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Are Meme Stocks Just Relying on Momentum?

Tony Nash joins BFM for another podcast where they discussed mainly the US meme stocks and what might the Fed do? Equities are trading in a range and what is the catalyst of that? They also discussed oil prices and inflation in China as China’s Producer Price Index surged to its highest since 2008.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/are-meme-stocks-just-relying-on-momentum on June 10, 2021.

 

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Show Notes

WSN: So to help us make some headway into why markets are in the red, we have on the line with us Tony Nash, CEO of Complete Intelligence. Good morning, Tony. U.S. equity markets seem to be trading in a rather tight range. What do you think the catalyst is going to be for markets to move either up or down?

 

TN: Sure. Everyone’s waiting for the Fed tomorrow morning to understand what direction and at what pace the Fed will tighten if they tighten or they twist or whatever they do. So it’s very much a fed and stimulus driven market. And people are waiting for the Fed to give them the sign for what’s next.

 

PS: And, Tony, the perspective on meme stocks like EMC, Clover Health, what’s happening there? Because yesterday there was a bit of downward pressure on them.

 

TN: They’re fun when you’re in the market with them, right? But you have to keep an eye on them all the time. I was talking to somebody earlier today who said they just bought one for fun. I think it was this morning. And 20 minutes later, they had made like 40 percent on their money and so they sold out. So, you just have to keep an eye on it minute by minute.

 

So if you’re in Asia, trading stocks is going to be a late night for you. But during the day here, people will buy in. They’ll see what happens. If they’re losing too much, they’ll sell quickly. If they’re making money, they’ll sell it once they hit their target.

 

WSN: So, Tony, you’re basically saying that all these treats have almost no fundamental basis in terms of valuations, is just momentum, is it?

 

TN: No, no. We’re at that point in the cycle where you’ve been on a small cap and make 40 percent. You’re not seeing much movement at all in the large cap stocks. You’re not seeing much movement at all in the indices. We’ve really gone to the long tail to see where the action is. And that’s really a scary time for the market.

 

The Fed knows this. They’re smart people, so they know that people are effectively gambling. So you’ve seen the kind of fears come out of crypto currencies over the past month. I wonder how that will happen. Or I expect the Feds to come out of equities or at least some of these more risky equities with some sort of Fed discussion.

 

WSN: So they fall dramatically like what we saw with Bitcoin. I mean, at one time, Bitcoin was up almost close to a hundred percent. And then on a year to date basis, it’s only up 20%. Is it all going to end in a bit of tears?

 

TN: It depends on which stock it is. Most of them are really just sentiment-based and very short-term sentiment-based. The Fed will suck money out of the economy or throw money into the economy. And if they do something to suck money out of the economy, then you can see that stuff. You could see those mean stocks really get boring really quickly.

 

WSN: So what are your expectations then in terms of the Fed and what they plan to do? I mean, how much of it is going to be driven by me, CPI numbers? Are you expecting inflation to be transitory or perhaps something more persistent?

 

TN: Yeah, I think well, you know, I think we’re going to see inflation to to be sticky for a few months, probably August, September. And we’ve been saying this for a while. But once once things are moving and there isn’t the kind of delightful surprise of reopening kind of at some point in the future. And it’s it’s happening already. You know, I think a lot of the excitement is going to fall out. There is not much more stimulus that can come out.

 

And so I think we’re going to hit a point where people kind of look at valuations and look at, say, revenue numbers and are just a little bit worried. So on the inflation side, things like eggs, the corn price, we expect the corn price to continue to rise in the summer. You know, soybean, these sorts of fundamentals, meats and proteins, they’re going to continue to rise on. Issues, but some of these other things like like some of the metals, these sorts of things, they may fall off.

 

TN: You’ve already seen copper start to stabilize. And so, you know, we see some of these things that have reached a point. We’re not sure that they’re necessarily going to go much higher, but we think they’ve kind of stabilized in a zone.

 

PS: And, Tony, you were mentioning just now about the defacing of equity does explain why treasuries rallied. Hot tenure yields are now at one point forty nine percent.

 

TN: Yeah, I think it does. I think people are you know, people are in a lot of cash right now. I mean, you see you see people worried, at least some of the the active investors that I know over the last, say, two months, more and more of them have moved to cash because they’re a little bit worried. So that’s not a big call on my part, saying we’re going to have market fallout. It’s just an observation of the more people I talk to, the more saying, look, we’ve really taken out of a lot of these speculative trades and really taken it to cash.

