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

    Mapping the Global Migration of Millionaires

    Thanks to a subscriber for this article by Nick Routley for Visual Capitalist. Here is a section:

    Time-honored locations – such as Switzerland and the Cayman Islands – continue to attract the world’s wealthy, but no country is experiencing HNWI inflows quite like Australia.

    The Land Down Under has a number of attributes that make it an attractive destination for migrating millionaires. The country has a robust economy, and is perceived as being a safe place to raise a family. Even better, Australia has no inheritance tax and a lower cost of health care, which can make it an attractive alternative to the U.S.

    In 2018, Australia jumped ahead of both Canada and France to become the seventh largest wealth market in the world.

    Greece, which was one of the worst performing wealth markets of the last decade, is finally seeing a modest inflow of millionaires again.

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    The World's Biggest Electric Vehicle Company Looks Nothing Like Tesla

    This article by Matthew Campbell and Ying Tian for Bloomberg may be of interest to subscribers. Here is a section:

    In automotive circles, Wang’s predictions of the combustion engine’s imminent demise often meet profound skepticism. Chinese sales of new-energy vehicles, a category comprising plug-in hybrids, pure EVs, and fuel-cell cars, more than tripled from 2015 to 2018, but they still account for only 4.5 percent of the total. The doubters, he argues, underestimate the country’s capacity for reinvention. “The Chinese way is to replace everything at once,” Wang says. “When we switched from black-and-white to color TVs, it took three years. In the West it was 10. Going from feature phones to smartphones took about one year. In Europe it was three. Cars will be the same. It will go very fast.”

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    Big Companies Thought Insurance Covered a Cyberattack. They May Be Wrong

    This article by Adam Satariano and Nicole Perlroth for the New York Times may be of interest to subscribers. Here is a section:

    Even with teams working around the clock, it was weeks before Mondelez recovered. Once the lost orders were tallied and the computer equipment was replaced, its financial hit was more than $100 million, according to court documents.

    After the ordeal, executives at the company took some solace in knowing that insurance would help cover the costs. Or so they thought.

    Mondelez’s insurer, Zurich Insurance, said it would not be sending a reimbursement check. It cited a common, but rarely used, clause in insurance contracts: the “war exclusion,” which protects insurers from being saddled with costs related to damage from war.

    Mondelez was deemed collateral damage in a cyberwar.

    The 2017 attack was a watershed moment for the insurance industry. Since then, insurers have been applying the war exemption to avoid claims related to digital attacks. In addition to Mondelez, the pharmaceutical giant Merck said insurers had denied claims after the NotPetya attack hit its sales research, sales and manufacturing operations, causing nearly $700 million in damage.

    When the United States government assigned responsibility for NotPetya to Russia in 2018, insurers were provided with a justification for refusing to cover the damage. Just as they wouldn’t be liable if a bomb blew up a corporate building during an armed conflict, they claim not to be responsible when a state-backed hack strikes a computer network.

    The disputes are playing out in court. In a closely watched legal battle, Mondelez sued Zurich Insurance last year for a breach of contract in an Illinois court, and Merck filed a similar suit in New Jersey in August. Merck sued more than 20 insurers that rejected claims related to the NotPetya attack, including several that cited the war exemption. The two cases could take years to resolve.

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    Betting on a Soft Landing: The Takeaways From the IMF Meetings

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

    The IMF cut its forecast for global expansion to the slowest pace since the financial crisis a decade ago, but played down the risk of recession and predicted growth will pick up in the second half of the year to stabilize at about 3.6 percent in 2020. That would be an improvement over the 3.3. percent pace projected for this year, but below the 3.8 percent of 2017.

    U.S. Treasury Secretary Steven Mnuchin stoked optimism by saying he was hopeful the U.S. and China are “close to the final round” of trade talks. U.K. Chancellor of the Exchequer Philip Hammond said the government and main opposition party could strike a Brexit deal within weeks.

    Europe’s struggles again emerged as a source of worry, leaving Germany under pressure to ease fiscal policy and the U.K. to arrange its withdrawal from the European Union. Still, European Central Bank President Mario Draghi was cautiously optimistic in arguing the euro-area has shown “remarkable resilience.”

