Investment Themes - General

Search all article by their themes/tags in the search area
below for example “Energy” or “Technology”.

Search Results

Found 1000 results in General
October 24 2019

Commentary by Eoin Treacy

Tesla's Surprise Looks Strangely Familiar

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

Tesla’s free cash flow, meanwhile, was positive for the second quarter in a row, at $371 million. Again, that is positive. Again, the number was flattered by Tesla underspending on its capex budget. Guidance for the year was $1.5 billion to $2 billion. Based on the low spending in the first half, the mid-point of Tesla’s range implied it spending an average of $610 million in the third and fourth quarters. Capex came in $225 million below that level, equivalent to 61% of the free cash flow. Tesla’s capex continues to come in lower than its depreciation expense, which is striking for a company with such expansive ambitions. The company puts this down to rising efficiency.

There is something ludicrous about the stock of a company already priced at $46 billion, or 422 times the 2020 GAAP earnings forecast, surging because it reported a small net profit rather than a small net loss (the consensus estimate was a negative $234 million). Ditto for a few hundred million of free cash flow largely explained by below-guidance capex. Tesla’s own forecast points to positive profits and free cash flow continuing, but which may suffer “temporary exceptions, particularly around the launch and ramp of new products.”

Eoin Treacy's view -

There is no doubt that Tesla is an expensive share but it’s ability to occasionally turn a profit confounds the highly vocal bearish community who point to the company as representing nothing more than a house of cards. At its most basic the company is producing vehicles many people aspire to own which is a positive. The very big question is whether it can continue to do so and make money at the same time.



This section continues in the Subscriber's Area. Back to top
October 23 2019

Commentary by Eoin Treacy

Video commentary for October 23rd 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: quantum supremacy, bitcoin pulls back, Stocks steady, Dollar eases back gold steady, oil firm, Continuous Commodity Index on the cusp of breaking out, Shenzhen B-Shares weak, India steady, Pound steadies. 
 



This section continues in the Subscriber's Area. Back to top
October 23 2019

Commentary by Eoin Treacy

Google Says Quantum Computer Beat 10,000-Year Task in Minutes

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

Alphabet Inc.’s Google said it’s built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years.

The results of Google’s tests, which were conducted using a quantum chip it developed in-house, were published Wednesday in the scientific journal Nature.

“This achievement is the result of years of research and the dedication of many people,” Google engineering director Hartmut Neven said in a blogpost. “It’s also the beginning of a new journey: figuring out how to put this technology to work. We’re working with the research community and have open-sourced tools to enable others to work alongside us to identify new applications.”

Eoin Treacy's view -

The question is not whether Google has achieved quantum supremacy or whether IBM will get there first. Rather the point is quantum mechanics has gone from philosophy to practicality in less than a century. Consider that the Greeks hypothesised the existence of the atom thousands of years ago but the nuclear age did not start until about 75 years ago. This is a clear example of the exponential pace of technological innovation.



This section continues in the Subscriber's Area. Back to top
October 23 2019

Commentary by Eoin Treacy

California's Gasoline Panic

This article from the Wall Street Journal’s Editorial Board may be of interest to subscribers. Here is a section:

But about 95% of gas stations with convenience stores are independently owned, which includes mom-and-pops that license brand names. Some consumers will pay more for brand-name gas as they will for Prada purses or Starbucks lattes. As gas prices rise, consumers may also burn more money than they save driving in search of the cheapest stations.

Notably, the commission ignores that retail margins include labor costs, utilities, rent and taxes. In 2012 the state increased taxes on high earners, which hit many small businesses. California’s minimum wage has increased by 50% since 2013. According to the Bureau of Labor Statistics, worker wages at California gas stations over the last five years have increased 50% more than nationwide.

Mr. Newsom has threatened legal action against oil companies to “protect the public.” But liberals have long wanted higher gas prices so folks will ditch gas-powered cars. The Governor last month ordered revenue to be redirected from the last gas tax hike, which was supposed to fund highway construction, to projects that “reverse the trend of increased fuel consumption and reduce greenhouse gas emissions.”

So Californians in the future can look forward to paying more to drive on deteriorating roads as they head to homes without electricity due to blackouts. How long will it take California voters to figure out that these are problems made in Sacramento by politicians?

Eoin Treacy's view -

Spikes in crude oil prices are associated with recessions because they represent a tax on consumption. It’s not coincidence that one of the reasons Europe’s economies have subpar growth is because they tax economic output through regulation and carbon trading with the express aim of increasing costs. California is well on the way to achieving the same outcomes.



This section continues in the Subscriber's Area. Back to top
October 23 2019

Commentary by Eoin Treacy

Bitcoin Tumbles to 5-Month Low as Libra Hit by U.S. Backlash

This article by Claire Ballentine and Olga Kharif for Bloomberg may be of interest to subscribers. Here is a section:

“The biggest thing behind this is that volumes have been very very low,” said Josh Lim, head of trading strategy at Galaxy Digital in New York. “On the sentiment side of things, the fact that the Libra coalition has faced some major challenges and the Telegram launch was halted by the SEC, it really curtailed investor appetite for crypto broadly.”

Potentially adding to concern is the news that Alphabet Inc.’s Google has built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years. Skeptics of cryptocurrencies have noted that advances in computing could make the slower proof of work system used by Bitcoin and other tokens obsolete.

Eoin Treacy's view -

The launch of bitcoin settled futures on the same day that the first whiff of Google’s quantum supremacy news broke in September was responsible for the dynamic break below $10,000. The Congressional debate about Facebook’s Libra project and confirmation of the quantum supremacy story were catalysts for selling pressure today.



This section continues in the Subscriber's Area. Back to top
October 22 2019

Commentary by Eoin Treacy

Video commentary for October 22nd 2019

October 22 2019

Commentary by Eoin Treacy

Pound Drops as U.K. Lawmakers Back Brexit Deal, Reject Timetable

This article by Charlotte Ryan for Bloomberg may be of interest to subscribers. Here it is in full:

The pound weakened after U.K. lawmakers rejected Prime Minister Boris Johnson’s plan to fast-track his Brexit accord through parliament.

Britain’s currency dropped against all of its major counterparts, but the losses were contained after the government won an initial vote on the deal. Johnson opened the door to a short extension to his Oct. 31 deadline, saying he would pause legislation and go back to the European Union, after earlier threatening to throw out the deal if lawmakers rejected his plans.

“For now it seems the market is still generally expecting this is a setback, but not a fatal setback, to a negotiated Brexit,” said Jeremy Stretch, head of G-10 currency strategy at Canadian Imperial Bank of Commerce. “There hasn’t been a rapid uptick in no-deal pricing at this point,” he said, referring to a scenario where the U.K. would leave the EU with no divorce deal.

The U.K. currency had rallied more than 8% from September’s low as Johnson secured an agreement with the EU and then lawmakers then forced him to request an extension to the Oct. 31 deadline, reducing that no-deal risk.

Sterling dropped as much as 0.7% after the votes to $1.2869, after rallying Monday to touch $1.3013, the strongest level since May. Against the euro, it fell 0.4% to 86.39 pence.

Eoin Treacy's view -

Parliament today supported the deal which, as expected, excises Northern Ireland economically from the UK. That is not going to be received well by loyalist communities in North Ireland. However, it is likely to be positive for the region’s economy since it will have a toe hold between the UK and the EU and subject to corporate taxes could attract inward investment.



This section continues in the Subscriber's Area. Back to top
October 22 2019

Commentary by Eoin Treacy

Normal Yield Curve Doesn't Mean Everything's Normal

This article by Mohamed A. El-Erian for Bloomberg may be of interest to subscribers. Here is a section:

The more that markets internalize this shifting monetary policy sentiment inside central banks, the more that they will unwind the policy expectations that fueled several forces acting to invert the U.S. yield curve, including indirect ones such as the enormous pressure on foreign investors to flee negative yields in Europe and Japan and go into longer-dated U.S. bonds. Look for this phenomenon to also maintain the yield spread between German and U.S. bonds at its current lower range despite what will continue to be relative economic outperformance by the U.S.

Just as I argued in March that it was unwise to react to the inversion of the Treasury yield curve with extreme anxiety about a U.S. recession, it would be premature to celebrate the recent partial reversion as an indicator of significant strengthening of U.S. economic prospects. Instead, both are reminders of the extent to which traditional economic signals have been distorted by a prolonged period of extraordinary central bank policies. And they should also been seen as just one of the unusual consequences of a monetary stance that, imposed for several years on central banks by the lack of proper policy action elsewhere, will now see the hoped-for benefits give way to a broadening and deepening recognition of the unintended consequences and collateral risks.  

Eoin Treacy's view -

An inverted yield curve has been one of the most readily available lead indicators for a US recession for decades. There is always an argument that this time is different and that it only works for the USA’s economy. It is also worth remembering that no US recession has occurred without an inverted yield curve first but is a very small number of false positives. When considering the history of the measure anyone who is willing to buck the historical trend is betting on the signal giving a false positive.



This section continues in the Subscriber's Area. Back to top
October 22 2019

Commentary by Eoin Treacy

Chile Unrest Has a Worrisome Message for the World

This article by John Authers may be of interest to subscribers. Here is a section:

The first is inequality. The Chicago Boys’ agenda delivered reasonably strong and stable aggregate growth, but Chile remains one of the most unequal countries on earth. It ranks as one of the leaders in inequality among members of the Organization for Economic Cooperation and Development, and, according to the World Bank, remains more unequal than either of its very different neighbors, Argentina and Peru. People are far angrier about a rising cost of living if it comes with a sense of injustice. 

Second, the catalyst was a proposal to raise public transport fares and energy bills. There is ample evidence from across the world that these will incite rebellion like nothing else — a point that those who hope to reduce greenhouse-gas emissions via a carbon tax should bear in mind. The violent protests of the Gilets Jaunes in France were over higher gasoline taxes, which were seen as penalizing car-dependent people in the provinces while favoring metropolitan elites. Mexico in 2017 saw riots and protests against what was known as the “gasolinazo,” a 20% rise in fuel prices that was a part of the government’s partial privatization of Pemex, the  monopoly state oil company. Last year, Brazil was rocked by protests and a strike by truck drivers in response to fuel shortages and a sharp increase in the price of diesel.

Third, Chile lacks a populist movement, or a canny populist caudillo politician. Such a figure might have been able to use public anger for their own purposes, but would also have had a better chance to control it. For example, Mexico’s left-wing populist president Andres Manuel Lopez Obrador frequently led public protests, but successfully persuaded his followers not to resort to violence. In Chile, where conventional politics lacks a party or a personality to channel their grievances, protesters have resorted to self-destructive vandalism. Which is to say, while charismatic Latin American populists understandably tend to make western leaders nervous, Chile shows that they can perform a vital function. 

Eoin Treacy's view -

The Arab Spring originated in Tunisia in a protest over the price of bread. The unrest in Lebanon last week was a response to the proposed tax on WhatsApp users. The Hong Kong unrest probably has its roots in the rising cost of living. Chile’s protests are equally about the cost of living. Does that suggest, within a decade the world has gone from worrying about bread to bigger ticket purchases? The surge in asset price inflation against a background of largely stagnant wages is at least partly to blame for this deterioration in the political status quo.



This section continues in the Subscriber's Area. Back to top
October 21 2019

Commentary by Eoin Treacy

October 21 2019

Commentary by Eoin Treacy

Leveraged loans: how much do credit ratings understate the risks?

Thanks to a subscriber for this report from UBS which may be of interest. Here is a section: 

Two of the main arguments against higher loan defaults are lower rates and lack of covenants. On lower rates, we believe the transmission mechanism of lower rates to leveraged loans is comparatively weak. Our recent work has shown that LL yields are little changed year-over-year, in part because wider spreads have offset modest declines in LIBOR rates. Looking ahead, 4 rate cuts in 2020 could help loan issuers but there are likely offsetting factors. One is that this assumes loan spreads do not widen, which we think is unlikely, particularly heading into 1H20 with US GDP growth slowing to 0.3-0.5% in 1H20. Two is if rating agency downgrades persist (as we expect) the future cost of new funding for issuers increases substantially with each rating notch; our analysis shows the current spread differential between a B- and a CCC+ loan is c300bp. Three is that the Fed has less room to stimulate: only 38-52% of the rate relief provided in the last two cycles. 