 

WSN: And let’s talk about oil. I mean, oil prices inching up or actually brought past the seventy dollars per barrel for WTI. Are we going to see U.S. shale producers return in a big way or will they take a wait and see approach?

 

TN: Do you know? You’ll see you’ll see an incremental return of shale producers. The real problem is that the OPEC plus group has about six point five million barrels sitting on the sidelines per month. So that’s accumulated. Right. And so they can turn that back on any time. So shale starts to come back in. They start to incrementally add barrels to the market and it pushes the oil price down. So I’m not all that worried about seeing, you know, a three figure oil price because there’s so much supply in the market and demand is coming on very slowly.

 

WSN: So do you think prices will be around this level? Can it break past 70 convincingly?

 

TN: It can. I mean, I think you can see you can see a little bit of upside from here, but I am not necessarily sure that we’ll see, you know, over 80 dollars or something like that on a sustained basis. There are a lot of people saying oil, the same people when oil was in the 30s, that it was going down a 20s and it would be there for the next two years. So, you know, I think you get the extremes in a lot of these commodity calls.

 

But but I don’t necessarily think we’re going there. It’s possible, but but it’s not within our outlook for sure.

 

WSN: All right. Thank you so much for your time. That was Tony Nash, CEO of Complete Intelligence, giving us his views on global markets. I think an interesting conversation about meme stocks because really that has grabbed headlines and a bit of question marks about what is driving price direction. And it’s actually not fundamental. It’s momentum. Maybe people just watching this and trying to make a quick buck out of it.

 

PS: If you’re in a different time zone, which I think Tony was alluding to, be prepared for very late nights at a roller coaster. Right. So if you’re doing the trading day and you can monitor and you can cut your losses, I think that’s the way to go. But if you’re based in Asia.

 

WSN: But I, I would I would put a caveat. I think this is not for everyone. Clearly, I think this is for maybe perhaps people who are a bit more sophisticated, willing to to stomach the risk reward because it could go either way.

 

PS: Well, we’ll think about it. Right. There is no theme in meme stocks.

 

WSN: You know, it’s whatever people like.

 

PS: Exactly. You’ve got Hertz a car rental. You’ve got GameStop a game gaming business. You’ve got AMC theater. There is no connection. There is no basis to see it as a collective theme. No one is going through. Maybe they all going through a hot time when some form or another. But it’s very hard to live on. That’s what you sit following the fundamentals.

 

WSN: Yeah, most of them actually in in the red. In the red, they’re all suffering from losses or they’re actually businesses, which like Blockbuster was one meems at one time, which is clearly going out of fashion. But, you know, there’s some for whatever reason, retail participation or interests.

 

PS: So it’s counter fundamental.

 

WSN: Yeah. Buy what you like.

 

It doesn’t have to make sense. But talking about something the markets like Singapore grab has has postponed the expected completion of its merger with the US. Back now, this ride hailing and food delivery giant Worx working on a financial audit for the past three years as the requirement, as per the requirement by the U.S. Securities and Exchange Commission. Now, according to a statement released yesterday, the deal is now set to be completed in the fourth quarter of this year versus earlier expectations of completion in the third quarter.

 

PS: I mean, grab post it really strong numbers. They’re consolidated. Group merchandise value rose 5.2 percent to USD three point six billion dollars. That’s equivalent to the total value of merchandise all over C2C extreme right now with strong food delivery growth offsetting a decline in rate, healing the companies that it didn’t provide revenue or profit. But grabs it in April, it’s set to have a market value of about 40 billion dollars after the combination with Altimeter Growth Corp., the spec of Brett Gutsiness, Altimeter Capital Management, now the combined entity stock will trade on the Nasdaq under the ticker Greb after the completion of the deal.

 

But I’m just going to be really curious, what’s the appetite going to be like? Maybe we’ll get some color in terms of really how well they’re doing financially, because a lot of these type of apps, I mean, super apps, as you know, they might have really, really very strong top line numbers, but profit might be non-existent or really dismal. Right. Because all of these apps were basically trying to create market share at the expense of anything else.

 

And this is the challenge with growth stocks, where you have this risk of higher interest rates, you may not get the valuations you want. So this is the challenge. And you see the contrast between China and us in China as we were talking a Jacuzzi yesterday, all the IPO for quite retail centric. But if you see what’s happening in the U.S., the IPOs are not so retail centric, you know, yes, they tend to be quite B2B driving enterprise growth and all that because it’s a different market in this market.