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    L'Oreal's Asian Sales Just Overtook Europe for the First Time

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

    "It’s true that the growth is not broad-based,” RBC analyst James Edwardes Jones said in a note to clients, “but given L’Oreal’s proven ability to identify, stimulate and capitalize on those parts of the business where the most attractive growth is to be had, we struggle to find fault with this.”

    The results show luxury’s resilience, as surging demand from Chinese shoppers fueled 14 percent quarterly growth for the division selling brands like Armani, Kiehl’s, and YSL.

    Meanwhile, some other manufacturers of products such as automobiles and electronics were hurt by a slowing Chinese economy.

    “It’s a real appetite of the young generation in China to go directly to these luxury brands. It’s really positive for us,” Chief Executive Officer Jean-Paul Agon said on a call with analysts. Western Europe showed some signs of improvement and could post a solid year, Agon said, “but nothing that would
    compete with what we see in Asia.”

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    China Stocks Fall as Better Data Dim Prospects of More Stimulus

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

    "The credit data lifted expectations on market liquidity and economic fundamentals," said Wang Jianhui, a Beijing-based analyst with Capital Securities Co. "It provided an excuse for investors who wanted to bottom fish stocks after last week’s correction. But it’s more likely a technical rebound as there hasn’t been any substantial change in fundamentals."

    The decline in mainland shares came after some companies issued profit warnings. In Shenzhen, Jiangling Motors Corp. sank by the 10 percent daily limit after it predicted an 84 percent decline in first-quarter net income from a year earlier.

    Shandong Chenming Paper Holdings Ltd. slid 8.9 percent after saying its first-quarter profit may plunge 94 percent to 96 percent.

    "While the macro numbers suggest a recovering trend, things are still looking weak in the micro segments including corporate profits," said Shen Zhangyang, a Shanghai-based strategist with
    Northeast Securities Co.

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    Glencore's Congo Unit to Start Shipping Some Cobalt Again

    This article by Thomas Biesheuvel for Bloomberg may be of interest to subscribers. Here it is in full:

    Glencore Plc’s Democratic Republic of Congo unit will restart some cobalt exports after it halted sales last year due to low levels of radioactivity.

    About 23 percent -- or 930 tons -- of the cobalt produced at Katanga Mining Ltd.’s Kamoto mine since January complies with regulations on uranium content, the company said in a statement. Katanga is controlled by Glencore and owns 75 percent of Kamoto.

    The unit halted sales of cobalt in November after detecting radiation and said that a plant to remove the contamination would be ready this year. The suspension of sales came after prices for the metal used in rechargeable batteries collapsed on growing concerns about oversupply.

    Glencore said at the time that it planned to stockpile cobalt supplies until the middle of this year. Kamoto is Glencore’s second-biggest source of the metal in Africa, producing about 11,100 tons last year.

    Glencore has a long history of trimming mine supply to match demand, and has criticized rivals for producing too much and depressing prices. The Swiss commodity giant curtailed zinc output at mines in Australia, Peru and Kazakhstan in 2015 when prices languished at six-year lows.

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    The Top Economic Challenges Facing Indonesia Election Winner

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

    The current account deficit, which last year widened to almost 3 percent of gross domestic product, remains a key vulnerability for the economy. It makes Indonesia reliant on foreign capital to fund its import needs, inflows that can be volatile as investor sentiment swings.

    The deficit was one of the main reasons why Indonesia was targeted in an emerging market sell-off last year, triggered by rising U.S. interest rates and a stronger dollar. The rupiah slumped more than 5 percent against the dollar in 2018, dropping to its lowest levels since the Asian financial crisis two decades prior, as investors pulled out of the nation’s stocks and bonds.

    The rupiah has bounced back in 2019, helped in part by the central bank’s swift action in raising interest rates by 175 basis points and the U.S. Federal Reserve’s shift away from policy tightening this year. The current account remains a risk though, and the government has imposed a number of measures to curb imports and spur exports to lower the deficit.

    Data on Monday showing a second consecutive monthly trade surplus in March suggests the current account deficit probably narrowed in the first quarter. Economists surveyed by Bloomberg had predicted a $177 million trade deficit in the month.

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