Houston named a top 10 big city for ethnic diversity by new study

BAYOU CITY BRAGGING RIGHTS

A new study ranks Houston as the country's 10th most ethnically diverse large city. Getty Images

Houston prides itself on its diversity — and rightfully so. A new study ranks Houston as the country's 10th most ethnically diverse large city.

Among 501 U.S. cities, Houston also ranks 28th overall and first in Texas, according to the study, released February 11 by personal finance website WalletHub.

To come up its ranking, WalletHub measured three key indicators of ethnic diversity: language, ethnicity and race, and birthplace. Houston ranks 25th for language diversity, 36th for ethnic and racial diversity, and 244th for birthplace diversity.

This finding differs from a study by Rice University's Kinder Institute for Urban Research that found Houston was the most ethnically and racially diverse metro area in the U.S. as of 2010. Why the disparity? The WalletHub study looked at data for the city of Houston, while the Kinder Institute study examined data for the entire Houston metro area.

The new finding also differs from a broader WalletHub study published in April 2019. In that study, Houston was crowned the most diverse city in the U.S., based on socioeconomic, cultural, economic, household, and religious diversity. Ethnic diversity is only one component of that ranking.

"Houston is the most diverse city in the United States. But diversity alone is not enough — we must always strive to be more inclusive," Houston Mayor Sylvester Turner tweeted in December 2019. "As your mayor, I know that diversity and inclusivity are what makes us strong. And I will always work to build one complete Houston."

However you slice it, Houston leads the pack in Texas for ethnic and racial diversity. Here's how other major cities in the Lone Star State fare in the new WalletHub study:

  • Arlington, No. 38
  • Plano, No. 46
  • Dallas, No. 47
  • Fort Worth, No. 62
  • Austin, No. 73
  • San Antonio, No. 136

While Austin and cities in the Dallas-Fort Worth area don't rank particularly high in the WalletHub study, Austin and DFW do show up on a recent list of the country's most racially diverse metro areas.

DFW held the No. 11 spot in the Bloomberg news service's 2018 ranking of racial diversity among the 100 largest U.S. metros, while Austin stood at No. 19. Houston bested both of those areas, though, landing at No. 5.

Austin and Dallas didn't perform as well in a racial and ethnic index compiled by U.S. News & World Report.

The index shows the racial and ethnic diversity of Dallas actually slipped 3.4 percent from 2010 to 2018, with Austin's diversity declining by 0.10 percent. The decrease was 2.6 percent in San Antonio and 1.2 percent in Houston, the index shows.

The diversity picture was brighter in other Texas cities included in the U.S. New & World Report index, which measured racial and ethnic diversity in U.S. cities with at least 300,000 residents. Arlington saw its racial and ethnic diversity rise 3.6 percent from 2010 to 2018, with Fort Worth at 1.8 percent.

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This article originally ran on CultureMap.

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Rice research on bond and stock market differences, earnings variations

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At the end of every quarter, publicly traded companies announce their profits and losses in an earnings report. These updates provide insight into a company’s performance and, in theory, give investors and shareholders clarity on whether to buy, sell or hold. If earnings are good, the stock price may soar. If they’re down, the price might plunge.

However, the implications for the stock price may not be immediately clear to all investors. In the face of this uncertainty, sellers will ask for high prices, and buyers will offer low ones, creating a significant “bid-ask spread.” When this happens, it becomes more costly to trade, and the stock becomes less liquid.

This is a well-documented effect on equity stock markets. However, according to research by Stefan Huber (Rice Business), Chongho Kim (Seoul National University) and Edward M. Watts (Yale SOM), the corporate bond market responds differently to earnings news. This is because bond markets differ from stock markets in a significant way.

Stocks v. Bonds: What Happens When Earnings Are Announced?

Equities are usually traded on centralized exchanges (e.g., New York Stock Exchange). The exchange automatically queues up buyers and sellers according to the quote they’ve entered. Trades are executed electronically, and the parties involved are typically anonymous. A prospective buyer might purchase Microsoft shares from someone drawing down their 401(k) — or they could be buying from Bill Gates himself.

Corporate bond markets work differently. They are “over-the-counter” (OTC) markets, meaning a buyer or seller needs to find a counterparty to trade with. This involves getting quotes from and negotiating with potential counterparties. This is an inherent friction in bond trading that results in much higher costs of trading in the form of wider bid-ask spreads.

Here’s what Huber and his colleagues learned from the research: Earnings announcements prompt many investors to trade. And on OTC markets, potential buyers and sellers become easier to find and negotiate with.

A Stronger Bargaining Position for Bonds

According to Huber, “When earnings information comes out, a lot of people want to trade. In bond markets, that makes it much easier to find someone to trade with. The more options you have to trade, the stronger your bargaining position becomes, and the lower your trading costs go.”