On lack of covenants, the key driver of defaults historically is not covenant violations but insolvency and illiquidity. One of the more holistic papers compares these factors in triggering defaults and argues that low market asset value to debt is the key driver while, on average, covenants add limited additional information4. We believe lack of covenants will change the event of default, with more distressed exchanges likely. But it is not clear this is a good outcome. Covenants had weakened leading up to the '15-16 energy default cycle, yet default rates were elevated (peak 22%) and many distressed exchanges failed with roughly half of firms re-defaulting. While loan downgrades to CCCs have been lagging those to B-, we are starting to see more evidence of downgrades to CCC. These decisions are primarily driven by weak operating performance, negative cash flow and capital structure unsustainability (even as issuers do not have maturities until 202022). Once a firm is downgraded to CCC, we believe the re-pricing in loan yields makes distressed exchanges likely, particularly in more stressed markets.

Eoin Treacy's view -

The race to secure a competitive yield has resulted in large quantities of debt being issued and the quality of issuers declining relative to the yield on offer. If a rising tide lifts all boats then the potential for shipwrecks to be revealed when the tide goes out is also a risk. Warren Buffett’s swimming naked remark comes to mind.

 



This section continues in the Subscriber's Area. Back to top
October 21 2019

Commentary by Eoin Treacy

China Braces for Sub-6% Economic Growth in Key Policy Meetings

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

“They measure the policy scope by looking at the overall debt, by looking at how much risk there is in shadow banking, in the housing sector and in inflation,” Yao said. “Looking at all these things, they judge they actually don’t have much scope from a long-term perspective. So they’re very careful about how to use it and when to use it.”

With few major monetary policy moves in the past month, the Loan Prime Rate, a market gauge of borrowing costs, remained unchanged in October, according to a PBOC release Monday.

In his statement to the IMF’s steering committee at the meetings, Yi said that growth had been stable this year and the “main economic indicators kept within an appropriate range.” While keeping credit growing, the bank should also pay attention to “maintaining a stabilized leverage ratio,” he said.

Yi won support for China’s approach from the IMF, which otherwise has been urging more action to support the global economy. Kenneth Kang, deputy director of the fund’s Asia and Pacific Department, said any support to prop up the Chinese economy should be “contained, calibrated to the shock, it should be temporary in nature and it should be focusing on re-balancing growth down the road.”

Eoin Treacy's view -

China’s administration is worried about the debt mountain which has been accrued over the last decade and are therefore reluctant to pull on the traditional levers for growth in the housing and infrastructure sectors. That is weighing on demand for just about all industrial commodities.



This section continues in the Subscriber's Area. Back to top
October 21 2019

Commentary by Eoin Treacy

US military report recommends giving AI autonomous authority to launch nuclear weapons

This article by Matthew Griffin may be of interest to subscribers. Here is a section:

In other words, they want to give an AI the nuclear codes. And yes, as the authors admit, it sure sounds a lot like the “Doomsday Machine” from Stanley Kubrick’s 1964 satire “Dr. Strangelove.”

The “Dead Hand” referenced in the title refers to the Soviet Union’s automated system that would have launched nuclear weapons if certain conditions were met, including the death of the Union’s leader.

This time, though, the AI-powered system suggested by Lowther and McGiffin wouldn’t even wait for a first strike against the US to occur — it would know what to do ahead of time.

“[I]t may be necessary to develop a system based on artificial intelligence, with predetermined response decisions, that detects, decides, and directs strategic forces with such speed that the attack-time compression challenge does not place the United States in an impossible position,” they wrote.

The attack-time compression is the phenomenon that modern technologies, including highly sensitive radar and near instantaneous communication, drastically reduced the time between detection and decision time. The challenge: modern weapon technologies, particularly hypersonic cruise missiles and aircraft, cut the window even further.

Eoin Treacy's view -

The advent of first strike weapons like hypersonic missiles and artificial intelligence “dead man’s switches” represent significant amplification of geopolitical stress.

 



This section continues in the Subscriber's Area. Back to top
October 21 2019

Commentary by Eoin Treacy

These Are the World's Best (and Worst) Pension Systems

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

The study comes as policy makers grapple with more people entering retirement, living longer and needing a steady flow of income on which to survive. Almost one-fifth of the world’s
population is forecast to be of retirement age by 2070, up from about 9% this year, United Nations data show.

“Systems around the world are facing unprecedented life expectancy and rising pressure on public resources to support the health and welfare of older citizens,” said David Knox, the report’s author and senior partner at Mercer. “It’s imperative that policy makers reflect on the strengths and weaknesses of their systems to ensure stronger long-term outcomes for the
retirees of the future.”

Eoin Treacy's view -

Raising the age at which citizens become eligible for pension makes economic sense but is one of the thorniest issues to put before voters. Japan obviously has a vital need to urgently replace aging workers and while immigration is now allowed, the program needs to be vastly expanded.



This section continues in the Subscriber's Area. Back to top
October 18 2019

Commentary by Eoin Treacy

October 18 2019

Commentary by Eoin Treacy

Mysterious

Thanks to a subscriber for this memo from Howard Marks which may be of interest. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

I suspect the changes in how the time value of money is considered, resulting from negative interest rates, is one of the most interesting topics in the market today. We are accustomed to thinking about how money loses value through devaluation and inflation but never give any thought to the value of time. Futures and options traders need to consider the time value of money because their contracts pressing maturity profiles. However, when there is no maturity, such as with property, art, collectibles or private equity the time value of money takes on a completely different meaning.



This section continues in the Subscriber's Area. Back to top
October 18 2019

Commentary by Eoin Treacy

Cloud Set to Drive a New "Roaring 20s" Defined by Big Productivity Improvements

Thanks to a subscriber for this report from Oppenheimer which may be of interest. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

I received a service call from Bloomberg this morning while I was reading this report and it occurred to me that I worked for a cloud company all those years ago and didn’t even know it. Back in the early 2000s Bloomberg insisted on dedicated lines before they would install a terminal. The system required the bandwidth to pump real-time prices and calculations through to the end user. Those calculators sat on the company’s servers rather than the desktop which is effectively what cloud computing is.



This section continues in the Subscriber's Area. Back to top
October 18 2019

Commentary by Eoin Treacy

Chinese Nuclear Stockpile Clouds Prospects for U.S.-Russia Deal

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

Russian officials say they want the current agreement extended for the allowed five years beyond its 2021 expiration. Foreign Minister Sergey Lavrov told reporters last month that that the U.S. continues to insist China be brought into negotiations, a message he said Secretary of State Michael Pompeo delivered to him at the annual United Nations General Assembly meetings.

But Moscow says time is running out. Negotiations for a new deal would typically take as long as a year. Even settling on an extension would be lengthy.

“We urge our American colleagues not to lose time anymore,” Russian Deputy Foreign Minister Sergei Ryabkov said in an interview with Russia’s International Affairs journal. “There’s almost none left. Simply letting this treaty die would be unforgivable. This will be perceived by the international community as neglecting one of the key pillars of international security.”

Despite American efforts, Beijing has so far balked at trilateral talks, arguing it is far behind Moscow and Washington, which together hold more than 90% of the world’s nuclear weapons.

“China has no interest in participating in a nuclear-arms-reduction negotiation with the U.S. or Russia, given the huge gap between China’s nuclear arsenal and those of the U.S. and Russia,” said Fu Cong, director general of the foreign ministry’s Arms Control Department. “The U.S. and Russia, as the countries possessing the largest and most advanced nuclear arsenals, bear special and primary responsibilities on nuclear disarmament.”

Eoin Treacy's view -

There is a Chinese expression to the effect “when the stork and the clam fight, the fisherman wins”. China is content for the USA and Russia to face off against one another in mutual agreements to curtail development of even more powerful nuclear weapons. Meanwhile the hypersonic missiles it is developing and showing off to the world in parades are an alternative first strike weapon where there are no treaties on containment.



This section continues in the Subscriber's Area. Back to top
October 17 2019

Commentary by Eoin Treacy

Video commentary for October 17th 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: major markets continue to pause at big round numbers but the relative strength of megacaps is a postive development, Dollar eases which is positive for emerging markets, gold and silver steady, nickel weak, India resurgent. 



This section continues in the Subscriber's Area. Back to top
October 17 2019

Commentary by Eoin Treacy

Monthly Economic Bulletin

Thanks to a subscriber for this report from Krungsri Research focusing on South East Asia. Here is a section:

Vietnam’s economy expanded 7.3% YoY in 3Q19, the strongest growth in three quarters. In the nine months to September 2019, the economy expanded 7.0%.

In addition, the central bank recently cut policy interest rate by 25bps to 6.0%, the first cut since October 2017. This would reduce cost of funds, increase liquidity, and support growth in consumption and investment—which together account for around 100% of GDP.

For the rest of the year, the economy will face challenges from a high-base GDP growth rate and rising external pressures from slowing global trade and the US-China trade war. However, Vietnam has resilient domestic demand and authorities have helped to support demand by cutting key interest rates. Hence, we forecast Vietnam’s economic growth at 6.6-6.8% for this year.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The trade war between the USA and China represents a clear signal that China is quickly pricing out of the low-end manufacturing sector. This is a trend which has been underway for some time but it is now gathering pace as the both the cost of doing business and the geopolitical risk increase.



This section continues in the Subscriber's Area. Back to top
October 17 2019

Commentary by Eoin Treacy

Has Arlene Foster Finally Overplayed Her Hand?

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

The Brexit ultras in Johnson’s party, known as the Spartans, may be unionists, but their interests and those of the DUP have never been fully aligned. The Spartans want the hardest Brexit possible, and that’s their ultimate priority, rather than the exact form of customs arrangements between the mainland U.K. and Northern Ireland and how exactly consent is given for that by the DUP.

Johnson’s deal doesn’t look like it crosses any of the Spartans’ red lines. They haven’t said so far whether they’ll back him, but some of the noises ahead of the deal’s announcement were positive. They realize if a deal doesn’t pass now, there’s a chance Brexit may never happen. Secure their support, and it’s possible Johnson could win enough votes to pass his deal, as Bloomberg’s Rob Hutton outlined on Wednesday.

Much depends too on whether Brexit-supporting Labour MPs back a deal.

It may seem hard to imagine what the DUP gains from its opposition, other than burnishing its own Braveheart reputation by holding out. But the DUP plays a long game. They’re asking themselves whether the new arrangements, which include customs and regulatory checks on the Irish Sea border, will over time make it easier for Northern Ireland to drift toward unification with Ireland. They’re thinking about how unionist voters will regard their support for a deal that doesn’t give them an effective veto over the new arrangements, as Johnson’s original proposal did. 

Eoin Treacy's view -

It is going to be a monumental task to get Boris Johnson’s deal through parliament without the assistance of the DUP. Unfortunately, the machinations of who votes in favour of the deal are unlikely to be purely in the national interest. Everyone knows an election is coming and parliamentarians are keenly aware that how they vote in this weekend’s question will probably come back to haunt them later.



This section continues in the Subscriber's Area. Back to top
October 17 2019

Commentary by Eoin Treacy

Traders Are Rushing Nickel Out of China to Capture LME Profits

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

China’s Tsingshan Holding Group Co. was one of the main forces behind a record drawdown in LME nickel inventories in early October, according to people familiar with the matter. Tsingshan is working with financing banks including JPMorgan Chase & Co. to take the metal off the exchange, the people said. Estimates for how much they bought range from 30,000 to 80,000 tons.

The nickel supply squeeze could signal a “Hamanaka moment,” according to Citigroup Inc. analysts including Oliver Nugent. That’s a reference to the Sumitomo Corp. trader who hoarded copper, driving up prices before the market collapsed in the 1990s.

