“In this case, I think it’s very much about this, about making something that tells the essence of this city that is about sense of lightness, a sense of light, the sense of transparency.”

Skyhomes interiors will be crafted by leading designer Daniel Goldberg, founder and creative director of State of Craft, in consultation with the owners.
Goldberg previously collaborated with Piano on London’s The Shard and Shard Place in 2012.

“We wanted to create two unique, world-class homes in the sky that capture the essence of living high above Sydney Harbour,” says Goldberg. “The experience of being in the Skyhomes was inspired by life on board private yachts with their seamless transition from inside to outside spaces, and the feeling of freedom and elegant comfort.”
As originally published on Robb Report Australia & New Zealand.
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Australian Housing Prices Forecast To Rise 20 Per Cent

Housing Market

One of Australia’s big four banks is forecasting 20 per cent gains in the housing market over the next two years.

The incredible figure comes out of Westpac’s first Housing Pulse report for 2021 and indicates Australian dwelling prices could be on the brink of a boom.

The banking institution’s chief economist Bill Evans stated in the report, released on Monday, that he was expecting dwelling prices to lift 10 per cent nationally in the next 12 months, with that pace continuing into 2022, citing strong economic growth as the cause.

“The upturn is being supported by record low-interest rates; the confident expectation among borrowers that these rates will remain low for years to come; ample credit supply; and an improving economic backdrop,” Evans said.

In the final quarter of 2020, dwelling approvals surged 22 per cent while lending for dwellings lifted by 16 per cent in the December quarter.

Smaller capital cities and regional towns were likely to capitalise on the forecast increases, however concerns linger around the Sydney and Melbourne high rise markets.

Further, Evans has foreshadowed good news for the labour markets with unemployment rates forecast to decline steadily to 6 per cent by end of 2021, and 5.3 per cent by the end of 2022.

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How To Avoid The 5 Worst Home Office Design Mistakes

Home office Set Up

FOR A YEAR now we’ve all been getting copious advice on how to make our remote workspaces worthy of our toil. Why then, incredulous designers want to know, are they still seeing people’s unmade beds during video calls?

“Professionals should exude professionalism,” said New York designer Vicente Wolf, who’s seen home offices cheapened by obviously plastic floral arrangements. “Keep the space clean and tidy. Straighten pictures, edit your bookcase. Take the time to see your background as it is conveyed by your computer’s eye.”

Here, interiors pros share five other home office blunders they’ve observed, and what to do instead.

Dead-end Desks

The quickest way to make your office feel like a college dorm room? Shove an undersized desk against a windowless wall, warned Dallas architect Eddie Maestri. “Nothing looks more sad and depressing.”

Instead: “What you see affects your mood and increases your work performance,” said Mr Maestri. If a real vista isn’t available, he positions the desk so its occupant has an expansive view of the room.

Cable Mayhem

Leave webs to the spiders. “I hate when tangled cords dangle from the desk in plain sight,” said Dallas designer Traci Connell.

Instead: If you have scope to place your desk against the back of a sofa or love seat, suggests Mark Lavender, an interior designer in Winnetka, Ill., “cords can then run behind the sofa, and the desk lamp pulls double duty as a sofa light.” Ms Connell channels cords through grommet holes she has drilled into desktops. Adapting the same idea, New York architect Eric J. Smith outfits a drawer or cabinet with a power strip and cables for an out-of-site charging station. Mr Maestri suggests this hack: “Connect all your cords to one power strip, then place the power strip and additional cord lengths in a small wastebasket under your desk.”

Workplace Drift

If you can’t shut the door on a dedicated workplace come day’s end, your “office” confronts you until bedtime, with files and monitors leering at you while you try to relax. Uncontained professional detritus compromises the life part of the life-work balance.

Instead: “It’s important to retain the other functions of the room,” said Mr Smith. Los Angeles designer Anne Carr’s stern advice: Order a cabinet, “preferably one with doors that close.” A bookcase with bins or baskets, she noted, can also hide essential but essentially ugly gear. Another option: a small, wheeled filing cabinet that can be pulled out during the day for extra desk space and tucked under a simple desk after hours, said Jerry Caldari of New York’s Bromley Caldari Architects. An inherently beautiful desk itself can pass for a civilized member of the family. Veronica Mishaan, a designer with offices in Bogotá, Colombia, and New York, chooses secretaries, whose surfaces fold up, or small, delicately curved desks. Both blend into a room without screaming “workspace,” she said.

