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

    Avocado prices hit record after bad weather dents supply

    This article by Alan Beattie for the Financial Times may be of interest to subscribers. Here is a section:

    The US market, the largest consumer of avocados, is facing a 50-60 per cent decline in Californian output from average levels, because of bad weather, while its main source of imports, Mexico, is expecting a 20 per cent fall in production, says Óscar Martínez at Reyes Gutiérrez, a Spanish avocado importer and distributor.

    “The US needs to get extra avocados, and Peru is expected to divert their supplies attracted by their high prices,” he adds.

    Avocado trees tend to alternate between “on” years, producing a bumper crop, and “off” years, where the tree recovers from the stress of the previous year’s large production.

    In Mexico, the world’s largest producer and exporter of avocados, the off-year has coincided with bad weather, sending the market soaring.

    Prices for Mexican Hass avocado have more than doubled since the start of the year, with a 10kg box of avocados jumping to 550 pesos ($26).

    Supplies from other producers have also been hit. “Lower output is also expected for the US and Peru where the harvest has been delayed due to heavy rains and flooding,” says Jara Zicha, analyst at Mintec.


    This section continues in the Subscriber's Area.

    Can Wal-Mart's Expensive New E-Commerce Operation Compete With Amazon?

    This article by Brad Stone and Matthew Boyle for Bloomberg caught my attention. Here is a section:

    The video worked exceedingly well. In August, Wal-Mart Stores Inc. announced it would acquire Jet.com for $3.3 billion in cash and stock. It was an extraordinary sum for a 15-month-old, purple-hued website that was struggling to retain customers and is still far from making a profit. Even more astonishing, Lore and his management team in Hoboken, N.J., were put in charge of Wal-Mart’s entire domestic e-commerce operation, overseeing more than 15,000 employees in Silicon Valley, Boston, Omaha, and its home office in Arkansas. They were assigned perhaps the most urgent rescue mission in business today: Repurpose Wal-Mart’s historically underachieving internet operation to compete in the age of Amazon. “Amazon has run away with it, and Wal-Mart has not executed well,” says Scot Wingo, chief executive officer of Channel Advisor Corp., which advises brands and merchants on how to sell online. “That’s what Marc Lore has inherited.”

    Lore’s ascendancy at Wal-Mart adds bitter personal drama that wouldn’t seem out of place on Real Housewives of New Jersey to a battle between two of the most disruptive forces in the history of retail. In 2010, Wal-Mart tried to buy Lore’s first online retail company, Quidsi Inc., which operated websites such as Diapers.com for parents and Wag.com for pet owners. But it moved too slowly and lost out to a higher bid from Amazon.com Inc. Lore then toiled at Amazon for over two years before quitting, in part out of disappointment with its refusal to invest more in Quidsi and to integrate his team into the company, according to two people close to him.


    This section continues in the Subscriber's Area.

    The EU's Attempt at First World War-Style Reparations Revenge Will Only Make Britain More United

    It is not the British government that is living on another planet but the Europeans, or at least those briefing the anti-Brexit media. I have always resisted falling into the old trap of endless Second World War analogies: they make it impossible to have a sensible discussion.

    But I’m finding it increasingly hard to avoid concluding that the EU is actually engaging in a bizarre attempt at reenacting the settlement that followed the First World War: the €100 billion figure is so extreme, so devoid of any rational basis or genuine legal logic that it must be seen as an attempt at imposing reparations on Britain. We are guilty of crimes against the European dream, and must therefore face cruel and unusual punishment.

    This is a shocking state of affairs, not least because of what it tells us about the increasingly delusional state of mind of many in Brussels (and even some in Germany), who see us as some sort of weak, vanquished foe ripe for the clobbering.

    The last time this sort of idiocy was attempted was in 1919, at the Treaty of Versailles, when a defeated Germany was ordered to accept full responsibility for the war and to pay vast reparations to the allied powers.

    A “Reparation Commission” was set up, and Germany was told to pay an immediate 20 billion marks in gold, commodities, ships, securities and other assets, while accepting occupation, oversight and endless humiliations.

