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

    SpaceX to be Tokenized

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

    They further explain if the market reaches the higher end, a new market could be opened with a new range, so making this effectively price discovery for non publicly traded companies, including McLaren, Reddit, SpaceX or OpenSea, Zapper, dYdX.

    This hasn’t quite launched yet, with it to be seen what it will look like exactly once it is in hard code, but the idea is that once the company goes public, then the prePO price is settled at the company’s opening price on the first day of trading.

    So in theory and perhaps even in practice this can allow for betting on startups even at the very early stages as well as mature companies that will probably go public at some point with the investor benefiting from the price appreciation that does finally settle once the company goes public.

    “When the asset goes public, you can exit your position at a final settlement price, based on the price at the end of the first day of public trading for stocks, or on a time-weighted average price for tokens,” they say.

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    Pfizer Boosts Forecast for Vaccine Sales to $33.5 Billion

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

     

    A resurgence of virus infections thanks to the delta variant is likely to mean sustained demand for vaccines around the world. Further, it is widely expected that many people could require booster shoots to bolster the immunity gained in the initial round of immunizations.

    Pfizer said in a presentation accompanying its earnings release that emerging real-world data “suggests immunity against infection and symptomatic disease may wane,” underscoring the need for boosters.

    The company said regulators will determine “whether, and which, populations to recommend booster,” and that they will likely first focus on those with compromised immune systems and older adults.

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    Big US implications from Israel

    This video from Dr. John Campbell may be of interest to subscribers.

    New Oriental Frogs

    Thanks to Iain Little for this edition of his Global Thematic Investors’ Diary. Here is a section:

    One of our HK analysts wrote this week: “the USA government has issued a joint advisory on the risks of conducting business, studying, and investing in HK, in a direct response to the June 2020 National Security Law (NSL)…which effectively crushed the autonomous region’s special freedoms. Certain multinationals in Hong Kong now face two-way political risk as the U.S.-China decoupling continues…Businesses will be forced to pick a side: adhere to U.S. sanctions and be penalized by China or potentially violate U.S. sanctions to maintain access to Chinese markets. Airlines will need to provide passenger information to authorities before flights depart…to prevent…political dissidents from leaving HK. The NSL allows authorities to conduct wiretaps or electronic surveillance, search and seize electronic devices, requires internet service providers to produce corporate or consumer data. The NSL has dissolved freedom of press in HK. The city’s public radio station is also now under tight censorship...all media based in HK now reflects the political agenda of Beijing. The U.S. has placed sanctions on several individuals and entities within HK, barring U.S. businesses and nationals from transacting with them.”

    It is clear that under President-For-Life Xi, the primary condition for portfolio investment in China –the safety of one’s capital in a free system under a Rule of Law- does not, indeed cannot, exist.

    This brings us back to the frog. The human tendency to cling onto hope and the status quo can be admirable, but it can also be a pathway to the poorhouse in investment. The destructive forces of late 1930s Germany were foreshadowed a decade before; “Mein Kampf” was published in 1925.

    Why not invest in sectors that are actively encouraged by the Chinese state, such as semi-conductors, or which lie outside the ambit of state interference? For institutional investors tied to a global equity index, this is indeed an option, though the tendrils of the Chinese state reach everywhere. For private investors who have no compulsion to invest in China, and who see the world of investment as a “global beauty contest” it may be considered a risk too far. Other more beautiful shores, those that feel the radiation effect of a booming China, may offer more attractive prospects. ASEAN and the free-thinking members of the Trans Pacific Partnership spring to mind.

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    Nike, Adidas Output Snarled as Covid Wave Shuts Asian Factories

    This article by Michelle Jamrisko for Bloomberg may be of interest. Here is a section:

    “It’s going to be worse before it gets better,” with shutdowns and staff disruptions increasing in Asia, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. “Places like Vietnam that largely avoided locking down cannot maintain an open posture. With vaccinations painfully slow, I assume more shutdowns in factories, with the ripple effects felt elsewhere.”

    Trade in goods has been a rare buffer for the Covid-ravaged global economy -- especially for export-heavy Asian countries -- but the latest reports show cracks in this growth pillar. The delta variant-driven surge has hit Southeast Asia especially hard, underscoring the delicate choices for policy makers who are balancing vaccination drives and mobility restrictions while trying to keep their economies afloat.

    The manufacturing pain is especially acute in Vietnam, where officials have taken drastic steps to ensure factories can continue operating. In some instances, electronics and tech companies have had workers sleep overnight on-site.