 

And they don’t really think about growth in the way maybe China thinks about it.

 

WSN: Yeah, but I’m just curious what kind of valuations at the end of the day they’ll get so but we definitely, definitely be watching this space very closely. I think this is clearly Southeast Asia’s big unicorn that everyone is keeping your eye on. BFM eighty nine point nine.

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News Articles

“Take a tooth for a tooth”: Is it possible to use the “American version of the Belt and Road” to counter China?

This article originally published at https://www.voachinese.com/a/beat-china-at-its-own-game-will-us-belt-and-road-work-20210224/5792031.html on June 3, 2021.

 

WASHINGTON — The former U.S. Secretary of the Navy and former Senator Jim Webb recently issued an article in which he put forward an interesting proposal in which he called on the Biden administration to launch the “American version of the Belt and Road Initiative” to counter China’s influence in the world. Weber believes that the United States can do better than China. This proposal has sparked a lot of debate. Some scholars believe that the United States encourages free competition and that the “Belt and Road” initiative is not the way the United States does things.

 

Weber published an article in the Wall Street Journal on February 17 advising the Biden administration to consider launching the “US version of the Belt and Road.” “China invests in large-scale infrastructure projects all over the world to increase its influence, and the United States can do the same,” he said.

 

Weber pointed out that as an important part of China’s global strategy for hegemony, the Chinese government has established economic and diplomatic ties with developing countries in Asia, Africa and Latin America through the “One Belt, One Road” project, and conducted military infiltration on the grounds of protecting the interests of these projects. However, public discussions in the United States have not paid enough attention to this.

 

Weber believes that the Chinese government’s escalating military, diplomatic provocations and human rights persecution in recent years have made many developing countries hesitate to participate in the Belt and Road Initiative. He called on the Biden administration to seize this opportunity and begin to attach importance to the “often neglected countries” in U.S. foreign policy, and to give these regions the opportunity to choose the U.S. in order to counter China’s influence and prevent the world system from being coerced by authoritarianism. This is conducive to the “diplomatic and economic health” of the United States.

 

“This is not a doomed career, but an unrecognized opportunity,” Weber said.

 

Weber proposed that the Biden administration implement a comprehensive and coordinated policy in Asia, Africa and Latin America, integrating thoughtful diplomacy, security commitments, and project investment and participation by the American business community to fill the vacuum.

 

Weber also believes that the United States can do better than China. “The U.S.’s major investment in this—without colonial motives and based on a more credible and more time-tested business model—will forcefully start developing economies, and at the same time boost the U.S. economy, and inspire further progress in a global free society. Pre-development,” Weber said.

 

The United States encourages free competition, “One Belt One Road” is not our way of doing things

 

As soon as the article came out, supporters called Weber a “visionary pragmatist”, and the United States urgently needed to implement it, and it was not too late. Jose Manuel, a student of international relations at King Juan Carlos University in Spain, said on Twitter: “If the United States wants to prevent China from winning the title of world superpower, it will be able to retaliate and support the Asian and African countries. Investment projects in Latin America.”

 

However, American liberal economists urged that the United States should not follow China in its competition with China.

 

Tony Nash, founder of the data analysis company Complete Intelligence, told VOA: “The Belt and Road Initiative or the Made in China 2025, this is not an American way of doing things.”

 

Nash believes that the best way for the United States to deal with competition among major powers is to encourage free competition. The United States’ world influence should come from an international system that advocates transparency and free competition.

 

On February 23, John Tamny, editor of RealClearMarkets, a US economic news website, pointed out that “the influence of the United States is freedom.” He believes that projects such as the “Belt and Road” highly dependent on government regulation will only waste huge amounts of resources. , And damage the United States’ world image of advocating free competition.

 

In an interview with VOA, Michael Kugelman, director of Asian projects at the Wilson Center in Washington think tank, said that the United States’ number one strategic competitor, China, is exerting its influence on a global scale through the Belt and Road Initiative. It is true that the United States has increased its investment in overseas infrastructure projects. There is strategic value, but now is not the time. Currently, the focus of the Biden administration is to revitalize the US economy.

