State Fiscal Rankings-ND #19

The Mercatus Center at George Mason University issued their 2018 rankings of states by fiscal condition. You can find the North Dakota discussion here. As a point of reference North Dakota was ranked in the top 5 each of the previous three years. The current ranking puts the state squarely in the average category. 

Take these rankings for what they are worth. The authors look at multiple different metrics and evaluate the commitments of the state, its ability to meet those commitments, and the ability to meet other issues that may be, as of now unforeseen. North Dakota does not fare as well on these as it has in the recent past, which should not be too much of a surprise when you consider the last couple of years performance in the economy. It was not bad, but it was not great and the state government needed to retrench. 

The one area where North Dakota did poorly was the “service-level solvency.” This metric attempts to measure the ability of the state to meet unanticipated needs (that is unexpected spending requirements) without necessarily harming the economy when they are forced to raise taxes? In this study North Dakota ranked 49th which is not good. 

This raises an interesting side question I have about a study such as this, and it is not an argument entered to sabotage the report. The fact of the matter is it would seem to matter the direction the state took to reach it’s current position. That is, a state cutting spending to balance the budget would, it seems to me, cut to the point that they can cover with current revenues, and would therefore have no additional slack. What I am saying is that I doubt many states cut spending to the point where they truly built in some degree of fiscal slack. Coming from a place where there is a necessity to cut the spending would seem to automatically hamper the ability of a state to perform well with this metric. I wonder if a multiple year average, moving average or otherwise, would change this?

While North Dakota ranks well in other areas a specific concern I have and mentioned on the Jarrod Thomas Show multiple times is the level of unfunded pension liabilities in the state. North Dakota ranks 12 but knowing the general state of pensions in the US we should still not be encouraged when they estimate a bit more than $12.5 billion in unfunded liabilities in the state. For example Nebraska has more unfunded liabilities at $22 billion, but that represents only 22% of state income while North Dakota’s amount represents 30% of state income according to the study.  

Stepping back for a moment lets think about this for a minute. As a small population state I think North Dakota is likely more volatile in general for most types of fiscal measures. We just exited an extended period of state budget cuts which, as I explain above, may work against the state in terms of measures of flexibility or slack. In all it confirms much of the radio discussion over the last several months, if not years. A low population, commodity based economy needs to be prudent at all times when thinking about fiscal matters. The full paper can be found at:

Eileen Norcross and Olivia Gonzalez. “Ranking the States by Fiscal Condition, 2018 Edition.” Mercatus Research, Mercatus Center at George Mason University, Arlington, VA, October 2018.

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New $100 Million VC Fund Aims to Bring China and Silicon Valley Closer

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Aerial cityscape view of San Francisco, California, USA. Source;

Venture capitalists love cryptocurrencies, as is evident by the rising number of VC firms dedicated to investing in digital assets. Now a new cryptocurrency VC fund investing in digital currencies is aiming to bridge the gap between Silicon Valley and China. The Dragonfly Capital Partners fund brings together a massive pool of $100 million. Its founders, Alexander Pack, and Bo Feng, represent one of the youngest crypto investors in Silicon Valley and one of the most experienced investors in China, respectively.

A New Crypto Fund Is Born

Dragonfly will invest in a variety of crypto-first funds, applications, and protocols. It will also dive into tech start-ups that are building infrastructure for crypto economies. Pack commented on the fund’s objectives, saying:

“Crypto is a new asset class, and it made sense to have a new firm to support it. We thought older ones would have a disadvantage.”

The founders of the fund are banking on Asian innovation in the crypto market. Asia could be one of the most important markets for crypto use cases, especially in terms of financial application.

Pack says that the fund is structured to operate “unconstrained,” because of which the fund doesn’t remain too caught up with established or larger firms. It has already invested about $20 million into 20 start-ups and funds. The fund receivers include price-stable currency basis and protocols like Spacemash and Oasis Labs.

MetaStable Capital also received funding from Dragonfly, and its general partner Haseeb Qureshi commented on the investment, saying:

“Despite crypto being a global and 24/7 market, it can often feel like two separate ecosystems between Asia and the West. Having a fund that can toe the line between the two hemispheres is a powerful advantage in being able to identify future trends and preempt where crypto is moving.”

Reputed Investor Backing

Even though Dragonfly is a new fund, Pack and Feng have good reputations in the market, especially in the emerging market category. Pack was earlier employed with Arbor Ventures and serving in Princeton in Asia teaching fellowship when he realized the potential for cryptocurrency growth in the region. He joined AngelList in San Francisco and built a crypto micro-fund soon after. This was followed by investments in Polychain Capital and Numerai. He then moved on to work with Bain Capital Ventures to lead its network investing wing, which invested in nontraditional opportunities and crypto funds.

The 20+ year veteran Feng met Pack as the two coinvested in a number of deals, including OKEx and Basis. Feng is the founder of Ceyuan Ventures.

New $100 Million VC Fund Aims to Bring China and Silicon Valley Closer was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.

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Investment Firm Summer Capital From Hong Kong Joins SEBA Crypto AG Fundraising

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SEBA Crypto AG, which aims to be the first cryptocurrency investment bank in the world, is looking for a license from the Swiss authorities. Summer Capital, a Hong Kong based firm, is taking a keen interest in the Swiss start-up’s business proposition. Summer Capital will participate in the fundraising for SEBA, which is headquartered in Zug, the municipality in Switzerland that has quickly become the Silicon Valley for Europe, especially for cryptocurrency start-ups.

