Comment of the Day
Video commentary for March 23rd 2022
A link to today's video commentary is posted in the Subscriber's Area,.
Some of the topics discussed include: short covering rally looks tired, oil and gold firm, bonds steady, technology rotation to productivity enhancers underway.
U.K. Treasury to Raise $36 Billion More Tax Despite Sunak's Cuts
This article from Bloomberg may be of interest to subscribers. Here is a section:
The U.K. Treasury will pocket about 27 billion pounds ($36 billion) more a year in revenue than previously forecast despite eye-catching tax cuts on pay announced in its Spring economic statement on Wednesday.
The figures, buried in documents from the Treasury and Office for Budget Responsibility, leave Chancellor of the Exchequer Rishi Sunak presiding over the highest tax burden since Clement Attlee’s Labour government in 1949.
The record gave lobby groups across the political spectrum ammunition to criticise Sunak’s handling of the public finances at a time when households are facing their biggest cost-of-living squeeze in at least three decades.
“The Treasury is taking with one hand to give away with the other,” said John O’Connell, chief executive officer of the TaxPayers’ Alliance, a consumer pressure group. “Cutting income tax down the line will be easily offset by the upcoming national insurance hike and freezing income tax thresholds, leaving taxpayers out of pocket overall.”
In his statement to Parliament, Sunak increased the payroll tax threshold at a cost of 6 billion pounds reduced the basic rate of income tax to 19% from 20%, handing households 5 billion pounds from the 2024-25 fiscal year.
Despite the giveaways, Sunak will raise 7 billion pounds more a year from taxes on wages than previously expected, the OBR said. The independent budget watchdog also assumes solid growth in corporate profits, which will generate an extra 6 billion pounds a year on average compared with October.
My view - Inflation gives cover to governments to look like they are cutting taxes while in fact increasing them. If the tax bands are held steady and inflation rises more people fall into the higher brackets as wages play catchup. The fact wages don’t quite keep up with inflation means consumers come out worse off.
Putin Demands Ruble Payment for Gas, Escalating Energy Conflict
This article from Bloomberg may be of interest to subscribers. Here is a section:
“Gazprom would need to ask buyers to agree to change the payment terms in contracts,” said Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd. “It reopens the contracts, and buyers could ask for shorter-terms for instance.”
Some 58% of Gazprom’s gross gas sales abroad were in euros as of the third quarter of last year, according to the producer’s most recent bond prospectus. Another 39% were in U.S. dollars. The press office of gas giant Gazprom PJSC declined to comment on whether its long-term supply agreements allow a switch to ruble payments.
Russia announced earlier this month a list of 48 states deemed hostile. They included the U.S., Japan, all European Union members, Switzerland and Norway. As a result, the bulk of Russian gas exports now go to “unfriendly” nations.
“At the same time, I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices and pricing mechanisms set forth in the existing contracts,” Putin said.
In the first 15 days of March, Gazprom exported an average of 500 million cubic meters per day to countries outside the former Soviet Union, including those in the EU, China and Turkey. Of the total, flows toward Europe averaged 384 million cubic meters per day, the producer’s data showed.
My view - This change of policy serves the short-term requirement of creating demand for the Ruble which will make enforcing sanctions even more difficult. That suggests the recent low of the Ruble near RUB120 is likely to be a medium-term nadir.
Adobe's (NASDAQ: ADBE) Lackluster Forecast Suggests Growing Competition
This article from Bloomberg may be of interest to subscribers. Here is a section:
While Adobe is one of the industry’s longtime success stories, the maker of creative and marketing software has faced rare investor skepticism recently over fears that businesses are reducing their spending on such tools and rivals are making in-roads among new customers. The stock has dropped 18% since its last earnings report on Dec. 16, closing Tuesday at $466.45 in New York. Shares declined about 2% in extended trading.
Adobe is in the midst of revising prices for its signature creative suite, the first major overhaul since 2017, said Chief Executive Officer Shantanu Narayen. The new structure will reflect features Adobe has added in the past five years, including new collaboration capabilities, executives said. The impact will be seen in revenue in the second half of the fiscal year, they said.
“It was time to take a very comprehensive look,” Narayen said on a conference call after the results were released. “We want to continue to attract hundreds of millions to the platform, but we also want to get value for the tremendous innovation we’ve provided.”
My view - Adobe transformed its fortunes with investors by adopting a subscription business model. The Photoshop service that used to cost thousands of dollars was suddenly much more accessible and every upgrade was instantly available to subscribers. The transition coincided with the evolution of ecommerce and the mobile telecommunications revolution and Adobe’s profits took off.
The Chart Seminar June 6th & 7th in London
Now in its 53rd year, the first venue for The Chart Seminar in the post pandemic era will be in London on June 6th and 7th at the Army & Navy Club.
To reserve your place please contact Sarah@fullertreacymoney.com.
Delegate Rates:
Full fee: £1799
Each additional delegate: £850
Fuller Treacy Money Subscriber rate: £850
Prices exclude VAT where applicable
Eoin's personal portfolio: equity index long closed at a small loss March 1st
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.