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

    Tesla's GM Deal Is Bad News for EV Charger Firms

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

    itself, meaning patience is more than just a virtue here. Tesla built its proprietary network essentially as a loss leader to stoke demand for its EVs, and it could do that in part because of Musk’s rarified knack for persuading investors to cover his losses. The three charging companies mentioned above have a combined market cap of about $5 billion, cash on hand of $550 million and expected cash burn across this year and next of more than $600 million. Their life is complicated enough. And now this.

    The path to turning a profit on public chargers is like any piece of industrial hardware: Get more people to use it so it doesn’t sit idle. The threshold for profitability with charging depends on many factors, though I’ve seen one useful estimate of 30%, or roughly seven hours of charging every day (see this). As it stands, EVgo, which is weighted more to fast-charging, said on its last earnings call that the top fifth of its charging stalls enjoyed utilization above 20%.

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    Global ocean temperatures spike to record levels as El Niño nears

    This article from Axios may be of interest. Here is a section: 

    This means the 2023 El Niño is elevating global average temperatures from a higher starting point, making it easier to set records.

    This is like a basketball player playing on a court with a steadily higher floor, making it easier to dunk the basketball.

    This may be why 2023 has already seen record ocean temperatures surpassing 2016’s numbers, and why this trend may be here to stay throughout the duration of the projected El Niño.

    What they're saying: "2023 is off to an alarming start, even before El Niño conditions fully develop later this year," Kim Cobb, a climate scientist at Brown University, told Axios via email. She noted that even a moderate El Niño is likely to lead to a new global temperature record.

    "Given the current pace of warming, however, even a new record will likely be surpassed in a matter of years. The planet is warming so fast now, even a natural cycle as strong as the El Niño-Southern Oscillation is beginning to be lost in the noise," Cobb said.

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    Crisis Seen Lasting Until Tuesday

    This note may be of interest. Here it is in full: 

    It will likely be Monday or Tuesday before the larger weather pattern that is pumping the smoke south from Canada starts to break up, according to Zack Taylor, a senior branch forecaster with the US Weather Prediction Center. There could be some minor improvement in New York Thursday as the worst of the smoke drifts more to the west. 

    The plume itself covers most of North America. In the long-term, the only real solution will be if the fires in Canada are brought under control. 

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    Jobless Claims Put FOMC Unemployment Forecast in Sight

    This note from Bloomberg Economics may be of interest. 

    OUR TAKE: The surge in jobless claims — to the highest level since October 2021 — is in line with our analysis of WARN notices, which suggested layoffs were set to spike. It’s increasingly feasible for the unemployment rate to reach the median FOMC participant’s 4.5% projection by year-end.

    Initial jobless claims for the week ended June 3 increased 28k to 261k. The reading was above the consensus (235k) and Bloomberg Economics’ projection (240k).

    The surge came from Ohio (6.3k), California (5.2k), Minnesota (2.7k) and Pennsylvania (2.0k).

    Given recent fraudulent applications in Massachusetts, it’s possible that other states are experiencing similar issues. However, the four-week moving average also increased by 7.5k to 237k, well above the 218k pre-pandemic average from 2019. That suggests labor-market conditions are continuing to cool.

    Continuing claims declined 37k to 1,757k for the week ended May 27, remaining above the pre-pandemic average of 1,699k. The insured unemployment rate — the number of people currently receiving unemployment insurance as a percentage of the labor force — remained at 1.2%.
    We expect continuing claims to move higher given the surge in initial claims and tracking of WARN notices.

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    Biogen Rises As 'Relatively Benign' FDA Documents Suggest An Alzheimer's Approval Is Near

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

    Biogen stock bounded higher Wednesday after the Food and Drug Administration posted "relatively benign" documents, suggesting the agency likely plans to approve the company's Alzheimer's treatment.

    A panel of advisors to the FDA will meet Friday to discuss the drug, Leqembi, which won accelerated approval in January. Now, the FDA will consider converting that to a traditional approval based on the results of a confirmatory study called Clarity-AD.

    "Overall, the briefing documents appear relatively benign, and we think the most likely outcome is a positive vote, followed by full approval," Wedbush analyst Laura Chico said in a note to clients.

    On the stock market today, Biogen stock rose 1.7% to close at 304.90. Shares bounced off their 50-day moving average, according to MarketSmith.com.

    Biogen and its partner, Eisai, have a long and storied history in Alzheimer's treatment, and analysts were quick to make comparisons to the companies' first approved drug, Aduhelm.

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    Traders Are Leaning Toward Fed Hike by July as Bond Yields Climb

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

    The Treasury market briefly restored the full pricing of Federal Reserve tightening by July, which would be the last interest-rate hike in 2023.

    The latest shift in expectations for Fed policy was accompanied by a slide bonds, with the yields on five-year Treasuries up at least 11 basis points. Selling picked up after the Bank of Canada cited stubborn inflation pressures for delivering a quarter-point hike Wednesday. 

    The rate on swap contracts linked to the July gathering climbed to a peak of 5.33% on Wednesday, or 25 basis points above the current effective fed funds rate of 5.08%, before easing back late in New York. The June swap showed eight basis points of tightening ahead of next week’s Fed meeting, suggesting that traders are leaning in favor of a tightening pause.

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