Waiting for Approval

Jack Chung, Summer Capital spokesman, said that the firm is expecting SEBA to receive a banking and securities dealer license from the Swiss Financial Market Supervisory Authority. Once the firm wins the approval, it will be able to extend cryptocurrency banking services to users. The services can subsequently be extended to Asian blockchain companies, especially to those that are struggling with the traditional banking system.

This is Summer Capital’s first investment in blockchain and cryptocurrency-based businesses. It currently manages a portfolio of over $1 billion. The firm invests in education, consumer technology, logistics, and fintech companies. The firm is expecting to invest in the initial coin offering by SEBA, which is scheduled for 2019.

Chung commented on the upcoming investment, saying:

“We believe we could support SEBA’s plan to expand into Asia, a region where digital asset trading and blockchain projects have been flourishing.”

Other Investors Interested in SEBA

Summer Capital is not the only institutional investor interested in SEBA. Black River Asset Management, a Swiss investment manager worth $100.8 million, is also participating in the series-A funding round. The value of either investor’s contribution to the funding has not been disclosed yet.

SEBA’s chief executive and former head of asset servicing at UBS, Guido Buhler, said that the firm is expecting to receive regulatory approval in the second quarter of next year. It will initially focus on providing transaction banking to users, solving one of the pain points of blockchain companies.

Buhler explained this, saying:

“It has been tough for blockchain start-ups to grow their businesses as they are unable to access the traditional banking system. We are building infrastructure to allow companies to pay salaries in cryptocurrencies and bridging the disconnect between fiat and cryptocurrency payment.”

The company is expected to almost triple its staff from 20 to 55 by the end of the first quarter of 2019. The company will also provide cryptocurrency custody services to its institutional clients.

Investment Firm Summer Capital From Hong Kong Joins SEBA Crypto AG Fundraising was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.

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Forbes 400: Bezos Now $63B Richer Than Gates, Ripple’s Chris Larsen Becomes First Crypto Billionaire to Join the List

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Forbes magazine just released its 400 Richest Americans list for 2018. And as expected, Amazon’s Jeff Bezos, Microsoft’s Bill Gates, and Berkshire Hathaway’s Warren Buffet still lead the pack at first, second, and third ranks, respectively. While the top positions remained virtually unchanged, there are a couple of new entrants in the lower part of the list, such as Ripple co-founder Chris Larsen.

Chris Larsen Lands on 383rd Spot

Forbes 400 is a very exclusive list that not just anyone with money could barge into. Even with the massive surge of the cryptocurrency market in 2017, which created countless newly minted millionaires, only one person from the group was considered wealthy enough to be included in the roster — Ripple co-founder Chris Larsen.

Larsen is on the 383rd spot on the Forbes list after the magazine valued his net worth at $21 billion. The magazine noted in its introduction that Larsen is the first member whose fortune came from the cryptocurrency sector, which mirrored the industry’s rapid expansion last year. Ripple, in particular, posted massive gains in 2017, when the token posted a 35,159-percent increase, according to Forbes. To put it into perspective, anyone who invested $100 in Ripple at the start of 2017 would have seen his or her investment rise to $35,259 by the end of the year.

The Ripple co-founder is also among the 15 people who made it to the magazine’s rankings for the first time. The other notable newbies are Dropbox’s Drew Houston and In-N-Out’s Lynsi Snyder, who at 36 years of age also earned another distinction for being the youngest female member on the list.

Amazon’s Jeff Bezos Is Now $63B Richer Than Microsoft’s Bill Gates

The biggest change this year is in the top two positions. In 2017, Bill Gates was number 1 at $89 billion, followed by Jeff Bezos, who was valued at $81.5 billion, and investment guru Warren Buffet, whose net worth was valued at $78 billion, which earned him the number 3 spot last year.

This year, Bezos not only overtook Gates but also widened his gap over his rival by a wide margin. Bezos’ net worth skyrocketed to $160 billion this year, while Gates’ net worth is estimated to be at $97 billion, which means that Bezos is now $63 billion richer than Gates.

The requirement to be included in this year’s Forbes 400 list is higher compared to the previous year’s cutoff. In 2017, billionaires needed $2 billion to make it to the list, according to Forbes. This year, however, the cutoff is higher, $2.1 billion, meaning people need to have a hundred million dollars more to make it to the list.

Forbes 400: Bezos Now $63B Richer Than Gates, Ripple’s Chris Larsen Becomes First Crypto Billionaire to Join the List was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.

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IOHK Releases September Update for Project Shelley

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KONSKIE, POLAND - JULY 08, 2018 Cardano (ADA) cryptocurrency website displayed on Huawei Y6 2018 smartphone. Source:

Project Shelley is an ambitious project by Cardano developers IOHK. It aims to make the Cardano blockchain fully decentralized and autonomous. On Tuesday, Oct. 9, IOHK project manager Liz Bancroft-Turner shared the September update on the Shelley project and talked about its test and quality plan.