The Citigroup report highlighted the disconnect between futures and physical markets. The LME nickel contract is signaling an extreme shortage, while conditions in the physical market are looser. That represents a “major downside risk” to prices given that global growth is starting to weaken, the bank said.

Eoin Treacy's view -

The fact that there is enough inventory to move metal around to close arbitrages which have resulted from the Indonesian ban on exports is not great news for the nickel price. Nickel is a significant component in battery chemistries and with the evolution of 8:1:1 formats, demand is likely to rise over the medium term. The challenge in the short term is global demand for automobiles of all kinds is falling.



This section continues in the Subscriber's Area. Back to top
October 16 2019

Commentary by Eoin Treacy

October 16 2019

Commentary by Eoin Treacy

Blueprint For Thinking About The Future

Thanks to Bernard Tan for this essay which may be of interest to subscribers. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

China’s people are its greatest resource. Education has historically been the single greatest enabler of individual and familial success in most countries and China is no exception. The success of overseas Chinese populations all over the world is in large part tied to their commitment to the education of their children and commitment to a frugal existence, work ethic and investment in property. It’s natural that the same cultural affinity should apply in China.

 



This section continues in the Subscriber's Area. Back to top
October 16 2019

Commentary by Eoin Treacy

Norway's Krone Hits Weakest on Record Amid Trade Turmoil

This article by Sveinung Sleire for Bloomberg may be of interest to subscribers.

Norway’s krone hit the weakest on record against the euro, surpassing the previous record set during the 2008 financial crisis.

The krone touched 10.1641 per euro at 2:45 pm in Oslo, according to Bloomberg data, amid pressure from global tensions and weakening oil prices.

Norway is Western Europe’s biggest producer of petroleum products and gets almost half its goods exports from oil and natural gas.

Norges Bank has been puzzled by the weakening currency, a move that has allowed it to raise interest rates four times since September 2018. The central bank has increased its estimate on the currency’s equilibrium exchange rate, meaning that it now sees the weakening currency as a structural shift.

Eoin Treacy's view -

Crude oil prices are close to breakeven levels for shale drillers, are challenging the profitability of newer offshore sites and are well below the fiscal breakevens for much of OPEC. That is putting downward pressure on the currencies of oil producers.



This section continues in the Subscriber's Area. Back to top
October 16 2019

Commentary by Eoin Treacy

Back to Reality; Trade "Truce" Changes Very Little; Overpaying for Growth Still the Biggest Risk

Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

The fiscal impetus from the Trump tax cuts is expiring but the boost from the commitment to increase government spending agreed in the summer remains an important factor. Nevertheless, even that is expected to fade in 2020. That suggests the turn to easier monetary policy at the Fed can’t happen quickly enough.



This section continues in the Subscriber's Area. Back to top
October 15 2019

Commentary by Eoin Treacy

Video commentary for October 15th 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: safe haven demand wanes, Treasuries at particular risk of pulling back, gold in Pounds retreats on Brexit opptimism, Wall Street led higher by semiconductors, Brazilian real weak, Australian Dollar eases but Dollar Index also eases. 



This section continues in the Subscriber's Area. Back to top
October 15 2019

Commentary by Eoin Treacy

Johnson Has a Big Brexit Problem: His Northern Irish Friends

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

“None of our 10 members will vote for a border in the Irish Sea,” Ian Paisley, son of the party founder and one of its MPs, said in a RTE interview late on Monday, accusing the Irish government of stirring the “sleeping giant” of unionism.

At the same time, he said “we can all be happy -- this doesn’t have to be quid pro quo where if we gain, the Republic of Irish loses.”

Under Johnson’s original plan, Northern Ireland -- the region the DUP draws its lawmakers from -- would leave the EU’s customs union and Stormont, the local power-sharing assembly, will have a veto over the future arrangements with the EU.

Customs Compromise

That plan was shot down by EU officials and the Irish government. Instead Johnson has offered to loosen the Stormont veto and has proposed a complex compromise solution on customs.

This would see Northern Ireland leave the EU’s customs union but still adhere to its rules. Crucially, the rest of the U.K. will leave the customs union and be free to adopt completely new rules after Brexit. That disparity between the freedom that would be available to mainland Britain and the shackles that Northern Ireland would be bound by is unacceptable to the DUP.

Eoin Treacy's view -

Theresa May hamstrung the Brexit negotiations when she failed to gain a larger majority in the snap election she called, which forced her into a coalition with the DUP. The founding principle on which the DUP runs is unwavering commitment to union with the rest of the UK. Visceral objection to any dilution of that link and suspicion of the intentions of every other party is the abiding attitude within the party.



This section continues in the Subscriber's Area. Back to top
October 15 2019

Commentary by Eoin Treacy

Email of the day - on gold in different currencies.

“Can you please give me the key to charting gold bullion in GBPs from your chart library. Many thanks in advance”

Eoin Treacy's view -

Thank you for this question which may be of interest to subscribers. Gold tends to do best in a negative real interest rate environment and when it is appreciating against most currencies.

There are a number of charts for gold in various currencies in the Chart Library. The easy way to find them is using the ticker code for gold as a currency which is XAU. Using XAU as the search term you will find charts for Gold in South African Rand, Indian Rupee, Swiss Franc, Brazilian Real, New Zealand Dollars, Swedish Krona, Singapore Dollars, Japanese Yen, Turkish Lira, Chinese Renminbi, Euro, British Pounds and Australian Dollars.



This section continues in the Subscriber's Area. Back to top
October 15 2019

Commentary by Eoin Treacy

Why Didn't Dimon Step In on Repo? Just Ask Fed

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

There’s no indication that the Fed will consider loosening its requirements on banks to shore up the repo market. Instead, the central bank appears to prefer to do everything itself, abruptly reversing course on the size of its balance sheet and increasing the amount of reserves. St. Louis Fed President James Bullard said on Tuesday that a standing repo facility would be a sensible “endgame” to prevent more bouts of extreme volatility in funding markets.

Eoin Treacy's view -

A standing repo facility at the Fed opens its balance sheet to potentially unlimited liability. That is the primary reason it has relied on the banking sector to provide liquidity historically and it is a testament to just how far the Fed is willing to go in deploying extraordinary liquidity measures.   



This section continues in the Subscriber's Area. Back to top
October 15 2019

Commentary by Eoin Treacy

Inside a Brazen Scheme to Woo China: Gifts, Golf and a $4,254 Wine

This article from the New York Times may be of interest to subscribers. Here is a section:

The bank gave a Chinese president a crystal tiger and a Bang & Olufsen sound system, together worth $18,000. A premier received a $15,000 crystal horse, his Chinese zodiac animal, and his son got $10,000 in golf outings and a trip to Las Vegas. A top state banking official, a son of one of China’s founding fathers, accepted a $4,254 bottle of French wine — Château Lafite Rothschild, vintage 1945, the year he was born.

Millions of dollars were paid out to Chinese consultants, including a business partner of the premier’s family and a firm that secured a meeting for the bank’s chief executive with the president. And more than 100 relatives of the Communist Party’s ruling elite were hired for jobs at the bank, even though it had deemed many unqualified.

This was all part of Deutsche Bank’s strategy to become a major player in China, beginning nearly two decades ago when it had virtually no presence there. And it worked. By 2011, the German company would be ranked by Bloomberg as the top bank for managing initial public offerings in China and elsewhere in Asia, outside Japan.

Eoin Treacy's view -

If anyone knows of an alternative route to building a business in China, I’d like to hear it.



This section continues in the Subscriber's Area. Back to top
October 14 2019

Commentary by Eoin Treacy

Video commentary for October 14th 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discusesd include: Pound pauses, Wall Street quiet, Japan and China steady, tanker rates surge, carbon credits steady, oil weak, gold steady, copper firms, commodities potentially primed for outperformance, Treasuries susceptible to profit taking. 



This section continues in the Subscriber's Area. Back to top
October 14 2019

Commentary by Eoin Treacy

Game Changer

Thanks to a subscriber for this report by Ed Hyman and team at Evercore which makes a bullish case. It’s loaded with interesting graphics and I commend it to subscribers. 

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

There are a couple of big points that stick out to me. The first is you can’t have a recession without unemployment rising. The second is oil price spikes have a causal factor in recessions over the last thirty years but we need to consider when they are a necessary cause. The third is recessions generally occur following a bubble in something. That sector represents the epicentre of risk and is most likely to collapse when the music stops.



This section continues in the Subscriber's Area. Back to top
October 14 2019

Commentary by Eoin Treacy

Elizabeth Warren's potential Presidential candidacy

Thanks to a subscriber for this snippet of an article by Niall Ferguson for the Sunday times.

Eoin Treacy's view -

Medicare for all is a laudable aspiration, but has the potential to be murderously difficult to implement. The healthcare sector employs millions of people and accounts for 18% of the US economy. Every doctor and dentist’s office in America have at least one person handling insurance claims, collecting co-pays, sending out bills etc. With a fully public option most of these administrative staff would be surplus to requirement. In other words, the clear risk from a fully public healthcare option would be recession even if the long-term benefit of cutting back on waste is a net positive.



This section continues in the Subscriber's Area. Back to top
October 14 2019

Commentary by Eoin Treacy

Oil Shipping Costs Soar to Highest Levels in 11 Years

This article by Costas Paris for the Wall Street Journal may be of interest to subscribers. Here is a section:

“There is a lot of confusion and uncertainty out there,” said Paolo d’Amico, head of Intertanko, a trade body representing tanker owners. “Everyone is afraid of being hit by the U.S., sanctions, rendering about 50 VLCCs untouchable.”

U.S. oil exports to Europe, which usually move in smaller tankers, hit a record 1.8 million barrels a day for the week ending Oct. 7, according to Kpler, an energy market intelligence company. The figure is double the 924,000 barrels in the previous week. But shipments to Asia, which are typically done on VLCCs, were reduced almost in half to 508,000 barrels.

A Singapore broker said rates for some VLCC cargoes on sailings from the U.S. Gulf Coast to the Far East were more than $120,000 on Thursday. Average earnings for supertankers picking up cargoes from around the world hit $94,124 a day, up from $18,284 on Sept. 25, when Washington blacklisted the Cosco fleet.

“VLCCs to Asia are a rare commodity, the market is red hot and will stay that way while the U.S. sanctions on Cosco ships are in place,” said the broker, who asked not to be named because he isn’t authorized to talk to the media.

Eoin Treacy's view -

The Baltic Dirty Tanker Index broke out on the upside last week, to trade above 1500 for the first time since 2008. That follows the breakout in the Baltic Dry Index in August. The latter’s move has not been as pronounced but does highlight the additional pressure on the shipping sector from the impending implementation of the IMO2020 rules on ship emissions.



This section continues in the Subscriber's Area. Back to top
October 11 2019

Commentary by Eoin Treacy

October 11 2019

Commentary by Eoin Treacy

Midcap British Stocks Soar On Move Toward Brexit Talks

This article by Steve Goldstein for MarketWatch may be of interest to subscribers. Here it is in full:

The midcap FTSE 250 rose 3.5%, its best single-day percentage gain in more than three years, as European leaders indicated there was progress toward reaching an agreed deal with the U.K. on leaving the European Union. The European Union says it has agreed with the United Kingdom to "intensify" Brexit negotiations in a belated attempt to reach a divorce deal ahead of Oct. 31. A number of FTSE 250 components sported double-digit gains, including bank CYBG, building materials distributor Grafton Group and home improvement retailer Travis Perkins. The FTSE 100 however saw much smaller gains, of just 0.7%, because many of those components record revenue in dollars.

Eoin Treacy's view -

The Pound has staged one its largest two-day rallies in years and that is pressuring the shares of companies that rely on overseas earnings. The divergence in performance between the FTSE-100 and the FTSE-250 highlights the benefit to domestically oriented companies from a resolution of the Brexit conundrum.



