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David Fuller and Eoin Treacy's Comment of the Day
Category - Global Middle Class

    Quarterly Global Outlook 4Q 2021

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

    New Zealand Inflation Surges to Fastest Pace in 10 Years

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

    The Reserve Bank of New Zealand (RBNZ), which seeks to keep inflation around the midpoint of a 1 per cent to 3 per cent target band, raised its official cash rate on Oct 6 and signalled more increases are coming. That is despite a coronavirus outbreak that has kept largest city Auckland in lockdown for two months, curbing economic growth.

    "We can now see annual CPI (consumer price index) inflation exceeding 5 per cent by the end of this year," said Mr Mark Smith, senior economist at ASB Bank in Auckland. "The widespread nature of price increases seen today was not a comforting sign. If it were not for the Delta variant outbreak, the pace of OCR (official cash rate) hikes being implemented by the RBNZ would potentially be quicker than 25 basis point increments."

    Investors ratcheted up bets on further RBNZ rate hikes. Another increase is now fully priced in for the Nov 24 policy decision and there is a chance the bank will deliver a 50-point move, swaps data shows.

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    Radiant aims to replace diesel generators with small nuclear reactors

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

    Radiant says its fuel "does not melt down, and withstands higher temperatures when compared to traditional nuclear fuels." Using helium as the coolant "greatly reduces corrosion, boiling and contamination risks," and the company says it's received provisional patents for ideas it's developed around refueling the reactors and efficiently transporting heat out of the reactor core.

    Radiant joins a number of companies now working on compact nuclear reactors, and a smaller number focusing specifically on portable units, which would include the floating barges proposed for mass-manufacture by Seaborg. It'll be a while before we see one up and running, but a clean, convenient, low-cost, long-life alternative to diesel generators would be very welcome.

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    Rising Rents Are Fueling Inflation, Posing Trouble for the Fed

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

    “Many participants pointed out that the owners’ equivalent rent component of price indexes should be monitored carefully, as rising home prices could lead to upward pressure on rents,” minutes from the Fed’s September meeting, released Wednesday, said.

    Rent is less critical to the Fed’s preferred inflation gauge, the one it officially targets when it shoots for 2 percent annual inflation on average, than it is to the C.P.I. But it is a big part of people’s experience with prices, so it could help shape their expectations about future cost increases.

    Those expectations matter a lot to the Fed. If consumers come to anticipate faster inflation, they may begin to demand higher wages to cover their rising expenses. As businesses lift prices to cover rising costs, they could set off an upward spiral. Already, some key measures of inflation outlooks — notably the New York Fed’s Survey of Consumer Expectations — have jumped higher.

    The Fed is already preparing to start slowing the large bond purchases it has been making during the pandemic to keep longer-term interest rates low and money flowing around the economy. If inflation stays high, the Fed may also come under pressure to raise its policy interest rate, its more traditional and more powerful tool. That might slow mortgage lending, cool the housing market and weigh down inflation.

    But doing that would come at a big cost, slowing the labor market when there are 5 million fewer jobs than before the pandemic. So for now, Fed officials are getting themselves into a position where they can be nimble without signaling that they’re poised to raise rates.

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    Gloves Come Off in EU Clash With Rogue Members Over Rule of Law

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

    Separately on Tuesday, Luxembourg Prime Minister Xavier Bettel said his government “fully supports the new conditionality mechanism.”

    Member nations “cannot take advantage of EU financial aid on the one hand, and disrespect the European values that unite us on the other. We cannot and will not accept this,” he said. “This is even truer in the context of a recent decision in Poland.”

    Testing the Limit
    The verdict questioning the supremacy of EU law, announced last week in Warsaw, marked a major escalation in Poland’s already fraught relations with the bloc and triggered street protests. In a joint statement just days later, France and Germany said Poland has a legal and moral obligation to abide by
    EU rules.

    Poland’s opposition, led by former European Council President Donald Tusk, accused the government of trying to force the country out of the EU. Prime Minister Mateusz Morawiecki, who triggered the ruling by the Polish court, has dismissed that accusation as “fake news”
    Still, his government ushered the ruling into law by publishing it in the official gazette on Tuesday, putting put to rest any doubt it may be seeking a way to compromise. “The government has decided to put itself on the collision course with the EU,” said Piotr Buras, a senior policy fellow at the European Council on Foreign Relations in Warsaw. “They’re trying to test the limits of how far they can go.”

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    Tony the Tiger's road to appearing in a Kellogg's worker protest

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

    While Tony the Tiger thinks Frosted Flakes are “grrr-eat,” hundreds of Kellogg’s factory workers think the company is “grrr-eedy”—and they’re using Tony to drive their point home.

    On Oct. 5, when about 1,400 Kellogg’s workers across four US plants went on strike over payments and benefits, a poster featuring the iconic tiger appeared along the picket line in Battle Creek, Michigan. In front of Tony were the words “I’m greedy.” A digital poster by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union also features an angry Tony holding a”Kellogg’s on Strrr-ike” sign.

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    World's biggest clean energy project to power Singapore from Australia

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

    The Australia-Asia PowerLink project, led by Australia's Sun Cable, plans to create a mammoth "Powell Creek Solar Precinct" on 12,000 hectares (29650 ac) of arid land about 800 km (500 miles) south of Darwin. The site, chosen because it's one of the most consistently sunny places on Earth, would be home to a mind-boggling 17-20 gigawatts of peak solar power generation and some 36-42 GWh of battery storage.

    To give you a sense of scale, that's nearly 10 times the size of the world's current largest solar power installation, the 2.245-GW Bhadia Solar Park in India, and more than 30 times more energy storage than the last "world's biggest battery" project we covered in February. It's a bit big.

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    Indonesia Parliament Approves 2022 Budget, Pushes Tax Reform Law

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

    Lawmakers passed the 2022 budget into law at a plenary meeting on Thursday, with state spending seen at 2,714.2 trillion rupiah, slightly lower than the 2,750 trillion rupiah set for this year. It set a faster economic growth forecast of 5.2% for 2022, while reducing its budget deficit to 4.85% of gross domestic product from a projected 5.8% this year. 

    Earlier in the day, a parliamentary commission approved a tax reform proposal that will introduce a carbon tax policy, overhaul the value-added tax system, expand income tax brackets, and offer another round of tax amnesty program. The bill will next be deliberated at the plenary level so it can be passed into law. 

    Indonesia joins its neighbors in finding solutions to improve finances as a protracted coronavirus outbreak depletes government coffers. While Thailand has been forced to raise its public debt ceiling and Malaysia weighs doing the same, Indonesia has stood by its pledge to bring its budget deficit back to 3% of GDP by 2023 by streamlining spending and expanding revenue sources.

     

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    Dollar Tree to Add Products Above $1 in Dollar Tree Plus Stores

    This article from Bloomberg may be of interest. Here it is in full: 

    Dollar Tree said it plans to begin adding new price points above $1 across all Dollar Tree Plus stores.

    To test additional price points above $1 in selected legacy Dollar Tree stores
    On track in 2021 to have 500 Dollar Tree Plus stores by fiscal year-end
    Another 1,500 stores are planned for fiscal 2022; at least 5,000 Dollar Tree Plus stores are expected by the end of fiscal 2024
    Currently has 105 Combo Stores; expects to add 400 Combo Stores in fiscal 2022
    Sees potential for up to 3,000 Combo Stores over the next several years

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