Aping the Actual Office

“You don’t need an ordinary black faux-leather chair—or one that looks like your kid’s gaming chair—pulled up to a clunky wooden desk to make you feel that you’re ‘working’ from home,” said Spencer Bass, creative director for office furniture retailer Label 180.

Instead: While the ideal work chair is still ergonomic, you can de-corporate the rest of your space. Chairish co-founder Anna Brockway suggests swapping utilitarian task lamps for ceramic varieties with contrasting colour shades—a magnolia-green lamp and cornflower-blue shade, for example. Hang artwork that inspires you, “and don’t forget about desktop accessories like vases with fresh flowers and beautiful vessels to hold your paper clips,” she said.

Permeable Portals

Pocket doors and sliding barn doors leave gaps that let the voices of remote-learners and WFH mates bounce right through.

Instead: Get a real door! Swinging solid ones are Brooklyn designer Adam Meshberg’s first choice, “not only for your privacy, but for the rest of the [household which] likely doesn’t care much about your conversations.” If natural light is a concern, he said, frosted glass doors let sunshine through but not the gaze of curious kids. Mr Meshberg also finds virtue in hardware that locks to let the “Zoom calls we’re all constantly on” unfold uninterrupted.

DESK SCARES / The worst WFH setups pros have seen

“A home office situated inside the walk-in closet…with the clothes hanging all over the work area.” —Vicente Wolf, designer, New York City

“I designed a home for a family that bought two used cubicles and put them in their formal living room. It was quite the negotiation to get them to sell the desks and start fresh.” —Kiel Wuellner, vice president of design at Vesta

“I had a client who was a big-game hunter and wanted me to make the legs of one of his safari animals into desk legs. I had to take a hard pass on this job.” —Chris Goddard, designer, Springdale, Ark.

“A urinal in the room! Can you imagine?” —Elizabeth Krueger, designer, Chicago

“An office that was covered floor to ceiling in white boards with words and tasks listed in tiny handwriting everywhere. It’s instant overwhelm.” —Christina Kim, designer, Manasquan, N.J.

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Texas Blackout Boosts Macquarie Bank By Up To $270 Million

gas station

The deep freeze that plunged millions of Texans into darkness is rippling through energy markets in unexpected ways, producing a financial windfall for Macquarie bank and severe pain for other companies caught up in the disruption.

The extreme weather froze wind turbines and oil-and-gas wells, closed oil refiners and prompted power stations to trip offline, sending a jolt through energy markets. Wholesale power prices rocketed, as did spot prices for natural gas in Texas, Oklahoma, Kansas and Arkansas.

The turbulence led to a bonanza for commodity traders at Macquarie Group Ltd., whose ability to funnel gas and electricity around the country enabled them to capitalise on soaring demand and prices in states such as Texas.

The bank bumped up its guidance Monday for earnings in the year through March to reflect the windfall. It said that net profit after tax would be 5% to 10% higher than in the 2020 fiscal year. That equates to an increase of up to $273.1 million. In its previous guidance, issued Feb. 9, Macquarie said it expected profits to be slightly down on 2020.

“Extreme winter weather conditions in North America have significantly increased short-term client demand for Macquarie’s capabilities in maintaining critical physical supply across the commodity complex, and particularly in relation to gas and power,” the bank said.

Macquarie’s windfall shows how big profits can be made wagering on relative scarcity of natural gas in a country awash in the fuel.

The U.S. shale-drilling boom unleashed so much gas over the past decade that prices have been depressed to the point that producers with gushers have gone bankrupt. Yet gas buyers, such as power plants and manufacturers, are routinely left paying surging prices when demand peaks during winter storms.

Behind such instances of energy feast and famine is a gas infrastructure system that has failed to keep up with all the drilling. Pipelines laid decades before the shale boom are often in the wrong places, or too small to meet today’s demand. Having space reserved on certain pipelines can become incredibly lucrative when uncharacteristic weather causes swells in demand.

Scarcity in Texas and the Great Plains was amplified last week when temperatures dropped low enough to freeze shut many of the region’s gas wells and other energy infrastructure. Capacity on pipelines into the region became precious. Traders and energy firms that had paid in advance for the right to use these supply routes were suddenly in position to rake in huge profits as utilities vied for fuel deliveries.

Macquarie describes itself as the second-largest marketer of physical gas in North America behind BP PLC, with a team in Houston and access to 80% of pipelines spanning the U.S., according to a person familiar with the matter. The business, which Macquarie has built out for over a decade, received a boost from the acquisition of Cargill Inc.’s North America power and gas division in 2017.