This section continues in the Subscriber's Area. Back to top
October 11 2019

Commentary by Eoin Treacy

U.S., China Said to Reach Partial Deal, Could Set Up Trade Truce

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

The U.S. and China reached a partial agreement Friday that would broker a truce in the trade war and lay the groundwork for a broader deal that Presidents Donald Trump and Xi Jinping could sign later this year, according to people familiar with the matter.

As part of the deal, China would agree to some agricultural concessions and the U.S. would provide some tariff relief. The pact is tentative and subject to change as Trump prepares to sit down with China’s Vice Premier Liu He later Friday.

Stocks jumped Friday after the news. Equities had advanced globally earlier in the day amid growing conviction that the U.S. and China would negotiate a trade truce. Trump tweeted earlier Friday that “good things” were happening in the meetings -- and that if the countries did reach an agreement, he would be able to sign it without a lengthy congressional approval process.

On Thursday and earlier Friday, Liu and U.S. Trade Representative Robert Lighthizer held the first senior-level discussions between Washington and Beijing since a previous agreement fell apart in May and tariffs were raised in the months after. The world’s two biggest economies have been trying for the past year and a half to settle their trade dispute.

Eoin Treacy's view -

The words from Bill Clinton’s early ‘90s election campaign must be ringing in President Trump’s ears, “It’s the economy, stupid”. There is a clear rationale for pressuring China on trade but is it worth losing the election for? The hardest hit parts of the US economy just about all voted for President Trump in the last election and have been specifically targeted by Chinese tariffs. Little wonder then that agricultural imports are front and centre in whatever deal is to be announced. With the election less than 13 months away it’s time to at least put the trade war on hold and let animal spirits loose. 



This section continues in the Subscriber's Area. Back to top
October 11 2019

Commentary by Eoin Treacy

Japanese Stocks Post First Weekly Gain in Three on Trade Hopes

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

Seeing how the two countries split off back in July, markets may not have had high expectations for this round of talks,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui DS Asset Management. “But a partial agreement now seems probable, with topics like subsidies being shelved for next year.”

Investors are breathing a sigh of relief as they anticipate a partial deal to come after 18 months of negotiations. An earlier report said the White House was looking to implement a currency pact as part of a preliminary deal that could see the scheduled tariff increase next week suspended. China has also said the country was open to a partial deal with the U.S., with plans to offer non-core concessions like purchases of commodities.

“There was a risk that negotiations would be cut short,” said Nobuhiko Kuramochi, the head of investment information at Mizuho Securities Co. in Tokyo. “But with both sides continuing the talks, there’s an expectation that some sort of a mini-deal will come out in the end.”

Eoin Treacy's view -

In many respects Japan is a high beta play on the trade war. As a major exporter it obviously has an interest in a benign international trading environment which allows the free passage of goods. On the other hand, the Yen tends to rally during periods of uncertainty because of its safe have status. That acts as a headwind to the export sector and the nominal price of the stock market.



This section continues in the Subscriber's Area. Back to top
October 11 2019

Commentary by Eoin Treacy

Melting Ice Redraws the World Map and Starts a Power Struggle

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

Shawn Bennett, deputy assistant secretary for oil and natural gas at the Department of Energy, said the U.S. was not concerned about competition. Growth projections for natural gas demand in India and other Asian countries are so high, and the need for supply diversification in Europe so acute that there’s little risk of a glut, he told Bloomberg. “Global demand for LNG is just going to grow,” he said.

The U.S. may be pushing back in more concrete ways. On September 30, the Department of the Treasury imposed sanctions on units of China’s Cosco Shipping Corp., over alleged breaches of U.S. sanctions against Iran. The move immediately hit the Yamal project’s LNG tanker routes because of Cosco’s share in one of the main shipping companies involved.

Still, for those who have been working in the Arctic for a long time, much of the geopolitical discussion sounds a little breathless. Last year, Russia’s Northern Sea Route carried 29 million tons of cargo, with projections rising to 90 million. The Suez Canal carries about 1 billion tons.

Eoin Treacy's view -

David and I predicted more than a decade ago that the USA would become energy independent that that represented a gamechanger for the energy sector that was completely underappreciated by markets. This chart suggests that reality, long promised, is now upon us.



This section continues in the Subscriber's Area. Back to top
October 11 2019

Commentary by Eoin Treacy

October 10 2019

Commentary by Eoin Treacy

October 10 2019

Commentary by Eoin Treacy

Market Internals

Eoin Treacy's view -

I have to admit I don’t look at the internals of the market all that often because it is the trend rather than the day to day moves which lend some insight into the health of the market. I thought it might be useful to look at some of the most common measures to discern if any clues to market direction are evident.

The Total Number of New 52 Week Highs on the NYSE Index is coming back down towards the lows December 2018 and towards the end of 2015. The significant spike on the upside in late 2017 was an anomaly suggesting a period of underperformance ahead, but generally lows are better predictors of market bottoms than spikes are of tops.



This section continues in the Subscriber's Area. Back to top
October 10 2019

Commentary by Eoin Treacy

Treasury 30-Year Bond Auction Draws Record Low Yield of 2.17%

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

Dramatically wider U.S. federal budget deficits, which stoked concerns about lower Treasury prices and higher yields as the supply of debt increased, are having the opposite effect, Williams said.

“You increase debt, and you’d think you’d increase yields in a dramatic way, but you’ve pulled forward growth from the future,” Williams said.

The longest-maturity Treasuries also have benefited from the government’s reliance mainly on shorter-maturity sectors to finance bigger deficits. Net issuance totaled $1.045 trillion in fiscal 2019, an increase of 31% from 2016. But while net bond sales increased by 33%, issuance of notes maturing in two- to 10-years doubled to $696 billion.
 

Eoin Treacy's view -

The deflationary consensus is pervasive and ensured the Treasury did not suffer another failed bond auction this afternoon. Nevertheless, just because $1 trillion deficits are not awakening investors to the risks of wholesale currency devaluation that does not mean the situation will persist indefinitely.



This section continues in the Subscriber's Area. Back to top
October 10 2019

Commentary by Eoin Treacy

Johnson and Varadkar See 'Pathway' to a Possible Brexit Deal

This article by Tim Ross and Robert Hutton for Bloomberg may be of interest to subscribers. Here is a section:

Afterward they issued a joint statement saying they had identified the potential for a route to an agreement during the course of a “detailed and constructive discussion.”

Both leaders “continue to believe that a deal is in everybody’s interest,” they said in the statement. “They agreed that they could see a pathway to a possible deal.”

Eoin Treacy's view -

Boris Johnson has every incentive to make a deal since he gets to blame Theresa May for any of the unsavoury bits which are lumped in get it over the line. Meanwhile, he has to hold fast to his exit deadline to lend urgency to the negotiations. Every time optimism about a successful resolution improves the Pound rallies.



This section continues in the Subscriber's Area. Back to top
October 09 2019

Commentary by Eoin Treacy

Video commentary for October 9th 2019

October 09 2019

Commentary by Eoin Treacy

Fed to Increase Supply of Bank Reserves

This article by Nikc Timiraos for the Wall Street Journal may be of interest to subscribers. Here is a section:

Rather than purchase longer-dated securities, Mr. Powell said officials are now contemplating buying shorter-dated Treasury bills. Officials believe holding long-term securities boosts the economy and financial markets by lowering long-term rates and driving investors into stocks and bonds. They think a portfolio weighted toward shorter-term securities provides less or no stimulus.

The Fed’s plan hasn’t been finalized, but Mr. Powell suggested would be ready by or before officials’ Oct. 29-30 policy meeting. The goal would be to rebuild the level of reserves in the system sufficiently above the low point of less than $1.4 trillion reached last month.

Eoin Treacy's view -

The demise of institutional prop trading and the requirement on banks to hold “Tier 1 capital”/government bonds mean there is no additional liquidity to contain spikes beyond the upper setting for repo rates. The Fed has no choice but to supply that liquidity.



This section continues in the Subscriber's Area. Back to top
October 09 2019

Commentary by Eoin Treacy

Email of the day - on trading precious metals.

I would like to get inside your thinking about PMs and silver in particular. As I recall from your seminar, this chart demonstrates (somewhat bearish) lower highs and lower lows since early Sep, similar to say Feb_Mar. How far does it have to pull back to tell you "now is the time to buy"? 16 looks like a major area of support - is that your target? Could you sell at say 18-18.5, then buy back, or do you prefer to accumulate? Where do you look for clues on timing?

Eoin Treacy's view -

Thank you for this question which may be of interest to other subscribers. The one thing I have learned in nearly 20 years of education in the markets is when trading precious metals, one needs to be prepared to be surprised. Let’s took at the technical picture in silver.



This section continues in the Subscriber's Area. Back to top
October 09 2019

Commentary by Eoin Treacy

Tesla Can't Perfect Autopilot Without a Few Deadly Crashes

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

Key to her argument is an insight about how cars learn. We’re accustomed to thinking of code as a series of instructions written by a human programmer. That’s how most computers work, but not the ones that Tesla and other driverless-car developers are using. Recognizing a bicycle and then anticipating which way it’s going to go is just too complicated to boil down to a series of instructions. Instead, programmers use machine learning to train their software. They might show it thousands of photographs of different bikes, from various angles and in many contexts. They might also show it some motorcycles or unicycles, so it learns the difference. Over time, the machine works out its own rules for interpreting what it sees.

The more experiences they have, the smarter these machines get. That’s part of the problem, Kalra argues, with keeping autonomous cars in a lab until they’re perfect. If we really wanted to maximize total lives saved, she says, we might even put autonomous cars on the road while they’re still more dangerous than humans, to speed up their education.

Even if we build a perfect driverless car, how will we know it? The only way to be certain would be to put it on the road. But since fatal accidents are statistically rare—in the U.S., about one for every 86 million miles traveled—the amount of necessary testing would be mind-boggling. In another Rand paper, Kalra estimates an autonomous car would have to travel 275 million failure-free miles to prove itself no more deadly than a human driver, a distance that would take 100 test cars more than 12 years of nonstop driving to cover.

Eoin Treacy's view -

At a Berkshire Hathaway annual meeting a few years ago Warren Buffett stated the relentless upward trajectory of insurance premiums was partly driven by texting while driving. As the pungent aroma of cannabis wafts its way through the streets of California, and other US states, I would opine driving while high is another hazard that is likely to further increase actuarial calculations of risk.



This section continues in the Subscriber's Area. Back to top
October 08 2019

Commentary by Eoin Treacy

October 08 2019

Commentary by Eoin Treacy

New Kind of Recession Threat Presents Problem for Powell and Fed

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

The unusual nature of the forces at play -- and the fact that many of them are geopolitical and emanate from abroad -- makes it more difficult for policy makers to decide how far to go in easing credit.

There’s even a question of how effective rate cuts will be in an economy where business executives fear such dire developments as the breakup of global supply chains.

Powell is expected to deliver his latest thinking on the outlook when he speaks to the National Association for Business Economics in Denver at 2:30 p.m. U.S. East Coast time on Tuesday. He said last week that despite some risks, the U.S. economy is in a “good place,’’ and that the Fed’s job is “to keep it there.’’

Eoin Treacy's view -

Mrs. Treacy’s containers arrived from China over the last few days and I spent most of this morning at Los Angeles port. I have been going to down to the customs warehouses twice a year for four years to help out in the business but also to get a feel for what activity is like at one of the country’s busiest ports of entry.



This section continues in the Subscriber's Area. Back to top
October 08 2019

Commentary by Eoin Treacy

Markets Don't Want to Hear Goldman's Happy Talk

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

Multiple surveys show that traders and investors see the U.S.-China trade war as the biggest risk facing markets. Bank of America Merrill Lynch’s latest monthly poll of global fund managers, released in mid-September, revealed that the number of respondents who said trade tensions were the biggest danger outstripped by far those who cited ineffective monetary policy and the potential bursting of the bond bubble. In her first major address as head of the International Monetary Fund, Kristalina Georgieva said Tuesday that the global economy is in a synchronized slowdown, in part due to trade uncertainty. Also on Tuesday, the National Federation of Independent Business said its small-business sentiment index fell to near the lowest level of Donald Trump’s presidency. Even more notable was that the part of the index measuring “uncertainty” plunged to its lowest since February 2016.  “More owners are unable to make a statement confidently, good or bad, about the future of economic conditions,” the group said, with 30% of respondents reporting “negative effects” from tariffs. To cut to the chase, if businesses can’t forecast with any confidence, how can investors or strategists?

