Comment of the Day
7th August 2023
Eoin Treacy
Aug 8
Video commentary for August 7th 2023
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: oil prices steady and chances of an embargo, stocks steady, biotech ETF lower but large caps breaking higher, Apple extends decline but Dow Industrials firms. Japan firms on weaker Yen.
Earthquake in East China Injures 21, Wrecks 126 Buildings
This article from Bloomberg may be of interest. Here is a section:
A 5.5-magnitude earthquake that hit the Eastern Chinese province of Shandong in the early hours of Sunday caused the collapse of 126 buildings and injured at least 21 people, according to early reports from state media.
The quake struck the county of Pingyuan in the Dezhou city at 2:33am Sunday, Xinhua News Agency reported. No leaks were found in oil and gas pipelines and power supply was normal, the report said.
State-run CCTV later said the quake may have had a maximum magnitude of 7 at a depth of 10 kilometers and warned that there may be more casualties, citing data from the China Earthquake Administration.
Eoin Treacy's view
The slew of natural disasters in China over the last week, from record floods to earthquakes, offers ample scope for the government to change course and provide the fiscal stimulus the economy needs. How China decides to deal with the slowdown in the property sector will have global repercussions.
This section continues in the Subscriber's Area.
Block Shares Drop Most Since March After Earnings Disappointment
This article from Bloomberg may be of interest to subscribers. Here is a section:
Block Inc (NYSE:SQ)., Jack Dorsey’s payments company, tumbled as much as 14% after reporting results that fell short of some analysts’ expectations.
Jefferies Financial Group Inc.’s Trevor Williams said in a note that Block’s earnings report “lacks oomph,” even after the company increased its adjusted profit outlook for the rest of the year when it reported second-quarter results Thursday. BTIG LLC analyst Lance Jessurun called Block’s July trends “disappointing.”
Shares of the San Francisco-based company fell 11% to $65.14 at 12:32 p.m. in New York, after dropping to as low as $63.38 in the biggest intraday plunge since March.
Williams cited limited upside for Block’s Cash App, which started as a person-to-person payments app and now offers access to a variety of financial products. He also called “tepid” one measure of how many dollars are processed by Block’s payments systems.
Both Cash App and Square, a payments platform geared toward small and midsize businesses, beat expectations in the second-quarter.
Eoin Treacy's view
Block is growing and is profitable but not enough to justify the valuation. That’s problematic in a high interest rate environment where the hurdle for investor interest is above zero.
This section continues in the Subscriber's Area.
Japan Public Workers May Get Biggest Salary Gains in 26 Years
This article from Bloomberg may be of interest to subscribers. Here is a section:
Wage levels are also set to rise for non-salaried workers. A labor ministry advisory panel agreed in late July to target lifting the national average for the minimum wage by 4.3% to above 1,000 yen ($7.05) for the first time, in what would be the largest boost since the ministry began keeping records in 1978. That change, which is expected to kick in from October, would affect about 20% of the labor force, according to JPMorgan.
Advances on incomes bode well for the Bank of Japan, where Governor Kazuo Ueda is watching income trends closely as a key factor that will determine the long-range likelihood of achieving 2% inflation on a sustained basis. Ueda has said repeatedly that for now there remains some distance to reaching that goal, implying that the bank will maintain its accommodative stance for a while.
Eoin Treacy's view
Wage demand growth is a central component in sustaining inflationary pressures, so this is good news from the perspective of central bankers who seek to defeat the deflationary mindset. That’s not good news for the currency but the stock market is reflecting the inflationary bias.
This section continues in the Subscriber's Area.
Eoin's personal portfolio: two investment positions opened August 1st 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.
This section continues in the Subscriber's Area.
© 2023 Eoin Treacy
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