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

    Japan Inc. Might Finally Have to Fatten Paychecks

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

    It's all a question of the tipping point: When do labor shortages become so acute that there's a scramble and employers both big and small have to pay up or risk, literally, running out of people? 

    Izumi Devalier, head of Japan Economics at Bank of America- Merrill Lynch, thinks we've reached that point. "There have been many false dawns, so making the case this time can be quite difficult," she acknowledges over lunch. But, using an admittedly anecdotal example, she observes that famously high levels of service at Japanese restaurants are starting to slip subtly because of the gathering labor shortage. "People know that if they don't secure talent now, it's going to get harder and harder."

    For those that want to stay in business, the need to retain staff will outweigh all others. Yamato Holdings Co. Ltd., the parcel delivery company with the cat-and-kitten logo that seems to be everywhere in Tokyo, is instructive. Faced with a shortage of drivers and efforts by competitors to poach those it did have, the firm raised its base rate for customers in April.

    It took almost three decades, but what's important is that it happened. Fierce competition among delivery firms had made Yamato Transport wary of raising prices, but overworked and underpaid staff had better offers. Something had to give. Forty- seven thousand employees were subsequently compensated for unpaid overtime.

    One might compare the shock to the system to the 1985 Plaza Accord, when Japan and West Germany agreed to let their currencies strengthen against the dollar. Among other things, Plaza accelerated the overseas expansion of Japanese corporations. Now companies need to make equally wrenching decisions about how best to deal with shrinking labor liquidity.


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    Mobile money is only just starting to transform some of Africa's markets

    This article by Moses Gahigi for Quartz may be of interest to subscribers. Here is a section:

    The glossy numbers however only tell part of the story, the real equalizer effect of mobile money has been the impact of the innovation around financial services, where telecom players have churned out multiple use cases cutting across all economic divides in Africa, from simple ones like money transfer and air time top-up to more sophisticated ones like bill payments and bank-to mobile wallet transactions.

    As more people overcome the digital cultural shock and become digitally literate they are shopping with tap & pay and other merchant payment solutions, while they also pay their utility bills, cable TV subscriptions and even taxes. Using mobile money significantly increases efficiencies, for instance Dar es Salaam water and sewerage cooperation registered a 38% increase in revenue collections when it started collecting it through mobile money.

    Granryd also noted that telecoms have to develop more Non-communication services that ease life and solve problems, while consolidating the existing user-cases, that it is through these new revenue streams that the industry will stay afloat.

    Mobile money has become a lifeline to unfortunate members of society, for instance up to 52% of refugees from Nyarugusu refugee camp in Tanzania use mobile money to receive humanitarian cash donations, remittances from home countries as well as wage payments.

    Although the innovation was born in East Africa, West Africa has emerged as the new mobile money frontier, where adoption is currently almost 29% of active mobile money accounts in Sub-Saharan Africa are now based, compared to just 8% five years ago.

    Markets such as Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe have more than 40% of users as active mobile money users.


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    Apple Signals Resilient IPhone Demand Helped by Supporting Cast

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

    “There is some relief from the fear of a significant pause before the 10th anniversary iPhone refresh,” said Michael Obuchowski, chief investment officer at Merlin Capital LLC in Boston, which holds Apple stock. “I’m beginning to think it won’t matter if the new iPhones aren’t that exciting.”

    Apple is likely to introduce three new handsets this year: a revamped top model, known for now as the iPhone 8, and upgrades to the existing iPhone 7 and iPhone 7 Plus, people familiar with the plans have told Bloomberg News. The high-end iPhone will include an organic light-emitting diode screen, and inadequate OLED supplies mean that it will not be as readily available as the cheaper handsets at launch, the people said.

    Cook said reporting about the new versions of the iPhone “has created a pause” in consumer buying “that is likely larger than previously.” Apple’s stock has soared on expectations that the new high- end smartphone, which will also include a front-facing three- dimensional sensor to enable facial recognition, will spur a resurgence in demand that will carry into the holiday quarter and beyond. Sales growth of the company’s flagship product has slowed over the past two years as the market has become increasingly saturated and competitors have offered cheaper products with similar capabilities.

