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Moody's Investor Service, the global provider of credit ratings, has slashed India's growth forecast to 9.6% for 2021, from its earlier estimate of 13.9%. All this and more in our weekly news update from India.

Listen as GFOA's John Fishbein talks with Tim Blake, Managing Director of Public Finance at Moody's Investors Service about the effects that COVID-19 and the resulting economic downturn has had on state and local government’s fiscal condition.

Hello everyone, and welcome to my Good News Bulletin The latest data about house prices was published today, with the new figures from SQM Research showing that six of the eight capital cities have recorded some level of growth during the month of June. Perth is the leader this month, with its house price index rising 1.3% in June, followed by Darwin with 1%, Canberra with 0.9% and Brisbane with 0.8%. The news media, however, will no doubt focus on the results for the two cities where prices fell in June, namely Sydney and Melbourne – because, as we all know, they’re the only places that truly matter in Australia – and besides, it’s a negative and that’s what media likes to focus on. In terms of annual changes, house prices remain higher than a year ago in all capital cities except Darwin – led by Sydney which is still up 11.5% despite a small decline in June, and Hobart which is 10.4% up on last year, and then Melbourne which is 10% higher than a year ago, despite the drop in the month of June. Nationally, house prices are 6.3% higher than a year ago and apartment prices are up 5% compared to 12 months ago. The overall impact of the SQM figures is that real estate continues to defy the predictions of major falls in property values.  We’ve been in the Covid-19 period for over four months and still no sign of property values falling off that proverbial cliff that the attention-seeking economists like to talk about.   Looking to the broader economy, Australia is forecast to be one of the world’s best performers through the Covid-19 period. The International Monetary Fund in its latest world outlook has revealed the pandemic will lead to a 4.9% fall in global economic activity in 2020. Australia — alone among advanced economies — will suffer a milder-than-anticipated GDP contraction of 4.5% per cent this year, down from an April prediction of a 6.7 per cent drop. The IMPF said that Australia is one of “few exceptions” where March quarter growth wasn’t worse than expected. This reiterates a recent strong rating of the Australian economy by the OECD.   Meanwhile, Australia is one of just 10 countries to retain its AAA credit rating through the coronavirus-induced global recession, after Moody's Investors Service affirmed the rating and maintained its stable outlook for government finances. Moody's says that Australia's AAA stable credit rating reflects the economy's strengths and good governance, including health management, that will support the country's resilience in response to the coronavirus pandemic. Moody's forecasts that the economy will shrink this year, but it says the government's budget spending and support from the Reserve Bank of Australia will mitigate the severe contraction. It says of Australia: "The fall in GDP is smaller than in other advanced economies in general, consistent with signs that more normal work and spending behaviours are gradually returning as the epidemic recedes in the country.” And it says: “In Moody's assessment, the resilience of the Australian economy supports a return to positive growth next year, without any significant long-lasting impact on growth potential once the crisis passes." Returning to events in the property market, millennials are at the forefront of house hunting around the country, as real estate agents across the nation report a surge in first-home buyers looking to take advantage of the high level of government support. Real estate experts say young professionals and couples are busy looking for opportunities to buy in Melbourne, Sydney, Brisbane and elsewhere, in many cases boosted by the HomeBuilder grant from the Federal Government. The reports come after CommSec released its Economic Six Pack charts for June, which revealed active first-home buyers reached a decade high level earlier this year. That momentum has further risen throughout the pandemic and could rise again with the federal government’s First Home Loan Deposit Scheme to re-open in July, with another 10,000 places available. There were 10,000 places available in January, which opportunistic first-home buyers snapped up in a matter of days – and the second round of government support starts this week. With so much government support around, at both the federal and state levels, it’s a very good time to be a first-home buyer. And of course the low level of interest rates makes it even better.   The weekly auction figures continue to show a market that turning over steadily, without really surging, which is what I would expect in the current climate. Last week there were 1,424 homes scheduled for auction and there was a preliminary clearance rate of 65%.  This was the highest number of auctions held in nine weeks, demonstrating an ongoing improvement in seller confidence as auction clearance rates hold reasonably firm under the increasingly higher volumes.   In comparison, the previous week saw 1,251 homes taken to auction returning a preliminary clearance rate of 66%, which later revised down to 60% in the final figures.  This time last year saw 1,295 homes taken to auction across the capital cities and a clearance rate of 63% was recorded. So the current results are fairly comparable to a year ago, despite the impacts of the current Covid-19 period.   