Comment of the Day
Big Picture Long-Term video February 18th 2022
China's Challenges
This article from Project Syndicate by George Soros may be of interest to subscribers. Here is a section:
The Winter Games are of course Xi’s prestige project, so the administration is going to incredible lengths to make the event a success. While the competitors will be isolated from the local population, continuing the effort after the Games are over makes little sense. City-wide lockdowns are unlikely to work against a variant as infectious as Omicron. This is evident in Hong Kong, where the outbreak looks increasingly serious. Yet the cost of zero-COVID is rising every day as the city is cut off from the rest of the world, and even from China.
Hong Kong highlights the wider challenge Omicron represents for Xi. He tried to impose total control but failed. As Omicron spreads, opposition within the CPC will grow stronger. Xi’s carefully choreographed elevation to the level of Mao and Deng may never occur.
It is to be hoped that Xi may be replaced by someone less repressive at home and more peaceful abroad. This would remove the greatest threat that open societies face today. Their task is to do everything within their power to encourage China to move in the desired direction.
My view - When state media is under total government control, nothing we hear about happens by mistake. It is worth remembering that when we assess what signals are being sent by China’s media.
Lithium Stock Livent Is Soaring. Strong Earnings and Guidance Looked 'Easy
This article from Barron’s may be of interest to subscribers. Here is a section:
Looking ahead for 2022, Livent expects to generate about $180 million in Ebitda, short for earnings before interest, taxes, depreciation, and amortization, on about $570 million in sales. Analysts were projecting closer to $160 million in Ebitda on $515 million in sales.
“Sometimes it’s really that easy,” wrote Evercore ISI analyst Stephen Richardson in a Thursday report. He was referring to the relatively clean quarter Livent just reported.
Albemarle’s quarter wasn’t as easy to digest. Richardson wrote earlier on Thursday that Albemarle’s volume and earnings guidance was better than he expected, but that the company’s guidance for costs and capital spending would be a drag on 2022 cash flow.
He is staying positive on both stocks. He rates Albemarle stock at Buy with a $295 price target. He didn’t adjust he price target after the company’s quarterly hiccup. Richardson actually put Albemarle stock on his “tactical outperform list” Friday.
“The confusion from [Albemarle] investors came largely on the cost line which lead some to believe this was a structural step-up in costs [and] lower margins, and was a new permanent aspect of the business,” wrote the analyst. “We think none of this is indeed true.”
My view - The lithium price has been accelerating higher. It’s a classic supply inelasticity meets rising demand market. Growing demand for electric vehicles and energy storage solutions is bumping up against a slow supply response.
Beware PayPal (NASDAQ:PYPL)'s New Fees for $100 Crypto Trades
This article may be of interest to subscribers. Here is a section:
Got some pocket change you want to throw at crypto? It won’t go as far on Venmo.
Venmo and its parent PayPal (NASDAQ:PYPL) Holdings Inc. alerted their users earlier this week that they’re changing their fees for crypto transactions under $200. While the companies said the pricing adjustments were just an effort to provide investors with more transparency, a closer look shows any customer making transactions of $100 or less will be a lot worse off.
The online payment platforms started offering customers the ability to buy, sell and hold four cryptocurrencies (Bitcoin, Ethereum, Litecoin and Bitcoin Cash) last year. Since then, Venmo’s cryptocurrency wallet has nabbed 18% of global market share for active wallets with payment features, making it the third most popular site as of late last year. PayPal was No. 1.
My view - How many crypto trading venues will ultimately survive is an open question but it is certainly likely to be fewer than exist today. One thing is certain, raising fees isn’t likely to encourage users to use the platform, much less find new customers. That’s doubly true in a troubled pricing environment for the sector.
The Chart Seminar 2022
With global vaccination rates rising, the prospect of anti-COVID pills on the horizon and the promise of travel restrictions being dropped, it is time to start thinking about venues for The Chart Seminar in 2022.
Please drop sarah@fullertreacymoney.com a line if you would be interested in attending an event next year, as well as your preferred location.
At present I am looking at a late May date for a London seminar and I am open to other times and locations subject to demand.
Eoin's personal portfolio: short reopened February 2nd 2022
One of the questions subscribers as most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.