Comment of the Day
24th July 2023
Eoin Treacy
Jul 25
Video commentary for July 24th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: China stimulus promise falls flat, Japan firms, India eases, Wall Street firm, bitcoin breaks lower, gold steady, oil firm, grains breaking out.
Ryanair Touts Lower Fares to Fill Planes as Costs Start to Bite
This article from Bloomberg may be of interest. Here is a section:
Chief Executive Officer Michael O’Leary previously said that ticket prices would remain elevated for the next five years because of higher oil prices and environmental charges. Ryanair, which has built its business model around ultra-cheap flights, said in May the typical €9.99 ($11) fare could double in price as summer demand skyrockets and because of a supply backlog caused by a shortage of planes.
The proposed fare stimulus comes as Ryanair expands its fleet with plans to take on an additional 173 aircraft by the end of March. Ryanair, which had 558 aircraft on June 30, announced a deal this year for as many as 300 Boeing 737 Max jets worth $40 billion. It comes as the Irish firm targets 30% of the European air-travel market by 2034.
Eoin Treacy's view
Will post-pandemic demand return to the pre-pandemic norm? Most estimates suggest the triumph of linear thinking is unchallenged. When business is poor, they suggest it will continue lower. When it rebounds, they think higher prices are sustainable indefinitely. The truth is a lot more cyclical.
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Wheat Climbs After Another Russian Missile Attack on Odesa Port
This article from Bloomberg may be of interest. Here is a section:
The world still has a large buffer of wheat stockpiles, and top shipper Russia continues to export its own bumper crop to world markets. About 33 million tons of crops were shipped to global destinations under the pact, including about 17 million tons of corn and nine million tons of wheat. The top destination was China, followed by Spain, Turkey, Italy and the Netherlands.
Elsewhere, lack of rains and heat are threatening crops in parts of the US and southern Europe, increasing risks to food supplies. Still, wheat futures have fallen by almost half from the record reached in March last year to $7.10 a bushel. That compares with an average of $5.82 over the past 10 years.
Eoin Treacy's view
We are entering a new phase of the war because both Moscow and Odessa are now targets for missile/drone strikes. The efforts to allow Ukraine export grain were aimed at ensuring buyers would have enough to eat. That has also been a central point in how well Russia has secured support from regional governments. The obvious escalation would be to bomb Russia’s export facilities through the Black Sea to both level the playing field and increase the urgency of negotiations.
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A Bug Exterminator That Trades Like Nvidia
This article from Bloomberg may be of interest to subscribers. Here is a section:
None of this bodes particularly well for humanity, of course, and there are signs that the warming climate could increase the demand for pest control even further into new areas. The termite population is getting hungrier. The mosquito season is growing longer. And some bugs, including the German cockroaches, are losing their sensitivity to existing pesticides. One way or another, Americans — led by those newly christened Floridians and Texas that arrived in the past several years — are going to have to learn to live in a world full of unpleasant critters, and that’s likely to add to the extermination industry’s reputation as a recession-proof juggernaut.
Eoin Treacy's view
It seems inevitable that the next trend in asset management will be in climate survival funds. Many ESG funds were just another way to leverage up on technology bets and displayed high beta to the sector. That’s not quite as compelling following the roller coaster of the last few years.
Meanwhile, investors are much more concerned these days with governance than environmental metrics. The way to get investors on board is to appeal to their desire to boost returns. Expanding markets lead to expanding earnings. If the range and prevalence of insects is growing that’s an investment opportunity.
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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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