He compares the process to shopping in a market with a flexible approach to pricing.

“Let's say you're at a farmers market and you want to buy an apple,” Huber says. “If there is only one seller, you buy the apple from that person. They can ask for whatever price they want. But if there are multiple sellers, you can ask around, and there is potential to get a better price. The price you get depends on the number of options you have in trading partners.”

What’s at Stake?

Although bonds receive less attention than equities, the stakes are high. There is about $10 trillion in outstanding corporate debt in the U.S., and more than $34 billion in average daily trading volume.

A detailed record of bond trades is available from the Financial Industry Regulatory Authority (FINRA), which requires that trades be reported via their Trade Reporting and Compliance Engine (TRACE).

The study from Huber and co-authors uses an enhanced version of TRACE to examine trades executed between 2002 and 2020. The team analyzed the thirty-day periods before and after earnings announcements to gather data about volume, bid-ask spreads and other measures of liquidity.

They find that, like on the stock market, there are more investors and broker-dealers trading bonds around earnings announcements. However, unlike on the stock market, transaction costs for bonds decrease by 6 to 7 percent in the form of bid-ask spreads.

What Sets This Research Apart?

“Taking a purely information asymmetry-based view would predict that what happens to stock liquidity would also happen to bonds,” Huber says. “A piece of information drops, and some people are better able to work with it, so others price protect, and bid-ask spreads and the cost of trading go up.”

“But if you consider the search and bargaining frictions in bond markets, you get a more nuanced picture. While information asymmetry increases, like it does on stock markets, the information prompts more investors into bond trading, which makes it easier to find counterparties and get better transaction prices. Consequently, bid-ask spreads go down. This search and bargaining friction does not really exist on equities exchanges. But we cannot ignore it in OTC markets.”

As corporate debt markets continue to grow in importance, it will become crucial for investors and regulators to understand the nuanced factors influencing their liquidity. This study provides a solid foundation for future research.

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This article originally ran on Rice Business Wisdom. For more, see “Earnings News and Over-the-Counter Markets.” Journal of Accounting Research 62.2 (2024): 701-35.

Houston e-commerce unicorn secures $130M in financing

scaling up

Houston-based Cart.com, which operates a multichannel commerce platform, has secured $105 million in debt refinancing from investment manager BlackRock.

The debt refinancing follows a recent $25 million series C extension round, bringing Cart.com’s series C total to $85 million. The scaleup’s valuation now stands at $1.2 billion, making it one of the few $1 billion-plus “unicorns” in the Houston area.

“Scaleup” refers to a startup that has achieved tremendous growth and has maintained a stable workforce, among other positive milestones. Airbnb, Peloton, and Uber are prime examples of businesses that evolved from startup to scaleup.

Cart.com says the new term loan facility from BlackRock consolidates its venture debt into one package “at competitive terms.” Those terms weren’t disclosed.

The company says the refinancing will enable it to expand into new markets and improve its technology, including its Constellation OMS order management system.

“Cart.com is one of the fastest-growing providers of commerce and logistics solutions today, and I’m excited to partner with BlackRock as we continue to aggressively invest to help our customers operate more efficiently,” Omair Tariq, the company’s founder and CEO, says in a news release.

Through a network of 14 fulfillment centers, Cart.com supports over 6,000 customers and 75 million orders per year.

"BlackRock is pleased to support Cart.com as it advances its mission to unify digital and physical commerce infrastructure," says Keon Reed, a director at BlackRock. “This latest facility underscores our confidence in the company’s differentiated product offerings and financial strategy as it enters its next stage of growth.”

Elon Musk says he's moving SpaceX, X headquarters from California to Texas

cha-cha-changes

Billionaire Elon Musk says he's moving the headquarters of SpaceX and social media company X to Texas from California.

Musk posted on X Tuesday that he plans on moving SpaceX from Hawthorne, California, to the company's rocket launch site dubbed Starbase in Texas. X will move to Austin from San Francisco.

He called a new law signed Monday by California Gov. Gavin Newsom that bars school districts from requiring staff to notify parents of their child’s gender identification change the “final straw.”

“I did make it clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children,” Musk wrote.

Tesla, where Musk is CEO, moved its corporate headquarters to Austin from Palo Alto, California in 2021.

Musk has also said that he has moved his residence from California to Texas, where there is no state personal income tax.

SpaceX builds and launches its massive Starship rockets from the southern tip of Texas at Boca Chica Beach, near the Mexican border at a site called Starbase. The company’s smaller Falcon 9 rockets take off from Cape Canaveral, Florida, and Southern California.

It’s just below South Padre Island, and about 20 miles from Brownsville.