Month: August 2021

Corporate earnings are pretty much in line with expectations — where are stocks heading now? And what about the Congress-approved stimulus package, will that help the market this year? Also, with the rising Covid cases again in the US and China, how will this affect the two countries? Both countries have drastically low consumption. How much effect does one have to another? Lastly, will crude continue on the downtrend?

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/consumer-sentiment-will-dampen-outlook on August 17, 2021.

 

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Show Notes

 

WSN: The business station BFM 89 nine good morning is 07:00 Tuesday, the 17 August and you’re listening to the morning run. I’m Wong Shou Ning and joining me in the studio this morning is Philip See. In the meantime, how are markets, Philip? Because I think it’s a bit of a red day.

 

PS: Yes, it was a red day, but actually the down SMP hit record higher up 3% other than the SEC was down 2%. Now if you cross over to Asia pack, it was also, as you said, a red day. Nikkei was down one 6% hunting negative 8%. Although in Shanghai marginally up zero 3%. Singapore was down 6%. Back home, a BNI interesting development went down quite a bit but recovered a bit to basically just be down 2% yeah.

 

WSN: Actually, I would have to say the LCI did better than expectations. The ring it actually initially weakened, but it’s somewhat recovered to the US dollar 4.2370. The currencies are always the first thing that gets hit, but against the pound is 5.8651 and against the sin dollar is 3.1250. Whether there’ll be continued weakness over the next two days is going to be a question Mark. We have to bear in mind that foreign are holding for equities is probably an all time low at 20%. Something will be asking Alexander Chia, regional head of research at RHB at 915 later on this morning.

 

So do tune in. But in the meantime, we’re going to find out where global markets are hidden with Tony Nash, CEO of Complete Intelligence. Good Morning Tony, thanks for speaking to us again. Now, US markets, despite a bit of a wobbly start, they seem to recover. They’re at their peaks and corporate earnings pretty much in line with expectations, although this week I think it’s going to be a heavy week for earnings. Now, which direction do you think stocks are set to trade ahead of the fat minutes that are supposed to be out this week?

 

TN: Well, ahead of the minutes. I think we’ll continue to see more of the same. The Fed is really in charge of markets now. We’ve seen earnings come in really stellar over the last few weeks, and we’ll continue to see that for ’23, ’22 earnings. But we’re expecting three earnings really to come in a little flat. We’ve started to see some people say that their revenues are down and to issue some earning warnings. I wouldn’t say before Wednesday, but I would say over the next few weeks we expect to see more rotations going on. We’ve seen rotations away from tech over the last few weeks and we expect to see some defensive rotation in the next couple of weeks, consumer cyclicals utilities, consumer staples, utilities, health care and so on.

 

PS: Do you think the stimulus packages that were approved by Congress will add a bit of steam going forward?

 

TN: Well, I think the infrastructure package is going to take ten years, really, that’s going to be spent over a decade. They’re going to claim that it’s going to be spent quickly, but it can’t really. And plus, it’s less than half a trillion dollars or something like that. So that money trickled out over ten years or something. I think there’s a rule of thumb for infrastructure is in. It has a 1.6 times economic impact. So let’s say it was 300 or $500 billion. It would be 1.5 times that impact on the economy.

 

So it will have a decent impact. It will just be spent over a protracted period of time. There are the budget cap battles coming up over the next two to three months in the US. So there’s a real expectation that a lot of the stimulus that the Congress has planned may not necessarily be approved because of the budget cap discussions that are coming up.

 

WSN: Meanwhile, Tony, I want to look at the relationship between US and China because we do know that the China themselves are battling the Covid crisis again and the recovery the data seems to be faltering in terms of how strong the economy is. How related are both these countries?

 

TN: Yeah. The worrying part about China right now, of course, COVID and a lot of the issues there. But we’re also seeing ports really start to really slow down. A lot of the throughput factories slow down, and it’s really concerning. So despite the red upgrades we’ve seen over the last several years about the US and China, they are really important trade partners, and their economies are really, really tied. So when we see a dramatic slowdown in China that affects everybody in Asia, it affects the US. When you see a slowdown in the US, it affects China. It affects Europe. So we don’t want to see a slowdown in China, seeing the resurgence of COVID and the impact on the economy. There is not good for anybody. Least of all US.