    John Maynard Keynes called it a Carthaginian peace, likening it to the total subjugation imposed on that Tunisian city-state by Rome. He decried France’s revanchism, and its obsession with extracting tributes from the Germans, and rightly predicted that the whole affair would end in tears in The Economic Consequences of the Peace.

    History never repeats itself, of course, and we are a successful, powerful nation that won’t be bullied by anybody. But the fact that Juncker is even trying it on should serve as a reminder that the Eurocrats are out of their depth, intellectually as well as practically; far from being accomplished negotiators, they are pathetic amateurs desperate to conceal the fact that they are terrified that the British cash will soon run out. Their arguments are bogus.

    The EU isn’t a force for economic freedom. It keeps demonstrating its mercantilism, and explicitly sees trade as a one-way favour, a privilege in return for which money and control (via European-imposed rule and the jurisdiction of its court) must be surrendered.

    In reality, trade is always mutually beneficial, and no other “trading block” charges a “fee” for access. The fact that Barnier and his gang want to make us “worse off” by imposing protectionist barriers on UK firms expose them as economic illiterates with no interest in free markets.

    This section continues in the Subscriber's Area.

    Belgian Finance Minister Warns EU: Change or Die

    Here is the opening of this refreshingly outspoken article:

    Brexit has “shattered” the principle of ever closer union in the EU, according to the Belgian finance minister, who warned that the bloc had to transform itself to survive.

    Johan Van Overtveldt said there was “clearly a problem” with the European Union, as he called for a quick, comprehensive trade deal with the UK and warned that punishing Britain would be counterproductive.

    Mr Van Overtveldt said a “different” and “better” EU, that focused on key areas such as security, migration, jobs and trade instead of policing trivial policies would help to boost prosperity in the bloc and remove the discontent sweeping across the Continent.

    “Sixty years after signing the Treaty of Rome, and 25 years after the Maastricht Treaty, the European Union is in trouble and is certainly in need of new inspiration and new directions. The EU cannot continue operating the way it does today,” he said at an event organised by the European Economics and Financial Centre in London.

    He urged policymakers to take a different approach to integration and said the idea of an EU forged in crisis put forward by Jean Monnet - dubbed the father of Europe - was “dead”.

    This section continues in the Subscriber's Area.

    Email of the day 1

    On the EU’s reaction to Brexit:

    Dear David - The words coming out of the EU elite appear to be getting more disgusting by the day. I say that as a 'remain' voter who now regrets the way he voted! If Juncker and co think their words and actions will sway Brits their way they are seriously deluded. I work here in the UK with many Europeans who were delighted that Theresa May proposed a rapid solution to the residency issue, but then were shocked by the EU's actions.

    This article by Brian Monteith for City A.M. – The EU is Scared: It knows no deal is better for Britain than a bad deal, is probably right in suggesting that the mood in Brussels is panic being hidden as toughness: 

    "The leaks that have emerged from EU Commission president Jean-Claude Juncker since his dinner with Theresa May at Downing Street last week confirm what any realistic observer has known since last June. Juncker & Co are afraid. Very afraid. I can agree with the president that Theresa May inhabits a different galaxy, but he is looking through the wrong end of the telescope; it is she who is firmly grounded in the mortal world of realpolitik, while the EU leadership at every level lives in an ethereal cosmos of inert gases disappearing up its own black hole. First, ask any seasoned negotiator about how best to conduct the process of finding a mutually desirable agreement, and they will tell you that, when you walk in to the meeting, you need to know what would make you give up on the talks and walk out again. Theresa May has already worked that out and it scares Juncker and his chief negotiator Michel Barnier."

    Theresa May is playing it superbly. She was right to call the election and that has rattled Brussels as they fear she will get a strong mandate from the British people. After the election, in a strong position, I suspect she will go quite slow for a while in order to let Juncker and Barnier dig even deeper holes for themselves with their outrageous bullying demands, so that when she decides to leave without a deal it will be very clear to the world who caused that inevitable decision.

    This section continues in the Subscriber's Area.

    Email of the day 2

    On “EU behaviour is down to alcoholic psychology”:

    A senior Swiss banker told me last night at dinner (over much wine!) EU behaviour is down to alcoholic psychology
    “EU is like a reformed alcoholic. Versailles, WW I, WW II the pathology. Psychologically, the nation states worried about a relapse into mutually destructive nation-state-hood used the crutch of the EU (“Ever closer Union”, “common market” etc) as an AA cure. So when threat of Brexit or Greece comes along, they turn nasty and aggressive like an alcoholic fearing disintegration of the personality”….Hadn’t heard this one before!

