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

    Bond Math Reveals Secret to Big Tech's Fate in U.S. Stock Market

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

    “If rates go up, they will underperform,” Aash Shah, senior portfolio manager with Summit Global Investments, said of the biggest tech stocks. “That’s nothing against their business, just a reality of discounted cash flow.”

    The interplay between technology stocks and Treasury rates is nothing new, of course; the rise in yields over 2018 contributed to an outsize rout in the Nasdaq 100 Index late that year, for example. And other forces, like last year’s shift away from companies hard hit by lockdowns, have also played a major role in driving tech stocks. 

    Chris Murphy, co-head of derivatives strategy at Susquehanna International, said a rise in yields doesn’t necessarily pose a risk to tech stocks if economic growth stays strong. But that could be eclipsed if investors grow fearful about the expected pullback in the Federal Reserve’s bond buying program.

    “If economic growth holds up, 10-year yields and the Nasdaq can rally together,” he said. “If the focus switches to the Fed tapering, then that’ll be bad for the Nasdaq and the relationship starts to become more negative.”

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    Japanese scientists produce first 3D-bioprinted, marbled Wagyu beef

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

    From humble beginnings that resembled soggy pork back in 2009, to the classic steaks and rib-eyes we've seen pop up in the last few years, lab-grown meat has come along in leaps and bounds. The most sophisticated examples use bioprinting to "print" living cells, which are nurtured to grow and differentiate into different cell types, ultimately building up into the tissues of the desired animal.

    The Osaka University team used two types of stem cells harvested from Wagyu cows as their starting point, bovine satellite cells and adipose-derived stem cells. These cells were incubated and coaxed into becoming the different cell types needed to form individual fibers for muscle, fat and blood vessels. These were then arranged into a 3D stack to resemble the high intramuscular fat content of Wagyu, better known as marbling, or sashi in Japan.

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    Iron Ore Spikes With Commodities Markets Set for Demand Revival

    This article by Annie Lee and Mark Burton for Bloomberg may be of interest to subscribers. Here is a section:

    Iron ore’s revival came after it lost about a quarter of its value in the past month, as China’s push to curb steel production hammered demand. But steel and other industrial commodities have rebounded this week, after China’s count of daily Covid cases fell back to zero and central bankers vowed to step up support for the real economy. Coking coal in China hit a record on Tuesday, while copper has also recovered amid signs that Chinese consumers are on a buying spree. 

    “Iron ore just cannot be the only one lagging while everything else in steel space is massively bid,” Xiaoyu Zhu, a metals trader at StoneX Financial Inc., said by email. “After the price spike in coal products in the last two days, it’s hard for iron ore to stay quiet.”

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    Brazil farmers remove dead coffee trees, some switching to grains

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

    Adriano Rabelo de Rezende, technical head at the Minasul coffee co-op, who flew over damaged coffee fields https://www.reuters.com/world/americas/frosts-stain-brazil-coffee-belt-growers-see-nearly-third-fields-hit-2021-07-30 with Reuters after the frosts, said the recommendation is for farmers to wait for the rains before taking any action.

    “With the rains some plants could recover, so it will be better to decide the best action: what type of pruning,” he said.

    Rains are expected in Minas Gerais by the end of the month. They will be key not only for the trees’ ability to recover, but also for the flowering stage that will determine production potential for the next crop.

    Mario Alvarenga, who has two coffee farms in Minas Gerais, said the drought remains challenging.

    “You don’t find any moisture in the soil up to 1 meter (40 inches) deep. Crops that were not hit by frosts are withering,” he said.

    Alvarenga estimates that 18% of his coffee crops were damaged by frosts. He has already started pruning where he thinks trees have a chance of recovering when the first rains arrive, leaving the ones that are dead to be taken out later.

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    Amazon offers £1,000 golden hellos to new warehouse workers to meet booming demand amid worsening UK recruitment crisis

    This article from the Daily Mail may be of interest to subscribers. Here is a section:

    Amazon is offering to pay up to £1,000 joining bonuses for new warehouse workers in the UK as it looks to meet a boom in demand and battle a worsening shortage of staff. 

    The online giant is advertising for 'urgently needed' warehouse pickers and packers across the country, offering hourly rates of up to £11.10 an hour for daytime shifts, rising to £22.20 an hour for overtime. 