 

However, Joyce Mao, a professor of history at Middlebury College in Vermont and an expert on U.S.-Asia relations, supports the United States’ overseas infrastructure investment. She told the Voice of America that the US foreign policy that integrates mature diplomacy and strategic intervention is inseparable from the domestic development of the United States. But she also pointed out that it is a challenge to obtain sufficient American public support and bipartisan consensus on this point.

 

Whether the proposal can be supported by the American public

 

Henry Blodget, the founder of the news website Business Insider, said on Twitter: “Good idea, but the United States has not yet reached an agreement on investment in domestic infrastructure.” Independent media “Chinese “Non-projects” also said on Twitter: “U.S. taxpayers’ own roads, bridges, and airports are in a state of disrepair. It is hard to imagine that they will support huge investments in infrastructure construction in developing countries to compete with China.”

 

Nash of Complete Intelligence believes that the American public cannot accept spending trillions of dollars on overseas projects right now. Under the impact of the epidemic, there are too many places to spend money in the United States. If the US government spends money and energy on this knot to form a global infrastructure investment plan, it will certainly make many taxpayers angry.

 

Kugelman of the Wilson Center said that the top priority of the Biden administration is obviously to restart the motor of the US domestic economy. Investment in overseas infrastructure is a strategic issue worth considering in the future, but at least it will have to wait a few more months. “If you do this at the same time, Two things become a situation where you have to keep the cake and eat the cake,” Kugelman said.

 

“People who are struggling in the’rust zone’ due to industrial decline will not have a good response if they hear that their government will launch such a huge plan to develop infrastructure projects thousands of miles away,” Kugelman said.

 

Professor Mao of Mingde College said that Weber’s proposal while the U.S. economy is still trapped by the epidemic is worthy of scrutiny. She pointed out that there are many debates about where the health and well-being of the American economy come from. This has always been a classic political issue that has divided opinions between conservatives and liberals in the United States. At this special moment of the epidemic, this disagreement focuses on what kind of economic plan is the one that will enable the United States to recover from the epidemic.

 

Weber said in the article that US investment in infrastructure projects in developing countries not only helps to counter China, but also benefits the US economy. But Professor Mao pointed out that Weber’s proposal seems to “assume that most Americans can understand and agree that the future of the US economy depends on the existence of internationalism and interventionism”, but the reality is not the case. She said that although there is a lot of political support in the United States, especially within the Republican conservatives, in the fight against China, investing in large-scale overseas infrastructure projects may not be consistent with their political priorities.

 

“What benefits will the U.S. version of the Belt and Road Initiative bring to ordinary U.S. citizens? How will employment opportunities be realized? To what extent can it help develop overseas markets and other resources for U.S. goods?” Professor Mao believes that this proposal is necessary Get enough support. These are the basic questions that need to be answered to the American public and policymakers.

 

Kugelman: There are ready-made investment frameworks available

 

Kugelman pointed out that although a large-scale plan such as the “US version of the Belt and Road” should first give way to the restoration of the domestic economy, Biden’s policy can make good use of the relevant institutions and tools that have been established during the Trump administration to implement Related investment commitments.

 

In 2018, Trump signed the “Good Use of Investment Guidance and Development Act” (referred to as the BUILD Act), which merged the Overseas Private Investment Corporation (OPIC) and the Development Credit Administration (DCA) under the United States Agency for International Development (USAID) to form a new establishment The United States International Development Finance Corporation (IDFC) was established to enhance the United States’ international development financing capabilities, and expanded financing and financing tools to coordinate and promote the participation of the U.S. private sector in the economic construction of developing countries.

 

Under the “Free and Open Indo-Pacific Policy”, the Trump administration signed a memorandum of cooperation on a trilateral infrastructure investment partnership with Japan and Australia in 2018 to jointly encourage and support domestic private companies to build high-tech projects in the Indo-Pacific region that meet international standards. Quality infrastructure construction project.

 

In 2019, the United States, Japan and Australia jointly launched the Blue Dot Network (Blue Dot Network) to counter China’s “One Belt One Road” initiative in Asia. The plan unites the government, enterprises and civil society to evaluate and certify infrastructure projects under “common standards” to promote high-quality projects for sustainable development.

 

David Dollar and Jonathan Stromseth, fellows of the Brookings Institution’s China Program, also called on the Biden administration to implement a series of infrastructure investment commitments in Southeast Asia during the Trump administration. They pointed out that nearly 42,000 U.S. companies export products to 10 member states of the Association of Southeast Asian Nations (ASEAN), supporting approximately 600,000 jobs in the U.S. However, the U.S.’s economic position in the region is facing the erosion of China, and Southeast Asia has become Beijing. A hotbed of strategic competition with Washington.