 

And so we still have a lot of supply chain issues globally, partly owing two COVID slowdown in China, Japan, Korea, elsewhere. Right. So we don’t want to see this. We will see restrictions in the US, not code restrictions, but restrictions to supply chains because of issues coming out of China again. And so this is bad all around. And we want China to succeed. Everyone wants China to succeed. So they’re in a boat together.

 

PS: But, yeah, in a double whammy. Right. China consumptions spent sentiment is at an all time low. And also US consumption sentiment is also registering a drastic drop in August. What does this mean for the US dollar and treasuries?

 

TN: No. Right. So with the US, we have inflationary pressure. We have pressure, workforce pressure. It’s been hard to fill spots. And companies we also have the central government stimulus is wearing off. And so with all three of those things happening, it’s a really rough period for consumers. And for companies. So we had what’s called the New York Fed Manufacturing Index come in today and excel from a a month reading is 43. This month’s reading is 18. Anything above zero is grow. So it’s still growing, but it’s slowed down dramatically. Companies, manufacturing companies are seeing things slow down. This is because of things like new orders. Slowing down. Shipments are slowing down. Orders that are on hold are rising. Consumers and manufacturers have started to feel it dramatically in August.

 

WSN: Okay. And the other thing we want to ask you about is oil, which is related to consumer behavior. I have noticed that Brent crude is $69 a barrel. WTI dropped to $67 per barrel. It’s been three days of declines. What are your expectations in terms of all prices? Is this the beginning of a downward trend?

 

TN: We’ve included is kind of range trading for a few months. I think just today, OPEC announced that they’re going to deny Biden’s request to increase their output because of peer pressure and all prices. So we think that Cuba bounce between saying mid 60s and the 70s somewhere in that range for quite some time. If we do see things and trying to get worse, if we do see more coded lockdowns and restrictions, and of course, we see downside there. I’m hoping, although the rate of recovery is slowing down, our hope is that it stays positive.

 

Okay, that way will contingency pressure on cure prices, but it will be in a range because OPEC still have something like 6 million barrels a day sitting on the sidelines, so they can always come in to add additional resources to reduce prices if needed.

 

WSN: All right. Thank you for your time. That was Tony Nash, CEO of Complete Intelligence, BFM 89.9.

 

 

 

This is another Business Matters episode at the BBC with Tony Nash as one of the guests. They discussed about the possible problems if Apple starts scanning phones for child abuse imageries, electronic vehicles and their future especially in the US where President Biden targets 50% total sales in the next decade, and should vaccines from developed countries be sent overseas to help developing countries?

 

 

This podcast was published on August 6, 2021 and the original source can be found at https://www.bbc.co.uk/programmes/w172xvqgghw0rpz.

 

BBC Business Matters Description:

Tech giant Apple has said that all of its smartphones and tablets in the US will soon scan them for images of child abuse and report those found. The move has already alarmed some, who are concerned devices could now be spied on. We speak to Matthew Green, a cryptographer and professor at Johns Hopkins University in the United States who revealed details about Apple’s plans before they were officially announced. President Biden has said that by 2030, half of the cars produced in the US will be zero emission vehicles. But is this realistic and does it go far enough? We ask Becca Ellison, deputy policy director at the environmental campaign group Evergreen Action. Vaccine maker Moderna has reported net income of $2.8bn for the three months to June 30th. Rasmus Bech Hansen is chief executive of the life sciences data analytics company Airfinity, and tells us how the company’s coronavirus vaccine has boosted its prospects. Plus, in the wake of the saga of office sharing company WeWork, the BBC’s Ed Butler explores whether technology startup founders have become the latest wave of cult leaders. And after the news that Lionel Messi will leave Barcelona, we ask his official biographer Guillem Balague, why money is the reason the world’s greatest footballer is leaving his club of 20 years.

 

All this and more discussed with our two guests on opposite sides of the world: Tony Nash, chief economist at Complete Intelligence in Texas and Zyma Islam, journalist for the Daily Star in Dhaka, Bangladesh.

 

Show Notes

 

BG: Tony, what’s your view on this? Do you wonder why the technology companies can really control how this software is used around the world and in years to come? Because there is a real risk that it is the thin end of the wedge? And what do you do on your phone is no longer private?

