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

    Email of the day - errata

    I would just like to correct an error you made in today’s commentary. Ebola is not in the coronavirus family. Ebola is an RNA filovirus virus in the family Filoviridae, their natural carrier hosts in the animal world are African fruit bats.

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    Email of the day on currency transfers

    The question about money transfer services was interesting to me because I went through the same investigation back in 20215. My experience may be useful to other subscribers.

    Although I was, of course, keen to avoid exorbitant Bank charges, the key issue for me ended up being the ability to do what I wanted. I looked at TransferWise and also tried CurrencyFair, but none quite did the job. I live in the UK but I have financial assets generating annual income in Canada. I have a simple deposit account there with CIBC, where that income is accumulated. From time to time I need to transfer cash from Canada to the UK. My requirement was to initiate from the UK but have the funds deducted automatically from the Canadian CIBC account and transferred to my account in the UK. Once set-up, I wanted this to be automatic from the point where I initiated.

    I eventually found a service called OFX https://www.ofx.com/. 

    Part of the transfer costs can arise from fees at the receiving bank when funds are from overseas. OFX gets around this by having 115 local bank accounts. There are no fees to retrieve the cash (in Canada) or to deposit in the UK.  Exchange rates are determined by spot prices when you initiate. Rates are locked once initiated and you can do forward pricing. Some other useful  facts about pricing at https://www.ofx.com/en-gb/faqs/whats-the-cheapest-way-to-send-money/

    The setup is a bit more stringent and time-consuming because of the need to set up a Direct Debit facility (in Canada, a Pre-Authorised Debit) so OFX can access your account. The security checks are inevitable.


    However, once it's all done, I can say it works very well, and the OFX people are very helpful on the phone if there are questions. They have even been forgiving when I mistakenly tried to send more than the $50K per-transaction amount.

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    Wall Street Warnings Grow Louder for Investors Defying Virus

    This article by Cecile Gutscher and Anchalee Worrachate for Bloomberg may be of interest to subscribers. Here is a section:

    “Pretty much every client we talk to wants to buy the dip,” wrote Tobias Levkovich, Citigroup Inc.‘s chief U.S. equity strategist in a note. “And that is not comforting.”

    The S&P 500 edged higher Thursday, extending the week’s gains to more than 3.5%, as the Stoxx Europe 600 Index climbed to a record and stocks soared in Asia. A gauge of European credit risk hit its lowest since 2007.

    Yet the battle against the virus could suffer a setback as factories reopen in China in the coming days and more people come into contact with each other. On the other hand, if factories fail to reopen, the economic impact could prove much more severe.

    At Robeco, money manager Jeroen Blokland is eyeing the rally warily. The head of multi-asset funds at the Rotterdam-based firm recently cut an overweight allocation to stocks to neutral because of the spread of coronavirus. He says it’s not yet time to dive back in.

    “Every investor is looking for the bottom and wants to find it a little bit earlier than his neighbor,” he said. “We need a little bit more confirmation that the outbreak will be contained before moving again.”

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    Japan Seen Needing U.S. Help to Check China's Digital Yuan

    This article by Yuko Takeo, Emi Urabe and Toru Fujioka for Bloomberg may be of interest to subscribers. Here is a section

    “We sense the digital yuan is a challenge to the existing global reserve currency system and currency hegemony,” said Nakayama, a top member of the ruling party group that drafted the proposals. “Without the U.S., we cannot counter China’s efforts to challenge the existing reserve currency and international settlement system.”

    The comments indicate the heightened concern among policy makers in Japan over the likely impact of a digitized yuan expected for later this year. China’s plan and Facebook’s efforts to launch its own Libra currency have sparked central banks around the world to get up to speed on how digital currencies would function and what their impact could be.

    “There are 1.4 billion people in China, so within the one belt, one road digital economic framework, the digital yuan has a high likelihood of becoming the standard within that digital economy,” 

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    Goldman's Currie Likes Palladium on Potential Deficit in China

    This article by Elena Mazneva, Francine Lacqua and Tom Keene for Bloomberg may be of interest to subscribers. Here is a section:

    Palladium could be an interesting trade given potential supply disruptions to China because of the coronavirus, Jeffrey Currie, head of global commodities research at Goldman Sachs, told Bloomberg TV.

    “The one I like right now that we are watching in the commodity market is palladium -- when palladium gets so tight that you actually start to shut down auto manufacturing.”

    Yet, “you don’t know when you hit one of these physical shortages until you actually hit them.”

    NOTE: Spot palladium traded near $2,412/oz Thursday, heading for a ~5% weekly gain after dropping a week earlier from record highs.

    Currie said last month he sees the potential for palladium to test $3,000/oz, then slide.

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    Email of the day on currency exchange sites:

    Can you please add Trade Desk, TTD NAS, to the Chart Library? Any ideas on good economical services to use for transferring money (from AUD to GBP & the reverse)? (I suspect some sectors of the UK post Brexit economy to do well. Also, I've a son studying in Cambridge.)

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    Why Tesla could become world''s first 10 trillion dollar company

    This article from The Driven may be of interest. Since it was released yesterday the title has been edited to "Why Tesla could soon become world’s most valuable company"; reflecting a quick moderation of sentiment. Here is a section:

    “There’s a lot of growth opportunities from that plant going forward,” Baron said on CNBC. “[Tesla] could be one of the largest companies in the whole world.”

    A day earlier, Ark Invest suggested the stock could be worth $US7,000 a share within five years. That equates to a market value of around $US1.5 trillion – making it more valuable than the current top stocks, Apple and Saudi Aramco. (And there’s a lot of Apple in the way Tesla proposes to managed its EV and batteries).

    Ark Invest’s reasons for this are worth repeating.

    “Based on our updated expectations for electric vehicle (EV) cost declines and demand, as well as our estimates for the potential profitability of robotaxis, our 2024 expected value per share for TSLA is $7,000,” it wrote in a note to investors over the weekend.

    This, essentially, is a massive bet on the success of Tesla’s Full Self Driving, and Musk’s dream of potentially turning every Tesla with the appropriate software into a robotaxi, and his own dreams of building a huge fleet of robo-taxis that will revolutionize the way we do road travel.

    Stanford University’s Tony Seba has been talking about the arrival of self-driving for a few years now.

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    Trump's Farmer Base Will Make More Money Thanks to Trade Deal

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

    Still, a last taste of aid is creating a temporary buffer. Payments of the final tranche started in January, contributing to the gains for this year’s profit projection. The USDA forecasts farmers will receive $15 billion in direct government payments in 2020, down from $23.7 billion in 2019 but still above the $11.5 billion received in 2017, before the trade war started.

    While the USDA’s estimates take into account the trade pact, they may not reflect the true scope of the impact, according to Carrie Litkowski, a senior economist with the USDA’s Economic Research Service.

    The projected gain for income also doesn’t reflect any potential blow-back from the outbreak of the deadly coronavrius in China, the world’s biggest food importer. The health crisis has in recent days called into question whether the Asian nation will meet the purchase targets established in the trade deal.

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