 

Nash: Government-supported projects shouldn’t be a way of American competition

 

Nash, who had provided consulting and assistance to China’s National Development and Reform Commission on the “Belt and Road” project, told VOA that China’s “Belt and Road” operation principle is to transfer funds from banks that carry out overseas business in China to China, which invests in infrastructure projects around the world. Among state-owned and semi-state-owned entities, it is a way of financing overseas and domestic debt. Although the United States also has international financing institutions such as the International Development Finance Corporation (IDFC), its scale of operation is unlikely to support large overseas investment projects such as China’s “One Belt, One Road” initiative. In addition, China can provide loans with negative interest rates for certain projects, but US financial institutions that have always focused on risk management standards are unlikely to do so.

 

Nash also said that the best way for the United States to compete among major powers is to compete freely. Whether it is China’s “One Belt, One Road” or “Made in China 2025” industrial policy, it should not be the way the United States follows. These projects are highly dependent on the role of the government, and the government has invested heavily to support the technology industry or support domestic companies to invest in overseas projects. Doing so may nourish a group of companies and industries whose actual competitiveness is not up to the standard.

 

“The best way is to let American construction companies and infrastructure companies go out to compete for projects. If they can’t compete, then they should fail because they are not competitive enough,” Nash said.

 

At a seminar last month, Clyde Prestowitz, a well-known American expert on globalization and Asian issues and director of the Institute for Economic Strategy, said that the Biden administration should have a far-reaching industrial policy. “China has their Made in China 2025, and we should have our Made in America 2025,” he said.

 

Nash believes that the way for the United States and China to maintain influence and leadership on a global scale is to uphold the values ​​of transparency and free competition. He believes that the United States previously required NATO allies to be open and transparent in defense spending as a manifestation of leadership.

 

He believes that the United States should also continue to pursue transparency against government subsidies and non-tariff barriers, so as to ensure that the World Trade Organization can effectively perform inspections in this area, so that the world can see how the industries of various countries are protected. of. At the same time, the United States should also call on the international community to pursue transparency in foreign aid. Where does the money go?

 

“The United States has come forward to demand transparency in multilateral organizations, transparency in foreign aid, and a free competition environment for international bidding for infrastructure projects. This is the best way for the United States to demonstrate and maintain leadership,” Nash said.

 

How to do the “US version of the Belt and Road Initiative”?

 

Kugelman believes that the United States is still gaining the upper hand in the competition between the United States and China, whether it is military strength or a leading advantage in high-tech fields. Like Weber, he also believes that although the United States has faced some setbacks in soft power in recent years, it is still ahead of China.

 

Kugelman therefore emphasized that the United States should have its own pace and expectations in terms of overseas infrastructure investment, and there is no need to equalize with China in the order of magnitude. After all, China has already led too many steps in this area. “With some progress in the field of infrastructure investment, instead of investing heavily in this to catch up with China in vain, why not focus more on maintaining the United States’ competitive advantage and comparative advantage in its traditionally leading field?” Kugelman said.

 

Kugelman partially agrees with Weber’s view that the United States can do better in infrastructure investment. He said that the quality of many of China’s Belt and Road projects has been criticized, such as financial opacity, the breeding of corruption, damage to the local environment, and the substandard rights of workers. The United States can provide a higher standard and high-quality options for these issues. China has built surveillance systems through infrastructure projects in some areas to export authoritarianism. The United States obviously can also provide less intrusive options in this regard.

 

Like Weber, Kugelman also believes that China’s “wolf war diplomacy” in recent years has opened up opportunities for the United States. Kugelman cited, for example, that China’s aggressive strategy of flexing muscles in the South China Sea has sounded the alarm for many countries in the region, and began to question whether the consistent attitude of “asking the United States for security and asking China for money” should continue. He believes that the United States should focus on investing in countries like the Philippines that hesitate to China and are a key regional ally of the United States.