 

TN: Yeah, I share all of the concerns that Zyma mentioned. I have three kids. I have the same worries as the person you interviewed. But these things always start with good intentions. Here’s the problem. The biggest problem of the interview that I heard him say is it’s under development. They haven’t even tested this stuff. They’re going to put it on everyone’s iPhone to snoop in their photos too. And what I worry about, there are planned layers of review in this. But what about that person, man or woman who is labeled a pedophile on accident? They will never get their life back ever. So all of this stuff starts with good intentions, but I guarantee they will ruin people’s lives with this.

 

BG: But if illegal material is being stored, passed around on people’s phones, surely tech companies do have a responsibility to do something.

 

TN: No I don’t. I run an artificial intelligence company. Computer vision is very good. That’s the technology generally that they’re using for this. But there are always anomalies. There are always problems. Tech companies have a responsibility to be tech companies. Tech companies are not the police. If we get pulled into an investigation, then we in all of our contracts, it says we will cooperate with the police. But it is not our responsibility, nor is it any other tech company’s responsibility to play the role of a police officer, unless they know that something’s going on. But this is going above and beyond, and I guarantee you they will label people pedophiles who are not pedophiles and they will ruin their lives.

 

BG: What kind of incentives do you think might be needed to try to get half of car sales to be electric or some other type of zero emission vehicle by the end of the decade?

 

TN: I think one of the things they really need to do is respect the intelligence of drivers. And they really need to look at the total emissions of the manufacturing process and the operation process of vehicles. Electric vehicles produce massive emissions during their manufacture with battery technology and so on. Once they’re alive, they plug into the grid. And depending on what your local power plant is generating from coal or gas or nuclear or whatever, there are other issues associated with those emissions, other indirect emissions.

 

What I would love to see is a side by side comparison with petrol based cars and electric vehicles through the lifecycle of their manufacture and use. How do they compare drivers in America? They like to have cars just like people in other places, although a little bit bigger here. I live in Texas. People here, though, are are getting wise to electric vehicles and the damage that the batteries that electric vehicles do just in the neighborhood, aside from mine here in Texas, a Tesla car caught on fire and melted the street, killed both people in the vehicle.

 

Consumers are becoming much more aware of the dangers of electric vehicles and they want to understand what’s going to happen. So those types of considerations as this transition happens, and I believe it will, but those types of considerations have to be taken into account and consumers have to be made aware or have to be told this information. Truly, the problem with these fuel efficiency standards is they only look at carbon and petrol vehicles. They don’t look at electric vehicles. So electric vehicles will look like zero when in fact. They’re not.

 

BG: This target that Joe Biden announced today is voluntary. What do you think it will be met this target of 50% of sales by 2030? You seem pretty skeptical that it will indeed, perhaps that it should be.

 

TN: I don’t think it will because I don’t think EVs can make that target without a subsidy for the buyer. So there’s these standards, but there are also massive subsidies for SUV buyers. What you’re doing is you’re penalizing low income people who pay taxes through sales tax or other things to subsidize. Let’s be very honest, highly educated cosmopolitans who buy EVs. You get fairly wealthy people who are subsidized by poor people with the subsidies they get when they buy a car. It’s a real problem.

 

BG: Tony, when you hear about the almost total lack of vaccine supplies there in Bangladesh, and we had the comments from the World Health Organization earlier in the week saying that they should wait in developed nations where pretty much every adult has been vaccinated. What do you think countries like the United States should be doing?

 

TN: I think we should make them aware. I think we should make them available globally so that people can catch up. Giving the boosters there is there is a sufficient portion. I know it’s not what the federal government wants, but there is a large portion of the U.S. population that has been vaccinated. Older people, people with complications who wanted to get vaccinated have been vaccinated early. So I think it’s time to move these into South Asia and other countries like Africa to make sure that there is enough for those countries. I’ve actually been pretty vocal about that.

 

BG: Presumably, though, there are an awful lot of Americans who say the US helped fund the research effort and they want their kids to be vaccinated.

 

TN: But kids under 12 can’t get the vaccine now. It won’t be approved by the FDA until the end of the year. So send it overseas. I just don’t understand what the problem is with sending this stuff overseas if they’re needed overseas. Again, I’m very supportive of sending this stuff overseas because kids can’t get the vaccine until it’s approved at the end of the year.