BRISBANE’S residential market is weathering the coronavirus storm fairly well, flying in the face of fears house prices would plummet, according to new research. The latest Real Estate Institute of Queensland quarterly market monitor reveals the median house price for the Brisbane local government area has risen 1.5% in annual terms, to $690,000, while unit prices have increased 1.2% annually to $420,000. Twelve suburbs outperformed the overall market, achieving double-digit house-price growth over the 12 month period. Fig Tree Pocket was a standout — the median house price in this western suburb jumped 36%, followed by Milton at 35%, Windsor with 25% and Seven Hills with a 22% increase. In terms of median unit prices, Bulimba rose 22%, followed by 17% in Murrarie and 15% in Morningside – and all three of those locations are in the eastern suburbs of Brisbane.. REIQ chief executive Antonia Mercorella says Brisbane is on track to be one of the best-performing property markets in the country over the next few years. And it’s worth noting that the new figures published by SQM Research today show that Brisbane prices rose 0.8% for houses and 1% for units during June – and in annual terms Brisbane prices are up 4.5% for houses and 2% for units.   And, for the final word today, here’s some news from two major businesses which have been booming during the pandemic, not despite Covid-19 but because of it.   Amazon is plotting a major expansion of its Australian business with plans to build one of the country's biggest warehouses in Western Sydney and a search is also under way for a giant shed in Melbourne. The local expansion plans come on the back of surging online sales due to COVID-19. Amazon's entry into the Australian market three years ago has been described as “underwhelming”, but the retailer is slowly but surely taking market share with its most recently filed accounts showing an almost doubling of revenues from its Australian business in 2019. Meanwhile, Atlassian has outlined the design for its new $1 billion-plus headquarters, which reportedly will be the world's tallest hybrid timber building to date. The locally based, Nasdaq-listed software company has confirmed plans for its 180-metre, 40-storey Sydney office tower next to Sydney's Central Station.  It will be the flagship project in a NSW government-backed technology precinct that will eventually link Ultimo with Redfern on the CBD's southern edge. It will sit next to the $2.5 billion Central Place Sydney project, a twin tower development by Dexus and Frasers Property Australia. Atlassian will be the major tenant, with 4000 staff in the tower. That’s it for now in terms of the positive events in the economy and the real estate market. And, before I go, a reminder that we published today the new 2020-21 FY edition of our most popular report, the National Top 10 Best Buys report. As a special offer to mark the end of old FY and the beginning of the new one, we are offering the report at half the normal price. And you can check it out on the new hotspotting.com.au website which we launched last week. Bye for now.

Strong gains in large technology companies a led a relatively modest rebound on US equity markets in what was another choppy session - Dow up +188-points or +0.95% to settle back above 20,000. The index had earlier declined as much as -721 points or over >3%. The broader S&P500 gained +0.47% . Shares of rental-car companies rebounded, with Hertz Global Holdings Inc up +22.8% a day after slumping 39.6% to a record low after Moody's Investors Service downgraded Hertz's credit to B3, which is six notches deep into speculative, or "junk" territory, from B2, as the outlook was revised to negative from stable. Avis Budget Group Inc gained +24.4%. Bed Bath & Beyond Inc rose +17.32% despite announcing that it would temporarily close more than half of its stores in the U.S. and Canada to help reduce the spread of COVID-19. The company will continue to operate stores which sell essential products for health care, personal care, infant care, cleaning supplies, and food and beverages. Department store operator Kohl's Corp fell -5.01% in extended trading (after gaining +10.2% in the regular session) after announcing it is closing all of its more than 1,100 retail stores in the U.S. later today AEST because of the coronavirus pandemic and the stores will be closed at least until 1 April. The technology-centric NASDAQ rose +2.30%. Netflix and Facebook rose 5.3% and 4.2%, respectively. Amazon gained 2.8%. Dick’s Sporting Goods Inc rose +12.4% despite disclosing in a filing that foot traffic has plummeted, and noted it would close stores for the next two weeks. The stock has lost ~50% over the past 12-months.

John Rogers, senior vice president at Moody's Investors Service, joins the podcast to discuss Moody's view on chemicals and credit markets in 2020.

South Africa could move deeper into junk territory as the nation looks set to lose the only stable outlook on its credit ratings this week. Of the 22 economists in a Bloomberg survey, 16 expect S&P Global Ratings to change its outlook on the country's credit rating to negative on Friday. That means the next move from the company, which already assesses South Africa's foreign-currency debt at two levels below investment grade, could be a further downgrade. This follows after Moody's Investors Service, which still assesses South Africa as investment grade, changed the outlook on its rating to negative two weeks ago after Finance Minister Tito Mboweni described a rapidly deteriorating fiscal outlook due to billions of dollars in bailouts for cash-strapped power producer Eskom in his medium-term budget statement. S&P warned in its most recent assessment in May that continued fiscal deterioration, structurally weaker economic performance and mounting external financing pressures could prompt it to lower the nation's credit assessment. --- Support this podcast: https://anchor.fm/newscast-africa/support Learn more about your ad choices. Visit megaphone.fm/adchoices

