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

    Investors in Japan Stocks Expect Turning Point After Olympics

    This article by Gearoid Reidy and Shoko Oda for Bloomberg may be of interest to subscribers. Here is a section:

    The Olympics and the success of the vaccine rollout are set to define Suga’s premiership. Suga must face two polls in quick succession after the emergency ends, with his term as leader of the ruling Liberal Democratic Party expiring and a general election set to take place in October or November.

    “If the vaccines continue and clear away the uncertainties surrounding the pandemic, that’s advantageous for the government” in the election, Invesco’s Kinoshita said.

    John Vail, chief global strategist at Nikko Asset Management Co., said when the Olympics are over and vaccination rates pick up, investors will turn positive as rebounds in industrial production and exports become evident.

    “When Japan comes out of this, it’s going to surge,” Vail says of the economy. “A lot of people don’t believe it until they see it. Especially in Japan, people tend to worry first and think about the future later.”

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    PE Daily: Private Equity's IPO Boom

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

    Private-equity firms are taking portfolio companies public at record levels, capitalizing on a highflying market as the economy rebounds from the pandemic-induced recession, Maria Armental reports for WSJ Pro Private Equity. In all, 105 private equity-backed companies priced initial public offerings in the U.S. in the first six months of this year, according to data provider Dealogic. The total has already surpassed the 89 U.S. IPOs by sponsor-backed companies in all of last year and is more than triple the number of such exits in 2019.

    Midmarket-focused Nautic Partners aims to raise $2.5 billion for its 10th buyout fund, Preeti Singh reports for WSJ Pro Private Equity, citing a public document from Rhode Island's public pension system. If the Providence, R.I.-based firm hits its target, Nautic Partners X LP would be about 60% larger than its predecessor, Nautic Partners IX LP, which closed with almost $1.57 billion in March 2019. The fund's sponsor is expected to commit as much as $100 million to the new pool, documents from the pension system and its investment consultant said.

    Ordinary people would have a way to join the wealthy as investors in private-equity funds under a proposal from two members of the House of Representatives, part of a wave of recent government efforts to expand access to alternative investments, Chris Cumming reports for WSJ Pro Private Equity. A bill introduced in the House on June 30 by Rep. Anthony Gonzalez (R., Ohio) and co-sponsored by Rep. Gregory Meeks (D., N.Y.) would amend the Investment Company Act of 1940 to prohibit limiting the amount a closed-end vehicle can invest in private funds.

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    Europe to Propose End of Combustion Engine Era in Green Overhaul

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

    Europe wants to lead the global fight against climate change to become the world’s first net-zero emissions continent by 2050 under its Green Deal. To reach the goal, it will need to overhaul every corner of its economy, with reducing greenhouse gases in transport and industry being the biggest challenges.

    The EU executive will next week propose strengthening and expanding its carbon market, revising energy taxation rules to discourage the use of fossil fuels and imposing the world’s first climate levy on certain emissions-intensive goods brought into the region. The Fit for 55 package will also include more ambitious climate targets for member states in areas not covered by the carbon market.

    The revised renewable energy law will set targets for the use of sustainable fuels in transport, heating and cooling, buildings and industry. To help the massive roll-out of electric vehicles, a regulation on alternative fuels will require member states to ensure electric charging points are installed every 60 kilometers (37 miles) on major highways. Hydrogen refueling points would have to be available at the maximum interval of 150 kilometers.

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    Orocobre June Quarter Output 3,300 Tonnes of Lithium Carbonate

    This note covering Orocobre’s production results today may be of interest.  

    About 66% of production was battery grade lithium carbonate vs 21% a year earlier.

    Sales of Olaroz lithium carbonate were 2,549t at $8,476/t FOB, with pricing up 45% on the March quarter

    Inventory has increased due to Covid-19 related transport delays and the requirement to hold additional safety stock in Japan to guarantee delivery into the Prime Planet Energy and Solutions contract

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    China Is the First Crack in the Covid Recovery

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

    Late Friday, the People's Bank of China cut its reserve requirement for most banks by half a percentage point. The move, which will unleash about 1 trillion yuan ($154 billion) of long-term liquidity, was flagged by Beijing earlier this week, but surprised economists with the speed of its arrival. Officials may be signaling that economic growth data for the second quarter, due for release next week, will be soft.

    The shift by the PBOC is jarring because China spent months conveying the idea that it was comfortable trimming — not adding — support for the economy. With the worst of the pandemic shock seemingly behind them, policy makers could return to one of their principle worries before Covid-19 struck: bolstering financial stability and discouraging firms from taking on too much debt. For all the concerns about market upheaval when the Fed eventually starts dialing back quantitative easing, it looked for a while Beijing had already started down that path. Friday’s reserve cut suggests China is the one pivoting — in a dovish, not hawkish, direction.

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    ECB Unveils Policy Regime Change That Lets Inflation Overshoot

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

    “The new formulation removes any possible ambiguity and resolutely conveys that 2% is not a ceiling,” President Christine Lagarde told reporters in a press conference, adding that the strategy review was agreed unanimously. “What we want to do is to avoid the negative deviation that will entrench inflation expectations.”

    The outcome “can be perceived as net dovish in the short-term,” said Ima Sammani, FX Market Analyst at Monex Europe. “The new symmetric inflation target gives the central bank ample room to run accommodative monetary policy for longer without having to fight markets.”

    Still, the euro gained after the announcement as traders perceived the ECB’s new strategy as less aggressive than the Federal Reserve’s flexible inflation targeting. The common currency was up 0.5% at $1.1848 at 2:42 p.m. Frankfurt time. It’s fallen from around $1.22 a month ago.

    On climate change, another controversial topic for some central bankers, the institution said it will now include considerations on that matter in its monetary policy operations. Meanwhile officials also said they will start considering owner-occupied housing costs in their supplementary measures of inflation.

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    U.S. Seeks to Lower Spiking Shipping Costs With Competition

    This article by Justin Sink Bloomberg may be of interest to subscribers. Here is a section:

    While the surging rates represent a profit bonanza for container lines including Copenhagen-based A.P. Moller-Maersk A/S and China’s Cosco Shipping Holdings Co., they’re making it more difficult for importers to absorb higher costs. Some are raising retail prices, adding to inflationary pressures that
    worry central banks, while Covid-related supply bottlenecks are also holding back economic activity.

    The push against consolidation is part of a forthcoming executive order on competition that President Joe Biden is expected to sign in the coming days. Other elements of the action are expected to include new rules governing airline fees, non-compete clauses, right-to-repair, and food labeling. In recent weeks, senior Transportation Department officials have been meeting with port officials, shipping industry players and retailers to try to address port congestion and long-term infrastructure challenges.

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    Wells Fargo Plans to Stop Offering Personal Lines of Credit

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

    Wells Fargo & Co. said it’s shutting down all existing personal lines of credit and will no longer offer the product to its customers.

    “In an effort to simplify our product offerings, we’ve made the decision to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products,” the bank said in an emailed statement. The firm has been providing existing customers with 60-day notices their accounts will be closed, with a fixed rate and minimum payment for their remaining balances, it said.

    Under Chief Executive Officer Charlie Scharf, Wells Fargo has been exiting businesses deemed inessential with the goal of simplifying operations and improving profitability following years of scandals. Earlier this year, the bank agreed to sell its asset-management and corporate-trust units, and last year it agreed to divest a $10 billion private student-loan book.

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