Comment of the Day
Video commentary for April 20th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Email of the day on investing in autocracies
Which firms have monopoly - pricing power?
My view - Thank you for this question which may be of interest to the Collective. David and I pondered this same issue a decade ago. Globalisation was flourishing, the shale revolution promised US energy independence and companies were expanding enthusiastically to capture market share among the new vibrant emerging market middle classes. We also worried about inflation because central bank money printing money was so prolific.
Sahara solar could soon rescue Britain's broken energy system
Thanks to a subscriber for this article by Ambrose Evans Pritchard for the Telegraph. Here is a section:
Such long cables would have leaked too much power to be viable in the past. Modern HVDC technology at 515 kilovolts has shaved the total loss to 15pc, including the conversion of electricity at both ends.
The coming generation of 800 or 1,000 kilovolts will shave the loss rate further. New methods of laying cables will open up the most direct deep-sea routes instead of having to hug the coasts, cutting transmission lines from Morocco by a quarter.
“We are going to see an explosion of long-distance interconnectors criss-crossing the seas. You could even link up the US and UK, since it is a similar cable distance,” said Mr Morrish.
My view - Covering the Sahara in solar arrays has been discussed for years and very little progress has been made. It’s not exactly the most politically stable place in the world, even if Morocco is less volatile than some of its neighbours. European countries have also probably had enough of being beholden to the Middle East and oil. Transferring dependence to solar and North Africa was viewed as less than appealing. However, Russia’s invasion of Ukraine may change that calculus and introduce urgency into the discussion.
Netflix Breaks Own Rules as Subscriber Losses Batter Shares
This article from Bloomberg may be of interest to subscribers. Here is a section:
Netflix Inc (NASDAQ:NFLX). is throwing out all of its old rules after losing customers for the first time in a decade, saying it will introduce an advertising-supported option and crack down on people sharing passwords.
The plans are intended to help staunch the loss of subscribers that pummeled the streaming service Wednesday, pushing the stock down as much as 29% in premarket trading in New York and potentially wiping about $43 billion from its market value. It the decline holds, it would put Netflix on course to be the worst performing stock of the year on both the benchmark S&P 500 and Nasdaq 100 indices.
Co-founder Reed Hastings has said for years that he doesn’t want to offer advertising and had no problems with password sharing. But the company is changing course after losing 200,000 customers in the first quarter, the first time it has shed subscribers since 2011. Netflix also projected it will shrink by another 2 million customers in the current second quarter, a huge setback for a company that regularly grew by 25 million subscribers or more a year. Netflix also will curb its spending on films and TV shows in response to the customer losses.
My view - S&P offers an investment grade rating, while Moody’s rates Netflix as the highest level of junk. That represents the widespread indecision about the company’s prospects. To some Netflix’s debt is a sound investment, to others it is no better than speculative grade. The yield on the 2028 bonds has doubled since the beginning of the year but stills trades at a price of 106. That premium is hardly justifiable as subscriber numbers contract.
Eoin's personal portfolio: stop introduced on short position
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.
The Chart Seminar June 6th & 7th in London
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