Buying in select blue-chip counters such as HDFC Bank, HUL, ITC and Maruti lifted benchmark indices on Tuesday. Positive global cues, too, boosted investor sentiment.  The S&P BSE Sensex rallied 292 points or 0.76 per cent to end at 38,506.09 levels while the NSE's Nifty50 index closed above the crucial 11,400-mark at 11,428.30, up 87 points or 0.77 per cent. Out of 30 components of the Sensex, 27 ended in the green and only 3 in the red. Vedanta (up 4 per cent) emerged as the biggest gainer on the index and Bharti Airtel was the top drag.  In the broader market, the S&P BSE MidCap index closed at 13,940.15 levels, up 99 points or 0.72 per cent while the S&P BSE SmallCap index ended at 12,773.61, down 14 points or 0.11 per cent. Among the sectoral indices on the NSE, barring Nifty IT index, all the other indices ended in the green. Auto stocks advanced the most, followed by metal and private bank counters. The Nifty Auto index ended over 2 per cent higher at 7,688.25 levels.  Volatility index India VIX declined 3.67 per cent to 16.79 levels. Buzzing Stocks Shares of Indiabulls Housing Finance (IBHFL) dipped 8 per cent to Rs 182 on the BSE on Tuesday, falling 13 per cent in the past two trading days, after Moody's Investors Service on Monday downgraded the corporate family rating (CFR) and the foreign-currency senior secured rating of the housing finance company to B2 from Ba2, citing funding challenges for the company. Shares of Bandhan Bank and Gruh Finance rallied by up to 9 per cent on the BSE on Tuesday ahead of record date for scheme of amalgamation. Shares of Gruh Finance will turn ex-date on Wednesday for the proposed amalgamation with Bandhan Bank. The share swap ratio for the amalgamation was fixed at 568 shares of Bandhan Bank for every 1,000 shares of Gruh Finance. Shares of Adani Transmission surged 14 per cent to Rs 255 on the BSE on Tuesday after the company said it has signed a share purchase agreement and completed the acquisition of the WRSS XXI (A) Transco Limited, incorporated by REC Transmission Projects Company. The stock was trading close to its 52-week high level of Rs 256, touched on November 28, 2018. Earnings Wipro on Tuesday posted a 35.1 per cent year-on-year (YoY) jump in its net profit at Rs 2,550 crore for the second quarter of the financial year 2019-20 (FY20). Gross revenue for the period came in at Rs 15,130 crore, up 4 per cent YoY. Earnings per share (EPS) for the quarter was Rs 4.3 per share and grew 36.7 per cent YoY, the company said in its statement.

En Oppenheimer Presenta hablamos con el canciller de Colombia, Carlos Holmes Trujillo, sobre la disputa entre Colombia y Venezuela tras el rearme de una facción disidente de las FARC, presuntamente estacionada en territorio venezolano. Y lo analizamos con Frank Mora, exsubsecretario adjunto de Defensa de EE.UU. para el Hemisferio Occidental. Conversamos con Ariane Ortiz-Bollin, vicepresidenta de riesgo de Moody's Investors Service, sobre el anuncio de la agencia podría rebajar la calificación soberana de México por su desempeño económico. Y finalmente, hablamos con José Miguel Vivanco, director de Human Rights Watch para las Américas, quien acaba de hablar sobre Venezuela y Nicaragua ante el Consejo de Derechos Humanos en la ONU en Ginebra.

Markets are likely to see a positive start on Wednesday as trends on SGX Nifty suggest a firm opening for domestic indices. Hopes of diminishing US-China tensions and reduced risk of no-deal Brexit prompted investors in Asia to take profit in risk-off trade ahead of key central bank policy meetings. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.10% while Japan's Nikkei was trading 0.6% higher during the early trade on Wednesday. On Wall Street, the S&P 500 ended little changed as a rally in energy and industrial shares countered a drop in the technology and real-estate sectors. The Dow Jones Industrial Average rose 0.28%, the S&P 500 gained 0.03%, and the Nasdaq Composite dropped 0.04% during the overnight trade on Tuesday. Besides, market participants are expected to track stock-specific action, oil price movement, and the Rupee's trajectory, and investment by FIIs and DIIs to steer through the day.   In the commodities market, oil prices inched towards $63 per barrel mark, their highest levels in six weeks, after an industry report showed that US crude stockpiles fell by more than twice the amount that analysts had forecast. Investors, therefore, shouldn't lose sight of paint, OMCs, and tyre manufacturing companies. Back home, the S&P BSE Sensex ended Monday's session 0.44% higher at 37,145, and the Nifty50 index settled at 11,003, up 0.52%. Top headlines for the day, and stocks that are likely to remain in focus--   >> Finance Minister Nirmala Sitharaman on Tuesday said the government was conscious that it needed to respond to the demands of the automobile industry. >> YES Bank will be in focus in today's session after reports suggested that Rana Kapoor, the bank's co-founder, was in talks with One97 Communications, owner of Paytm, to sell his stake in the private sector lender. >> The year-long liquidity pain in the NBFC sector is set to linger on through the rest of the fiscal year owing to the deepening slump in the overall economy, an India-Ratings and Research report said. >> The Reserve Bank of India mandating banks to link certain loans to the external benchmark-based interest rate from October 1 is credit negative to the lenders as it will limit their flexibility in managing risks, Moody's Investors Service said on Tuesday Here is a stock recommendation by Anand Rathi Shares and Stock Brokers -- The brokerage recommends BUYING ITC at current market price, for the target of Rs 259. The stop loss is at Rs 240.