 

华盛顿 — 

前美国海军部长也是前参议员吉姆·韦伯(Jim Webb)最近发文，提出一项有意思的建议，他呼吁拜登政府启动“美国版的一带一路”来抗衡中国在世界的影响。韦伯认为，美国可以做得比中国更好。这项建议引发不少议论，有学者认为，美国鼓励自由竞争，“一带一路”不是美国的做事方式。

 

韦伯2月17日在《华尔街日报》上发文倡议拜登政府考虑启动“美版一带一路”。“中国在世界各地到处投资大型基建项目以增强影响力，美国也可以这么做，” 他说。

 

韦伯指出，作为中国争霸全球战略的重要部分，中国政府通过“一带一路”项目与亚非拉发展中国家建立经济和外交联系，并以保护这些项目利益为由进行军事渗透。但美国的公共讨论对此重视不足。

 

韦伯认为，中国政府近年来不断升级的军事、外交挑衅和人权迫害已让许多发展中国家开始对参与一带一路产生迟疑。他呼吁拜登政府抓住这一时机，开始重视在美国对外政策中“常被忽视的国家”，给这些地区选择美国的机会，以此抗衡中国影响力，防止世界体系为威权主义所胁迫，这有利于美国的“外交和经济健康”。

 

“这不是败局注定的事业，而是没被认识到的机会，” 韦伯说。

 

韦伯提议拜登政府在亚非拉地区实施一项各领域通力协调的全面政策，融合深思熟虑的外交、安全保障承诺和美国商界的项目投资和参与，填补真空。

 

韦伯也认为美国可以比中国做得更好。“美国在这上面的重大投入——不带殖民动机且基于更具信誉度、更久经考验的商业模式——将强力启动发展中经济体，同时提升美国经济，激励全球自由社会的进一步向前发展，” 韦伯说。

 

美国鼓励自由竞争 “一带一路”不是我们的做事方法

 

文章一出，支持者称韦伯是“有远见的实用主义者”，美国急需践行，为时不晚。西班牙胡安卡洛斯国王大学国际关系专业学生何塞·玛努埃尔(Jose Manuel)在推特上表示：“美国若想阻止中国夺得世界超级大国的头衔，就得以牙还牙，支持在亚非拉国家的投资项目。”

 

然而，美国自由派经济学家呼吁，美国不该在与中国的竞争中效仿中国的做法。

 

数据分析公司Complete Intelligence创始人托尼·纳什(Tony Nash) 告诉美国之音：“‘一带一路’或‘中国制造2025’，这不是美国式的做事方式。”

 

纳什认为，美国应对大国竞争的最佳方式是鼓励自由竞争，美国的世界影响力该来自于倡导透明和自由竞争的国际体系。

 

美国经济新闻网站RealClearMarkets编辑约翰·塔姆尼(John Tamny)2月23日发文指出，“美国的影响力就是自由”，他认为“一带一路”这类高度依赖政府调控的项目只会浪费巨额资源，并损害美国倡导自由竞争的世界形象。

 

华盛顿智库威尔逊中心亚洲项目主任迈克尔·库格尔曼(Michael Kugelman)在接受美国之音采访时表示，美国的头号战略竞争对手中国在全球范围内通过一带一路施展影响，美国增强海外基建项目投资固然有战略价值，但现在不是时候。疫情当前，拜登政府的重心是重振美国经济。

 

不过，美国佛蒙特州明德学院(Middlebury College)历史系教授、美亚关系专家乔伊斯·毛(Joyce Mao)支持美国的海外基建投资。她对美国之音表示，融合成熟外交和策略性干预的美国对外政策和美国国内的发展密不可分。但她也指出，要在这一点上获得足够的美国公众支持和两党共识是个挑战。

 

提议能否获美国公众支持

 

新闻网站商业内幕(Business Insider)的创始人亨利·布拉吉(Henry Blodget)在推特上说：“好主意，但美国都还没能在投资国内基础设施上达成一致。” 独立媒体“中非项目”也在推特上称：“美国纳税人自己的道路、桥梁和机场处于年久失修状态，很难想象他们会支持巨额投资发展中国家的基础设施建设以与中国竞争。”

 

Complete Intelligence的纳什认为，美国公众现下不可能接受花几万亿美元在海外项目上。疫情冲击下，美国国内有太多地方需要花钱。美国政府如果在这个节骨眼上花钱和精力组建一个全球基建投资计划，肯定会让很多纳税人生气。

 

威尔逊中心的库格尔曼表示，拜登政府的当务之急显然是重启美国国内经济的马达，投资海外基建是今后值得考虑的战略议题，但至少也得再等几个月，“若此刻同时做这两件事，就变成又要留住蛋糕又要吃蛋糕的局面，” 库格尔曼说。