Understanding Project Shelley

According to Bancroft-Turner, the goal of Shelley is to “become fully decentralized and autonomous.” It will depend on three streams — incentives, delegation, and networking. For incentives, the goal is to ensure that stakeholders of the blockchain have ample motivation to run the protocol and help the system run more smoothly. Delegation is about users providing their block signing rights to a third party. Networking means allowing the creation of an infrastructure that can support full decentralization.

She said that IOHK had completed the Delegation Research Paper and the Incentives Research Paper already. Now the team is working on delegation design specification, peer discovery design, communication protocol design, and Delta Q measurement design. Other ongoing processes include the creation of a detailed technical implementation plan, core DIF design, testnet planning, and test and quality plan creation.

Looking Forward to the Future

According to the Project Shelley roadmap, IOHK will be working on Core DIF; delegation/incentives core, front and back; communication protocol; Delta Q measurements; and, finally, testnet deployment in the third and fourth quarters of 2018.

Bancroft-Turner also talked about property-based tests for the blockchain protocol. Two different descriptions will be tested against each other, supported by the pure model for running asynchronous protocols and pure model for software transactions.

The most important part of their roadmap at the moment is the test and plan quality. It will include test strategy, test execution strategy, and test management, which will help in making reporting defects easier and improving the overall transparency of the blockchain.

There will also be performance and benchmarking tests, security tests, and other tests that facilitate the transition from centralized to decentralized networks.

The Shelley project brings us the next phase in the Cardano blockchain after the Byron phase. If all things go right and the Shelley testnet goes live by the end of the year, it would mark a huge win for Cardano, as well as IOHK.

IOHK Releases September Update for Project Shelley was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.

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Monero [XMR] Interview: “Privacy Is a Basic Human Right” – Justin Ehrenhofer Talks of the Importance of Monero (Exclusive)

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One golden Monero coin leaning against an open leather wallet on a plain surface. Source:

Launched in April 2014, Monero is a digital currency that is private, secure, untraceable and fungible. Monero currently stands as the 10th largest cryptocurrency with a market cap of over $1.8 billion and is considered the leading ‘privacy coin.’ Monero’s website states that it “is more than just a technology” and that the values its technology stand for are also important. These core guiding values include security, privacy, and decentralization.

Due to its privacy and fungibility features Monero has received some negative press claiming it allows criminals to launder money. However, Monero supporters state that this pales in comparison to the money laundering done through the USD. In fact, they say:

“The only thing negative press proves is that the privacy and fungibility of Monero is sound; making it the primary feature that has Monero primed to replace cash in our planet’s digital future.” reached out to Justin Ehrenhofer the Monero Community Workgroup organizer to discuss this privacy coin. The interview went as follows:

Could you introduce yourself and tell us about your role as the Monero Community Workgroup organizer?

I am the organizer for the Community Workgroup and a few others. Monero has an Outreach Workgroup that is organized by other people. My friend and I started this workgroup to better spread the word of Monero through quality educational resources under the name “Monero Marketing Workgroup.” After a few months of operation, other workgroups matured, and we shifted the focus to providing a common place for the community to share ideas and collaborate among other workgroups. We host biweekly community meetings that cover the latest Forum Funding System (FFS) updates, workgroup updates, and important discussions. We leave time at the end of the meeting for open ideas. We also host a monthly Coffee Chat; a casual conversation focused on humanizing contributors and aimed at newcomers.

Can you tell us what Monero is all about in a couple of sentences?

Monero is a decentralized cryptocurrency with strong focuses on privacy, fungibility, and security. Monero allows people to interact in a digital economy with the same advantages as cash, including traits like fungibility that most people take for granted. The protocol is fully open-source, and users have full control over their privacy and security.

Why is it important to have privacy coins like Monero?

Privacy is a basic human right, and we should not lose this right when moving to a digital system. When you pay someone for a good or service, they should not learn your wallet balance, the source of funds, and be able to track activity in that account indefinitely. Similarly, merchants do not want to accidentally receive “tainted” coins associated with a previous negative activity. Monero’s privacy features allow people to transact digitally without worrying about whose Monero is worth more or less than another, or whose Monero will result in their account being investigated or closed.

Monero is a top 10 market cap cryptocurrency and considered the leading privacy coin. Why do you think this is?

Monero provides a substantial amount of privacy for all transactions and takes a respected approach to decision-making. It is a fair and decentralized coin like Bitcoin. However, it offers substantial privacy and security benefits over other cryptocurrencies. Systems on Monero can interact without worrying about leaking important transaction metadata including the amount, which is nearly impossible to replicate reliably on a system that is transparent by default.

Are there any worries that regulations will force XMR off of exchanges? If so could Monero prosper via P2P transactions?

I do not believe that Monero will be regulated off exchanges in most countries. The Monero community needs to continue to explain that Monero is a tool that provides necessary functions of money. Monero is already prospering on P2P exchanges such as Bisq, where it is consistently the most traded coin.

Could you tell us about the upcoming October 18th upgrade?

The October 18 upgrade is one of the typical twice-per-year upgrades that Monero undertakes. This upgrade introduces three major features: 1) substantial efficiency improvements with bulletproofs to cut transaction size, verification time, and fees by approximately 80%, 2) a mandatory ringsize of 11, further improving privacy, and 3) a new Proof of Work (PoW) algorithm that is incompatible with possible dedicated mining hardware. In sum, this upgrade is a massive win for efficiency, scalability, privacy, security, and decentralization.