U.S. and China trade negotiators are scheduled to meet on Thursday to resume talks. What’s discouraging is that instead of making conciliatory comments, each side seems to be hardening their stances. Chinese officials said Monday that what isn’t on the table from China’s perspective — and never will be — are changes to its laws to protect foreign intellectual property. Later that day, the U.S. placed eight of China’s technology giants on a blacklist over alleged human rights violations against Muslim minorities. In response, China hinted that it might retaliate. Then the news broke that the Trump administration is moving ahead with discussions around possible restrictions on portfolio flows into China. None of this sounds like either side is ready to make a deal.

Eoin Treacy's view -

Political rhetoric amplifying ahead of the start of negotiations have been a trend that has evolved over the last year. Each of the other occasions has ended in disappointment and the market is now pricing in a similar conclusion to the upcoming talks.



This section continues in the Subscriber's Area. Back to top
October 08 2019

Commentary by Eoin Treacy

US has fewer listed public companies than China

Thanks to a subscriber for this article by Robin Wigglesworth for the Financial Times. Here is a section:

Chalk one up for Beijing in its long battle with Washington: the US now has fewer listed public companies than China.

A spate of shelved and fizzling initial public offerings has recently cast a pall over the US equity market, with WeWork scrapping plans to sell shares after investors balked at its valuation and corporate governance structures.

Yet the number of listed US companies has been shrinking for more than two decades, as private equity firms and acquisitive companies have gobbled up many public groups. At the same time, ample venture capital and buoyant debt markets have allowed other fast-growing groups to stay private for much longer than in the past.

That has crimped the number of public American companies from a peak of more than 8,000 in 1996 to about 4,400 currently, according to data compiled by JPMorgan Asset Management.

Eoin Treacy's view -

Ultralow interest rates, abundant liquidity and increasingly onerous reporting requirements mean it is much less attractive to be a public company today in the USA than it used to be. For China it is more a story of trying to create additional funding avenues for companies beyond the government and state-owned banks.



This section continues in the Subscriber's Area. Back to top
October 07 2019

Commentary by Eoin Treacy

October 07 2019

Commentary by Eoin Treacy

The Bond Market is the Biggest Bubble of our Lifetime

Thanks to a subscriber for this interview of Louis-Vincent Gave which appeared in themarket.ch. Here is a section:

On a global level, bonds with a value of about $15 trillion currently trade with a negative yield. What’s going on here?

For every investor today, the starting point must be the bond market. Just a few weeks ago, we had $17 trillion of negative yielding debt. We’re now down to about 15, but even that is way too much. This is investment money that is guaranteed to produce a loss of capital. These extreme levels in today’s bond market can only have three possible explanations. One, the world faces an economic meltdown of epic proportions. Two, the bond market is the biggest bubble we have ever witnessed, and three, we have just experienced a massive buying panic in bonds.

Eoin Treacy's view -

I agree with all three of these points so we then need to address the question of what will happen to deflate the bubble. The answer is inflation which is like kryptonite for the bond market. The only way anyone can justify buying bonds with a negative yield is if they believe the deflationary argument is self-fulfilling. 



This section continues in the Subscriber's Area. Back to top
October 07 2019

Commentary by Eoin Treacy

Email of the day - on trading discipline

I have been in and out of this site since just before I was caned by GFC. I ought to feel bitter about loss of savings, however if I added up all of the suboptimal decisions in life, they might exceed a few spectacular dumb decisions 2005-2012 with a few too many zero's for comfort. I am fortunate that I have a great day job, so maybe I might get away with being a bit stupid. I have read some sad stories on this site - that speak to the difficulty of successful trading, and the high rate of failure amongst amateurs like me. I wondered what happened to the authors - did they just walk away? I value learning - have been to the chart seminar twice, and thought it very considered. The best bits for me were the insights into price behaviour, and that price/time only appears to be random; it’s just very hard to predict. 7 years ago, a subscriber asked on this site what was meant by trading discipline. I am sure you and many of your reader know; obviously I am still learning. I won't say what I think it means, but I now understand the value of a trading plan, and understanding market mechanisms. I haven't found the perfect trading guide, but I came across one recently that has helped me understand more about currency markets (and therefore all markets with leverage). It is well written, measured, not biographical but benefits from the author's market experience. So, I thought I would share it with you and your readers: it is a good read, and useful beyond a scope suggested by the title. Brent Donnelly. The Art of Currency Trading. I would be interested in what other subscribers think of its content, and any other recommendations that have had practical and positive effect on trading outcomes.

Eoin Treacy's view -

Thank you for this email and I am sorry to hear your trading record has not met your expectations.

In case there is any confusion, whenever I speak about trading discipline, the most important aspect is position sizing. Investors tend to be most bullish at major peaks and most bearish at lows. The best time to take profits, partial or otherwise, is when prices are widely overextended relative to a trend mean on the upside. The best time to think about initiating longs is following periods of weakness when there is evidence of support being found.

Thematic investing, where you can identify a compelling narrative and fundamental rationale, tends to deliver reasonably consistent trends where this kind of positioning is most attractive and likely to deliver investing success.



This section continues in the Subscriber's Area. Back to top
October 07 2019

Commentary by Eoin Treacy

China Is Breeding Giant Pigs That Are as Heavy as Polar Bears

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

High pork prices in the northeastern province of Jilin is prompting farmers to raise pigs to reach an average weight of 175 kilograms to 200 kilograms, higher than the normal weight of 125 kilograms. They want to raise them “as big as possible,” said Zhao Hailin, a hog farmer in the region.

The trend isn’t limited to small farms either. Major protein producers in China, including Wens Foodstuffs Group Co, the country’s top pig breeder, Cofco Meat Holdings Ltd. And Beijing Dabeinong Technology Group Co. say they are trying to increase the average weight of their pigs. Big farms are focusing on boosting the heft by at least 14%, said Lin Guofa, a senior analyst with consulting firm Bric Agriculture Group.

The average weight of pigs at slaughter at some large-scale farms has climbed to as much as 140 kilograms, compared with about 110 kilograms normally, Lin said. That could boost profits by more than 30%, he said.

The large swine are being bred during a desperate time for China. With African swine fever decimating the nation’s hog herd -- in half, by some estimates -- prices of pork have soared to record levels, leading the government to urge farmers to boost production to temper inflation. Wholesale pork prices in China have surged more than 70% this year.

Eoin Treacy's view -

There is no cure of African Swine Flu and it is almost always fatal for pigs that contract the disease. That spread of the disease in China has put upward pressure on the price of pork and rebuilding the national herd is going to take at least a few years. That is assuming the necessary sanitation measures are taken to insulate the supply chain from cross contamination, which represents a significant additional cost.



This section continues in the Subscriber's Area. Back to top
October 04 2019

Commentary by Eoin Treacy

LPO Memorial Concert in David Fuller's honour

Eoin Treacy's view -

A memorial will be held for David in the Level five function room, green side, at the Royal Festival Hall on Saturday October 5th, beginning at 5:30pm.

There will be about 20 minutes for everyone to gather and each of the people who have volunteered to speak will have about 4 minutes to do so.

The concert is due to begin at 7:30 PM

I do not believe it is necessary to have a ticket for the concert to attend the memorial. 



This section continues in the Subscriber's Area. Back to top
October 04 2019

Commentary by Eoin Treacy

October 04 2019

Commentary by Eoin Treacy

California Dreamin'

This note from Yardeni Research may be of interest to subscribers. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The one thing we know is the consensus’ in markets seldom reach the worst or best predictions of investors. The rationale for MMT is compelling. The US government is already running a $1 trillion deficit in a boom and needs to pay for that with a large issuance of bonds. Since this is occurring before a crisis, investors logically conclude that trend has to continue in a linear manner. However, we have ample evidence of outcomes eventually working out much differently in reality.



This section continues in the Subscriber's Area. Back to top
October 04 2019

Commentary by Eoin Treacy

Stocks Rally on Fed Bets as Jobs Calm Growth Fears: Markets Wrap

This article by Randall Jensen and Sarah Ponczek for Bloomberg may be of interest to subscribers. Here is a section:

“This one comes in pretty close to neutral in terms of the slowdown. It’s not encouraging, it doesn’t look like a re-acceleration in growth, but it also probably puts at bay some of the fears that have come in around the ISM manufacturing and ISM services numbers,” said Luke Tilley, chief economist at money manager Wilmington Trust Corp. in Delaware. “This should make people and investors comfortable that we still have enough job growth to keep consumer spending on the positive side.”

Today’s job numbers followed a string of disappointing economic data this week that had fueled concerns a slowdown in manufacturing could spread to the consumer, and in turn ratcheted up bets that the Fed will reduce rates this month. The burst of rate-cut optimism helped snap a two-day losing streak that reached 3% in the S&P 500 Index Thursday.

Eoin Treacy's view -

The Nasdaq-100 posted a small upside key reversal yesterday from the region of the trend mean and followed through on the upside today. The primary Wall Street indices have been ranging between their trend means and their all-time peaks for much of the last four months and despite a great deal of negativity the potential for a breakout to new highs remains the base case.



This section continues in the Subscriber's Area. Back to top
October 04 2019

Commentary by Eoin Treacy

Rare Earths Review Erbium: The Secret Sauce in 5G Networks?

Thanks to a subscriber for this report from Hallgarten & Company which may be of interest. Here is a section from the conclusion:

We sense that China’s Rare Earth advantage has been made vulnerable due to massive overexploitation over the last 30 years and the ONLY remedy is to cut back exports and start stockpiling material before the country becomes as dependent upon fickle outside forces in REEs as it is in Cobalt. This potentially sets the scene for a supply crunch outside China and no amount of WTO whining and appeals will stop the Chinese halting exports if it is deemed to be in the national interest.

We have previously called the Great Dysprosium Crisis of 2020, and now we add the Great Erbium Dilemma of 2021-24. These linked supply crunches will come as a “surprise” to the powers that be, both in China and outside. And yet the warning signs are there for everyone to see. The Adamas report on Dysprosium was a red flag, and now the more sotto voce alarm bells of Erbium are largely going unheeded as well. For those countries wanting to be players, or at least control their destiny, in 5G the hunt for Erbium must now be powered up.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

It is reasonable, at least in my view to argue that China was able to export large quantities of rare earth metals when it was technologically backward but will have to consume more of its own supply as the technological capability of its economy improves. At a minimum it suggests the demand for rare earth elements is likely to remain on a growth trajectory.



This section continues in the Subscriber's Area. Back to top
October 03 2019

Commentary by Eoin Treacy

October 03 2019

Commentary by Eoin Treacy

The Global Internet Phenomena Report

Thanks to a subscriber for this report from Sandvine which may be of interest. Here is a section:

Google (Alphabet): YouTube, Google Cloud, Google Play, Google Search, Google Docs, Google Drive, DoubleClick, Gmail, and Crashlytics
Netflix: Netflix Video
Facebook: Facebook, Instagram, Facebook Video, WhatsApp, Facebook Messenger, Oculus Rift Microsoft: Xbox Live, Windows Update, Skype, Outlook 365, Office 365, SharePoint, OneDrive, Windows Store, LinkedIn
Apple: iTunes, iCloud, Apple Software Update, FaceTime, Apple Music, Apple.com, iCloud Photo Stream, Mac App Store

The brands with video traffic have a significant advantage on the downstream. Google (YouTube), Netflix, Facebook, and Amazon (Amazon Prime) have strong video offerings. Apple soon will, and Microsoft’s entry into gaming streaming (Mixer) will likely move them up this list if they can continue to recruit high profile gamers.

