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The world's debt rose by $3 trillion in the first quarter of 2019 — an almost unprecedented borrowing binge that brought total global debt to $246.5 trillion.
Why it matters: High levels of debt put countries in a vulnerable position in the event of a downturn and could endanger the world's economic recovery, said economists from the Institute of International Finance, which released the study today.
What's happening: Countries had been reducing their debt burdens since the beginning of 2018, when global debt reached its highest level on record, $248 trillion. But Q1's major uptick brought it to nearly 320% of the world's GDP, also near the all-time high, according to IIF's data.
What they're saying: "The 2018 slowdown in debt accumulation is looking more blip than trend," Emre Tiftik, IIF's deputy director of global policy initiatives, said in the report, released today.
Background: The Fed is expected to lower U.S. overnight interest rates at its policy meeting this month, following rate cuts from the central banks of Australia, India and New Zealand as well as multiple emerging market countries this year.
Watch this space: Substantial debt growth is taking place in Finland, Canada and Japan, which have seen the largest increase in debt-to-GDP ratios of all countries IIF tracks over the past year. Developed markets, like the U.S., Western Europe and Japan, saw total debt rise by $1.6 trillion in Q1, with debt outstanding now totaling $177 trillion.
Debt in smaller emerging market countries, which are now providing the majority of the world's growth, rose to a record high of $69 trillion in the first quarter, IIF reported.
Why it matters: EM debt has been growing at a breakneck pace so far this year, as global investors search for yield with developed market interest rates at or near all-time lows.
What to watch: Net borrowing in so-called frontier markets — countries too small or underdeveloped to be labeled emerging, such as Zambia, Bangladesh and Tunisia — reached over $250 billion in 2018, bringing the total stock of FM debt to more than $3.2 trillion, according to IIF data. That was equal to 117% of frontier countries' GDP.
The big picture: This could become a problem for both the investors buying the bonds and the countries issuing them. The IMF and IIF both highlighted growing concerns about debt sustainability earlier this year, prompting calls for policy remedies including more transparency in lending to vulnerable countries.
Marriott International president and CEO Arne Sorenson said in an interview Friday that so-called resort fees are not going away despite a recent lawsuit from the attorney general of Washington, D.C.
"We'll obviously fight it," Sorenson said of the lawsuit, which alleges Marriott made hundreds of millions of dollars from the fees, which are described as deceptive and in violation the District's consumer protection laws.
Why it matters to the market: Resort fees have certainly helped Marriott's bottom line. Shares have outperformed the S&P 500 by 11% so far this year, rising a little more than 31% year to date, and has outperformed the S&P by around 340% over the decade-long period D.C.'s attorney general alleges the "drip pricing" scheme has been happening.
What it means: While the comparisons are incomplete and most certainly not apples to apples, Bird's revenues and margins are impressive, even given the truncated timeframe, analysts told Axios.
What he's not saying: Neither Fujiu nor VanderZanden denied The Information's claim that Bird is down to $100 million in cash, after raising $700 million, and is seeking $300 million in new funding.
Axios' Felix Salmon writes: You wouldn't make a 5x leveraged bet on the S&P 500 — not unless you were an extremely sophisticated financial arbitrageur, or a reckless gambler.
Even then you wouldn't put substantially all of your net worth into such a bet. Stocks are just too volatile. But millions of Americans make 5x leveraged bets on their homes — that's what it means to borrow 80% of the value of the house and put just 20% down.
By the numbers: Unison, a housing-finance startup, has crunched U.S. house-price data in a paper to be released tomorrow. Over the long run, any given home is likely to experience price volatility of about 15% per year; during the height of the crisis, that number spiked to more than 35%. That's broadly in line with the kind of volatility you see in the stock market.
Be smart: Annualized house price volatility is much greater than the amount you can expect a home to rise in value over the long term. That number is closer to about 4%. While homes are much less volatile than individual stocks, they're just as volatile as the kind of diversified stock indices most people invest in.
The bottom line: Any given home has roughly a 30% chance of ending up being worth less in five years' time than it is today. If you can't afford that to happen, you probably shouldn't buy.