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

    Peru Riven in Two With Presidential Election Too Close to Call

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

    Peru’s currency and stocks tumbled after incomplete results of Sunday’s presidential runoff showed the leftist candidate gaining momentum even as he trailed by a thin margin in the count.

    The sol headed to its biggest drop in more than a decade at one point and the S&P/BVL Peru General Index fell as much as 6.8%, the most since November, with mining companies and financial firms among the hardest hit. Overseas bonds edged lower in light trading while the cost to insure against a default climbed.

    Analysts were left to scour incomplete vote tallies for hints at who had the advantage, after investor favorite Keiko Fujimori saw her early lead over leftist opponent Pedro Castillo fade overnight and in the early morning. With almost 93% of votes counted, Fujimori had 50.1% support to 49.9% for Castillo, a former school teacher turned union organizer from the Peruvian highlands.

    “The country is pretty much split down the middle,” said Alfredo Torres, director of Ipsos Peru. An unofficial quick count published earlier by Ipsos gave Castillo a 0.4 percentage point advantage over Fujimori, within the margin of error, while an Ipsos exit poll after Sunday’s voting showed Fujimori with a slight lead.

    Fujimori, who is under investigation for corruption and campaigned while out on bail, gets more of her support from urban centers, while Castillo has the advantage in the countryside. She has vowed to save the country from “communism” by preserving a liberal economic model and boosting cash payments to families affected by the pandemic. The daughter of a jailed former president, it’s her third attempt at the top office.

    Castillo, who launched his political bid with a Marxist party and was virtually unknown at the start of the year, ran on a platform of extracting more taxes from multinational miners and oil drillers to increase outlays on education and health. He blames the country’s inequality on the ruling elite whom he says have long been content to run Peru from Lima while ignoring swathes of the country.

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    Biogen Alzheimer's Drug Approved in Disease Landmark

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

    The FDA said in a statement on Monday that it was allowing the drug on the market because it reduces amyloid, a sticky, harmful protein that clogs the brains of Alzheimer’s patients. Amyloid’s role in Alzheimer’s is debated, but numerous other drugs that target it are being developed by pharmaceutical companies.

    Biogen plans to sell the therapy under the brand name Aduhelm. It will cost $56,000 a year, the Cambridge, Massachusetts-based biotechnology company and its Tokyo-based partner, Eisai Co. Ltd., said in a statement.

    U.S.-traded shares of Eisai leapt 60% to $118.73.

    In an interview, Biogen Chief Executive Officer Michel Vounatsos said that the company had already produced millions of vials of the drug and that it would hit the market within 10 days to two weeks, once the company had done things like printed labels.

    Over 900 infusion sites in the U.S. are prepared to administer the drugs, he said.

    By giving the treatment a broad label allowing it to be used for a wide swath of Alzheimer’s patients, and not just the very early-stage patients the drug was mostly studied on, “the FDA is basically empowering the physician to make the decision,” who it is most appropriate for, Vounatsos said.

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    The Fed's Small Unwind May Have Big Implications for Credit

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

    Record low junk yields, the tightest spreads since 2007 on high-grade debt, rapidly evaporating distress -- the Fed’s fingerprints are all over credit markets. Central bank purchases ended up being marginal but the psychological boost can’t be overstated, leaving spreads vulnerable to widening now it’s backing out.

    “The Fed has your back” was the constant refrain from investors piling into corporate credit over the last 14 months, even after valuations overshot pre-pandemic levels and high-grade losses accumulated. The program technically only extended to the very best quality junk, but it squeezed yields all the way down to CCC, arguably keeping a lot of zombies walking.

    Of course, now they’ve been used once, it’ll be tough to leave those tools sitting idle next time there’s a blowup, so some investors will keep faith. And there’s still too much cash chasing returns in an asset class that could be seen as offering relative value. But removing the Fed crutch may force buyers to look a little harder at credit fundamentals amid razor-thin valuations.

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    Global Food Prices Surge to Near Decade High, UN Says

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

    Drought in key Brazilian growing regions is crippling crops from corn to coffee, and vegetable oil production growth has slowed in Southeast Asia. That’s boosting costs for livestock producers and risks further straining global grain stockpiles that have been depleted by soaring Chinese demand. The surge has stirred memories of 2008 and 2011, when price spikes led to food riots in more than 30 nations.

    “We have very little room for any production shock. We have very little room for any unexpected surge in demand in any country,” Abdolreza Abbassian, senior economist at the UN’s Food and Agriculture Organization, said by phone. “Any of those things could push prices up further than they are now, and then we could start getting worried.”

    The prolonged gains across the staple commodities are trickling through to store shelves, with countries from Kenya to Mexico reporting higher food costs. The pain could be particularly pronounced in some of the poorest import-dependent nations, which have limited purchasing power and social safety nets as they grapple with the pandemic.

    The UN’s index is treading at its highest since September 2011, with last month’s gain of 4.8% being the biggest in more than 10 years. All five components of the index rose during the month, with the advance led by pricier vegetable oils, grain and sugar.

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    Email of the day on post pandemic recovery candidates

    Dear Eoin I hope that your move went well. The chart of Carnival (CUK in the USA) is making an interesting breakout. It is a classic example of a company that suffered greatly from Covid and that has a great recovery potential.

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    Australia's Economy Powers On, Recouping Pandemic Losses

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

    Australia’s rapid rebound has been underpinned by its ability to limit Covid-19 outbreaks, boosting consumer and business confidence. A massive fiscal-monetary injection strengthened the financial position of households and firms during the lockdown, and consumers are spending and companies hiring.

    “Australia is in rare company here -- only five other countries can boast an economy that’s larger now than before the pandemic,” said Kristian Kolding, a partner at Deloitte Access Economics. “Maintaining this trajectory is now the task at hand -- the lockdowns in Victoria are a stark reminder that the pandemic is far from over.”

    Deloitte noted that on average, economies in the Organisation for Economic Cooperation and Development are 2.7% smaller than they were before the pandemic. The U.K. is almost 9% smaller, the European Union is 5% smaller and the U.S. has shrunk 1%, it said.

    Yet a potential risk to the outlook is the sluggish rollout of a Covid vaccine. This has been magnified by a renewed outbreak of the virus in Melbourne that prompted a lockdown in the nation’s second-largest city, and has now been extended for another week.

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