David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Why would North Korea's Kim and Russia's Putin want to meet?

    This article from Al Jazerra may be of interest. Here is a section:

    “North Korea did not leave the Cold War; it still has that production, and it has ordinance of the same Soviet/Russian calibres copycats, so that can actually provide Russia with things that the Russian military needs on the front line,” Felgenhauer said.  

    Buying munitions from North Korea would be a violation of UN resolutions, which were supported by Russia, that ban all arms trading with the isolated country. But now that it faces international sanctions and export controls over its war in Ukraine, Russia has been seeking weapons from other sanctioned countries, such as North Korea and Iran.


    It’s unclear whether Russia would be willing to provide North Korea with advanced technologies related to nuclear weapons and ICBMs, Cha said. Russia has always tightly guarded its most important weapons technologies, even from key partners like China, he said.

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    China's #1 oil company says peak gasoline demand has already passed

    This article from NewAtlas may be of interest. Here is a section:

    So China's largest oil company Sinopec is already seeing a drop in demand, from which it doesn't expect to recover. Previous predictions placed peak demand somewhere in 2025, but at a conference in Zhengzhou in August, Bloomberg reported that one Zhou Yan, from Sinopec’s retail sales division, said EVs were already displacing some 15 million tons of Chinese oil product sales in 2023, and that the company is forecasting that 2024 and subsequent years will see declining demand.

    According to the International Energy Agency, Chinese demand accounted for more than 70% of global oil market growth in 2023, so while global oil product sales are at record highs of around 102.2 million barrels per day in 2023 (up around 2.2 million barrels per day over figures from 2022), and gasoline for passenger cars is only a percentage of total oil product demand, it'll be interesting to see how China's rapid EV uptake affects predictions for global peak oil demand.

    The IEA released its forecast in June, estimating that peak global oil use for transport will arrive around 2026, but strong demand from the petrochemical and aviation sectors would continue to support overall market growth, albeit at slower rates, at least as far out as 2028.

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    Huawei Chip Shows US Curbs Are Porous, Not Useless

    This article from Bloomberg may be of interest. Here is a section:

    It’s highly unlikely Chinese chipmakers can squeeze more out of old tools to get them beyond 5nm, which means they’ll be stuck while foreign rivals continue to advance. And if they do make further breakthroughs, the US and its allies have plenty of ways to tighten up their curbs, including broadening the scope of the equipment ban and adding materials to the list. 

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    Money, Politics Imperil Indonesia's $21.5 Billion Climate Deal

    This article from Bloomberg may be of interest. Here is a section:

    The initial promise of peaking Indonesia’s power sector emissions by 2030 at no more than 290 million tons of carbon dioxide, about 20% below a baseline level for the year, looks out of the question. An alternate scenario laid out in the draft plan would raise the target maximum to 395 MT of CO2, to account for the construction of new captive plants to serve growing industrial power needs.

    Officials have said they are aiming to have a revised—perhaps final—investment plan before COP28 begins in Dubai at the end of November, taking on public feedback. But to do that, they will need to come to agreement on at least three major, interrelated issues: the money, the emissions target and the mechanics of the coal phaseout, including changes to Indonesian laws and policies that hold back wider green progress.


    But there may not yet be enough in either bucket. There is just $289 million in grants, with half earmarked for technical assistance—funding for experts, consultants and advisors to model and support the energy transition. Almost all of the rest is loans, at interest rates to be determined later.

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    Lithium Giant Albemarle Nears $4.3 Billion Liontown Takeover

    This article from Bloomberg may be of interest. Here is a section:

    A deal would cement the stunning rise of the Australian lithium sector, where the share prices of newly founded and previously little-known companies have soared more than 10-fold amid surging demand for the metal. The race for lithium has mining heavyweights, battery manufacturers and automakers from Rio Tinto Plc to Tesla Inc. chasing deals with firms with even early stage or pre-production projects.

    Liontown, based in Perth, owns one of the most promising early-stage lithium projects in Australia, the world’s top exporter of the metal. It has supply agreements with major automakers including Tesla and Ford Motor Co.

    US-based Albemarle, which already owns stakes in lithium mines in Australia and has a processing plant there, offered to acquire all of Liontown’s equity at A$3 a share. That follows a bid of A$2.50 in March.

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    Eoin's personal portfolio: hedge short introduced in bond position September 1st

    Summers Says Job Report Is a Step Down Road to US Soft Landing

    This article may be of interest to subscribers. Here is a section: 

    Summers also reiterated his concern about the widening US fiscal deficit, and the need for Washington to wrestle with raising the government’s revenue over time. One reason why the economy has been so strong in the face of high interest rates has been a fiscal swing of “perhaps 3%” of gross domestic product this year compared with 2022, he said.

    Shutdown Warning

    “It would be helpful if we could get to more realistic views about the fact that we’re going to need more revenues,” he said. He also warned lawmakers against failing to enact annual appropriations bills that are needed to keep the federal government funded after the start of the new fiscal year on Oct. 1.

    A shutdown caused by an impasse over spending bills “doesn’t save any money, and further serves to disillusion people with Washington,” he said.

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    Mexico Peso Nears Worst Day Since March as Banxico Unwinds Hedge

    This article from Bloomberg may be of interest. Here is a section:

    Operating conditions in the exchange market “have returned to adequate levels” of liquidity and depth, Banxico said in the statement. “Credit institutions and other economic agents have the conditions to cover their risks related to the exchange rate directly in the exchange market.”

    The shift is “a clear sign that the peso might be too strong,” said Benito Berber, chief economist for the Americas at Natixis.

    Hedges will be rolled over once and for 50% of the current amount starting next month. For six-month operations, the term will be reduced to one month with the renewal only applying to 50% of amount. Operations with nine and 12-month terms will be left to expire.

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