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

    The Metals for Your EV Are Stuck in a 30-Mile Traffic Jam

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

    Zambia, too, has ambitious expansion plans. The region could add nearly 1 million tons of annual copper production over the next decade, according to Adam Khan, copper supply analyst at CRU Group, and others are more optimistic still.

    “Copper is the new oil,” Zambian Finance Minister Situmbeko Musokotwane said in an interview. “This is a very good opportunity for us.”

    There’s no doubt that the region’s copper will be needed. To meet the global target of net-zero by 2050, the world may need to double supplies of what S&P Global calls “the metal of electrification.” “The green-energy transition is the biggest purchase order in history for the commodities industry,” said Benedikt Sobotka, chief executive officer of miner Eurasian Resources Group.

    To be sure, logistics are not the only impediment. Corruption is rife, and disputes with governments are common. One of the largest copper and cobalt mines, Tenke Fungurume, hasn’t been allowed to export any material since July because of a dispute between its owner CMOC Group and Congolese state mining company Gecamines.

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    BOE Tells Investors to Rein In Expectations for Rate Hikes

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    But in an usually blunt comment on investors’ outlook for future hikes, it stressed the peak in rates will be “lower than priced into financial markets.”

    Staying on the market path used in the forecasts, which peaks at around 5.25% next year, would knock 3% off GDP and ultimately push inflation to zero, the BOE said. An outlook based on rates staying at their current 3% level implies a shorter, shallower recession and sees inflation fall close to target in two years’ time.

    “We think bank rate will have to go up less than what’s currently priced into financial markets,” BOE Governor Andrew Bailey said at a press conference. “That is important because, for instance, it means that the rates of new fixed-term mortgages should not need to rise as they have done.”

    The remarks mark a sharp contrast with Federal Reserve Chair Jerome Powell, who said Wednesday that US rates will probably go higher than people are thinking. UK government bonds and the pound fell after the BOE’s decision. Investors had already tempered their view for UK rates, suggesting a peak around 4.75%.

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    Why This Is India's Decade

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

    In the post-Covid environment, global CEOs appear more comfortable with both work from home and work from India. The emergence of distributed delivery models, along with tighter labor markets globally, has accelerated outsourcing to India. The number of global in-house captive centers that opened in India over the last two years was almost double that of the prior four years. During the two pandemic years, the number of people employed in this industry in India rose from 4.3 million to 5.1mn,and the country's share of global services trade rose 60bps to 4.3%. In the coming decade, the number of people employed in India for jobs outside the country is likely to at least double to over 11mn,and we estimate global spending on outsourcing could rise from US$180bn per year to around US$500bn by 2030. This will have significant effects on both commercial and residential real estate demand.

    If India is already the 'office to the world', it is increasingly becoming its factory as well. We anticipate a wave of manufacturing capex owing to government policies aimed at lifting corporate profits' share of GDP via tax cuts and hard dollars for investing in specific sectors, and we note that performance-linked incentive (PLI) schemes now total US$33bn across 14 sectors. Multinationals are more optimistic than ever about investing in India, as the all-time high on our MNC Sentiment Index shows (Exhibit 39),and the government is encouraging investment by both building infrastructure and supplying land for factories. The trends outlined in Morgan Stanley’s multipolar world thesis and cheap labor add to the mix. We estimate that manufacturing's share of GDP will rise from 15.6% currently to 21% by 2031, which implies nominal output jumping from US$447bn to about US$1.49trn.

     

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    Brazil Has So Much Fertilizer That Cargo Is Being Rerouted

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

    “With prices at record levels, farmers decided to reduce applications to protect their margins,” Marina Cavalcante, an analyst at Bloomberg’s Green Markets said. Farmers are able to skip application of phosphate fertilizers without compromising yields since the soil can retain this nutrient for more than a year, she said.

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    Eoin's personal portfolio: stock market index shorts reopened November 2nd

    Wall Street Sees 'Devil's Bargain' in Powell's Rate Comments

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

    “This is a devil’s bargain,” said Steve Chiavarone, senior portfolio manager at Federated Hermes. “Size of rate hikes will likely fall, but terminal rate is likely higher -- the implication is a greater number of smaller rate hikes. That is not dovish.” 

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    Central banks haven't bought this much gold since 1967

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

    Turkey was the biggest buyer of gold during the quarter, followed by Uzbekistan (26.13 tons) and India (17.46 tons). Not all countries report their gold purchases regularly, so it’s difficult to know how much, for example, China and Russia bought during this same period.

    India is also shoring up its gold reserves.

    Indian consumers habitually purchase gold jewelry ahead of the festive season every October. But that aside, the Reserve Bank of India (RBI) bought 13 tons of gold in July and 4 tons in September, pushing its reserves to 785 tons, according to the WGC.

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    NASCAR driver stuns racing world with a move learned from Nintendo GameCube

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

    To understand the advantage of Chastain's move, a little knowledge of racing physics comes in handy. Typically, when taking a tight turn on a racetrack, drivers brake to counteract forces that push their cars toward the outside of the track. This braking action dramatically slows them down on the turn. This time, instead of slowing down for the turn, Chastain kept his car in fifth gear, hugged the wall, let go of the wheel, and allowed the wall to hold his car in place—no brakes necessary. That's how he passed five cars and set a 75-year lap record.

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