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30 June 2020
Video commentary for June 29th 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Bad news appears to be good news for stocks with rising COVID-19 cases stoking speculation for additional stimulus, oil and natural gas steady, gold steady,
Australian lawmaker says he isn't a suspect in China probe
This article by Rod McGuirk for APNews may be of interest. Here is a section:
The secret service, best known as ASIO, confirmed in a statement that “search warrant activity occurred in Sydney on Friday as part of an ongoing investigation,” but would not comment on Moselmane or its involvement.
Less than two weeks ago, Morrison said that a “sophisticated state-based cyber actor” was targeting Australia in an escalating cyber campaign that was threatening all levels of government, businesses, essential services and critical infrastructure.
Most analysts said Morrison was referring to China, but the prime minister would not name the country.
Already high tensions between Australia and China have been raised by the pandemic.
China in recent weeks has banned beef exports from Australia’s largest abattoirs, ended trade in Australian barley with a tariff wall and warned its citizens against visiting Australia. The measures have been interpreted by many as punishment for Australia’s advocacy of an independent probe into the origins and spread of the coronavirus.
Australia’s foreign minister has accused China of using the anxiety around the pandemic to undermine Western democracies by spreading disinformation online, prompting China to accuse Australia of disinformation.
Eoin Treacy's view
Australia depends on China’s demand for many of its exports. That’s represents a difficulty for the country in attempting to assert independence from China. For its part, China has a clear interest in securing its supply chains. That means ensuring Australia is at least amenable if not fully subservient to its wishes.
Growth of Working-Age Adults Hasn't Kept Up With Graying America
This article by Alex Tanzi for Bloomberg may be of interest to subscribers. Here is a section:
The aging population is pushing up the insolvency dates of the major trust funds that many seniors reply on. The CRFB now sees the Medicare Hospital Insurance trust fund going bust by 2023, and the combined Social Security trust funds depleted by 2031.
Almost 13 million Americans are older than 80, and the number of centenarians almost doubled from 2010 to more than 100,000 last year, according to the data.
The aging of America and low births mean that the U.S. dependency ratio has increased. The ratio looks at the size of the population younger than 15 (60,570,846 in 2019) and the 65-and-older population (54,058,263) and how their combined size compares to the population age 15 to 64 (213,610,414).
In 2019, the dependency ratio showed that for every 100 people of working age, there were almost 54 other Americans potentially needing support.
Eoin Treacy's view
The age group most at risk from the coronavirus is well reported to be the over 60s. This group staying at work beyond the traditional retirement age was one of the primary reasons the US economy was able to contain inflation despite peak employment and a rising participation rate. If many of these people fail to return to work, they go from being contributors to beneficiaries of state supports.
Chesapeake's Collapse Is Latest in Long Line of Shale Busts
This article by David Wethe for Bloomberg may be of interest to subscribers. Here is a section:
More than 200 North American oil and gas producers, owing over $130 billion in debt, have filed for bankruptcy since the beginning of 2015, according to a May report from law firm Haynes & Boone. This month alone, seven oil and gas companies have gone under, tying December 2015 for the busiest on record after crude prices plunged amid the Covid-19 pandemic, according to data compiled by Bloomberg.
The shale boom spearheaded by the likes of Chesapeake a decade ago was fueled by debt. Profitability and shareholder returns have been consistently disappointing, and investors had already grown wary of throwing more money into shale before this year’s oil crash. The rate of default on high-yield energy debt stood at 11%, Fitch Ratings said in a June 11 report, the highest level since April 2017.
Eoin Treacy's view
Unconventional drilling is capital intensive. Arguably, it would not have been a viable development option for new supply without the tailwind of very low interest rates and abundant liquidity. The challenge the sector faces is once a well begins producing, there is a very steep increase in supply, followed by a steep decline. That ensures companies are very exposed to near-term oil prices. The significant volatility in commodity prices has been a headwind for the sector, because most operations are profitable in the region of $60-$80 a barrel.
Merkel Throws Her Support Behind Radical European Recovery Plan
This article by Ania Nussbaum and Arne Delfs for Bloomberg may be of interest to subscribers. Here is a section:
German Chancellor Angela Merkel made a pitch for a radical recovery proposal for the virus-ravaged European Union and warned her cohorts that there was no time to lose.
Her words carried extra weigh, spoken in person on Monday alongside Emmanuel Macron. The French president is the other heavyweight in the euro. He is a long-term advocate of ever-closer collaboration for a common position on international relations and a joint fiscal policy.
Germany has always been the more reluctant partner on both fronts, but there are signs the famously cautious Merkel is letting up.
“Talks won’t fail because of us,” Merkel told reporters in Meseberg, Germany. “But there will be no new proposal.”
Merkel’s exhortation comes before all 27 EU members gather in Brussels on July 17 to discuss a stimulus package that would see the bloc issue 750 billion euros ($845 billion) in joint debt and make 500 billion euros of that in grants to the nations most affected by the coronavirus crisis.
The plan, which needs the unanimous approval of all EU members, seeks to tackle divergences in the region’s internal market that have widened as a result of the uneven impact of the outbreak and differing national responses.
Eoin Treacy's view
Here is a summary of what the director general of the WHO had to say today:
Tedros Adhanom Ghebreyesus, director general of the World Health Organization, said that living with Covid-19 is the “new normal” and that “we will need even greater stores of resilience, patience, humility and generosity in the months ahead.” He spoke Monday at a press briefing in Geneva.
Eoin's personal portfolio: stock market short stopped out a small profit June 16th
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.
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