In addition to enjoying the holidays, December is a good time to pause and take stock of the past year. This also is an opportune time to get out the crystal ball to contemplate what might happen in 2019. 2018: The Year in Review There were a number of very nice gifts under the tree this year, but also a lot of lumps of coal. In 2018, we saw four big themes: marketplace dynamics; Washington follies; higher ed governance failures (which includes higher ed’s version of #MeToo); and the Harvard admissions lawsuit. Marketplace Dynamics: The Maturing and Decline of Higher Ed Markets In our previous blog and podcast on M&A activity in higher ed, we discussed the product life cycle and where higher ed stands in relation to this concept.  To briefly recap, the product life cycle (PLC) is a marketing tool that is applied to products, but also is relevant when examining market segments or industries. The PLC is made up of four stages: The introduction stage, which is characterized by the organization building brand awareness; The growth stage, which is characterized by strong growth as the organization builds brand preference and increases market share; The maturity stage, which is characterized by diminishing growth as “competition” increases and competitors offer similar “products.” This results in the implementation of multiple marketing strategies, such as cutting prices, rethinking positioning and branding, and market consolidation; and The decline stage, which is characterized by a decline in sales (which may be potentially significant). In many cases, the product (or organization) goes out of business or, as a last result, finds a buyer (leading to a merger or acquisition). Higher ed finds itself straddling the stages of maturity and decline, which is characterized by decreasing enrollment, lack of differentiation in the higher ed marketplace, and an increase in market consolidation and/or college closings. Which brings us to now. Breaking Down the Numbers.  Over the last few years (2016-2018), more than 100 colleges haves closed. Many can be directly attributed to the decertification of ACICS by the Obama administration. However, the more relevant reason for many of these closures is the lifecycle and current operating environment of higher education.  Over the past few years, 65 for-profits closed and seven merged with other institutions. Some of those mergers were huge (Purdue acquiring Kaplan, Strayer acquiring Capella, National University System acquiring Northcentral). In addition, 14 nonprofit universities closed and five merged while 36 public institutions merged or consolidated. This merger and acquisition activity makes perfect sense given that higher education is in the maturing to declining portions of the lifecycle. Transfer Students and Reducing Costs. We’ve also seen community colleges assume more of a role in reducing the costs of higher ed, as well as in degree completion.  State (and other) colleges are beginning to put more emphasis on attracting transfer students.  For example, Gov. Jerry Brown (D-Cal) is withholding $50 million from the University of California system until the system increases the acceptance and enrollment of transfer students while also meeting auditor requests to fix accounting issues. Brown’s decision was based on his commitment to a 2-to-1 ratio of freshmen to transfer students. However, several system’s institutions reported a ratio closer to 4-to-1. Privates are also emphasizing outreach to transfer students due to the costs to both the institution and the students.  Some privates are renting space at community college, thus giving students an easily available and direct track to a four-year degree.   This makes a lot of sense, especially given the current high cost of private education (e.g., one California private is charging $55,000 a year for undergraduate programs, amounts we see at Ivy League schools).  Thus, students find more affordable options by first attending a community college and then transferring to a public or private institution. This approach reduces the amount of student loans needed to complete a degree. This type of approach is especially important with students who start college without a clear idea of what they want to study or their pathway to earning their degree and end up dropping out due to cost.  This accounts for why we are seeing so many post-traditional students in higher education; they initially started college without understanding what they wanted to study and now are returning to complete their degrees. Having this community college low-cost option that transfers coursework to four-year colleges and university makes good sense because it minimizes the student’s time to completion and cost. College Closures and Rejuvenation. We continue to see higher education closures. While higher education leaders may point to the resurrection of Sweet Briar, those types of reemergence are few and far between.    Sweet Briar was an interesting case. Although the school had a substantial endowment (unlike most schools), those funds were legally earmarked for specific things and could not be used for operating funds.  This is an interesting (and possibly unique) situation and will make a great case study for future grad students who want to study the process of bringing a school back from the dead. Department of Education and Washington The second theme for 2018 is all about Washington, D.C. Frankly, there are so many things, it’s hard to know where to start. ACICS. ACICS is (in)famous for its accreditation of Corinthian and ITT, both of which folded, leaving 100s of 1000s of students stranded. Not surprisingly, ACICS was decertified by the Obama administration in 2016. At its height, ACICS accredited 200+ universities, but in the time between 2016 (when ACICS lost its accreditation) and now, most of the institutions accredited by ACICS have moved to other accrediting bodies.    However, the Trump Administration has other ideas on accreditation. Secretary of Education Betsy DeVos reinstated ACICS’ accreditation authority this year in a process that had many missteps. However, the most egregious was that the department’s senior official who made the case for ACICS’ reinstatement is a former lobbyist who worked with for-profit universities, a clear conflict of interest. In her justification for reinstatement, the former lobbyist, Diane Auer Jones, said the Department of Education determined that ACICS was in compliance on 19 of the 21 applicable criteria. Equally as important, she stated that ACICS was likely in compliance with these criteria when President Obama’s Education Secretary John King, Jr. removed ACICS’ accreditation certification. According to the Education Department, ACICS is still “out of compliance” with federal standards in the remaining two areas but has been given another 12 months to come back into compliance.  