As shown in the chart, Google is #1 overall and on the upstream. The combination of YouTube, Google Search, and Google Cloud are the biggest contributors to the upstream traffic, as they are an integral part of any Android device’s experience.

Netflix is the #1 on the downstream and #2 overall as the only pure play in the bunch. As we mentioned last year, if Netflix was not the most efficient streamer at every resolution, their total could easily be twice what it is today, and they continue to excel in video codec work and efficiency in resolution downshifts and upshifts.

Google is also #1 on connections. This is a much more collaborative effort among Google apps. YouTube, Google Cloud Messaging, Google Search, Crashlytics, DoubleClick, and even Nest are the biggest contributors to Google connections per device.

Amazon: Amazon Prime, Twitch, Amazon.com, Alexa, Amazon Glacier, Amazon Music

When combined, these brands took up over 43% of all traffic volume on the internet: The details are interesting. Overall, Google edged out Netflix as the top consumer of bandwidth on the internet (as well as upstream) and dominated in the percentage of connections. Unsurprisingly, Netflix was the single largest consumer of traffic downstream, but Google was not far behind. This is confirmation that brands can build synergies, expand their business, and succeed. The obvious outlier in this case is Netflix, which does one thing and does it exceedingly well, albeit at very high volume. With new streaming services coming out from Facebook and Apple, with 4K and live streaming taking hold, these numbers might climb even higher next year.

Eoin Treacy's view -

The companies that dominate the internet have almost all adopted some form of the subscription business model. Their success in capturing the attention of hundreds of millions of consumers and the ad revenue and spending power that goes with it represent powerful cashflows. Their success also encourages competition and the evolution of new streaming services is a challenge to the early hegemony of some companies.



This section continues in the Subscriber's Area. Back to top
October 03 2019

Commentary by Eoin Treacy

At Least 70 Countries Have Had Disinformation Campaigns, Study Finds

This article from the New York Times may be of interest to subscribers. Here is a section:

“The danger is the proliferation” of the techniques, he said. “Anybody who wants to influence the 2020 election may be tempted to copy what the Russian operation did in 2016.”

China’s emergence as a powerful force in global disinformation is one of the most significant developments of the past year, researchers said. The country has long used propaganda domestically, but the protests this year in Hong Kong brought evidence that it was expanding its efforts. In August, Facebook, Twitter and YouTube suspended accounts linked to Beijing that were spreading disinformation about the protests.

Philip N. Howard, director of the Oxford Internet Institute and one of the authors of the report, said that such online disinformation campaigns can no longer be understood to be the work of “lone hackers, or individual activists, or teenagers in the basement doing things for clickbait.”

There is a new professionalism to the activity, with formal organizations that use hiring plans, performance bonuses and receptionists, he said.

Eoin Treacy's view -

Social media became one of the primary venues for consuming news by accident and it has allowed a great many people find a voice. Unfortunately, it has also afforded governments the ability to shape public opinion both at home and abroad.



This section continues in the Subscriber's Area. Back to top
October 03 2019

Commentary by Eoin Treacy

Pound Gets Boost From Thaw in Parliament Tensions

This note by Charlotte Ryan for Bloomberg may be of interest to subscribers. Here it is in full:

The pound rose to its highest level in over a week, with the currency getting a boost as Boris Johnson appeared to win the backing of Conservatives on both sides of the Brexit debate, according to strategists.

Sterling gains as much as 0.7% to $1.2388, after earlier dropping as much as 0.3%

“Sterling is as happy as Parliament seems calm today,” said CIBC head of G-10 currency strategy Jeremy Stretch. “On the basis of the talk in Parliament if the EU were to agree to the latest proposals that of course is more than a big if, then it would appear that Parliament would vote in favor”

Speaking with market participants, it seems “they sense the red lines are shifting,” said Neil Jones, head of currency sales for financial institutions at Mizuho Bank. “It’s a more upbeat tone from Boris Johnson and the EU added to some reference the ERG may agree whatever Johnson comes back with,” he added, referring to the group of Conservative euroskeptics

Eoin Treacy's view -

The UK’s parliament has voted repeatedly that they will not allow the government to push through a no deal Brexit. The only deal on the table is the one negotiated by Theresa May. Regardless of the fact that it represents membership of the EU in all but name, it still represents the most likely solution that has a chance of passing a vote in Parliament. If Boris Johnson can secure a deal of the Irish border it is likely to pass a vote in Parliament.



This section continues in the Subscriber's Area. Back to top
October 02 2019

Commentary by Eoin Treacy

October 02 2019

Commentary by Eoin Treacy

Stocks Tumble, Bonds Climb as Slowdown Fears Mount

This article by Randall Jensen and Vildana Hajric for Bloomberg may be of interest to subscribers. Here is a section:

The hiring numbers pushed the 10-year Treasury yield lower for a fifth straight day as it pushed below 1.6%. The yen rose versus the dollar and gold spiked above $1,500. The equity rout spread to Europe, where the Stoxx 600 saw its biggest slide in 10 months and the FTSE 100 dropped the most since 2016. Oil fell below $53 a barrel after a report showed U.S. crude inventories increased.

The disappointing data out of the U.S. and Europe, as well as weak earnings reports from automakers this week, is forcing investors to reconsider their strategies. The most recent economic numbers are driving concerns that a slowdown, which had been mostly confined to manufacturing, may be spreading to the consumer amid the U.S.-China trade war. Those fears also increased bets that the Federal Reserve will cut rates this month. Focus now turns to services PMI data on Thursday and the nonfarm payrolls data on Friday.

Eoin Treacy's view -

The fear many people have is the debt issue which macro investors have been talking about over the last 18 months is eventually going to result in a problem where investors revolt at paltry yields relative to the risk.

The failure of bond auctions in Germany, Japan and US over the last couple of months, while glossed over the in press, suggest there is liquidity risk in the bond market. The spiking of repo rates and the requirement for the Fed to introduce, what is effectively, a standing repo facility also highlights illiquidity.



This section continues in the Subscriber's Area. Back to top
October 02 2019

Commentary by Eoin Treacy

German Fiscal Stimulus Already Creeping In, Whatever Merkel Says

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

The government considers it’s still not clear whether Germany will plunge into a full-blown recession and, as a result, the full array of remedies may not need to be deployed.

Germany’s five leading research institutes slashed their forecasts for economic growth this year and next, citing trade tensions and Brexit weighing on German industry. GDP is to grow 1.1% in 2020 from a previous forecast of 1.8%, and 0.5% this year from an earlier prediction of 0.8%.

Traditionally, Germany shifts to high alert whenever the global economy looks to be slowing -- the country’s dependence on exports means that it tends to head south with the rest of the world. But with the domestic market still relatively robust and the ECB renewing monetary stimulus, Merkel’s economic team judges that this time the path toward recession is less certain.

On the down side, a prolonged trade war could eventually lead to a much bigger fallout than expected, according to another scenario being considered. That spurred the government to gradually increase investments and bolster the labor market as a preemptive and precautionary measure.

Finance Minister Scholz told ARD TV on Wednesday that economic forecasts are pointing toward a recovery and that there is currently no need for a stimulus program.

“We are well prepared because we have good financial resources and can react, should it really come to an economic crisis but so far it’s just slower growth,” Scholz said.

Eoin Treacy's view -

The bond market has been signallng for a while that all is not well in the global economy. The fact that just about all of Germany’s sovereign debt is trading with a negative yield is as much about the outlook for global growth as it is about the ECB’s negative interest rate policy. The Eurozone has been relying on the strength of the export sector to pull growth higher but the slowdown is exposing the absence of a clear domestic demand story to offset the slowdown in demand.

While clear signalling for the end of the austerity program remains unlikely, there is evidence of fiscal laxity creeping in all over the continent. Italy, France and Spain are already engaged in fiscal stimulus and it is only a matter of time before Germany deploys its balance sheet to support the economy.



This section continues in the Subscriber's Area. Back to top
October 02 2019

Commentary by Eoin Treacy

The Seven-Year Auto Loan: America's Middle Class Can't Afford Its Cars

This article by Ben Eisen and Adrienne Roberts for the Wall Street Journal may be of interest to subscribers. Here is a section:

Just 18% of U.S. households had enough liquid assets to cover the cost of a new car, according to a Wall Street Journal analysis of 2016 data from the Fed’s triennial Survey of Consumer Finances, a proportion that hasn’t changed much in recent years.

Even a conservative car loan often won’t do it. The median-income U.S. household with a four-year loan, 20% down and a payment under 10% of gross income—a standard budget—could afford a car worth $18,390, excluding taxes, according to an analysis by personal-finance website Bankrate.com.

Eoin Treacy's view -

Tesla is likely to introduce a car with a battery capable of lasting for one million miles of driving. Having a car for long enough to come close to even a fraction of that distance could justify taking out a seven-year loan to fund the purchase but that misses the point. The aim is for those batteries to go into autonomous vehicles.



This section continues in the Subscriber's Area. Back to top
October 02 2019

Commentary by Eoin Treacy

2019: The 50th year of The Chart Seminar

Eoin Treacy's view -

The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO. 

If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.



This section continues in the Subscriber's Area. Back to top
October 01 2019

Commentary by Eoin Treacy

Video commentary for October 1st 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area.

Some of the topics covered include: Renminbi weakens, US factory data disappoints but that increases potential for additional stimulus, Dollar eases, gold rebounds, oil weakens further, DAX downside key reversal, Brexit disillusionment potentially leads to opportunity 



This section continues in the Subscriber's Area. Back to top
October 01 2019

Commentary by Eoin Treacy

Xi Says China's Rise Unstoppable in Face of Protests, Trade War

This article by Annie Lee, Peter Martin and James Mayger for Bloomberg may be of interest to subscribers. Here is a section:

President Xi Jinping declared that no force could stop China’s rise, exuding confidence during a key
anniversary as he faced unprecedented challenges from protesters in Hong Kong and Donald Trump’s trade war.

Speaking at the start of grand parade marking 70 years since the founding of the People’s Republic, Xi called for stability in Hong Kong, unity among Chinese ethnic groups, and the “complete unification” of the country. Xi delivered the remarks at the site where late Communist Party patriarch Mao Zedong proclaimed the nation’s founding on Oct. 1, 1949.

“Today, a socialist China is standing in the east of the world and there is no force that can shake the foundation of this great nation,” Xi told a crowd of carefully vetted guests under smoggy skies in the center of the capital. “No force can stop the Chinese people and the Chinese nation forging ahead.”
Xi’s rallying cry came before an hours-long pageant showcasing China’s industrial and scientific achievements, including sophisticated weaponry such as DF-17 ballistic missiles believed capable of circumventing U.S. defense systems.

The closely scripted proceedings sought to reinforce the strength of a party facing multiple threats, from the slowest economic growth in decades to violent unrest in one of Asia’s top financial hubs.

Eoin Treacy's view -

Sometimes I feel like a broken record always repeating the same point about China, but governance is everything. The ranks of apologists for tyranny continue to advocate strongly for China despite its record on human rights, the environment, intellectual property, corruption, censorship and a host of additional factors.

The one thing China has going for it, is its economic expansion. Investors will be willing to give it the benefit of the doubt provided the expansion persists. It will an entirely different narrative if China has a recession.



This section continues in the Subscriber's Area. Back to top
October 01 2019

Commentary by Eoin Treacy

Australia Cuts Key Rate as Global Threats, Unemployment Rise

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

“Forward-looking indicators of labor demand indicate that employment growth is likely to slow from its recent fast rate,” Lowe said. “The economy still has spare capacity and lower interest rates will help make inroads into that.”

Meanwhile, the clouds gathering offshore are increasingly menacing: Global growth is slowing, dragged down by the protracted U.S.-China trade conflict; financial hub Hong Kong is racked by protests; key trading partners Japan and South Korea are locked in confrontation; Brexit is looming; and to cap it all, President Donald Trump could face impeachment proceedings.