 

BG: Tony, in business, is the cult of the leader or of the entrepreneur really a bad thing?

 

TN: I think it can be a good thing. But specific technology, I founded our firm, I’m a tech CEO and I speak to a lot of investors. And no venture capitalist thinks that any of their companies are. We work. No venture capitalist believes that can happen to them.

 

BG: Which is a problem, right? Because, of course it can

 

TN: It’s an absolute problem. And when I listen in out of nowhere and pitch, gosh, I wish I could pitch in as well as he does because venture capitalists are suckers for a great pitch. They will fund anything that has a great pitch. And again, they’ll tell you they’re not OK, but they are. I meet so many entrepreneurs, founders who can pitch, but what is there to their business? Well, they get funded and that’s it. I think the pitch is something that that every tech founder really, really focused on learning how to do. They don’t actually learn how to run a business. Very few.

 

BG: Is there is there a cult of Tony Nash at your company?

 

TN: I wish there was. I wish that was the case, but it’s not. I’m sorry.

 

BG: It’s such a shame. This is Business Matters with my thanks Tony Nash and Zyma Islam. And join us again same time tomorrow bye bye.

 

 

 

Corporate earnings are beating the Wall Street estimates — are these even accurate? For the exporting countries in Asia — will they be badly hit with further lockdowns? And why is WTI crude oil dropped all of a sudden? All these and more in this quick podcast interview with Tony Nash at the BFM 89.9 The Morning Run.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/us-complete-lockdowns-unlikely on August 5, 2021.

 

❗️ Check out more of our insights in featured in the CI Newsletter and QuickHit interviews with experts.

❗️ Discover how Complete Intelligence can help your company be more profitable with AI and ML technologies. Book a demo here.

 

Show Notes

 

SM: BFM 89.9. Good morning. You are listening to the Morning Run. I’m Shazana Mokhtar in studio today with Wong Shou Ning and Philip See. First, though, as always, we recap how global markets ended the trading day.

 

PS: Yes, the U.S. was relatively mixed. The Dow is down 0.9%. S&P 500 also -0.5%. Nasdaq was up 0.1%, crossing over to the Pacific and Asia. Also a mixed day. The Nikkei was down 1.2%. Shanghai Composite and Hang Seng were both up 0.9%, Singapore up 1.1%. And actually, not surprisingly, FBN, Kilcher was down 1.6%.

 

SM: And for some insights into what’s moving markets, we have on the line Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Always good to have you. So looking at corporate second quarter earnings, they’ve been beating Wall Street estimates, yet a prevailing bearishness seems to be creeping into U.S. markets. Is this an accurate reading driven by the rise of Covid-19 cases from the Delta variant?

 

TN: Yeah, earnings are up about 90% year on year, and a lot of that really has to do with companies cutting back staff and trimming expenses. This is a really nice, obviously not unexpected, but a really nice pop. But the cutbacks have come to a limit if we’re straddling a come back. Part of that is revenues are up 22% on quarter, which is great. But given the cutbacks, it looks extraordinarily good. So these things have a way of winding down. There’s only so much you can only get this good for so long. So we do expect this to to erode a little bit going into next quarter.

 

WSN: But does this mean that markets will find it hard to go to the next leg up in?

 

TN: It depends. It depends on company performance, but it also depends on things like central bank activity and fiscal spending. So if we look at Covid, it depends on which way it’s going. And if Delta variant gets worse and the fatality rate gets worse, which isn’t here in Texas, the fatality rate per case is half of what it was back in February. So just six months ago, the fatality rate here was twice per case of Covid.

 

So we’re hearing a lot about case counts. But the reality is the fatalities are declining pretty rapidly. So here we see that is a good thing. And and so we’re hopeful that things will you know, we’ll continue to move back to a normal situation. But there’s a lot of talk about, you know, closing things down. New York just put coded passports in for going to restaurants and going out in public, the sort of thing.

 

What that does is that really it really hurts small local businesses. It hurts chains for, say, restaurants and shopping. It helps companies like Amazon that do a lot of local deliveries. So so if New York is going to lock down, it helps to work from home type of company try it. But it seems to me in the US it’s going to be really hard to close the US down again because there’s a lot of push back in the US to closing down in some places, not so much New York, California, those those places, but other places. If there was an attempt to lock down again here in Texas, people would be pretty resistant.

