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

    China's Steadying Inflation Leaves Door Open for Monetary Easing

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

    “The PBOC is likely to continue to use interest rate and liquidity tools to loosen monetary conditions in 2020, though the easing will probably be less pronounced than last year,” David Qu, a China economist at Bloomberg Economics in Hong Kong, wrote in a note. “We expect the PBOC to stick to a stance of measured easing to counter the economic slowdown.”

    For the year, consumer inflation for 2019 stood at 2.9%, in line with the government-set target of 3%, while producer prices declined 0.3%. Core inflation, which removes the more volatile food and energy prices, stabilized at 1.4% in December, signaling ongoing weakness in the broader economy.

    China’s economy has shown signs of recovery in recent months as global demand steadies and trade tensions ease. As commodity prices rise and factories start restocking, PPI deflation is set to continue to moderate and some see it turning positive as soon as January.

    This section continues in the Subscriber's Area.

    Deloitte-Ballard Joint White Paper Assesses Hydrogen & Fuel Cell Solutions for Transportation

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

    Randy MacEwen, Ballard President and CEO said, "In less than 10 years, it will become cheaper to run a fuel cell electric vehicle (FCEV) than it is to run a battery electric vehicle (BEV) or an internal combustion engine (ICE) vehicle for certain commercial applications."

    Although FCEVs are currently more expensive to run per 100 kilometers (km) than BEVs and ICE commercial vehicles, they are set to become much cheaper as manufacturing technology matures, economies of scale improve, hydrogen fuel costs decline and infrastructure develops. Indeed, the white paper conservatively estimates the Total Cost of Ownership (TCO) for commercial hydrogen vehicles will fall by more than 50% in the next 10 years.

    This section continues in the Subscriber's Area.

    Fiat Will Effectively Fund Tesla's German Factory, Baird Says

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

    Chief Executive Officer Elon Musk announced in November that Tesla planned to build a plant outside Berlin. The facility is expected to produce Model 3 sedans and Model Y crossovers starting in 2021.

    Fiat Chrysler is going to launch a new version of its Fiat 500 battery-powered vehicle in Europe this year, along with plug-in hybrid versions of its Jeep Compass, Renegade and Wrangler models. That, combined with the Tesla credits, should make the company compliant with Europe’s emissions rules, CEO Mike Manley told analysts in July.

    While Fiat Chrysler would otherwise struggle to meet new carbon-dioxide emissions standards in Europe, the so-called open-pool option available in the European Union allows automakers to group their fleets together to meet targets.

    Compliance has gotten harder for automakers as consumers have shifted toward gasoline cars, which emit comparatively more CO2, following Volkswagen AG’s diesel-emissions scandal that first erupted in 2015.

    This section continues in the Subscriber's Area.

    Trump Backs Away From Conflict With Iran After Harmless Attack

    This article by Josh Wingrove and Jennifer Jacobs may be of interest to subscribers. Here is a section:

    Iran fired more than a dozen guided missiles at two U.S. bases in Iraq in retaliation for the killing of Qassem Soleimani. But a Pentagon analysis of the attack suggested the missiles were aimed at unpopulated parts of the bases, according to people familiar with the matter.

    Satellite imagery of the bases provided by Planet Labs showed damaged aircraft hangers and other structures at the Al Asad airbase in western Iraq following the strike.

    “Iran appears to be standing down,” Trump said. “Which is a good thing for all parties concerned and a very good thing for the world.”

    Iran’s restraint and Trump’s measured remarks in response suggest a path toward easing tensions with Tehran, which surged after Soleimani’s killing in a U.S. drone strike near the Baghdad airport last week.

    Iranian Foreign Minister Javad Zarif said on Twitter earlier Wednesday that the missile attack “concluded” Iran’s retaliation for Soleimani’s killing. Even if Tehran refrains from further direct attacks, it might still seek reprisals through more covert means, such as attacks by proxy militias or in cyberspace.

    This section continues in the Subscriber's Area.

    Byron Wien and Joe Zidle Announce the Ten Surprises of 2020

    Thanks to a subscriber for this note from Blackstone which may be of interest. Here is a section:

    1. The economy disappoints the consensus forecast, but a recession is avoided. Federal Reserve Chair Powell lowers the Fed funds rate to 1%. Without a comprehensive trade deal in hand, President Trump exercises every executive authority he has to stimulate growth and ward off recession. He cuts payroll taxes to put more money in the hands of consumers.

    This section continues in the Subscriber's Area.

    Pandora Soars as Investors Get Early Glimpse of Results

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

    The world’s biggest maker of jewelry added roughly a tenth to its market value on Monday after reassuring investors it would reach the upper end of its profit forecast for 2019.

    Shares in Pandora A/S rose as much as 12%, as the Copenhagen-based company released some preliminary figures ahead of its Feb. 4 annual results. It now expects its profit margin for 2019 to be in the higher end of the previously guided range of 26-27%.

    The update was “definitely good news,” said Per Fogh, an analyst at Sydbank. “Many people had expected Pandora to miss that guidance altogether, so a margin in the upper end of the range shows that Pandora has been able to get its costs under control under its turnaround plan.”

    This section continues in the Subscriber's Area.

    Email of the day - on gold's fair value

    Thank you for the interesting article about golds "fair" value. I remember many many years ago David once mentioned that somebody he respects mentioned that the fair value of a certain British gold coin is a dinner for two at Claridges in London. Unfortunately, I do not remember which coin it was.

    This section continues in the Subscriber's Area.