Comment of the Day
21st July 2023
Eoin Treacy
Jul 22
Video commentary for July 21st 2023
A link to this week's Big Picture Long-Term video is posted in the Subscriber's Area.
Sunak Suffers Twin Election Blows in Effort to Revive Tory Hopes
This article from Bloomberg may be of interest to subscribers. Here is a section:
Sunak and his team had downplayed their chances in the three special elections in very different districts, arguing that even winning one would represent a victory given governments are often given a kicking in mid-term votes. The prime minister is eyeing holding the next national vote in November 2024 to allow Britain’s ailing economy as much time as possible to recover, a person familiar with his thinking told Bloomberg.
Economic data has begun to turn this week with a bigger-than-expected inflation drop, while figures published Friday show government borrowing undershot official forecasts — potentially giving Chancellor of the Exchequer Jeremy Hunt room for tax cuts.
The prime minister told reporters in Uxbridge the Conservatives will take encouragement from the result there, arguing it shows the outcome of the general election “is not a done deal.”
Eoin Treacy's view
Byelections are more like referendums on the performance of the government. Holding a staunch conservative seat in the leafy suburbs of London is not a victory compared to the risk of losing the red wall Boris Johnson successfully enticed into the Conservative fold for the first time by appealing to their nationalism.
The Illegal Migration Act of 2023 was announced a couple of days ago and introduced today. It is a bald attempt to court the affections of the converts to the Conservative Party as both parties prepare for an election next year.
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Chaos, Dysfunction Force South Africa to Lean on Private Sector
This article from Bloomberg may be of interest to subscribers. Here is a section:
Like Discovery, which also pays for some of the fire engines in the South African commercial capital, precious metals producer Sibanye-Stillwater Ltd. ensures that water near its mines is safe to drink and roads are maintained and well lit; it upgrades schools and clinics. Food producer Tiger Brands secures water supply for the town that’s home to its fruit-processing business, and Investec PLC (LSE:INVP) powers a traffic light near its offices during blackouts in Johannesburg. Glencore PLC (LSE:GLEN), Anglo American PLC (LSE:AAL) spinoff Thungela Resources Ltd. and other owners of an export terminal spend about $1 million a month to protect trains transporting their coal from cable thieves.
“It’s not altruism,” said Lungisa Fuzile, chief executive officer of the South African unit of Standard Bank Group Ltd., the continent’s biggest lender. “You can’t run a successful private business in a sea of chaos.”
Government incompetence, corruption and policy paralysis have left critical infrastructure in Africa’s most-industrialized nation in tatters, forcing companies to step into areas that are within the purview of the state in most countries.
Eoin Treacy's view
Miners long ago figured out that if they want to be allowed to dig, they also need to have the local community on side. That usually means building roads, schools, hospitals, and community centres.
It’s a sorry reflection of the state of public infrastructure when the services provided by miners are the gold standard. The inability of the state to sustain public infrastructure raises the possibility that private installations will be appropriated and/or that taxes will be raised to close funding gaps.
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Cocoa Factories Slowing Down Spell Trouble for Chocolate Makers
This article for Bloomberg may be of interest to subscribers. Here is a section:
“The demand issues are multifold,” said Judy Ganes, president of consultancy J. Ganes Consulting, who has followed the market for more than 30 years. “There’s not just cocoa prices that are high, but sugar prices are also high, and manufacturers always look for ways to meet margins and work to put fewer chocolate chips in a cookie, or they shrink the bar sizes.”
Factories usually process cocoa several months before products are turned into chocolate. That means the slowdown likely signals the industry is expecting less demand ahead. Barry Callebaut AG, the world’s largest maker of bulk chocolate, said earlier this month that its sales volume fell 2.7% in the first nine months of the year, with its gourmet and specialists’ business seeing the biggest drop.
Eoin Treacy's view
The sweet tooth of the emerging middle class has allowed companies like Nestle, Chocoladefabriken Lindt & Sprungli AG and Hershey thrive, while simultaneously feeding a diabetes epidemic which has created of the most reliable streams of cashflow in any market. It’s truly a sign of consumer pressure when demand for an addictive product like chocolate declines.
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Eoin's personal portfolio: July 20th stock index short initiated
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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