Comment of the Day
24th January 2023
Eoin Treacy
Video commentary for January 24th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Australia extends rebound aided by the US Dollar's decline, Japan and Hong Kong also firm, India steady, Defense companies firm, significant single stock volatiltiy on the back of earnings, gold continues to firm.
The Future of Uncertainty
Thanks to a subscriber for this transcript of 3rd Atal Bihari Vajpayee Memorial Lecture delivered by Ambassador Bilahari Kausikan of Singapore in New Delhi yesterday. Here is a section:
First, no country can avoid engaging with both the US and China. Dealing with both simultaneously is a necessary condition for dealing effectively with either. Without the US there can be no balance to China anywhere; without engagement with China, the US may well take us for granted. The latter possibility may be less in the case of a big country like India, but it is not non-existent.
Second, I know of no country that is without concerns about some aspect or another of both American and Chinese behaviour. The concerns are not the same, nor are they held with equal intensity, and they are not always articulated – indeed, they are often publicly denied -- but they exist even in the closest of American allies and in states deeply dependent on China.
Eoin Treacy's view
This perspective gels very well with the reality on the ground I observed in Saudi Arabia on my last two visits. The simple reality is China is the country’s biggest customer and the USA the country’s greatest geopolitical ally. There is no way to play favourites the greatest risk for any country is to be taken for granted because that greatly enhances the scope for one’s interests to be trampled.
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Germany Set to Allow Poland's Re-Export of Tanks to Ukraine
This article from Bloomberg may be of interest to subscribers. Here is a section:
As Ukraine and its allies prepare for a potential escalation in fighting in the spring, the debate over sending battle tanks to back Kyiv’s military and potentially retake territory has become a flashpoint among NATO allies. US and European officials have bridled at Scholz’s slow decision-making, saying the German leader should be more assertive, following through his promised “Zeitenwende,” or historic turning point on security.
Scholz has insisted that Germany should not act alone in sending new categories of heavy weapons that could provoke an escalation with Moscow. He’s placed a premium on moving in lockstep with the US and NATO.
“We never go alone,” Scholz said in an interview last week with Bloomberg.
Eoin Treacy's view
There are estimates Rheinmetall could send as many as 139 Leopard Type 1 and 2 tanks to Ukraine via various swap agreements over the next several months. By that time, there is a risk available inventory will be fully exhausted.
This section continues in the Subscriber's Area.
Microsoft beats on earnings as cloud unit shows strong growth
This article from CNBC may be of interest. Here is a section:
Microsoft’s total revenue increased by 2% year over year in that quarter ending Dec. 31, the slowest rate since 2016, according to a statement. Net income fell to $16.43 billion from $18.77 billion in the year-ago quarter. The company took a $1.2 billion charge in the quarter in connection with its decision to cut 10,000 employees, revise its hardware lineup and consolidate leases.
Revenue in Microsoft’s Intelligent Cloud segment amounted to $21.51 billion, up 18% and slightly above the $21.44 billion consensus among analysts polled by StreetAccount. The unit includes the Azure public cloud, Windows Server, SQL Server, Nuance and Enterprise Services. Revenue from Azure and other public cloud services, which Microsoft does not report in dollars, grew by 31%, slightly above the estimate of almost 31% that analysts polled by CNBC and StreetAccount had expected. In the previous quarter, the category grew 35%.
Eoin Treacy's view
Cloud computing helped to save Microsoft’s quarter since compute, which includes computer games declined by 19%.
Cloud computing is not about to disappear but the days of every cloud company doing well are over. There is not clear scope for consolidation and middle market players will either be acquired or out competed over the coming couple of years.
This section continues in the Subscriber's Area.
Eoin's personal portfolio: trading short breakeven stop triggered January 20th 2023
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary on a daily basis until there is a change.