Comment of the Day
26th January 2023
Video commentary for January 26th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Intel disappoints, Tesla discounting temporarily boosts demand, carbon credits and oil firm, European banks break higher, Hong Kong resumes trading with further gains, bonds yields steady, Australian dollar firm
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Made-in-China Cars Are Primed to Conquer the Global Market
This article by may be of interest to subscribers. Here is a section:
“To fight the Chinese, we will have to have comparable cost structures,” Stellantis NV (NYSE:STLA, EPA:STLA) CEO Carlos Tavares said on Dec. 19, speaking to reporters at a powertrain plant in Tremery in northern France. “Alternatively, Europe will have to decide to close its borders at least partially to Chinese rivals. If Europe doesn’t want to put itself in this position, we need to work harder on the competitiveness of what we do.”
And
The growth in the supply chain in China has also kept pace with car manufacturing. Domestic companies now make almost all parts, including those they used to import until about a decade ago, such as high-strength steel and reinforced fiberglass. As a result, China ran a trade surplus in vehicles and vehicle parts for the first time in 2021. The assembly lines still depend on advanced machines from Japan and Germany, though.
“There seems to have been a step change,” Dyer says. “The long-term trend is for increasing sales of Chinese brands around the world.”
Eoin Treacy's view
A decade ago it was obvious China was moving up the value chain in manufacturing. It might have not have reached heights of 3nm chip production but planes and automobile parity is now a reality. That’s as much of challenge for Airbus and Boeing as it is for Toyota, Hyundai, Volkswagen and GM.
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Australia's 4Q CPI Gives More Reason to End Hikes in Feb
This note from Bloomberg may be of interest. Here it is in full:
Australia's surprisingly strong 4Q inflation isn't likely to phase the Reserve Bank of Australia. The headline outcome exceeded consensus estimates, but undershot the central bank's forecasts - and isn't a threat to our view that a February rate hike is likely to be the last of this cycle.
The economy’s inflationary pulse largely reflects temporary shocks, centered on utilities and airfares in 4Q. A number of other categories showed continued signs that pressures are set to subside in 2023. The central bank’s expectation for a lift in wage growth - necessary for inflation to be sustained in the target band - looks increasingly vulnerable given emerging signs of a softening labor market. Click on the Text tab for the full report.
Eoin Treacy's view
The Australian Dollar has broken the two-year sequence of lower rally highs against the US Dollar. This is the 7th time since 1985 that the Australian Dollar has rebounded from the $0.60 area. The only time it has sustained move below that level was a brief period between 2001 and 2002. I’ll never forget that time because I felt well off from my success in door to door selling in Melbourne and only got £1 for every A$2.60 when I got to London in the spring of 2000.
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Intel Tumbles After Forecast Suggests Its Comeback Is Far Off
This article from Bloomberg may be of interest. Here is a section:
Intel Corp. slid in late trading after giving a dire forecast for the current period, hurt by sinking demand from PC customers and tough competition in the lucrative market for server hardware.
First-quarter sales will be $10.5 billion to $11.5 billion, the chipmaker said in a statement Thursday. That compares with an average analyst estimate of $14 billion. Intel expects to lose 15 cents in the quarter, excluding some items. Analysts had projected a profit of 25 cents.
The outlook reflects the myriad challenges facing Intel, which was attempting to stage a comeback even before the market for personal-computer chips — its main source of revenue — fell into a slump. To get back on track, the company needs computer makers to quickly work through inventory stockpiles and return to ordering components. That would provide Intel with a revenue boost needed to help shore up its finances, which were already stretched by ambitious plans to regain technological leadership within the chip industry.
Eoin Treacy's view
The road to global competitive leadership is long and filled with obstacles. Above all catching up with Taiwan Semiconductor will be expensive and, even then, may not be possible. Both Intel and IBM failed to satisfy expectations for future earnings this week.
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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.
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