    New Technologies
    Slowing smartphone sales have prompted Apple to invest more heavily in developing new technologies. It’s working on smart glasses, an autonomous driving system, improved health and fitness offerings, and its own semiconductor technology.

    Research and development spending jumped 15 percent to $2.9 billion in the most recent quarter. Apple unveiled the early fruits of its spending on augmented reality technology in June, releasing a set of tools which let developers build AR software for the iPhone and iPad when the next operating system for those devices is rolled out later this year. Cook has over the past 18 months repeatedly said how excited he is about the prospects for AR.

    Cook is preparing to release Apple’s first new hardware category since 2015. The HomePod, the smart speaker that will go on sale in December, is the company’s response to Amazon.com Inc.’s Echo and Alphabet Inc.’s Google Home speakers. The company is hoping that advanced acoustic capabilities will encourage consumers to pay $349 for the device -- almost three times as much as the Google Home.


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    StanChart Plunges as Troubled Outlook Overshadows Revenue Gain

    This article by Stephen Morris and Sofia Horta e Costa for Bloomberg may be of interest to subscribers. Here is a section:

    Bill Winters’ overhaul of Standard Chartered Plc has stalled. The emerging-market-focused lender fell the most in almost nine months after the chief executive officer sounded caution about growth prospects and blamed “extraordinary uncertainty” around regulations for a decision not to reinstate the dividend.

    The comments overshadowed a second quarter of revenue gains and pretax profit that doubled. “The absence of a dividend is a negative surprise,” said Ian Gordon, an analyst at Investec Bank Plc. “Revenues remain weak, improving only by $6 million quarter on quarter. The run- rate is far too low to generate the scale and pace of recovery” investors expect, he said, noting the “sheer scale” of the $5 billion decline in income between 2012 and 2016.

    Winters, 55, is in his third year of trying to rebuild Standard Chartered’s reputation and balance sheet after an expansion into risky emerging-market lending led to billions of dollars of writedowns and misconduct fines. He’s led efforts to clean up the culture, while reducing risk and pulling back from underperforming businesses, such as an internal private-equity arm that lost $650 million last year.

    “The external environment is still weighing on our full potential. Some of our markets are beginning to recover nicely, others are still in the doldrums,” Winters said on a call with reporters Wednesday. The bank has “a clear need to improve earnings,” with income rising at “a relatively modest pace.”


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    Email of the day on biotech's recent performance and the Subscriber's videos

    Would you care to comment on the sudden decline in biotech shares over the last few days?  

    I have just started following your videos, after being a stickler for the audios all this time.  I must say they add depth.  It's like have a running chart seminar all year round!  I particularly admire the way you can multitask, carrying on a seamless commentary about something else while your fingers are busy looking for the next chart, without long audio pauses while you wait for the screen to catch up


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    Greenspan Sees No Stock Excess, Warns of Bond Market Bubble

    This article by Oliver Renick  and Liz McCormick for Bloomberg may be of interest to subscribers. Here is a section:

    “By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

    While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends. Deutsche Bank AG’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market.

    “The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy -- to a stagflation not seen since the 1970s. That is not good for asset prices.”


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    Musings from the Oil Patch August 1st 2017

    Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

    Since these solid-state batteries can be packed more tightly, more power can be put into the same space occupied by a current lithium-ion battery, significantly boosting a vehicle’s range.  Another advantage of these solid-state batteries is that they can handle higher charging currents safely.  That allows for faster charging times, assuming the remote charging stations are equipped with more powerful charging current equipment.   

    According to the patent applications, solid-state batteries are less susceptible to temperature variations than liquid electrolyte batteries, which is a hidden issue for many EVs who suffer lost power and range due to extreme heat and cold.  Additionally, solid-state batteries eliminate the need for many of the safety features of current lithium-ion batteries, which will help boost their relative cost advantage, thereby improving the economics for EVs.   


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