The carnage from ACICS’ original accreditation still continues. Just this month, the Education Corporation of America (ECA), which was once accredited by ACICS and oversaw Virginia College, shuttered its doors, leaving 20,000 students up a creek without a paddle. In fairness to ACICS, they removed Virginia College’s accreditation, but only after the college attempted to get accreditation from another accreditor and failed miserably. Gainful Employment and Borrower Defense. Changes in gainful employment and borrower defense also emerged in 2018. In relation to the former, the Education Department missed the filing deadline for the gainful employment rule so these changes cannot come into play until mid-2020. Furthermore, the Social Security Administration -- which provides the earnings data needed to calculate gainful employment -- decided not to renew the information-sharing agreement that expired in May. Because of this, the Education Department will not have the data they need to calculate earnings data. So, in essence, gainful employment is dead for now. Borrower defense is another area on which Washington gets raspberries. Regulations put in place by the Obama administration protected students whose colleges (e.g., Corinthian and ITT) closed, leaving them with degrees that were considered worthless. However, the Ed Department under Secretary DeVos rejected the vast majority of the claims. It took Congressional pressure to turn the process around, and although the process has gotten better, it still not where it needs to be. I think we can expect to see some new regulations coming out of Washington over the next year in this area. Title IX and Sexual Abuse. The Education Department put out their draft ruling on new Title IX guidance in November and, overall, colleges are not happy. The revisions make major changes to the standard that, in many cases, are as clear as mud and/or will discourage victims from coming forward. New Title IX Guidance. The first of the changes narrows the definition of sexual assault. The old standard was “unwelcome conduct of a sexual nature,” and the new standard is “unwelcome sexual conduct; or unwelcome conduct on the basis of sex that is so severe, pervasive, and objectively offensive that it effectively denies a person equal access to the recipient’s education program or activity.” The Ed Department justified this by saying it is in line with the Supreme Court guidance, but survivors’ advocates have come out forcefully and said that this new definition will put survivors’ education at risk. The second major change is the standard by which sexual assault is adjudicated. Previously, the standard was that the assault was “likely to have happened.” However, the new guidance provides for a higher standard, i.e., “preponderance of evidence,” the same standard that is used in civil suits. This is lower than “beyond a reasonable doubt,” the standard which is used in criminal trials, but it still creates a higher burden on the victim to prove that the incident happened. In its guidance, the Ed Dept stated that institutions can use either standard, but this potentially opens the institution up to lawsuits, e.g., institutions may face a lawsuit by the accused if they use the lower standard or the victim if the institution uses the higher standard. The third major change has to do with holding universities responsible. Under the previous guidance, universities and colleges could be held responsible if they “knew about or reasonably should have known” about an incident. However, under the new guidelines, the institution must have “actual knowledge” of the incident in order to be held responsible; this requires the victim to make a formal complaint through official channels. Telling a professor or resident adviser isn’t sufficient – it must be reported to someone who can do something about it, such as a school official who is involved in enforcement. Additionally, schools can only be held responsible for incidents that happen on school property or at school-sponsored events, not at private, off-campus residences. Thus, if a fraternity house is located off-campus and an assault takes place there (as was the allegation in the Judge Kavanaugh – Christine Blasey Ford incident), the institution cannot be held liable, even if they have knowledge that these events have taken place in the past. Lastly, the accused will have the chance to cross-examine the victim under the new guidance, and many feel this will discourage victims from coming forward and reporting incidents. Whenever you get into sexual assault or similar types of accusations, the resolution process must be more than he said/she said. However, that is what it could come down to because of the cross-examination requirement. Many victims’ advocates and lawyers are concerned that we will revert to a previous time when a woman who accused a man of sexual assault would ultimately be the one on trial because of her dress or behaviors or whatever. MSU and Sexual Assault / Harassment in Education. A subset of this area brings to light the #MeToo movement in higher ed, especially in the aftermath of the Supreme Court hearings with Justice Kavanaugh.  It took a tremendous amount of courage for Christine Blasey Ford to bring up what happened to her after so many years and in such a public venue. Sadly, look at what ultimately happened – the good ol’ boys network derailed the investigation before it was able to go through to a conclusion. We also are seeing the fallout from the Michigan State sexual assault case. MSU’s former president has been brought up on felony charges for lying to the police, and the institution’s undergraduate applications have fallen by almost 8.5 percent in the wake of the scandal. Not only is this situation tarnishing MSU’s reputation, it is hitting them in the pocketbook. And maybe that's what has to happen for people to change. Higher Ed Governance Failures and the Role of the Board We are seeing a failure in the governance process in many higher ed schools. Three cases fall into this area at the following institutions: Penn State, Michigan State, and the University of Maryland. We must ask ourselves in all these situations, “Where were the Board of Directors/Regents/Trustees?” In the Penn State scandal, some Regents were brought up on criminal charges. We haven't seen that yet in the Michigan State scandal, but I believe we will.  MSU’s interim president has not done a great job in reaching out to the victims – it has been pretty nasty in many respects, but one must ask where are their Board of Regents? Same with the University of Maryland football coach after the player died – the board directed the university president to retain the football coach, but the president refused (rightly so). From all appearances, the majority of boards and Regents do not understand what their role is. Regents at state schools generally are political appointees, and it is considered to be a feather in one’s cap to be appointed to a Board of Regents/Trustees for a state university.  However, just because one is a political appointee to a board doesn’t remove their fiduciary duties as a board member.  