    This section continues in the Subscriber's Area.

    Seeking a policy response to the robot takeover

    This article by Alice M. Rivlin for Bloomberg may be of interest to subscribers. Here is a section:

    If driverless deliveries prove faster, cheaper, safer, and more accurate, they would likely be adopted quickly and affect all parts of the country. Truck driving is much less concentrated in particular areas than, say, coal mining or steel making.

    In 2016, there were 1.7 million heavy and tractor-trailer truck drivers, with a median annual wage of $43,590; 859 hundred thousand light-truck and delivery workers, who earned $34,700; and 426 hundred thousand driver/sales workers, who earned $28,449. So a rough estimate would be that driverless deliveries would put at least 2.5 million drivers out of work, not counting drivers’ helpers and a substantial number of workers in truck stops and roadside services patronized by truckers. Truck drivers drink a lot of coffee.

    Like many lost manufacturing jobs, truck driving requires skill, some special training, hard work, and fortitude, but not much formal education. If you did not go beyond high school, but are a reliable, safe driver—especially if you are willing to work the demanding schedules of long-haul truckers—you can support a family and have decent benefits by driving a truck.

    The transition to driverless deliveries would also create some new jobs, many of them technical jobs involving software development and programming that would command relatively high wages. Vehicle maintenance jobs would still be necessary, and would likely require enhanced electronic skills with higher pay than current truck maintenance jobs. Expanded demand for the cheaper delivered products would likely create additional jobs in the transportation sector. It is impossible to predict the ultimate effects of any major technological change, but in the short run it is a good bet that a lot of former drivers would be looking for work and finding their skills and experience ill-suited to available jobs at comparable wages.

    This section continues in the Subscriber's Area.

    EY's Attractiveness Program Africa

    This report focusing on Africa and its success in attracting foreign direct investment may be of interest to subscribers. Here is a section:

    More positively though, in terms of capital investments, the flow of FDI into Africa recovered in 2016 after a dip in 2015. During 2016, capital investment into Africa rose 31.9%. Investment per project averaged US$139m, against US$92.5m in 2015. This surge was driven by several large, capital intensive projects in the real estate, hospitality and construction (RHC), and transport and logistics sectors. The continent’s share of global FDI capital flows increased to 11.4%, up from 9.4% in 2015. That made Africa the second fastest growing destination when measured by FDI capital.

    This somewhat mixed picture is not surprising to us. We believe that investor sentiment toward Africa is likely to remain somewhat softer over the next few years. From our point of view, this has far less to do with Africa’s fundamentals than it does with a world characterized by heightened geopolitical uncertainty and greater risk aversion. Companies already doing business in Africa will continue to invest, but will probably exercise a greater degree of caution and be more discerning. We are still of the opinion that any shorter-term shifts in FDI levels will be cyclical rather than structural. We also anticipate that the evolution of FDI — increasing diversification in terms of sources, destinations and sectors — will continue. Over the longer term, as economic recovery slowly gathers pace and as many African economies continue to mature, we also anticipate that levels of FDI will remain robust and will continue to grow.  

    This section continues in the Subscriber's Area.

    Fed Sticks to Gradual Rate-Hike Approach Despite Slowdown

    This article by Jeanna Smialek and Christopher Condon may be of interest to subscribers. Here is a section:

    The widely expected decision contained no concrete commitment to the timing of the next rate increase. Even so, investors increased bets on a move in June after absorbing the Fed’s sanguine assessment of the outlook and its encouraging observations on inflation, following data showing first-quarter economic growth of 0.7 percent and monthly price declines in March.

    “Nothing in the statement today, which was voted unanimously by the FOMC, leads me to believe that the Fed is even close to changing its mind on rates,” Roberto Perli, a partner at Cornerstone Macro LLC in Washington, wrote in a note to clients. “Base case is for a couple more rate hikes this year -- probably in June and September -- and for the beginning of balance sheet shrinkage in December.”

    This section continues in the Subscriber's Area.