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

    Amazon to Cut Prices at Whole Foods as Acquisition Closes

    This article by Mark Gurman and Matt Townsend for Bloomberg highlights the continued polarisation in the retail sector between those with a technological/low cost advantage and conventional stores. Here is a section:

    The company said it will begin slashing prices on a broad cross section of Whole Foods groceries Monday -- the same day the $13.7 billion deal is set to close. That will start with items such as chicken, eggs, some vegetables, and some types of organic fish. Amazon reeled off a long list of other plans to combine its leading e-commerce and delivery assets with the physical locations of Whole Foods stores.

    "This is a pretty impressive array of bold moves on the first day of an acquisition -- unprecedented, we would say," said Carol Levenson, an analyst at Gimme Credit.

    The moves by Amazon inflame an already raging price war in U.S. groceries -- a sector known for razor-thin profit margins.

    German discount grocers like Lidl and Aldi are expanding in the U.S. and Wal-Mart Stores Inc. has been investing in more discounts too. Low prices are familiar terrain for Amazon, which has operated with little profitability for more than a decade. Shares of grocery-store chains fell on the announcements.

    Kroger Co. declined as much as 2.4 percent while Sprouts Farmers Market Inc. sank 2.5 percent. Wal-Mart Stores Inc., which sells the most groceries in the U.S., also dropped 0.8 percent.

    Amazon will also begin selling Whole Foods branded products, including those that are part of the 365 brand, via its website, and through fast delivery services like AmazonFresh, PrimeNow, and Prime Pantry, the company said.

    Beyond price cuts and increased distribution, Amazon Prime will become Whole Foods’ customer rewards program, allowing shoppers to rack up Amazon rewards when they purchase pasture-raised eggs, organic milk and kombucha.

     

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    America Is on the Verge of Ratpocalypse

    This article by Emily Atkin for New Republic may be of interest to subscribers. Here is a section:

    It’s no surprise that rats thrive in cities, where humans provide an abundance of food and shelter. But experts now agree that the weather is playing a role in these recent increases. Extreme summer heat and this past winter’s mild temperatures have created urban rat utopias.

    “The reason the rats are so bad now, we believe, is because of the warm winters,” said Gerard Brown, program manager of the Rodent and Vector Control Division of the D.C. Department of Health, at a 2016 rat summit.
    Rat pro Corrigan agrees. “Breeding usually slows down during the winter months,” he said. But with shorter, warmer winters becoming more common—2016 was America’s warmest winter on record—rats are experiencing a baby boom. “They have an edge of squeezing out one more litter, one more half litter,” Corrigan said.

    One more litter or half litter makes a serious difference when a population boom is not only a nuisance, but a public health and economic crisis. Rats breed like rabbits; as this alarming Rentokil graphic shows, two rats in an ideal environment can turn into 482 million rats over a period of three years. Urban rats caused $19 billion worth of economic damage in the year 2000, partially due to the fact that they eat away at buildings and other infrastructure. Imagine how much they’re costing now.

     

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    Harvey Likely to Be First Hurricane to Strike Texas Since 2008

    This article by Brian K Sullivan and Melissa Cheok for Bloomberg may be of interest to subscribers. Here is a section: 

    “It could intensify right up to landfall on Friday,” said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan. “I expect a Category 1 hurricane at landfall, but I cannot rule out a Category 2.”

    Harvey is expected to bring multiple hazards including heavy rainfall, storm surge and possible hurricane conditions to parts of the Texas coast on Friday. Heavy rainfall is expected to spread across portions of south, central and eastern Texas and the lower Mississippi Valley from Friday through early next week and could cause life-threatening flooding, according to the advisory.

    The Gulf Coast from Corpus Christi, Texas, to Lake Charles, Louisiana, is home to nearly 30 refineries -- making up about 7 million barrels a day of refining capacity, or one-third of the U.S. total. It’s in the path of expected heavy rainfall. Flooding poses risks to operations and may cause power failures.

