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

    Europe's Power Crunch Shuts Down Factories as Prices Hit Record

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

    Electricite de France SA said last week it will halt four reactors accounting for 10% of the nation’s nuclear capacity, straining power grids already faced with the prospect of a spell of cold weather. At the beginning of January, almost 30% of France’s nuclear capacity will be offline, increasing the country’s reliance on gas, coal and even oil.

    “If we have a very, very cold day, it could be problematic, especially if we have to import and our neighbors have problems as well,” said Paris-based Anne-Sophie Corbeau, a research scholar at the Center on Global Energy Policy at Columbia University. “This is the domino effect we need to fear. But electricity will be expensive, there’s going to be a cost to pay.”

    German power for next year jumped to a high of 335 euros a megawatt-hour, following a 25% rally on Tuesday, before slipping back. The French equivalent rose as much as 2.5% to record of 408 euros. Prices gained amid thin holiday trading even as gas declines. There was also speculation some traders may be closing short positions due to rising capital requirements from exchanges.

    “The strength in the French market has been the main engine -- aside from gas prices -- of strength in neighboring markets, including Germany, in recent days,” said Glenn Rickson, head of European power analysis at S&P Global Platts.

    “I also suspect that any big moves ahead of the run-up to Christmas have as much to do with the thinness of the market and traders needing to close short positions ahead of shutting down for the holidays as anything else.”

    Soaring gas and power prices have already forced European utility giants from RWE AG to Uniper SE to boost liquidity requirements. Many smaller suppliers didn’t have the same option, with more than 20 going out of business in the U.K. alone.

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    Musk Says He Has Sold Enough Stock to Unwind 10% of His Stake

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

    Elon Musk has disposed of enough shares to reach a target of reducing his stake in Tesla Inc. by 10%, the head of the electric-car leader said in an interview. 

    “I sold stock that should roughly make my total Tesla share sale roughly 10%,” he told satirical website Babylon Bee. 

    Musk has been offloading Tesla stock since asking his Twitter followers in November whether he should sell some of his stake. The move is part of a plan to generate cash to cover an estimated tax bill of more than $10 billion on stock options Musk is due to exercise.

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    Cultivated meat: Out of the lab, into the frying pan

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

    Cultivated meat has the potential to not just match but surpass the taste and texture of conventional meat, as well as to introduce novel products. If consumers take to these products, the market for cultivated meat could reach $25 billion by 2030 (Exhibit 3). Currently, the world primarily eats the meat of animals that are the easiest to farm industrially, but cultivated meat won’t face those constraints. Instead, the industry could select cell lines from specific animals with the best traits, such as Wagyu beef or wild salmon, and replicate them at the same cost as, say, beef patties or tilapia.

    Cultivated meat can also go one step further and select cell lines from animals that are not widely eaten because of their low meat content, long growing time, or lack of availability. For example, ostrich meat, a product that has challenged many ranchers, could be cultivated and become a trendy low-fat, red-meat alternative. There could even be room for highly creative product innovation: the industry’s imaginative take on dodo poultry could make a better nugget than chicken, or a burger made of what research chefs think mammoth might have tasted like could be a mouthwatering new concept.

    While most start-ups are focusing first on more popular species and breeds, Eat Just’s GOOD Meat and the company Orbillion Bio are exploring Wagyu, and the company Vow is working to explore more exotic options, such as kangaroo and alpaca.

    In the nearer term, companies may choose to focus on a single area and mix plant protein and other flavors into their products to achieve the desired taste and texture. Eat Just’s chicken product sold in Singapore, for example, is more than 70 percent cultivated cells, with a small amount of plant protein added in for structure, while Future Meat in Israel mixes cultivated fat with plant protein. It’s too early to tell if blended options are merely an interim fix or if they present a sufficiently compelling option for long-term adoption.

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    Stocks Under Pressure as Megacap Tech Sells Off

    This note from Bloomberg may be of interest. Here is a section:

    A rout in some of the world’s biggest technology companies dragged down the broader equity market, outweighing gains in companies that stand to benefit the most from an economic rebound.

