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June 18 2021

Commentary by Eoin Treacy

June 18 2021

Commentary by Eoin Treacy

Luxury Boom Helps Birkin Bag Maker Overtake a Beer Giant

This note from Bloomberg highlights an interesting development.

Hermes International, best known for its silk scarves and $10,000 Birkin handbags, is becoming one of the world’s hottest luxury stocks. The shares hit a fresh record on Friday, giving the company a market capitalization of about 130 billion euros ($155 billion) and nudging it above beer giant Anheuser-Busch InBev NV. Hermes, which only joined France’s CAC 40 Index three years ago, has benefited from a boom in demand for luxury goods that showed no sign of abating during lockdowns, while closed bars and restaurants weighed on AB InBev and other brewers.

Eoin Treacy's view

Hermes’ most popular products are in limited supply by design. That helps to create an aura of exclusivity and keeps demand high. It is also a recipe for low growth as price rises are implemented in an orderly manner against a background of deliberately controlled sales. Why then would the share accelerate?

There are two primary reasons. The first is only the name bags are in limited supply and everything else is produced at greater scale. The second is that massive money supply growth inflates the ability of consumer to afford luxury goods. That suggests the accelerating trend is a product of stimulus and is just as subject to the outlook for global money growth as growth stocks.

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June 18 2021

Commentary by Eoin Treacy

June 18 2021

Commentary by Eoin Treacy

As good as it gets, for now

Thanks to a subscriber for this report from Macquarie 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. 

The beginning of any new bull market creates a wide dispersion of views about future potential. The most important are between the cyclical versus secular camps. Cycle bull markets are powerful but short lived while secular bull markets surprise in their persistence over years.

There is likely to be a lot more dispersion in the commodity complex on this occasion that there was at the beginning of the big bull market that began in the early 2000s. The biggest difference is there is no secular shortage of oil.

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June 18 2021

Commentary by Eoin Treacy

"Mosquito smoothies" streamline production of promising malaria vaccine

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

This new process, spearheaded by scientists at Imperial College London, could make the process far more efficient. The method involves the batch processing of whole mosquitoes, which are reduced to a slurry that is then filtered by size, density and electrical charge. This process of making "mosquito smoothies" leaves behind the necessary sporozoite products for vaccination.

“Creating whole-parasites vaccines in large enough volumes and in a timely and cost-effective way has been a major roadblock for advancing malaria vaccinology, unless you can employ an army of skilled mosquito dissectors," says lead researcher Professor Jake Baum, from Imperial College London. "Our new method presents a way to radically cheapen, speed up and improve vaccine production.”

In addition to making the process faster and cheaper, the technique can also make the vaccine more potent. Traditional extraction of sporozoites brings with it contaminants such as unwanted proteins and other debris, which can affect the infectivity of the sporozoites and possibly the immune system response, compromising the efficacy of the whole parasite vaccine. Conversely, the mosquito smoothies result in pure uncontaminated samples.

Eoin Treacy's view

The promise of a vaccine against malaria is a significant piece of the missing puzzle to economic development in Africa. Malaria is a wasting disease that strikes people in their prime. It reduces productivity and requires other people to care for the invalid, which only compounds the effect. It is one of the biggest taxes on productivity on the continent. If malaria is solved, it frees up resources and productive capacity for significant evolution of human potential.

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