    The roles up for grabs at Amazon span warehouses nationwide, including Darlington, Dartford, Swansea, Redditch, Coventry and Redruth as well many London locations, including Croydon, Enfield and Luton.

    Job ads on the Indeed website reveal that workers who are taken between now and September 18 are eligible for the bonus.

    Full-time and temp contracts are being advertised on the site, with 'immediate starts' and no prior experience required. 

    It comes as UK firms are struggling to fill roles across a number of industries as a result of gaps left by EU workers who have returned home because of Brexit and the pandemic, as well as people having to self-isolate because of Covid.

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    Powell's Jackson Hole Gamble Runs Risk of Backfiring

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    In the end, it will come down to what Powell considers the bigger longer-term risk for the U.S.: Become trapped in a disinflationary spiral like that experienced by Japan as the forces of technological advances and globalization continue to press down on prices, or enter an inflationary zone of escalating cost pressures akin to what the U.S. suffered a half century ago.

    Right now, he’s betting that the former is the bigger long-run danger, and holding off from tightening credit.

    “The new framework is not so much about what kind of monetary policy you would expect right now, but what you might expect over the next year or perhaps longer as this recovery continues,” Wendy Edelberg, director of The Hamilton Project at the Brookings Institution, says. “They have made a pretty convincing argument they are going to keep monetary policy accommodative for longer than they would have under a different policy rule.”

    But the path ahead will be far from easy as the Fed seeks to softly land the economy in the neighborhood of on-target inflation and maximum employment.

    “It’s going to very difficult,” says Blinder, who was at the Fed when it achieved what many economists consider its only perfect landing for the economy, in the mid 1990s. “If they can achieve that, they deserve more than a pat on the back.” 

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    What interns and new grads really get paid at top tech companies

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

    For example, Collins found that, according to 19 survey respondents so far, Facebook is offering an average annual salary of $109,526 with a massive signing bonus of $79,737 for employees in technical roles like iOS or full stack developer, or software or network engineer.

    By comparison, according to 31 survey respondents, Google is paying recent graduates in tech roles an average of $107,000 annualized salary with an average signing bonus of $27,327.

    And Microsoft was offering new grads a $107,455 annualized salary with a $26,591 signing bonus, according to 22 respondents.

    Looking at the self-reported salary and bonus data by job title, Collins found that software engineers and developers are out-earning their peers in user experience design and sales engineering by tens of thousands, annually.

    And even though government salaries are presumed to be much lower than those in the private sector, working in tech in a government office will score entry-level engineers and developers a slightly better salary, on average, than working for a seed- or Series A-stage startup, the survey suggests.

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    World's biggest wind turbine shows the disproportionate power of scale

    This article from NewAtlas may be of interest to subscribers.

    China's MingYang Smart Energy has announced an offshore wind turbine even bigger than GE's monstrous Haliade-X. The MySE 16.0-242 is a 16-megawatt, 242-meter-tall (794-ft) behemoth capable of powering 20,000 homes per unit over a 25-year service life.

    The stats on these renewable-energy colossi are getting pretty crazy. When MingYang's new turbine first spins up in prototype form next year, its three 118-m (387-ft) blades will sweep a 46,000-sq-m (495,140-sq-ft) area bigger than six soccer fields.

    Every year, each one expected to generate 80 GWh of electricity. That's 45 percent more than the company's MySE 11.0-203, from just a 19 percent increase in diameter. No wonder these things keep getting bigger; the bigger they get, the better they seem to work, and the fewer expensive installation projects need to be undertaken to develop the same capacity.

    The overall result should be a drop in offshore wind energy production prices – a sorely needed drop, too. Current levelized costs of energy, as estimated by the US Energy Information Administration for new energy generation assets going live in 2026, place offshore wind as the most expensive way of generating a megawatt-hour right now, at US$120.52, where ultra-supercritical coal is more like $72.78 and standalone solar is around $32.78 before subsidies.

    Obviously, wind fills in gaps that solar can't, and it'll be a crucial part of the energy mix going forward. Scaling the industry up with these mammoth turbines is the key reason why industry experts are predicting that the cost of offshore wind will drop by between 37 and 49 percent by 2050, as reported by Renew Economy.

    MingYang says the MySE 16.0-242 is just the start of its "new 15MW+ offshore product platform," and that it's capable of operating installed to the sea floor or on a floating base. The full prototype will be built in 2022, installed and into operation by 2023. Commercial production is slated to begin in the first half of 2024.

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