Monero has received a lot of negative press claiming Monero enables criminals to launder money. Would you like to comment on this?

Monero is a tool that many will use for illicit purposes, including money laundering, unwanted mining, and ransomware. Of course, the wider Monero community denounces these uses. Luckily, these transactions make up an incredibly small proportion of network activity, and this proportion decreases as Monero is used for more mainstream uses. I believe we will see a similar transition as we did with Bitcoin: people initially viewed it as a darknet currency, but now that association is mostly broken as other uses have been reinforced. Monero should follow the same basic pattern.

Does Monero have any interesting partnerships lined up?

Monero is not a corporation. We always encourage people to build software on top of Monero. Mastering Monero, a book that introduces many important topics to interested readers, should be released very soon. This is a community initiative funded through the Forum Funding System (FFS).

Are there any other exciting future plans you can share with us?

Kovri implementation in Monero is expected later this year. This will allow users to more easily hide their IP address metadata they send to nodes on the network. Kasisto, a Monero point of sale payment processor, is expected to reach its second beta at the end of November.

What has been your biggest challenge so far working as a Monero contributor?

It is incredibly difficult to “manage” a decentralized community. Monero news, development, research, and initiatives are spread across dozens of workgroups and hundreds of active contributors. It is often difficult to keep up with all the latest changes and remember who is volunteering on what project. This is a focus of the Monero Community Workgroup: bringing these people together without losing any benefits of decentralization. Frankly, this often seems like an impossible task.

Where do you see Monero being in 5 years?

Hopefully, Monero will incorporate many additional privacy and security enhancements to further defend its position as the “cockroach cryptocurrency” of sorts. As sidechains and digital assets continue to grow in popularity, Monero should be an ideal project to interface with. You can easily build applications without worrying about metadata leaks between your system and other systems.

Monero [XMR] Interview: “Privacy Is a Basic Human Right” – Justin Ehrenhofer Talks of the Importance of Monero (Exclusive) was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.

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Night Racing at Kempton Park: Thoughts & Tips on Wednesday

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If you are looking for a very likely winner to open the Kempton card at 5.40pm, John Gosden’s Buffalo River has been knocking firmly at the door in three career starts to date. But at a shade of odds-on, the son of Noble Mission may be worth taking a view against…

He ran to respectable Racing Post ratings (RPRs) of 87 on his first two starts on the turf, before going off at 2/9f favourite for a 7f novice race over this course and distance last time out in late September. He didn’t do a lot wrong, bar bumping into a useful James Tate trained newcomer, but in posting an RPR of 84, he didn’t exactly take a step forward either. The Derby entrant will probably win by weight of experience and form to date alone in a race lacking both all round, but there is one horse I’d be keen to have on side from an each way perspective.

Charlie Appleby is an absolute stud when it comes to firing in Kempton winners, having saddled up 59 of them from 194 (30.41%) runners the past 3 years. He’s only sent out 6 runners in the past 7 days, but 2 of them have won and jockey William Buick is also in terrific form of late. So the recently gelded Golden Valour has to have decent claims here. He was well backed at Yarmouth the last day, but lost his footing early on and with it went his chance. He’s surely a good deal better than the RPR of 65 he was able to show there and his sire Kingman – enjoying a superb first crop season – is also amongst the winners on this All-Weather surface, which is encouraging.

Sir Michael Stoute’s Sovereign Grant is the obvious one to land Division II of the same 7f Novice race at 6.10pm. He’s a Kingman 2yo too and showed plenty on his Sandown debut when 4th to Rajinsky, before fluffing his lines at 4/6f in Yarmouth last month. Owned by The Queen, the colt is unfurnished and will probably develop into a considerably better 3yo, but he may have nestled upon a fairly good opportunity here.

The 3yo Maiden contest over 1m3f at 6.40pm can go the way of Ralph Beckett’s nicely bred 3yo gelding Silver Crescent, who is a full brother to the Willie Mullins’ trained and Rich Ricci owned smart dual-purpose performer Low Sun (who will win the Cesarewitch by the way). Ralph Beckett’s stable is in good form in the last month and this 3yo will appreciate this one furlong step back in trip under Harry Bentley. Casper The Cub and Don’t Look Down are legitimate threats in what looks an interesting battle on paper, but Silver Crescent fares very well on the statistical ratings I use (RatingTheRaces, top rated), his form is sound and you’d have to be hopeful of a big run tonight.

Dark Side Dream was a little lonely in front in the final furlong here last time out, but put the race to bed quite comfortably under De Sousa and although he doesn’t habitually follow up one success with another, he must have very fair claims again, this time under Josephine Gordon, who has ridden the horse five times in the past. Chris Dwyer’s veteran 6yo has a 2-2-6 record around Kempton Park and will be able to secure a handy position from stall 6. A 2lb rise for that win leaves him on a mark of 77 here, but he’s ran to 80+ RPRs on 5 of his last 6 starts, which gives encouragement that he can be very competitive in the 7.10pm, despite this mild rise in class.