More training needs to be done to ensure Regents understand their duties as well as how governance has changed over the years. This also goes for boards of private universities. The vast majority of these types of higher ed boards are made up of “friends of the president” or other large donors. This is especially egregious with many Christian colleges, whose boards are made up of religious affiliates or ecumenical personnel who have no experience sitting on the board of a multimillion-dollar organization and/or an understanding of higher ed. Fallout from the Harvard Admissions Lawsuit The Harvard lawsuit, in which a group of Asian Americans sued the university over its admissions policies, ultimately will impact a majority of higher ed institutions. Even though Harvard says that they are following the guidance from the Supreme Court, they get sued. Same with UCLA – they have been sued as well. Although a ruling is still forthcoming on the Harvard case, I think there will be ripple effects and we haven’t seen the end of this. Predictions for 2019 While much of the crystal ball’s foretelling for 2019 is cloudy, there are some clear indications of what lies in the future. An Acceleration of Consolidation and Closures First, we will see an acceleration of consolidations and closures in higher ed. For example, just in the last couple weeks, Moody's Investors Service and Fitch ratings both have declared a negative outlook for the higher ed sector for 2019. This is huge. We have a marketplace that is saturated. In these types of markets, smarter institutions focus on economies of scale (mergers), as well as positioning and differentiation (why is my university and/or degree different)? Carnegie Mellon and MIT have done this very well. This is one way to combat saturation, but not a lot of schools understand marketing positioning and differentiation. Consolidation (mergers) occurs for one of three reasons. Acquisition of a new technology; Market expansion and/or growth; or Eliminate competition and/or create market efficiencies. Consolidation will continue to accelerate. One need not look any further than what is happening with Pennsylvania’s 21 state universities. These institutions are vying for a smaller number of students graduating from high school, so are closing multiple campuses and realigning programs to eliminate duplication. This impacts the towns in which they are located since they are the major employers, and any change they make in consolidating degrees and/or reorganizing the system affects jobs, creating a ripple effect. Closures will also increase, but we think there will be far more consolidation rather than outright closings. The trend will continue toward the mega universities -- the merger of Strayer and Capella or Purdue and Kaplan -- or more shared services between universities. We will start to see far more of this with the privates as they struggle to survive. The biggest challenge is going to be for the smaller universities that don’t have strong endowments. What are they going to do? Most of these universities rely solely on tuition and/or state and federal funding to keep their doors open. They have limited research dollars coming in as compared to the Tier 1/R1 institutions. Right now, the closure rate is below 1%, but it will accelerate. The one wildcard in this is a potential recession, which could result in people going back to school to gain new skills and earn a different degree. Maybe that will help universities. The other trend that we have not talked about is how many people are disparaging higher ed, saying a college degree is not worth the money that you pay for it. This is going to hurt higher ed and its ability to bring in more students. This too may lead to more mergers and closures. Changing the Higher Ed Business Model The business model for higher ed must change. We don’t see rapid transformational change in the next year. However, there will be many changes in the next five years that people will realize was part of a changing higher ed landscape as they look in the rearview mirror. Neg Reg 2019 and its Implications.  The upcoming negotiated rulemaking process by the Ed Department focusing on accreditation and innovation could be very impactful, especially with its focus on credit hours and online education. Credit Hours. Moving away from credit hours as a measure of learning could be one of those breakthrough transformations that could spur the changing of higher ed’s business model. Once the Ed Department makes these changes, we will begin to see more institutions using CBE and giving credit for previous learning and life experiences. If you take a look at the three colleges that have done very well using these models (Western Governors who is the poster child for CBE, Capella, and Southern New Hampshire), they have seen tremendous growth while reducing the cost to students. This is a win-win and I think we’ll see more of this.  Online Education.  Although online education is an area that is beginning to get saturated because of for-profits, we will see far more privates and state schools moving into this area, as well as continued consolidations with online providers (OPMs), such as Learning House. Because so many OPMs exist, some of the smaller colleges will be able to expand into this area at a reasonably low-cost investment, and more for-profits will be acquisition targets. We will start seeing institutions embrace the opportunity to share online courses. This too will require changes from the Neg Reg process with respect to accreditation, but once these types of changes come out, we will start seeing sharing of courses and services as we have not seen in the education industry. Negotiations with Faculty. We will begin to see higher ed leaders toughen their stance with faculty. Market saturation with institutions and programs has resulted in price discounting, sometimes at a rate of more than 60%. This is not sustainable. According to Inside Higher Ed’s 2018 Annual Survey of Chief Business Officers (CFOs), 48% of respondents strongly agree or agree that their college tuition discount rate is unsustainable. This is up from 34% in 2017. Furthermore, two-thirds of CFOs at the privates say the same thing. This is huge. Institutions must start cutting programs that are not “profitable,” but in doing this, they must deal with faculty. Unfortunately, faculty look at programmatic cuts through the lens of job security instead of what graduates need to be attractive in the job market.  When faculty start to do this, there will be security and jobs for nearly all.  Faculty Promotion and Tenure. We will start seeing changes in how faculty are promoted and assessed.  Currently, faculty are promoted and assessed by their publication records. Going forward, we’ll see less reliance on citations and publications and more on teaching. Additionally, faculty hiring and tenure will change. We will start seeing a review of tenured faculty every 5 to 10 years, instead of having a job for life. I don’t see tenure going away anytime soon – it is too institutionalized – but employment for life will become a thing of the past in five years. Knowing Who Your Customers Are and What They Need. Many higher ed leaders have locked themselves in the ivory tower for too long, and it's time they understood what students need to be taught and what industry needs to be successful. Texas A&M is another really good example of this. They talk with stakeholder groups on a regular basis, including just completing a values survey. The institutional leaders currently are engaging in what they call Aggie 2030 to understand the future of higher education as a whole and where Texas A&M is going. This is the type of strategic planning that universities need to be doing with their alumni, stakeholders and the people who hire their graduates. Student Enrollment and Impact on Marketing Research and Spending. Another trend involves students making enrollment decisions based on their own proximity to a college. This is important for universities to realize and understand. Unless you are a R1 or major university, your students are more than likely going to come