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

    China Mulls New Property Support Package to Boost Economy

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

    A mountain of developer debt — equal to about 12% of China’s GDP — is at risk of default and poses a threat to financial stability, according to Bloomberg Economics. That’s despite a slew of existing support measures for the industry, which include: 

    Lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months
    A nationwide cap on real estate commissions to boost demand
    Allowing private equity funds to raise money for residential property developments
    Pledging 200 billion yuan ($28 billion) in special loans to ensure stalled housing projects are delivered
    A 16-point plan unveiled in November that ranged from addressing the liquidity crisis to loosening down-payment requirements for homebuyers

    Speculation about further policy support helped propel a gauge of Chinese property developers to a more than 6% gain on Friday before the Bloomberg report, the most since December. In the coastal city of Qingdao, the government this week lowered the down payment ratio for first- and second-time home buyers in areas not subject to purchase restrictions, local media reported earlier on Friday.

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    3M agrees to tentative PFAS settlement of 'at least' $10B

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

    3M has agreed to a tentative settlement of "at least" $10B to resolve water pollution claims tied to PFAS "forever chemicals,' people familiar with the proposed pact tell Bloomberg's Jef Feeley. The potential deal would require board approval, the report noted.

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    Hubert's Peak Is Here

    Thanks to a subscriber for this report from Goehring & Rozencwajg. Here is a section on shale oil production growth: 

    Conventional wisdom believed the industry had improved its drilling and completion of shale wells. The ability to stay in the zone, the choice, and the volume of proppant and fluid were all said to have resulted in sharply higher drilling productivity. Wall Street and the energy industry both promoted a consistent narrative. We felt there were several unanswered questions and undertook a study to consider what was driving surging well productivity. If the industry had radically improved drilling techniques, it would ultimately be bearish for the sector. A previous low-quality Tier 2 location could now be transformed, through enhanced drilling and completion techniques, into a top-quality Tier 1 well. As a result, the inventory of best wells would explode, and the shale basins would continue to thrive for years to come. Modeling well performance is hugely complex. Shale basins are highly nonlinear with high degrees of variable inter-dependence. As a result, traditional statistical techniques, such as the linear regressions used by most analysts, fall short. We turned to advanced methods, including machine learning and neural networks, and achieved surprising results. Instead of improved drilling techniques, we concluded that two-thirds of the improved productivity between 2013-2018 came from favoring the best drilling locations. In 2013, 22% of Midland wells were Tier 1. By 2018, Tier 1 represented 50% of all wells. Since a Tier 1 well is nearly twice as productive as a Tier 2 well, the migration from lower to higher quality areas drove a massive amount of the improved well productivity.

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    Eoin's personal portfolio: stock market short closed at a loss May 26th 2023

    GDP Surprises Up - Tailwinds Are Here to Stay

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

    India’s GDP growth increased to 6.1% year on year in January-March, from an upwardly revised 4.5% in the final quarter of last year. The reading exceeded even our forecast of 5.7% — the highest in a Bloomberg News survey — and was 1.1 percentage points higher than the consensus estimate.

    For fiscal 2022, which ended March 31, that translates into GDP growth of 7.2%, higher than the government’s second advance estimate of 7%. This was in line with our forecast, but 0.2 ppt higher than the consensus estimate.

    Key drivers behind the positive data surprise included government subsidies that are energizing the electronics sector, multinationals shifting back-office business to India to reduce costs, and stronger real credit growth.

    The Reserve Bank of India’s cumulative 250 basis points of repo rate increases in this cycle didn’t appear to have any meaningful impact. The construction sector, which is most sensitive to interest rates, also recorded higher growth in 1Q.

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    EPW Committee Advances Risch, Crapo Nuclear Energy Bill

    Here are some of the key details of the nuclear bill passed today. 

    Develop and Deploy New Nuclear Technologies

    The bill reduces regulatory costs for companies seeking to license advanced nuclear reactor technologies.
    The bill creates a prize to incentivize the successful deployment of next-generation nuclear reactor technologies.
    The bill requires the NRC to develop a pathway to enable the timely licensing of nuclear facilities at brownfield sites.

    Preserve Existing Nuclear Energy

    The bill modernizes outdated rules that restrict international investment.
    The bill extends a long-established, indemnification policy necessary to enable the continued operation of today’s reactors and give certainty for capital investments in building new reactors.

    Strengthen America’s Nuclear Fuel Cycle and Supply Chain Infrastructure

    The bill directs the NRC to establish an initiative to enhance preparedness to qualify and license advanced nuclear fuels.
    The bill identifies modern manufacturing techniques to build nuclear reactors better, faster, cheaper and smarter.

    Authorize funds for Environmental Cleanup Programs

    The bill authorizes funding to assist in cleaning up legacy abandoned mining sites on Tribal lands.

    Improve Commission Efficiency

    The bill provides flexibility for the NRC to budget and manage organizational support activities to ensure the NRC is prepared to address NRC staff issues associated with an aging workforce.
    The bill provides the NRC Chair the tools to hire and retain highly-specialized staff and exceptionally well-qualified individuals to successfully and safely review and approve advanced nuclear reactor licenses.
    The bill requires the NRC to periodically review and assess performance metrics and milestone schedules to ensure licensing can be completed on an efficient schedule.

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    Why Apple's headset could succeed where every similar product has failed

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

    Around the same time, Apple started buying several companies focused on specific technologies that could end up in a headset.

    In 2013 it bought Primesense, whose 3D camera sensor eventually ended up being part of the basis for FaceID, the company’s facial recognition system for iPhones, and influenced the company’s current depth-sensing cameras.
    In 2015, it bought Metaio , which made AR software for mobile devices.
    In 2016, it bought Flyby Media, which worked on computer vision technology.
    In 2017, it bought SensoMotoric Instruments, which developed eye tracking, a core VR technology, as well as Vrvrana, which developed a VR headset.
    In 2018, it bought Akonia Holographics, which developed transparent lenses for AR glasses
    It bought NextVR, which filmed video content for virtual reality, including sports.

    Apple also started releasing developer’s kits for augmented reality, including one called ARKit which could use the iPhone’s hardware to create limited AR experiences on the phone, like interacting with a virtual pet or trying out digital furniture in a living room.

    Apple now has an entire library of software to perform difficult tasks that the headset will need to be able to do to integrate the real world and a virtual world seamlessly.

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