Dragon Mountain likes to go forward in his races, but Josephine Gordon may have to exercise a little more patience aboard Hugo Palmer’s colt in the 7.40pm. He does arrive in better form than most here though, having won his last two races at the Sunbury venue and I suspect he won’t be running in 0-80 races for long. Jeremy Noseda’s Cenotaph has done nothing but improve on artificial surfaces of late and the former Aidan O’Brien trained son of War Front is unbeaten in three starts since leaving Ballydoyle. Breathless Times should give him a race of it in receipt of 5lb for this 6f Conditions Stakes – worth a cool £20,000 in prize-money – but in posting an RPR of 113 and a Topspeed rating of 96 last time out, this very useful 6yo marked himself down as a force to be reckoned with for the time being. He could be set for a trip to Meydan for the late winter months and will do well at the Carnival is maintaining his current level of form, and the horse has a clear opportunity to add to his tally tonight under William Buick.

The closing contest at 9.10pm is another quality Class 3 affair, this time a 3yo handicap for horses rated between 81-95. Charlie Appleby’s Auxerre is a warm order at the top of the market, but although boasting clear form claims, he does have plenty on his plate. At the prices, I’ll venture a punt on Sir Michael Stoute’s Elector, an experienced 3yo Dansili colt that has been keeping classy company all season. The drop to a mile makes for an interesting test tonight and I reckon it’ll see the horse put up a very strong challenge in the closing stages, given his ability to stay further. It is his second run after a wind op too, which is often a profitable angle to take note of.

You can read more from Kevin O’Malley and find the latest form, racecards, free tips & news on GG.CO.UK.

Bet on Horse Racing

Odds are provided at time of writing, please check your betslip to confirm they have not changed before betting.

The post Night Racing at Kempton Park: Thoughts & Tips on Wednesday appeared first on BetBright Blog.

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BetBright STATZONE: Friday ITV Racing (12th Oct 2018)

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Welcome to the BetBright STATZONE, where we give you the stats and you make the decisions!

Another busy day at HQ this Friday with the ITV cameras heading to Newmarket for the opening day of their Dubai Future Champions Meeting as we get more chances to see some of the stars of the future on show.

We’ve five LIVE races to take in that include the Cornwallis Stakes, Oh So Sharp Stakes, Challenge Stakes and the Old Rowley Mile Handicap, but the clear feature is the Group One Fillies’ Mile – a race that ALL of the last 14 winners had raced in the last 4 weeks, while 13 of the last 14 successful horses were yet to win a Group One!

So, as always, we’ve got it all covered here on STATZONE with all the key trends, plus our verdict, on each of the LIVE ITV races – we’re confident these trends will point you in the direction of a few winners, or at least help narrow down some of the field to highlight the horses that fit the best profile of past winners – So, let’s get cracking!


Newmarket Trends and Tips: 12th Oct 2018

1.50 – Newmarket Academy Godolphin Beacon Project Cornwallis Stakes (Group 3) Cl1 5f ITV

13/15 – Had won over 5f previously
12/15 – Returned 8/1 or shorter
11/15 – Rated 98 or more
11/15 – Ran within the last 30 days
11/15 – Foaled in March or later
11/15 – Winning distance – 1 ½ or less
11/15 – Won at least twice or more before
10/15 – Had raced 5 or more times
10/15 – Finished 1st or 2nd in their last race
8/15 – Had won a Listed or Group race before
7/15 – Filly winners
6/15 – Raced at Ayr last time out
6/15 – Won their last race
4/15 – Winning favourites
4/15 – Raced at Doncaster last time out

STATZONE VERDICT: Trainer Aidan O’Brien has a decent 26% record with his juveniles at the track so his Sergei Prokofiev looks a big contender. This 110-rated 2 year-old is the highest-rated in the field and should find this a lot easier than the Group One Phoenix and Middle Park Stakes he’s run in of late. The return to 5f is also interesting as his last two runs over this trip resulted in wins – hard to rule out. Pocket Dynamo, Well Done Fox, who was a good second in the Flying Childers last time out, and Poetry have also shown a good level of form in their recent races and can’t be dismissed, while Frankie is an interesting jockey booking for the Clive Cox-trained Heartwarming – however, the yard are only 3 from 23 with their juveniles at the track so that would be a concern. I think of the bigger prices the hat-trick-seeking PRINCE OF ROME (e/w) is interesting with William Buick booked to ride. He’s won his last two well at Chelmsford and looks worth a crack in this higher grade. However, the main call here is TRUE MASON. This Karl Burke runner has done little wrong this season and been placed in all three Group races he’s run in so far. The drop back to a Group Three will be easier for him, as will the step back in trip to 5f after just getting run out of things over further in his recent races.


2.25 – The Godolphin Lifetime Care Oh So Sharp Stakes (Group 3) (Fillies) Cl1 7f ITV

13/14 – Had between 1-2 wins already
13/14 – Had raced in the last 5 weeks
13/14 – Placed in the top 3 last time out
13/14 – Had between 1-3 career runs
11/14 – Returned 10/1 or shorter in the betting
11/14 – Drawn in stall 6 or higher
10/14 – Won last time out
10/14 – Foaled in March or later
10/14 – Winning distance – ½ length or less
8/14 – Returned 11/2 or shorter in the betting
8/14 – Had won over 7f or further before
8/14 – Unplaced favourites
7/14 – Irish bred
4/14 – Winning favourites
5/14 – Raced at Newmarket last time out
2/14 – Trained by Sir Michael Stoute
2/14 – Trained by Ralph Beckett
2/14 – Trained by Richard Hannon
2/14 – Ridden by Ryan Moore