    The garment industry, with lower profits and more workers, hasn’t been able to replicate that effort. Feng Tay Enterprise Co., Pou Chen Corp. and Sports Gear Co. are among manufacturers that have suspended some operations in Vietnam.

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    Zomato Soars 80% in Debut of India's New Tech Generation

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

    For many others, the potential outweighs the downsides. With almost half its 1.3 billion people accessing the internet via smartphones, a bet on Zomato represents optimism that India’s tech upstarts could go the way of the U.S. or China, particularly as India’s internet infrastructure remains nascent and consumers are just getting used to buying online.

    “This is how it is supposed to work. Nine out of 10 will fail,” Goyal, who is barred from commenting in the run-up to the listing, said in an earlier interview. “But the one that thrives will be a spectacular success.”

    Fund-Raising Blitz
    In previous conversations, Goyal recounted how he first got the idea for an online service when, as a math and computer science student at the Indian Institute of Technology, he was particularly frustrated with a pizza order. His resolve strengthened after he graduated and joined Bain, where he saw colleagues in the company cafeteria skimming the limited menu and talking longingly about food at nearby restaurants.

    Goyal and Chaddah started uploading menus of neighborhood cafes and restaurants onto the company intranet, with phone numbers. That was a huge hit with coworkers, driving a weekend venture they christened foodiebay.com. After his wife got a teaching job at Delhi University, Goyal quit to pursue
    entrepreneurship full-time, shrugging off the onset of the global financial crisis.

    In the India of a decade ago, entrepreneurship was frowned upon and Goyal didn’t tell his parents -- both teachers -- until much later. In the first year, the startup began by listing thousands of restaurants in India’s six biggest cities. Then came an email from entrepreneur-turned-investor Sanjeev Bikhchandani, who invested $1 million through his Info Edge India Ltd.

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    Stock Traders Buy the Dip as Cyclicals Drive Rally

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

    “We have a ways to go on the cyclical recovery here,” Levine, head of equities at the firm, said on Bloomberg TV and Radio. The U.S. has exhibited “an exceptionalism in the amount of fiscal policy, the amount of monetary stimulus and also in the way we vaccinated the population. And because of that I actually am very bullish,” she added.

    For Bill Callahan, an investment strategist at Schroders, “equities just make sense right now,” and dip buyers will be rewarded as the market continues to grind higher.

    On the economic front, data showed U.S. housing starts increased in June by more than forecast, suggesting residential construction is stabilizing despite lingering supply-chain constraints and labor shortages.

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    Five companies make quarter of world's single use plastics

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

    Plastic waste is “a massive problem . . . On this trajectory, we will have more plastics in our ocean by weight than fish by 2050”, said Sander Defruyt, who leads the New Plastics Economy initiative at the Ellen MacArthur Foundation. 

    Its root cause was our “throwaway society” — countries must move from a system “based on the extraction of resources to one that is based on the circulation of resources”.

    Plastics are made from fossil fuel-based chemicals, and break up into smaller and smaller pieces when they are disposed of, rather than decompose in the way that food does. Although disposable plastic items can often be recycled, many are not and millions of tonnes of plastic waste find their way into the ocean each year. 

    As images of plastic-strewn beaches have become familiar sights, governments have started cracking down on the material with plastic bans or taxes.

    Last year, England banned single use plastic straws, stirrers and cotton buds, and raised the charge on plastic bags. China outlawed single use bags and cutlery in major cities, and is planning to extend plastic bans in the years to 2025.

    In a drive to entice eco conscious shoppers, consumer brands, including coffee chain Starbucks and fast food retailer McDonald’s, have started replacing disposable plastic items with paper alternatives. In April, grocer Morrisons announced it would become the first UK supermarket to completely remove plastic bags from stores.

    In its 2020 annual report, Dow said plastics were facing “increased public scrutiny”.

    “Local, state, federal and foreign governments have been increasingly proposing — and in some cases approving — bans on certain plastic-based products including single-use plastics,” which could affect demand, it said.

    Nevertheless, producers expect global demand for plastics to increase, driven by population growth and an expanding middle class. The pandemic also prompted an increase in the use of disposable items, which have been seen as a way to minimise the virus’ transmission.

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    U.K. Set for Big Reopening as Cases Soar Most in the World

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

    But the lifting of curbs came against a fraught backdrop of surging infections and political strife for Johnson. The U.K. added more than 54,000 new cases Saturday, and over 47,600 on Sunday, more than Indonesia, the current pandemic epicenter, according to data compiled by Johns Hopkins University.