    The S&P 500 fell after earlier climbing on bets that central banks can move toward tighter policies to fight inflation without derailing the economy. The Nasdaq 100 tumbled, led by losses in giants like Apple Inc. and Tesla Inc. Commodity, financial and industrial shares rose. European equities jumped as the region’s policy makers unveiled a gradual pullback of pandemic stimulus, while the pound gained as the Bank of England unexpectedly raised rates. Bitcoin slumped.

    Central banks are weighing measures to fight price pressures while balancing risks to growth amid coronavirus challenges. European Central Bank President Christine Lagarde unveiled forecasts showing a strong economic rebound along with an outlook for faster inflation. The Federal Reserve said Wednesday it will accelerate the pace at which it tapers bond purchases, and projected rate hikes through 2024.

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    Apple Falls on iPhone Demand Report, Weighing on Suppliers

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

    Apple Inc. shares dropped after the iPhone maker was said to tell suppliers that demand for its flagship product has slowed, taking the shine off their recent record high.

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    Jamie Dimon Jokes, but Will China's Leadership Laugh?

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

    “The Communist Party is celebrating its 100th year — so is JPMorgan,” the bank’s chief executive officer, Jamie Dimon, said Tuesday at a panel discussion at the Boston College Chief Executives Club. “I’d make a bet we last longer,” reported Bloomberg News. 

    And

    In China, business dealings often come down to narrative. One day, a foreign bank is welcome, and its presence is seen as helping China improve its financial industry. The next day, the same enterprise could be painted as a predatory vulture. Words matter, and harmless intent or humor can be misconstrued in translation. Jamie Dimon has every right to tell a joke, but it always helps to know your audience.

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    Email of the day - on short-term trading versus the big picture long-term outlook

    Eoin, on the weekend big picture you were talking up the prospects of the Fangman, sounding more positive on the names then I can recall. One trading day later, you have shorted the Nasdaq. The message is mixed at best. Please can you help me/us understand this

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    Staples Center to become Crypto.com Arena in reported $700 million naming rights deal

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

    Staples Center is getting a new name. Starting Christmas Day, it will be Crypto.com Arena.

    The downtown Los Angeles home of the NBA's Lakers and Clippers, the NHL's Kings and the WNBA's Sparks will change its name after 22 years of operation, arena owner AEG announced Tuesday night.

    Crypto.com is paying $700 million, according to multiple reports, over 20 years to rename the building. The parties aren't publicly announcing the financial terms of what's believed to be the richest naming rights deal in sports history.

    The 20,000-seat arena has been Staples Center since it opened in October 1999, with the naming rights owned by the American office-supplies retail company under a 20-year agreement. The name will change when the Lakers host the Brooklyn Nets in the NBA's annual Christmas showcase.

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    Inflation in U.S. Builds With Biggest Gain in Prices Since 1990

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

    “We haven’t seen, I’ll say, any more resistance to our price increases than we’ve seen historically.” -- McDonald’s Corp. CFO Kevin Ozan, Oct. 27 earnings call

    “Looking at Q4, we expect our selling price actions to continue to gain traction, as we work to mitigate the raw material and logistics inflationary pressures we have experienced throughout the year.” -- 3M Co. CFO Monish Patolawala, Oct. 26 earnings call

    “We feel very comfortable that any inflation that is affecting our margin today, we have the ability to offset it.” - Chipotle Mexican Grill Inc. CFO John Hartung, Oct. 21 earnings
    call

    “We have now announced pricing in nine out of ten categories, so very broad based.” -- Procter & Gamble Co. CFO Andre Schulten, Oct. 19 earnings call

    While most CPI categories rose, the cost of airfares declined for a fourth month and apparel prices were unchanged. Wages have strengthened markedly in recent months -- with some measures rising by the most on record -- but higher consumer prices are eroding Americans’ buying power. 

    Inflation-adjusted average hourly earnings fell 1.2% in October from a year earlier, separate data showed Wednesday.
     

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