STATZONE VERDICT: Maybe not the best renewal of this race. The Ralph Beckett yard have won the prize twice in the last 14 years, with their most recent success coming in 2012 – they run Glance. This filly won well at Goodwood last time out, but this will be harder and the Beckett yard in more recent times are only 2 from 30 with their youngsters at the track. John Gosden has a 21% record with his 2 year-olds here and his 105-rated Angel’s Hideaway sets a fair standard. She landed the Group Three Keenland Stakes at Ascot earlier this season but has failed to build on that in better company since. The drop back to this level will help and she can’t be ruled out, but I just have a niggle that she’s a tad exposed now and might have something improve past her. Hidden Message and the O’Brien-trained FROSTY could be those improvers. The first-named comes from the William Haggas yard and was super-impressive on debut when dotting-up at Yarmouth last month. She’s clearly well thought of but the yard are only 4 from 77 with their juveniles here so that’s a worry. In contrast, O’Brien has a 26% record with this 2 year-olds at the track and his Frosty was a nice winner on debut at Dundalk. She holds an Irish 1,000 Guineas entry for next season and has at least won over this 7f trip. The yard are sure to have had many contenders to run in this so the fact she’s been chosen to make the trip is also a big plus.


3.00 – The Godolphin Stud & Stable Awards Challenge Stakes (Group 2) Cl1 7f ITV

15/15 – Won a Listed (4) or Group (10) race previously
15/15 – Won over 7f previously
15/15 – Won by a horse aged 5 or younger
15/15 – Raced 3 or more times that season
12/15 – Won 3 or more times previously
12/15 – Winners from stall 10 or lower
11/15 –  Raced at Newmarket (Rowley) previously
11/15 – Winning distance – 1 length or more
11/15 – Officially rated 113 or higher
9/15 – Priced 7/1 or lower
8/15 – Placed in their last race
8/15 – Favourites placed
6/15 – Won at Newmarket (Rowley) previously
6/15 – Raced at either Ascot (3) or Goodwood (2) last time out
4/15 – Won their previous race
4/15 – Favourites that won
2/15 – Trained by Jeremy Noseda
1/15 – Filly/Mare winners

STATZONE VERDICT: Plenty of old faces on show here, but it’s hard to get away from last year’s winner in the race – LIMATO. This Henry Candy-trained 6 year-old was a very easy 3 ½ length winner of this race last season and more of the same looks on the cards. He heads here in cracking order after wins at Newmarket (July) and York over 6f but looks well worth another crack over 7f. He’s one of just two proven course and distance winners in the field, with Salateen being the other. The 10 year-old Gordon Lord Byron was a fine third in the race last year too and can go well again, while with 3 and 4 year-olds winning 7 of the last 8 runnings then Mankib (4) and D’bai (4) are certainly no back numbers either. Finally, the mare, Dancing Star, gets a handy 3lbs from the others and has run well at Group Three level the last twice to also command respect.


3.35 – Bet365 Fillies´ Mile (Group 1) Cl1 1m ITV

14/14 – Finished in the first three last time out
14/14 – Had raced in the last 4 weeks
13/14 – Finished in the first two last time out
13/14- Yet to win a Group 1
13/14 – Foaled in Feb or later
12/14 – Had won over 7f or 1m before
11/14 – Had won between 2-3 times before
10/14 – Favourites that finished in the top three
10/14 – Returned 5/1 or shorter in the betting
10/14 – Won last time out
10/14 – Had won a Group race before
9/14 – Foaled in Feb or March
7/14 – Raced at Doncaster last time out
6/14 – Winning favourites (or joint)
6/14 – Irish bred
4/14 – Trained by Aidan O’Brien
4/14 – Irish-trained winners
3/14 – US bred
3/14 – Won by trainer John Gosden
3/14 – Won by a Godolphin-owned horse
2/14 – Ridden by Frankie Dettori

STATZONE VERDICT: Trainer Aidan O’Brien, who – don’t forget – has a 26% record with his juveniles here, has won three of the last four runnings of this race so his entries – Hermosa and Zagitova – enter the mix. Both are rated in the 100’s, with recent Group Three Naas winner, HERMOSA, just edging it being rated 4lbs higher. The 117-rated Pretty Polyanna sets the standard though and is already a Group One winner this season. She did, however, flop in the Cheveley Park Stakes last time out and this is a step up from 6f to a mile so her ability to get the extra yardage is a big question mark, while the Bell stable are not in the best of form at the moment. Antonia De Vega has done nothing wrong in winning her only two starts to date, including the Group Three Prestige Stakes at Goodwood last time out. On breeding the step up to a mile will suit so she’s expected to be in the mix. However, it might be worth taking a chance on another unbeaten filly – SHAMBOLIC (e/w). From the John Gosden yard, she’s won her two starts at HQ (July) and Ascot, plus showed a gutsy attitude to come out on top after a bumping battle with the runner-up in her last race. Frankie rides for the first time and if all 8 run then she looks the value call in the race with more improvement to come. The fact connections are upping her into Group One company after no running in any Group races suggests they think she’s useful.