    The surge in cases weighed on the pound, which fell as much as 0.4% to $1.3707, the lowest since mid-April. Meanwhile, demand for safety boosted U.K. government bonds, with 10-year gilt yields falling two and a half basis points to 0.60%.

    The prime minister, meanwhile, is fighting to regain his credibility after a furious backlash forced him and finance minister Rishi Sunak to abandon an initial attempt to avoid their own government’s isolation rules. The pair were told they needed to stay home after meeting Health Secretary Sajid Javid, who tested positive for Covid-19.

    The furore — overshadowing what U.K. media have called “Freedom Day” — is a deep irony for Johnson. It graphically demonstrates the perils the premier faces as he tries to break the U.K.’s cycle of lockdowns and revive economic activity while ensuring state-run hospitals are not overwhelmed.

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    Email of the day on South Africa reportedly from Clem Sauter:

    “Dear friends,

    Many of you outside of South Africa are wondering what is really going on. So here is a very simple outline. The thing is obviously far more complex and nuanced than can be set out in a brief note but this will give you some picture of what is really happening.

    Following the 1994 democratic elections in South Africa, South Africa did really well economically until about 2008. That was also the year that Jacob Zuma was elected president of the ANC. At that point in time, some of us had a sense of disquiet already. But little did any of us understand then the extent of the corruption and weakening of government institutions that would follow. We have no clear idea of the extent of what was stolen during the Jacob Zuma years, other than that it is a stupendous sum of money which this country certainly cannot afford. Eventually however the internal tide within the ANC started to slowly turn against Jacob Zuma. On 18 December 2017 Cyril Ramaphosa was elected as the president of the ANC (and also subsequently became the president of South Africa). But it was a very narrow margin of victory.

    The thing about Cyril Ramaphosa is that he is fundamentally a principled man. And certainly, determined to clean up the history of corruption we have seen since 2008. Various steps have been taken by him and the ANC under his guidance to give effect to this. One of the things that was done was to establish a commission chaired by Raymond Zondo, who is the Deputy Chief Justice of South Africa. The purpose of this commission was to investigate the corruption issues and to expose them to the light of day.

    Jacob Zuma was required to appear in front of the commission. He effectively refused to do so. He was ordered by the Constitutional Court to do so. He defied the order of the Constitutional Court. The Constitutional Court in turn ordered his imprisonment for a period of 15 months for contempt of court. This, whatever you call it, is fundamentally the rule of law in action.

    Initially there was resistance to imprisonment by Jacob Zuma and his supporters. A week ago, however Jacob Zuma submitted himself to imprisonment. And then all hell broke loose.

    What you need to understand is that Jacob Zuma has his powerbase in KwaZulu Natal, where the riots have been at their worst. This is also, as the name will tell you, the home territory of the Zulu nation. And Jacob Zuma is a prominent figure in the Zulu nation. Within the Jacob Zuma camp, individuals set about instigating the so-called protests, riots and looting that you have seen in the media. To a significant extent they leveraged the problems of poverty and inequality in South Africa to achieve their ends. Very often in this country we have areas where many very poor people are resident adjacent to commercial complexes. This was an ideal combination to exploit. In addition to that there are the existing fissures along race lines that exist in our society which were also available to leverage. Audio files doing the rounds encouraged people to attack and destroy what are perceived to be white and white owned businesses. In the end though, many black businesspeople also suffered considerable losses.

    The gameplan was to create a situation which would force the hand of the current government. Ideally, it would result in an overreaction by the security forces, with the result that many of the poor and vulnerable would be killed (which is what happened at Marikana a few years back). If that occurred, it would likely force the resignation or removal of Cyril Ramaphosa as president. Meaning the Jacob Zuma camp would have achieved their objective. This is one reason why the security forces have been so careful not to use excessive force in dealing with the riots and the looters.

    While there is still a lot of instability in KwaZulu Natal and certain pockets in Gauteng, what is now starting to emerge quite clearly is that the gambit by the Jacob Zuma camp has failed. South African society of all walks has turned its face against this insurrection. In effect, an attempted coup has failed.

    South Africans are a strange nation in many ways. They argue and fight amongst themselves but when pushed to the edge, they always pull together for the common good. This has happened again and again over the decades.

    This has been perhaps a necessary test of our democracy and of the rule of law. Make no mistake but that South Africa has many very real challenges. But South Africa will pass through this and will put the locust years behind it.”

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