The bank rents access to natural-gas pipelines and electricity networks across the U.S., enabling it to profit when prices in some regions are significantly higher than in others and when consumers are in urgent need of fuel or power. That was the case last week, when frozen energy infrastructure and the closure of oil-and-gas wells set off a race for natural gas among Texas power plants and other consumers.

Macquarie sent large volumes of gas from the north of the U.S. to the south, where the cold weather sent prices soaring last week, the person familiar with the matter said. It supplied electricity in Texas as well as gas to generate electrical power.

At one point, natural gas changed hands for more than $900 per million British thermal units at the ONEOK Gas Transportation hub in Oklahoma, according to commodities data provider S&P Global Platts. By Friday, prices at the hub had fallen back to about $14 per million British thermal units. That was still comparatively high: Benchmark futures for U.S. natural gas, which are tied to delivery at Henry Hub in Louisiana, have generally cost between $2.50 and $3.50 per million British thermal units in recent months.

Shares of Macquarie rose 3.4% on Monday after the company raised its profit outlook. They are now down 2.8% over the past 12 months.

Millions were left without power and heat in Texas last week as the lowest temperatures in decades wreaked havoc on the state’s utilities. Frozen water lines burst and left big residents in cities without safe drinking water. Stores closed because they had no power, which made food and water even more scarce.

Roughly 70 deaths, mostly in Texas, have been attributed to the cold weather, according to the Associated Press. Some are believed to have frozen to death in their homes.

Macquarie last year provided an undisclosed amount of investment capital to upstart Houston-based utility Griddy Energy LLC, whose business model is to pass variable wholesale electricity prices through to customers. Griddy customers complained of paying lofty sums when power prices shot up to thousands of dollars per megawatt hour last week, according to local Texas media reports.

One customer told the Dallas Morning News that his electric bill for five days stood at US$5000, the amount he would normally pay for several years of power. Another told the Dallas-Fort Worth NBC affiliate that he had been charged more than US$16000 for February.

A Griddy spokeswoman said an order by the state utility agency to the operator of the electricity grid to make market prices reflect the scarcity of power pushed up prices for its customers. On Feb. 12, the company started emailing and texting customers to say they might be better off switching providers for a short time to avoid exposure to wholesale prices, she said.

Corporate casualties from the freeze are also starting to emerge. Just Energy Group Inc., a Canada-based energy supplier, on Monday said it faced a financial hit of about US$250 million, in part from buying electricity at sky-high prices in Texas during the cold blast. The company, which said the blow could stop it from continuing as a going concern, saw its shares slump 31%.

In another instance, shares of Atmos Energy Corp. fell 4.4% Monday after the Dallas-based gas supplier said it would have to pay between US$2.5 billion and US$3.5 billion for gas it bought at elevated prices in Texas, Colorado and Kansas. Atmos may issue stock or raise debt to help to pay for the purchases, it said Friday.

German energy company RWE AG said its 2021 earnings would be hit by outages at the company’s wind turbines, as well as from high prices for electricity.

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TENNIS COURTS LOB HIGH RETURNS FOR PRIME MARKET

Tennise Courts

Driven by shifting lifestyle changes brought about by COVID-19 and furthered by rising market confidence, new research has outed a dramatic spike in the sale of Australian super-prime properties holding tennis courts.

Knight Frank’s inaugural Australian Residential Tennis Court Premium report has found sales of super-prime property with courts spiked during 2020 – $682.8m transacted across 38 sales, up 230% on 2019’s 14 sales.

Properties with tennis courts commanded a 22% higher sale price than those without, the average price rising by 1.6% to $18 million in 2020. The research also found nearly a quarter (23%) of all super-prime residential 2020 sales were properties with courts.

“In 2020, Sydney saw $436.6 million of tennis court-featured super-prime sales across 22 transactions, although this total volume fell short by 3 per cent of surpassing its highest volume reached in 2018,” said Knight Frank’s Head of Residential Research Michelle Ciesielski.

Beyond volume, a cultural shift driven by the pandemic is said to have heightened purchaser desires.

“Australians transformed the way they lived in 2020 due to COVID-19, with the role of the home expanding to become a place of work, education and vacation due to periodic lockdowns during the pandemic,” added Knight Frank’s National Head of Residential, Shaye Harris.

Based on sales figures since 2011, the top three performing suburbs for super-prime properties with tennis courts were Melbourne’s Toorak (39 sales), Sydney’s Bellevue Hill (23 sales) and Vaucluse and Mosman, which were equal third with 16 sales.

Last June Tennis Australia reported a significant rise in interest in the sport – online booking data across 173 venues revealing that the number of court bookings more than doubled from 10,912 in May 2019 to 22,569 in May 2020.