4.10 – Bet365 Old Rowley Cup Handicap Cl2 (3yo) 1m4f ITV

4 previous runnings
3/4 – Had won at least twice before
3/4 – Carried 9-0 or less in weight
3/4 – Drawn in a double-figure stall
3/4 – Had raced in the last 4 weeks
3/4 – Finished 1st or 2nd last time out
2/4 – Priced 8/1 in the betting
2/4 – Ran at Haydock last time out
0/4 – winning favourites


With only four previous runnings then we’ve not much to go on regarding the trends. Three of the last four winners were drawn in double-figures though so Rock Eagle and Ben Vrackie will have this stat on their side. We’ve not seen a winning favourite in the last four runnings so it looks like the Stoute runner – Baritone – and the O’Brien entry Astronomer will be fighting it out for the market leader position. Both are respected, and both come here off the back of good recent wins. Stoute also won this race in 2015 so knows what’s needed, and this 3 year-old could not have been more impressive when winning at Pontefract last time out – albeit at 1/3 on. Breath Caught won well at Kempton last time but this is a harder race. On a plus, he’s the only course winner in the field and rarely runs a bad race so looks likely to be in the shake-up. However, I think the step up to 1m4f looks a good move for ROCK EAGLE. This Ralph Beckett runner has been running on well over 1m2f of late and with only four career runs should have more to offer. A small break since his last run will have freshened him up for this and jockey, Harry Bentley, knows the horse well. Of the rest, JACK REGAN (e/w) can go well at a price. The Ian Williams camp do well with their 3 year-olds at the track and this horse comes here in good order after a win on the flat (Doncaster) and most-recently at Market Rasen over hurdles. He clearly stays further than this 1m4f trip and we can expect that proven stamina to be made full use of.


That should be all you need, if you can’t make the right decisions with all that info, there’s no helping you!

The post BetBright STATZONE: Friday ITV Racing (12th Oct 2018) appeared first on BetBright Blog.

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How Scotland Solved their Left-Back Problem by Dissolving the Position

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When re-appointed manager of the Scotland national team in February, the greatest selection dilemma facing Alex McLeish regarded the left-back position. The competition for places in this particular area was so intense that even Leeds United’s Barry Douglas, who provided more assists than anyone else in the English Championship last season while helping Wolves to promotion, couldn’t consistently force his way into the squad.

This headache originated four years ago, when Andrew Robertson left Dundee United for the Premier League with Hull City and Kieran Tierney made his debut for Celtic. Since then, the former has established himself as a key player at Liverpool, while the latter has earned covetous glances from all around Europe for his performances in Scotland. Both are exceptional players, and arguably their country’s two best footballers. Both are also left-backs by trade.

Robertson and Tierney threatened to become Scotland’s very own Steven Gerrard-Frank Lampard conundrum. It was impossible to fit both into their favoured position, so an alternative solution had to be found to get them on the pitch simultaneously.

The obvious answer was to play one on the left wing, though this would reduce the space ahead for the winger to attack into. Mitigating this inconvenience, McLeish’s predecessor, Gordon Strachan, frequently chose to field Tierney on the right of a back four. However, this created another issue – the Celtic man would have to cut in onto his preferred left foot every time he attacked down the flank.

McLeish thought slightly more radically than that. His answer to Scotland’s left-back dilemma was to dissolve the position altogether. Doing away with the back four that has generally been favoured in recent decades, he implemented a 3-5-2 system for the UEFA Nations League clash with Albania at Hampden in September. Within the new system, Tierney dropped back to left centre-back, while Robertson offered width as the left wing-back. McLeish’s change in shape worked, helping Scotland to a strong team performance and a crucial 2-0 win.

The Tierney-Robertson experiment was equally successful. Tierney, who has played on the left of a back three on rare occasions under Brendan Rodgers’ auspices at club level, brought good control, composure and attacking intent to the team’s build-up, while Robertson was able to make use of his outstanding crossing ability out on the flank. The duo combined well together, too.
When Robertson held his position out wide, Tierney would take the opportunity to make underlapping runs into the space available in the inside channel. Then, when Tierney decided the time was right to bomb on down the wing, Robertson would step inside to enable his teammate’s run. Their switching of positions and dynamism was impossible for Albania’s defence to deal with, leading to plenty of opportunities on that side of the pitch.

Just as the dilemma relating to these two players has been likened to a similar one faced by the English national team years ago, the solution to the problem was inspired by events transpiring south of the border.

When discussing the major influences behind his tactical switch, McLeish cited Antonio Conte’s Chelsea and Craig Brown’s Scotland before turning his attention to the current England setup, telling the Daily Record: “We’ve also taken inspiration from the Auld Enemy, with Gareth Southgate moving Kyle Walker into centre-back to accommodate two good players (Walker and Kieran Trippier) in the same team.”

Tierney is the Walker to Robertson’s Trippier – he is the more adaptable of the two, while Robertson, like his English equivalent, is at his best when his crossing capability is maximised. McLeish is lucky not only that the Celtic youngster is so versatile, but is also completely devoid of egotism. Few others of his talent level would be so willing to subordinate themselves to the needs of the collective.

“For me it’s all about whatever gives the team the best chance to qualify,” Tierney said when asked about his change of role at international level. “Getting forward is a massive part of my game…But I’m a defender, that’s my first job. And, at centre back, you’re defending a lot more. It’s about learning. I’m still very young. And I like that the manager trusts me to go in to centre-back and play my game. I don’t know if he’s changed the formation just to get me into the team, but I’m grateful.”