Against that backdrop, Lowe wants to stoke the local economy hard to try to ensure its resilience. At 0.75%, the cash rate is close to the lower bound that he and Deputy Governor Guy Debelle estimate is around 0.25%-0.5%. Both have previously said they don’t expect to have to turn to bond buying and other alternative measures, as they wait and gauge the success of existing stimulus.

“The Reserve Bank is likely to cut again early next year,” said Callam Pickering, economist at global jobs site Indeed. “Bank officials are reluctant to discuss quantitative easing but it becomes a real possibility the closer we come to a cash rate of 0%.”

Eoin Treacy's view -

The Australian government is one of the only AAA rated sovereigns left and that financial firepower is quite likely to be utilised in further fiscal and monetary stimulus to blunt the effects of global tensions on the domestic economy. The challenge of high consumer debt and elevated property prices compounds the issue.



This section continues in the Subscriber's Area. Back to top
October 01 2019

Commentary by Eoin Treacy

Bunging the EU billions of pounds for free shows the toxic ineptitude at the heart of May's Brexit deal

This article by Robert Rowland (MEP for the Brexit Party) for the Telegraph may be of interest to subscribers. Here is a section:

If you owned 16.1pc of the European Investment Bank (EIB) would you give it away free to the other wealthy members as you leave the EU? 

That’s what Philip Hammond, the former chancellor and his team of civil servants have done.
Hidden in Theresa May’s discredited Withdrawal Treaty, ex-Chancellor Philip Hammond (then also on the Board of Governors of the EIB) gifted it €7.5bn of taxpayer's money for no concessions.  He then accepted a 12-year repayment of €3.5bn with no interest, from a bank making €5bn profits in just the last two years.

The ultra-Remain ex-chancellor was prepared to leave the UK credit card open over a decade to ensure the EIB can continue to lend on non-commercial terms to the EU 27 at UK taxpayer risk.

The UK is also treaty-bound for another €36bn of “callable capital”.  This is money we will pay to underpin the EIB if the eurozone collapses. Additional toxic risk exposure comes through the EU Budget which guarantees €500bn of EIB loan note risk that we would be exposed to during any “transition”. It is a truly toxic trick, conjured up by Hammond and his team. 

But how did this happen?
Under May’s Withdrawal Treaty, the UK’s initial EIB capital contributions, mostly given in 1973, of €3.5bn – in today’s money roughly €35bn – can be repaid in 12 instalments of around €300m a year. 

Eoin Treacy's view -

This article provides a good example of the reasons why a substantial number of people believe the deal negotiated by Theresa May’s government is untenable. It gives up all of the UK’s primary negotiating points without demonstrating what concessions, if any were won in return.



This section continues in the Subscriber's Area. Back to top
September 30 2019

Commentary by Eoin Treacy

September 30 2019

Commentary by Eoin Treacy

DRAM Production Growth Could Be Less Than Previously Forecast

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

When asked about the factors driving Micron's hiking of its calendar 2019 outlook for NAND demand growth -- Micron now expects industry-wide NAND bit demand to grow by a low-to-mid 40s percentage, up from prior guidance for mid-30s growth -- Zinser was quick to note the impact of rising smartphone storage capacities in the wake of healthy price declines.

And in line with earnings call comments made by CEO Sanjay Mehrotra, Zinser noted that lower NAND prices are lifting solid-state drive capacities and (in what's a negative for hard drive suppliers) attach rates. He indicated the data center is an area where price elasticity is especially boosting NAND demand.

In addition to hiking its NAND demand guidance, Micron cut its NAND industry supply (output) guidance amid ongoing capital spending cuts, forecasting NAND bit supply will only grow by about 30% this year. For 2020, Micron is guiding for NAND bit demand to grow by a high-20s to low-30s percentage, and for supply growth to be "somewhat below" demand growth.

Eoin Treacy's view -

The disappointing guidance Micron gave at its earnings call resulted in a sharp retracement of its overextension relative to the trend mean. However, that decline is occurring against the background of underperformance this year which has seen the share recoup less than half of last year’s decline.



This section continues in the Subscriber's Area. Back to top
September 30 2019

Commentary by Eoin Treacy

The good news is the same as the bad news: This market looks just like 1998

Thanks to a subscriber for this article from MarketWatch which may be of interest. Here is a section:

A yield curve inversion? International weakness triggering a broad manufacturing slowdown? A potentially overconfident consumer and a Federal Reserve caught up in a brief interest-rate cutting cycle, regardless of steady GDP growth? And, of course, an impeachment inquiry.

Does this sound like a recipe for a strong fourth-quarter rally?

Well, in 1998, it sure was, says BTIG strategist Julian Emanuel, who points out the similarities between then and now are “too striking” to ignore.

In our call of the day, he suggests the pent-up caution that’s “bordering on pessimism” due to mounting political tensions at home and abroad could lead to an end-of-year run should outcomes prove more positive than expected.

“Similar to 1998, where stocks rallied for 18 months (advancing 68%) from the cyclical low to the point of maximum public bullishness, the 3/2000 ‘Tech Bubble Top,’” Emanuel explained in a note, “we expect the current four-month S&P 500 trading range to resolve with new all-time highs as the prospect of higher interest rates... results in fund flows to stocks and the public’s eventual embracing of the ‘most hated bull market of all-time.’”

Eoin Treacy's view -

The central banks of the world are sufficiently scared of a recession that they are willing to do whatever is necessary to sustain the current expansion. We already have a bubble in sovereign bonds and it is quite likely this cycle will eventually climax with a bubble in equities as well.



This section continues in the Subscriber's Area. Back to top
September 30 2019

Commentary by Eoin Treacy

Gold Slumps to an Eight-Week Low as Dollar, U.S. Stocks Rall

This article by Yvonne Yue Li for Bloomberg may be of interest to subscribers. Here is a section:

A strengthening dollar and the rally in equities is spoiling the party for gold bulls. Gold futures tumbled to the lowest in almost eight weeks after the Trump administration partially refuted a report that it would target Chinese capital market. Speculation is mounting that Washington issued the statement to encourage Beijing to move closer to signing a deal with Washington, a strategist at R.J. O’Brien & Associates said.

Monday’s slump trimmed the precious metal’s fourth straight quarterly gain, the longest winning streak in eight years. Bulls are retreating after taking their net-long position in gold to the highest in government data going back to 2006.

The strength in the greenback “is the biggest headwind for gold right now,” Phil Streible of RJO said by phone from Chicago.
 

Eoin Treacy's view -

The point I find most interesting about the move we are seeing in gold is how similar it is in magnitude to what occurred in the early 2000s. The initial spike occurred in 1999 but it took about two and half years for the price to breakout to new highs. It subsequently rallied 18% from the breakout point and retraced the whole move, to test the upper side of the base, before trending higher in an impressive manner for the next nine years.



This section continues in the Subscriber's Area. Back to top
September 27 2019

Commentary by Eoin Treacy

September 27 2019

Commentary by Eoin Treacy

Japan's Topix Set to Beat S&P 500 for First Time in Two Years

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

“Japanese stocks underperformed for a long time and their valuations were left as very cheap,” Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. in Tokyo. “A correction in cheaper valuation stocks have occurred globally and Japanese stocks are the most prominent example for that.”

September has been good to the Topix, which is set for its best month since October 2015. Up until late August, the gauge was one of this year’s worst-performers among the 24 developed markets tracked by Bloomberg.

Norihiro Fujito, the chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, says Japan’s market is enjoying a “a typical return reversal.” Foreign investors may be taking profit on U.S. equities, while covering short positions on Japanese shares, he said.

Foreigners net bought 937 billion yen ($8.7 billion) of cash equities and futures in the week ended Sept. 13, according to Japan Exchange Group data. That was the fourth consecutive week of net buying.

Eoin Treacy's view -

The Topix Index (2.43%) currently yields more than the S&P500 (1.93%) which is both reflective of the compression in US yields but also the relatively high historical payout by Japanese firms.



This section continues in the Subscriber's Area. Back to top
September 27 2019

Commentary by Eoin Treacy

White House Weighs Limits on U.S. Portfolio Flows Into China

This article by Jenny Leonard and Shawn Donnan for Bloomberg may be of interest to subscribers. Here is a section:

The arguments for action inside the Trump team vary from simply enforcing U.S. transparency laws and creating a level of reciprocity, to raising national-security concerns with some of the Chinese companies that American pension funds are exposed to, according to people familiar with the conversations.

Some of those companies are firms that the U.S. government has identified as bad actors or has imposed sanctions against. The argument continues that Americans would unlikely want to invest in those companies if they had the choice.

The market capitalization of the 156 Chinese companies, including at least 11 state-owned firms, listed on the three-largest U.S. exchanges — the NASDAQ, New York Stock Exchange and NYSE American — stood at a collective $1.2 trillion as of late February, according to a report by the U.S.-China Economic and Security Review Commission.

China earlier this month removed a $300 billion cap on overseas purchases of Chinese stocks and bonds meaning global funds no longer need to apply to purchase quotas to buy the assets. The move is designed to lure more foreign capital into Chinese markets.

Eoin Treacy's view -

The removal of the cap on QFII investments was largely moot since only about a third of the allocation was being used anyway. The point I have been making for years is the only incentive China has to open up its financial sector is to diversify its risk. Today’s most of the risk resides domestically. The only way China can expect to receive assistance from the rest of the world during a crisis is if that risk is shared. That is the only reason for opening up to the financial sector to overseas investment. Risk pooling is the most basic factor in insurance planning and that is what China is doing. It therefore makes logical sense to question whether it is wise to buy what they are now so desperate to sell?



This section continues in the Subscriber's Area. Back to top
September 27 2019

Commentary by Eoin Treacy

13.5 tons of gold found in Chinese Ex Mayor's Basement

This article from crimerussia.com may be of interest to subscribers.

Police of the PRC searched the house of Zhang Qi, 57, the former mayor of Danzhou and found a large amount of cash, as well as 13.5 tons of gold in ingots in a secret basement of his home, reported local media.

In addition to the mayor’s post, the official held others, such as the Secretary of the Communist Party. According to unofficial reports, in addition to the gold, cash worth 268 billion yuan was discovered.

Luxurious real estate with a total area of ​​several thousand square meters, which the former city manager had been hiding for a long time, became the cherry on the cake for the Chinese Anti-Corruption Committee.

Eoin Treacy's view -

One of the most memorable quotes I’ve heard in China was back in 2011 when the communist official from a small town a couple of hours north of Beijing said to me “I’m only a small guy so I’m only a little corrupt”. His boss was the county head and the gift to attend his daughter’s wedding was a stack of CNY100 notes six inches tall. They were counting the money in cubic metres. Then think about the head of the head of a province like Hainan which is being developed as “China’s Hawaii”. From that perspective the monopoly money sums are still huge but do help to highlight just how engrained corruption is.



This section continues in the Subscriber's Area. Back to top
September 27 2019

Commentary by Eoin Treacy

September 26 2019

Commentary by Eoin Treacy

September 26th 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: Wall Street steady, Dollar Index at new closing high, Euro weak, Treasuries steady, Peloton IPO flops, Saudi Aramco IPO in less than a month, China weak and commodity currencies extend downtrends, India steady, oil steady.



This section continues in the Subscriber's Area. Back to top
September 26 2019

Commentary by Eoin Treacy

Chinese Tech Companies Turn to Financial Services

This article by Stella Yigan Xie for the Wall Street Journal may be of interest to subscribers. Here is a section:

Hao Jianyu, 26, who works at Google in Beijing and owns a Xiaomi phone, says he holds credit cards from China’s four biggest banks but prefers taking out loans from Xiaomi Finance to fund his daily spending. He says daily interest on what he borrows is 0.065%, an annualized rate of 23.4%. That’s higher than the interest rate on his credit cards, Mr. Hao says, but he has been able to increase his credit limit much faster with Xiaomi. The more often he uses Xiaomi’s short-term loans and repays on time, the bigger his credit line, which now exceeds the limits on his credit cards. He says his credit limit from Xiaomi has increased to 60,000 yuan from a few thousand yuan over two years.