from a limited geographical pool. This has implications as to how and where you spend marketing dollars, but unfortunately, many institutions are wasting marketing dollars. As much as institutions would like to draw from a larger geographical area, institutions must put a greater emphasis on doing market research to understand where their students live and then spend the marketing dollars to get more students from that area. As the saying goes, fish where the fish are, because it's a waste of money otherwise. Harvard Lawsuit and Admissions. The Harvard lawsuit has the potential going all the way to the Supreme Court, and who knows how that will be decided with the current makeup of the Court. Cost Containment. We also will start to see far more cost containment as institutions no longer have the same level of disposable income. I think we will also start seeing the salaries of chief executives start to come down, especially as transparency hits the budgeting process. Higher Ed Funding. Cities and states will begin to fund college for students. The City of Chicago recently announced a new program where students will receive scholarships to cover costs of associate degrees that will be set up through DePaul University. And in another example, Starbucks is funding college for their people. We will start to see more of this as an employee benefit, but also as a way for businesses to invest in and retain quality employees. International Students. International students attending U.S. universities will continue to be an issue so long as the Trump administration continues to mess with immigration. This will continue to impact U.S. institutions as international students pay full tuition and universities use those funds to keep their bottom lines in the green. This is especially true with Chinese students.  Because of trade wars and increased emphasis on background checks, we will see fewer Chinese students enrolling in the nation’s higher education institutions. HBCUs.  I think the other one to look at HBCUs. I think there could be some really good things to come out of the HBCUs over the next few years. I've no idea what it is, but the crystal ball says to keep an eye on them.    Wrapping Up So long as the Trump administration is in office, we will continue to see turbulence coming out of the Department of Education and the rest of the government.  One thing is for sure: it will not be boring! Merry Christmas / happy Hanukkah, and wishing all the very best for 2019. Bullet Points Looking Back – The Highlights from 2018 Higher ed finds itself in the maturity to declining stages as characterized by declining enrollments, lack of differentiation in the higher ed marketplace, and an increase in market consolidation (M&A activity) and/or college closings. Over the last few years, 2016-2018, more than 100 colleges haves closed. Many can be directly attributed to ACICS being decertified by the Obama administration, but more relevant is where education is in the lifecycle and current operating environment.  State (and other) colleges are beginning to put more of an emphasis on attracting transfer students.  Privates are also getting into this space due to costs to both them and their students.  Some privates are co-locating at community colleges, renting space from them, and this gives their students a direct track to a four-year degree.    ACICS was decertified by the Obama administration in 2016, but Secretary DeVos reinstated its accreditation authority this year. There were many missteps with this whole process, but the most egregious of these was because of a conflict of interest (or appearance thereof) of the department senior official who made the case for ACICS’ reinstatement. Gainful employment is essentially dead for two reasons: The Education Department missed the filing deadline for the gainful employment rule so the changes that they want to make to gainful employment cannot come into play until mid-2020. Because of an inter-agency dispute over data sharing, the Ed Dept cannot get the data it needs to calculate gainful employment, thus essentially killing gainful employment. The Ed Department in November put out their draft ruling on new Title IX guidance. Overall, colleges and victims’ advocates are not happy with the changes. There are four major changes: The narrowing of the definition of sexual assault. Suggesting a higher standard for adjudication be used, i.e., “preponderance of evidence,” the same standard that is used in civil suits. Lessening the culpability of institutions and narrowing the reporting requirements. Giving the accused the right to cross-examine the victim. There is a failure in the governance process in many higher ed schools as exemplified by the Michigan State University sexual abuse scandal, and the death of a University of Maryland football player and the retaining of the football coach. More training needs to be done to ensure Regents understand their duties, and how governance has changed over the years. Looking Forward – Predictions for 2019 We will see an acceleration of mergers, consolidations and closures in higher ed. The 2019 Neg Reg process will begin a transformation of higher ed and its business model. Online education will continue its growth over the next 2-3 years. Much of this will be spurred by consolidation and strategic alliances with online providers. We will begin to see faculty promotion and tenure processes changing as a result of the need for universities to cull programs that are not financially viable. Market research will increasingly take root in higher ed, as institutions need to make smarter use of their marketing dollars by determining where their true prospective students are. Cost containment will continue to accelerate in higher ed, especially in privates where discounting has been the norm. This will find its way to the C suite and we will start to see a reduction of presidential salaries, especially at privates. We will start seeing more “interesting” ways for education to be funded. Part of this will come out of the Neg Reg process, but more city, state, and private entities will invest in their residents’ and employees’ futures. Links to Articles, Apps, or websites mentioned during the interview: Product Lifecycle: http://www.quickmba.com/marketing/product/lifecycle/ National University System: https://nu.edu Department of Education: https://www.ed.gov/ Neg Reg 2019 Process: www2.ed.gov/policy/highered/reg/hearulemaking/2018/index.html Your Social Media Links: LinkedIn: https://www.linkedin.com/in/drdrumm/ Twitter: @thechangeldr Email: podcast@changinghighered.com

Lori Marks, a senior credit officer at Moody's Investors Service, Inc., was a guest on Nareit’s REIT Report podcast, recorded in San Francisco during Nareit’s REITworld: 2018 Annual Conference. Marks said overall credit conditions for REITs are “stable, as real estate fundamentals remain solid and REITs maintain healthy balance sheets.” Growth is slowing for many property types, she said, with REITs expected to generate low single digit net operating income (NOI) growth next year. Moody’s expects REITs to maintain discipline as they seek investment opportunities, Marks said. “REITs are still able to issue unsecured debt at attractive, albeit higher, interest rates, and are also enjoying access to private capital as institutional demand for real estate remains strong,” she noted.