Scottish football can also be grateful. What could have become an era-defining tactical issue has been dealt with before Tierney and Robertson have even hit their individual peaks. Previously, the concern was that the inclusion of one would limit the other. Now, they are playing, and thriving, right next to one another.

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Odds are provided at time of writing, please check your betslip to confirm they have not changed before betting.

The post How Scotland Solved their Left-Back Problem by Dissolving the Position appeared first on BetBright Blog.

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Why Do Banks Target ROE?

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LSE_Why Do Banks Target ROE?

Nonfinancial corporations focus on the growth in earnings per share (EPS) to benchmark their performance. Banks used to follow a similar practice, but starting in the late 1970s they began to emphasize return on equity (ROE) instead. In this blog post, we outline findings from our recent staff report, which argues that banks had an incentive to make this change when their charter values eroded owing to increased competition, and the incentive to change was magnified by risk-insensitive deposit insurance.

Did Banks Always Use Return on Equity to Measure Performance?

Traditionally, nonfinancial corporations emphasized performance targets linked to their EPS. For example, in its 1940 annual report, Black and Decker noted that “the net earnings for the year available for dividends amounted to $1,064,095.29 or earnings of approximately $2.82 per share, as compared with net earnings of $595,851.34 or $1.60 per share for the previous year.” As of 2000, the company was still using remarkably similar language when describing its financial performance.

Banks also appear to have favored metrics linked to EPS up until the late 1970s, but since then their preference has shifted toward ROE. For example, the Bank of Boston noted in its 1979 report that “The Corporation earned its highest return on your invested capital in more than a decade. Our return on stockholders’ equity, which dipped as low as 8.4 percent for 1976, climbed to a healthy 13.7 percent for 1979.” Since then, the Bank of Boston has emphasized ROE every year.

In our staff report, we document that stock market investors recognize this difference between banks and nonfinancial firms. Using a constant sample of U.S. banks and nonfinancial corporations since the early 1970s, we show that the market-to-book values of banks’ stocks react more to ROE announcements than EPS announcements while the reverse occurs for nonfinancial firms. In addition, we find that banks’ market-to-book equity became relatively insensitive to EPS only after the 1980s. Thus, firms’ choice of performance metrics matters to stock investors.

Why Do Banks Use Return on Equity to Measure Performance?

We explain banks’ preference for ROE using a theoretical model of a bank that maximizes its shareholders’ value in excess of the shareholders’ contributed capital. The model has two key elements: First, the bank’s deposits are insured by the government; second, the bank has “charter” or “franchise” value that derives from its ability to pay interest on insured deposits that is below a competitive risk-free rate. Using the model, we show that when banks respond to greater competition and have fixed-rate deposit insurance, then ROE makes banks appear more financially healthy than EPS growth does.

When more competition erodes banks’ charter values, they rationally reduce the amount of their equity capital relative to deposits, and the decline is greater when banks are subject to fixed-rate, rather than fair-value, deposit insurance. While lower charter value reduces their net interest margin and EPS growth, the decrease in equity capital causes a further worsening of EPS growth.

What happens to the ROE measure when a bank reduces its initial capital in response to greater competition? Surprisingly, the effect is a rise in ROE growth that can easily offset the mechanical decline from a lower net interest margin. Moreover, banks reduce capital more when deposit insurance is risk-insensitive, which makes ROE look even better than it would if deposit insurance were fairly priced. In summary, responding to greater competition by lowering capital makes a bank’s ROE measure look better and its EPS growth look worse.

Can the Model Explain Banks’ Recent Preference for the Return on Equity Measure?

Having fixed-rate deposit insurance increases banks’ preference for holding lower levels of equity capital and, in turn, for targeting ROE. Historically, the Federal Deposit Insurance Corporation’s (FDIC) insurance premiums have been assessed without regard to bank risk. It was only in 1991 that the FDIC changed this flat-rate assessment system to one based on each bank’s level of risk. However, effective insurance premiums in the following years remained only mildly linked to bank risk.

Increased competition that reduces charter values also gives banks a preference for holding lower levels of equity capital and, thus, using ROE as a performance metric. Starting in the late 1970s, U.S. banks were exposed to increasing competition from nonbank financial institutions. In particular, money market funds competed directly for bank deposits, as shown in the chart below. Competition in the banking sector further intensified in the 1980s following states’ decisions to lift restrictions on branching within their borders and to permit out-of-state institutions to acquire their banks.

Why Do Banks Target ROE?

Implications of Post-Crisis Bank Regulations for Banks’ Use of ROE Measure

Our model predicts that banks would be especially resistant to any post-financial crisis regulation, such as Basel III, that requires them to increase their equity capital. After Basel III, a typical bank’s performance is worse on an ROE basis than on an EPS basis, and if minimum capital standards continue to rise, we could see banks de-emphasize ROE in favor of EPS, reversing the recent historical trend.


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

George Pennacchi is a professor of finance at the University of Illinois.

João A.C. SantosJoão A.C. Santos is a senior vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

How to cite this blog post:

George Pennacchi and João A.C. Santos, “Why Do Banks Target ROE?,” Federal Reserve Bank of New York Liberty Street Economics (blog), October 9, 2018,

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