In a stock-exchange filing last year before Xiaomi went public, the Beijing-headquartered company said its finance business had a “highly advanced and customized credit assessment and risk management approach” that was built on its big database of users. The company said its proprietary risk-assessment model is used to preapprove individuals for certain amounts of credit. Xiaomi said in reporting its results for the second quarter of this year that revenue from its fintech business grew 63% from a year earlier to 792 million yuan ($112 million) in the three months through June.

Eoin Treacy's view -

China is attempting to implement countercyclical monetary policy. There is a bubble in the housing market and 50 million homes are vacant. Their consumer sector, particularly younger upwardly mobile generations have taken to credit like just about all new consumers in other countries before them.



This section continues in the Subscriber's Area. Back to top
September 26 2019

Commentary by Eoin Treacy

The Navy Says Those UFO Videos Are Real

This article by Kyle Mizokami for popular Mechanics may be of interest. Here is a section:

That terminology is important. "Unidentified Aerial Phenomena" provides "the basic descriptor for the sightings/observations of unauthorized/unidentified aircraft/objects that have been observed entering/operating in the airspace of various military-controlled training ranges," Gradisher told The Black Vault.

In other words, the Pentagon says the aerial objects in the videos are simply unidentified, and for now, unexplained. The Navy is pointedly not saying the objects are flying saucers or otherwise controlled by aliens.

Earlier this year, the Department of Defense told The Black Vault that the videos were unclassified, but never cleared for public release, and that there had been no review process within the Pentagon for releasing them.

Eoin Treacy's view -

This is either a big piece of technological news or one of the best pieces of counter intelligence in recent times.



This section continues in the Subscriber's Area. Back to top
September 26 2019

Commentary by Eoin Treacy

Peloton Deepens IPO Slump in 3rd-Worst Unicorn Debut Since '08

This article by Crystal Tse and Hailey Waller for Bloomberg may be of interest to subscribers. Here is a section:

Peloton Interactive Inc. fell as much as 9.5% Thursday after raising $1.16 billion in its U.S. initial public offering, becoming the latest unprofitable startup to fail to win over investors in its trading debut.

Peloton’s shares opened at $27 and were down 7.2% to $26.90 at 12:38 p.m. in New York trading, giving the company a value $7.5 billion. The fitness startup sold 40 million shares for $29 each on Wednesday, after marketing them for $26 to $29.

It marks the third-worst trading debut in 10 years in the U.S. for companies that have raised at least $1 billion, according to data compiled by Bloomberg. The IPO also comes as investors have been rattled by the sudden disintegration of WeWork’s plan to go public in September.

Peloton Chief Executive Officer John Foley said in an interview with Bloomberg Television that he had “some disappointment” about the reception but was confident in his company’s prospects.

Eoin Treacy's view -

The one point that seemed to get very little commentary in the lead up to this IPO was just how fad-prone the fitness industry is. Soul Cycle and spinning are all the rage at the moment. I personally go to at least two, if not three, hybrid cycling and toning classes a week. After 18 months of these classes I am starting to find them monotonous and that is a big challenge for a company that is trying to sell a range of workouts via phone or its enormously overpriced pieces of equipment. I just can’t see why someone would pay $40 to Peloton for online classes when they can pay the same or less at an LAFitness without the capital expense and space requirement of the exercise equipment.



This section continues in the Subscriber's Area. Back to top
September 25 2019

Commentary by Eoin Treacy

September 25 2019

Commentary by Eoin Treacy

Machine Learning's "Amazing" Ability to Predict Chaos

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

“This is really very good,” Holger Kantz, a chaos theorist at the Max Planck Institute for the Physics of Complex Systems in Dresden, Germany, said of the eight-Lyapunov-time prediction. “The machine-learning technique is almost as good as knowing the truth, so to say.”

The algorithm knows nothing about the Kuramoto-Sivashinsky equation itself; it only sees data recorded about the evolving solution to the equation. This makes the machine-learning approach powerful; in many cases, the equations describing a chaotic system aren’t known, crippling dynamicists’ efforts to model and predict them. Ott and company’s results suggest you don’t need the equations — only data. “This paper suggests that one day we might be able perhaps to predict weather by machine-learning algorithms and not by sophisticated models of the atmosphere,” Kantz said.

Besides weather forecasting, experts say the machine-learning technique could help with monitoring cardiac arrhythmias for signs of impending heart attacks and monitoring neuronal firing patterns in the brain for signs of neuron spikes. More speculatively, it might also help with predicting rogue waves, which endanger ships, and possibly even earthquakes.

Eoin Treacy's view -

The trajectory of human development has largely been focused on the occasional appearance of a particularly gifted individual. Someone theorises what will be achievable in future and develops a mathematical formula which will take time to prove with physical experiments. The intervening period between the theory and reality has often been counted in centuries.

The advent of machine learning and artificial intelligence greatly accelerated that intellectual evolution. It represents a wonderful example of an enabling technology which will create productivity gains and new technology sectors out of nowhere.   



This section continues in the Subscriber's Area. Back to top
September 25 2019

Commentary by Eoin Treacy

Blitzscale and Hope: Unicorns, IPOs and the Fear of Repeating the Late 1990s

Thanks to a subscriber for this report Epoch Investment Management Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

I share some sympathy with the view that there are some private companies that have the majority of their growth in their future and not in the past. There is a rational argument that most successful companies in the stock market today was a private company once upon a time so there are obviously going to be some successes.

However, what I find particularly interesting is the agonising over the lack of covenants in the debt markets and the surge in leveraged loans, yet there is has been precious little commentary on the growth in dual class shares and the diminution of minority shareholder interests.  



This section continues in the Subscriber's Area. Back to top
September 25 2019

Commentary by Eoin Treacy

The History and Future of Debt

This report by Jim Reid for Deutsche Bank may be of interest to subscribers. Here is a section:

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

Germany failed to sell a 2 billion zero coupon bond in August which was a precursor to the reversionary move seen in bond prices. However, the economy is recession and there is no prospect of the ECB raising rates. Instead quantitative easing will further increase the ECB’s holdings of regional sovereigns.

Richard Russell used to say “print or die” and that is exactly what the central banks of the world are going to do. What I find particularly interesting is the comparison with debt levels only being approximating current levels during wartime. That must mean we are in a war but this time it is with ourselves and the contention is about the ability to pay unfunded liabilities.



This section continues in the Subscriber's Area. Back to top
September 24 2019

Commentary by Eoin Treacy

Video commentary for September 24th 2019

September 24 2019

Commentary by Eoin Treacy

How are the original leaders in this cycle doing?

Eoin Treacy's view -

Abundant, almost free capital, means there is money for just about every speculative venture. There have been a number of companies that would not ordinarily have been able to raise capital for their ideas but were able to do so because there was so much available capital. The companies that IPOed early are now some of the largest in the world while those that are still private are having difficulty going public.



This section continues in the Subscriber's Area. Back to top
September 24 2019

Commentary by Eoin Treacy

Eoin's personal portfolio update

Eoin Treacy's view -

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided. 



This section continues in the Subscriber's Area. Back to top
September 24 2019

Commentary by Eoin Treacy

Financial Services Exports

I found this graphic from howmuch.net to be particularly interesting. The obvious point is the UK’s financial services is a major component of the global sector; second only to the USA.

September 24 2019

Commentary by Eoin Treacy

How We Should Bust an Investing Myth

This article by Jason Zweig for the Wall Street Journal may be of interest to subscribers. Here is a section:

According to PitchBook Data, 66 companies valued at $1 billion or more have done initial public offerings from 2011 through mid-September 2019. A third of those IPOs came at prices below the value set in the companies’ last round of private funding. Bloom Energy Corp. , Cloudera Inc., Domo Inc., Reata Pharmaceuticals Inc., and Zynga Inc. all launched IPOs priced at least 40% lower than the valuation in their final private-funding round, according to PitchBook.

Perhaps that’s because conventional valuation methods may overstate what private funds’ venture holdings are worth. Often, several share classes are valued equally even though they aren’t all entitled to the same payoffs.

Or perhaps the brilliance of the private market is overstated. Consider a recent survey of nearly 900 venture capitalists.

Asked whether they “often make a gut decision to invest” in a fledgling company rather than relying on analysis, 44% of venture-fund executives said yes.

Which financial metrics do they use to analyze investments? “None,” admitted 9% of respondents. Only 11% quantitatively analyze past investment performance. A similar survey of private-equity executives found that they “do not frequently use” the methods that are standard among public investors for discounting the future cash their holdings might generate.

Eoin Treacy's view -

The “vision thing” as Bill Clinton was wont to say is not a topic that submits readily to discounted cashflows. That is particularly true of angel investing where one is taking bets on companies with no earnings not to mind profits. However, an investor that is investing in a company with billions in earnings and still running billion-dollar losses has to know they are not in the same game as an angel investor. After the first or second round of funding, the only rationale for investing is the wish to sell to a bigger fool later unless one is luck enough to latch onto a lottery scale winner.



This section continues in the Subscriber's Area. Back to top
September 24 2019

Commentary by Eoin Treacy

China Gives New Waivers for Tariff-Free U.S. Soybean Purchases

This article from Bloomberg News may be of interest to subscribers. Here it is in full:

The Chinese government has given new waivers to several domestic state and private companies to buy U.S. soybeans without being subject to retaliatory tariffs, according to people familiar with the situation.

The companies received tariff waivers for between 2 million to 3 million tons of American soy, said the people, who asked not to be identified as the information is private. Some firms have already bought at least 20 cargoes, or about 1.2 million tons, of the commodity from the U.S. Pacific North West on Monday, the people said.

Among the companies are state-owned buyers Cofco and Sinograin as well as five other crushers, the people said. China’s commerce ministry didn’t respond to a fax seeking comment.

Eoin Treacy's view -

China has a food price inflation problem which is not easily fixable because the plagues and pestilence which affected the tillage and animal husbandry sectors are chronic in nature. There have been efforts to try and source soybeans in particular from Brazil but there are just not enough to go around. As predicted in last night’s subscriber’s audio this action to buy more American agricultural exports was inevitable.



This section continues in the Subscriber's Area. Back to top
September 23 2019

Commentary by Eoin Treacy

Video commentary for September 23rd 2019

Eoin Treacy's view -

A link to today's video commentary is posted in the Subscriber's Area. 

Some of the topics discussed include: India cuts corporate taxes which boosts stocks, China imposes Communist officials in its companies which has the opposite effect, Germany heading to recession which increases fiscal stimulus potential, Silver surges, platinum and gold rally. oil and bonds steady, 



This section continues in the Subscriber's Area. Back to top
September 23 2019

Commentary by Eoin Treacy

As Gold Prices Heat Up, Miners Play It Cool

This article by Alistair McDonald for the Wall Street Journal may be of interest to subscribers. Here is a section:

Despite that optimism, gold miners say they aren’t planning the same sort of megaprojects and acquisition sprees that characterized the last ramp up in prices in the years ahead of 2011. Instead, wary of volatile prices, they plan to pay down debt and return money to shareholders.

Many companies, including the world’s largest gold miner, Newmont Goldcorp Corp., say they will only approve new projects if they can make money with gold at $1,200, about 20% below where the metal currently trades. Gold prices also have spent the majority of the eight years since 2011’s bust trading above that level, underscoring how conservative companies have become.

“We won’t push ahead with investments that would struggle to sustain themselves if the gold price trades lower,” said Kelvin Dushnisky, chief executive of AngloGold Ashanti Ltd. “This was a common mistake for many gold producers in the previous upcycle.” The South African miner, whose share price has risen 62% in the year to date, is among the companies sticking by the $1,200 threshold for new projects.

Eoin Treacy's view -

In the early part of a mining investment cycle, miners have been so scarred by the depth of the bear market that they run tight ships and eschew debt. However, the higher prices rise and the more pressure they come under to replace reserves and increase supply, the lure of debt, mergers and exploration increases leverage ratios.



This section continues in the Subscriber's Area. Back to top