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

    Tapering on Deck-Stick with Defensive Quality in Factor Frenzy

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

    Tapering is tightening for markets, if not the economy. Due to the much greater than expected rise in inflation, the Fed is pivoting to a more aggressive removal of monetary accommodation. We believe this is warranted and supported by an administration that appears less focused on the stock market as a barometer of its success. Furthermore, tapering is different than in 2014 for 3 reasons: 1) the Fed is exiting QE twice as fast this time,2) asset prices are much richer today and 3) growth is decelerating rather than accelerating. This could be important for the economy, too, given how levered consumers are to stock prices today.

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    Email of the day on carbon sequestration

    Montreal company Carbicrete has developed a method for sequestering carbon in concrete, claiming its product captures more carbon than it emits. The technology cuts out the need for calcium-based cement, a key ingredient in traditional concrete that is responsible for around eight per cent of all global CO2 emissions. I thought you might be interested in this.

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    VW Boosts Future Tech Spending, Enlarges Management Board

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

    Volkswagen AG raised its five-year spending plan and overhauled its management board, seeking to catch up with Tesla Inc. and end an internal dispute over the changes needed to get there.

    The German company will invest 159 billion euros ($180 billion) in total in the next half decade, of which 89 billion euros are for technologies like software and electric cars. That’s more than in last year’s rolling plan, pointing to a faster departure from combustion engines. By 2026, about a quarter of all sales will be electric only, VW predicted.

    VW’s aggressive transformation hasn’t been without controversy, and Chief Executive Officer Herbert Diesshas come under fire from labor representatives accusing him of plotting mass layoffs to make VW more nimble.

    Diess’s position at the helm was the subject of public debate in recent weeks, and Chairman Hans Dieter Poetsch sought to quell any speculation today about his future by calling Diess an “agent of change.” At the same time, the CEO ceded some tasks to others on the management board, which has now swelled to 12 members.

    “Our exceedingly robust and solid financial base enables us to finance the necessary investments on our own,” Poetsch said in a statement. “We are also therefore very confident that these investment decisions will steer the Volkswagen Group to future success.”

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    Vodafone Shares Jump After Betaville 'Uncooked Alert'

    This note from Bloomberg may be of interest to subscribers. Here it is in full: 

    Vodafone shares rose as much as 3.3% following a so-called “uncooked” mention in a Betaville report regarding potential private equity interest in the telecom operator. Shares pared gain to 1.8% as of 4:18 p.m.

    Representatives for Vodafone were not immediately available to comment when contacted by Bloomberg via phone and email
    Betaville says there is speculation that one of Europe’s largest private equity firms is looking at all of some of Vodafone, citing people following the situation
    NOTE: The speculation is described as “uncooked,” a term the Betaville blog often uses to refer to market gossip
    NOTE: Vodafone shares have declined 5.9% YTD vs Stoxx Telecoms Index’s 9.5% gain
    READ: Private Equity Rummages in the Telco Bargain Bin: Chris Hughes

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    SEC probes Tesla over whistleblower claims on solar panel defects

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

    Henkes, a former Toyota Motor quality division manager, was fired from Tesla in August 2020 and he sued Tesla claiming the dismissal was in retaliation for raising safety concerns. Tesla did not respond to Reuters' emailed questions, while the SEC declined to comment.

    In the SEC complaint, Henkes said Tesla and SolarCity, which it acquired in 2016, did not disclose its "liability and exposure to property damage, risk of injury of users, fire etc to shareholders" prior and after the acquisition.

    Tesla also failed to notify its customers that defective electrical connectors could lead to fires, according to the complaint.

    Tesla told consumers that it needed to conduct maintenance on the solar panel system to avoid a failure that could shut down the system. It did not warn of fire risks, offer temporary shutdown to mitigate risk, or report the problems to regulators, Henkes said.

    Tesla shares fell 5.5% at $960.25 on Monday after the Reuters report.

    More than 60,000 residential customers in the U.S. and 500 government and commercial accounts were affected by the issue, according to his lawsuit filed in November last year against Tesla Energy over wrongful termination.

    It is not clear how many of those remain after Tesla's remediation program.

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    Email of the day - on deflationary risks

    In today’s Audio you stated that there was an increasing risk of deflation. This is unsurprising because the capitalist system rewards the production of cheaper and better goods, while the continuing industrialization of the under-developed countries maintains downward pressure on wages. Throw in the emergence of crypto currencies and one must ask if gold will ever regain its former status in the economic system. Your views would be appreciated.

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    Apple Falls on iPhone Demand Report, Weighing on Suppliers

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

    Apple Inc. shares dropped after the iPhone maker was said to tell suppliers that demand for its flagship product has slowed, taking the shine off their recent record high.

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    China to Close Loophole Used by Tech Firms for Foreign IPOs

    Companies currently listed in the U.S. and Hong Kong that use VIEs would need to make adjustments so their ownership structures are more transparent in regulatory reviews, especially in sectors off limits for foreign investment, the people said. It’s unclear if that would mean a revamp of shareholders or, more drastically, a delisting of the most sensitive firms -- moves that could revive fears of a decoupling between China and the U.S. in areas like technology. Details of the proposed rules are still being discussed and could change.

    The overhaul would represent one of Beijing’s biggest steps to crack down on overseas listings following the New York IPO of ride-hailing giant Didi Global Inc., which proceeded despite regulatory concerns. Authorities have since moved swiftly to halt the flood of firms seeking to go public in the U.S., shuttering a path that’s generated billions of dollars for technology firms and their Wall Street backers.

    It’s all part of a yearlong campaign to curb the breakneck growth of China’s internet sector and what Beijing has termed a “reckless” expansion of private capital. Banning VIEs from foreign listings would close a gap that’s been used for two decades by technology giants from Alibaba Group Holding Ltd. To Tencent Holdings Ltd. to sidestep restrictions on foreign investment and list offshore. It potentially thwarts the ambitions of firms like ByteDance Ltd. contemplating going public outside the mainland.
     

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