Sarah Carlson, a senior vice president at Moody's Investors Service, discusses the White House budget proposal and the direction of the U.S. credit profile. Bloomberg's Meenal Vamburkar talks about Trump's decision to grant a U.S. permit to Transcanada for its Keystone XL pipeline. Joel Levington, a senior credit analyst at Bloomberg Intelligence, discusses BI's activist audit model, which helps signal companies that may be exposed to rising credit risk. Finally, Frank Holmes, CEO and CIO of U.S. Global Investors, explains to Pimm Fox and Lisa Abramowicz why he still likes airlines.

Speakers: William Bennett, Former U.S. Secretary of Education; Author, "Is College Worth It?" Steven Knapp, President, The George Washington University Daphne Koller, Co-Founder, Coursera Inc. Patricia McWade, Dean of Student Financial Services, Georgetown University Anthony Miller, Deputy Secretary and Chief Operating Officer, U.S. Department of Education Moderator: John Nelson, Managing Director, Public Finance Group, Moody's Investors Service. Student debt surpassed the $1 trillion mark in 2012 and now is the second-largest category of household debt behind mortgages. Default rates exceed those of credit cards, and college tuition and fees have been rising even faster than health care costs. At the same time, employers are seeing a mismatch between their needs and the qualifications of those in the labor pool. This incongruity threatens to derail productivity and economic growth, raising serious questions about national competitiveness. Given this backdrop, how can the American higher education model fulfill the learning, affordability and job-preparation needs of students? What role can colleges and universities, online technology and government play in setting higher education on the best possible course?

U.S. manufacturing expanded in November as new orders and production improved, but the pace of growth was a touch weaker than the prior month. The Institute for Supply Management reported that its manufacturing index registered 50.8 last month, down from 50.9 in October. If you've got a 7% adjustable mortgage that's about to skyrocket past 10%, getting a break may get a lot easier. One solution to the foreclosure problem gaining traction would freeze rates at lower levels. The Hope Now Alliance, coalition of lenders, servicers, investors and community groups, put together by the Treasury Department, is working on a version of a freeze that could be announced later this week. Lennar Corp. (LEN) has sold a property portfolio to a new venture mostly owned by an affiliate Morgan Stanley (MS) for $525 million. As part of the deal, Lennar sold the entity about 11,000 home sites. The properties had a book value of about $1.3 billion.Oil prices fell about $1 a barrel in a volatile market on speculation that OPEC may still boost output at this week?s meeting.Lehman Brothers (LEH) said it plans to re-brand its Australian business, Grange Securities, to Lehman Brothers Australia as it seeks to build its brand name in the fast-growing region. It will also rename its Grange Asset Management arm Lehman Brothers Asset Management. In Forex News The yen rebounded from a two-week low against the dollar after Moody's Investors Service said it is preparing the biggest credit-rating cuts since subprime-mortgage defaults rocked financial markets. The yen rose versus all 16 most-traded currencies as investors retreated from carry trades and sold higher-yielding assets bought with loans from Japan. The yen also advanced as Bank of Japan Governor signaled interest rates may have to rise. At a time when everyone from billionaire investors such as Warren Buffett and Bill Gross to celebrities all want nothing to do with the dollar, a growing number of strategists say the stage is being set for a rally in 2008. The U.S. budget and trade deficits are narrowing in tandem for the first time since 1995, when the currency gained 8 percent as measured by the Federal Reserve's U.S. Trade Weighted Dollar Index. Scheduled Economic Reports (Tuesday)None ScheduledIn Earnings NewsMetLife (MET) forecast quarterly operating earnings per share between $1.40 and $1.45, up from $1.36 per share in the fourth quarter of 2006. Analysts expected $1.43 per share.UnitedHealth Group (UNH) said it expects 2007 profit between $3.49 and $3.50 per share.CH Energy Group (CHG) lowered its full-year earnings to the range of $2.50 to $2.70 a share. Scheduled Earnings Reports (Tuesday)AutoZone, Chico?s FAS, Layne Christensen, Payless ShoeSource, Sanderson Farms, PhotronicsStocks in the NewsActivision (ATVI) traded higher after Vivendi said it will buy control of the videogame giant and merge its own game division into ATVI.Jakks Pacific (JAKK) said the U.S. District Court for the Southern District of New York would dismiss a complaint filed against it by World Wrestling Entertainment Inc.Goodrich Petroleum (GDP) launched a public offering for 5.2 million shares.