     

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    It's Hard to Keep Up With All That Lithium Demand

    This article by Laura Millan Lombrana and Jonathan Gilbert for Bloomberg may be of interest to subscribers. Here is a section:

    Producers everywhere have struggled to keep up with demand as electric cars went from almost no sales a decade ago to more than half a million vehicles last year. The battery in a Model S from Musk’s Tesla Inc. uses about 45 kilograms (100 pounds) of lithium carbonate. More mines are planned, but difficulties at Olaroz -- the first new South American lithium mine in two decades -- are limiting funding for new ventures in Argentina, home to the world’s third-largest reserves.

    “The uncertainty on the supply side is driving prices up and making investors nervous,” said Daniela Desormeaux, CEO of Santiago-based lithium consulting firm SignumBOX. “We need a new project entering the market every year to satisfy growing demand. If that doesn’t happen, the market will be tight.”

     

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    It's Not Just Provident, U.K. Dominates List of 2017 Stock Bombs

    This article by Cormac Mullen for Bloomberg may be of interest to subscribers. Here is a section: 

    Provident Financial Plc’s 66 percent collapse yesterday -- the biggest one-day plunge in Europe’s Stoxx 600 this year -- followed the latest in a string of profit warnings from U.K. companies.

    As a result, four of the five biggest one-day price retreats this year in the benchmark have come from U.K. stocks. Provident’s tumble was preceded by declines of more than 20 percent by Petrofac Ltd., Pearson Plc and BT Group Plc, according to data compiled by Bloomberg.

    In fact, U.K. names make up 11 of the 20 steepest single-day losses in 2017, the data show.

    The downward earnings revisions add to a landscape littered with the fallout from Brexit, rising consumer debt loads and a beleaguered pound. For those evaluating performance in euro terms, the FTSE 100 is the worst major index in Europe this year.

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    Copper rally lifts Antofagasta's profits, up 88% in first half of 2017

    This article by Cecilia Jamasmie for Mining.com may be of interest to subscribers. Here is a section: 

    Chile-focused copper miner Antofagasta Plc. (LON:ANTO) posted Tuesday an impressive 88% jump in earnings during the six months to June 30, thanks to a sustained rally in prices for the metal, which has surged 19% so far this year, as well as cost savings.

    The miner, one of the oldest companies listed in London, said earnings before interest, tax, depreciation and amortization, or Ebitda, increased to $1.1 billion in the period, as revenues grew by 42% to $2 billion.

    Chief executive Iván Arriagada, who has been at the helm for less than a year and a half, said the improved performance will allow the company to pay an interim dividend of 10.3 US cents a share, up from 3.1 a year ago. This is in line with Antofagasta’s policy of paying out a minimum of 35% of underlying net earnings to investors, he said.

     

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    China's Robot Revolution May Affect the Global Economy

    This article from Bloomberg caught my attention. Here is a section:

    “By turbocharging supply and depressing demand, automation risks exacerbating China’s reliance on export-driven growth – threatening hopes for a more balanced domestic and global economy,” BI economists Tom Orlik and Fielding Chen wrote.
    Pay gains are intact. Domestic manufacturing workers with a high-school education saw wages rise 53 percent from 2010 to 2014, according to China Household Finance Survey data cited by BI. 

    “Increasing use of robots should be bad news for medium-skilled workers, especially those in sectors where routine work means scope for automation,” Orlik and Chen said. “Yet wage growth in China remains rapid, and if anything, medium-skilled workers conducting routine work are doing better than average.”

     

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    Facebook Usage Among Teens Set to Drop in U.S

    This article by Sarah Frier for Bloomberg may be of interest to subscribers. Here is a section:

    “Teens and tweens remaining on Facebook seem to be less engaged –- logging in less frequently and spending less time on the platform,” Orozco said. “At the same time, we now have Facebook-nevers, many children aging into the tween demographic that appear to be overlooking Facebook altogether, yet still engaging with Facebook-owned Instagram.”

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