 

PS: And you made a point on central bank activity. Fed Vice Chairman Richard Clarida confirmed that they are on track to raise rates in twenty twenty three, but jobs data is soft. So how should we make of all this?

 

TN: Yeah, I don’t see that happening. Look, you know, people talk about rates a lot, but the Fed has so many tools. I would expect the Fed to commence some sort of QE plan in the not too distant future before I would expect rates talk. I think we’re closer to QE than we are to rates much closer to QE than we are at a rate. So I don’t see rates changing certainly in obviously in twenty one. I don’t see them changing in twenty two. If it’s twenty three, maybe it’s the back half, but I just don’t see that happening simply because we’ve got to stop the flow of finance ministry and central bank activity going into economies globally first before we start to impose higher rates on borrowers. So we just need to get to a zero state or a semi normal state before we start imposing higher rates on borrowers.

 

SM: OK, and turning our attention closer to home, Tony. An economic upswing in Southeast Asia this year looks increasingly uncertain. And given that ASEAN is predominantly export dependent, how badly hit do you think countries in this region are going to be?

 

TN: Yeah, I think it’s hard. For those countries that have the benefit of, say, natural resources exports like Malaysia with palm oil and crude oil and other things, I think that helps. However, manufactured goods are difficult, partly on supply chain issues, partly on Covid, you know, restrictions and other things. So international transport is still in a very difficult situation. So I think it’s tough for Southeast Asia. I think there’s a big move in Europe and North America to have more manufacturing done nearby in regions.

 

So I think this, over a period that’s been protracted 18 months or longer. I think the more that happens, the more we see unwinding of global supply chains and the more we see the unwinding of Asia as the centralized manufacturing hub globally. I think we’ve seen more regional manufacturing. I don’t think that necessarily means that the manufacturing in China or other places are necessarily in danger. Unfortunately, a place that I think places that I think are more in danger of places like Malaysia, Thailand, the middle income, middle tier type of manufacturing countries. So the automation, competitiveness, these sorts of things are really much more important in places like Malaysia and Thailand.

 

WSN: And Tony, I want to switch to oil because when I look at the Bloomberg at the moment, WTI is showing at sixty eight U.S. dollars a barrel for delivery in September. What do you make of this sudden drop in prices? Is it due to demand decline?

 

TN: It’s on Covid fears. News all over the here in the U.S. It’s a lot of Covid fear mongering and you know, a lot of that. The media is based in New York and D.C. And so there’s a lot of chatter on the government side. And in New York, the New York media is trying to get the the focus away from Andrew Cuomo, the governor there, and really trying to focus on Covid and other things. So markets are reacting.

 

Business doesn’t want things closed down. Again, people in business don’t want to close down again. So I think, you know, you’re going to see a real push pull in markets over the next couple of weeks as that debate happens about two places closed down or not. And you’ll see some volatility in things like commodities and in other markets as that very active discussion continues.

 

SM: All right, Tony, thanks as always for your insights. That was Tony Nash, CEO of Complete Intelligence, talking to us about the situation of the economy in the US. And, you know, that push and pull between closing down, how do we deal with with the covid, but at the same time, you know, make sure the economy doesn’t suffer too much.

 

PS: You made a very interesting point that with closing down, who is affected the most. Right, with respect to businesses. He did say smaller businesses are more susceptible as result of a closure locked out. But the same is exactly the same thing you’re going to see across the board.

 

WSN: Yeah, yeah. I think he also brought up an interesting point about the fact that, yes, there is this decentralization of manufacturing hubs. Right. Because I think a lot of businesses are concerned that with covid-19 and they have really been proven that supply chains can be very easily disrupted. But ironically, Malaysia may not be a beneficiary. It might move to other countries. And it’s a question of whether we move up the value chain to provide that, you know, that that automation that we need do.

 

The things that we talk about are 4.0. I’ll be ready for it. Do we have to staff for it? Will they go to other countries? And he hinted that he might. So I’m just curious, in the longer term, what is our government’s plans, especially now 12 million, your plan confirmed to be in September and budget 2022 in October?

 

SM: That’s right. And we’re going to get a perspective on this later on in the show at seven forty five when we speak to the president of the Malaysian Semiconductor Industry Association. So stay tuned for that BFM eighty nine point nine.