 

“因工业衰退而挣扎在‘铁锈地带’的人们，如果他们听说自己的政府将启动如此庞大的计划，以发展千里之外的基建项目，不会有好反响的，”库格尔曼说。

 

明德学院的毛教授表示，韦伯在美国经济仍为疫情所困之际作出这样的提议有一定值得推敲之处。她指出，有关美国经济的健康和福祉从何而来有很多争论，这历来是个让美国保守派和自由派意见分歧的经典政治问题。在疫情这一特殊时刻下，这种分歧就聚焦在到底怎样的经济计划才是能让美国从疫情中恢复的计划。

 

韦伯在文章中说，美国在发展中国家投资基建项目不仅有助于抗衡中国，而且也有利于美国经济。但毛教授指出，韦伯的这一建议似乎是“假设了大多数美国人能理解和认同美国经济的未来依赖于国际主义的存在和干涉主义的存在”，但现实并非如此。她说，尽管在对抗中国方面，美国国内尤其是共和党保守派内部有很多政治支持，但投资海外大型基建项目可能与他们的政治优先项并不一致。

 

“美国版的‘一带一路’会给普通美国公民带来哪些实惠？就业机会将如何实现？能在多大程度上帮助开发美国商品的海外市场和其他资源？” 毛教授认为，这份提议若要获得足够支持，这些是需要向美国公众和政策制定者回答的基本问题。

 

库格尔曼：有现成投资框架可用

 

库格尔曼指出，虽然“美版一带一路”这样大规模的计划该先让位于恢复美国国内经济，但拜登政策可以利用好从特朗普政府期间已经设立的相关机构和工具，落实相关投资承诺。

 

特朗普于2018年签署《善用投资引导发展法》(简称BUILD法)，将海外私人投资公司(OPIC)和美国国际开发署(USAID)下属的发展信贷管理局(DCA)合并，新成立了美国国际发展金融公司(IDFC)，以增强美国的国际发展融资能力，对融资力度和融资工具都进行了拓展，统筹并促进美国私营部门参与发展中国家的经济建设。

 

在“自由开放印太政策”下，特朗普政府在2018年与日本和澳大利亚签署了三边基础设施投资伙伴关系合作备忘录，共同鼓励和支持本国私营企业在印太地区建设符合国际标准的高质量基础设施建设项目。

 

2019年，美国与日本和澳大利亚共同推出蓝点计划(Blue Dot Network)，在亚洲地区抗衡中国的“一带一路”。该计划联合政府、企业和民间社会，在“共同标准下”评鉴和认证基建项目，助推可持续发展的高质量项目。

 

布鲁金斯学会中国项目研究员杜大伟(David Dollar)和周思哲(Jonathan Stromseth)也在2月17日呼吁拜登政府将特朗普政府期间一系列针对东南亚地区的基建投资承诺落实。他们指出，近4.2万家美国公司向东南亚国家联盟(ASEAN)10个成员国出口产品，支持美国约60万个就业机会，但美国在该区域的经济地位正面临中国的蚕食，东南亚已成为北京和华盛顿之间战略竞争的温床。

 

纳什：政府扶持项目不该是美国的竞争方式

 

曾在“一带一路”项目上为中国国家发改委提供咨询帮助的纳什告诉美国之音，中国“一带一路”的运行原理是将资金从中国开展海外业务的银行输送到在世界各地投资基建项目的中国国有和半国有实体中，是一种为海外和国内债务融资的方式。美国虽也有像美国国际发展金融公司(IDFC)这样的国际融资机构，但其运行规模不可能支撑像中国“一带一路”这样庞大的海外投资项目。此外，中国能向某些项目提供负利率的贷款，但一向注重风险管理标准的美国金融机构不太可能这么做。

 

纳什同时表示，美国进行大国竞争的最佳方式就是自由竞争。不管是中国的“一带一路”还是“中国制造2025”这样的产业政策，都不该是美国效仿的方式。这些项目都高度依赖政府角色，由政府出巨资扶持科技产业或扶持本国公司进行海外项目投资。这样做有可能滋养一批实际竞争力并不达标的公司和产业。

 

“最好的方法是让美国的建筑公司和基础设施公司自己出去竞争获得项目。如果他们竞争不到，那他们就该失败，因为他们没有足够竞争力，” 纳什说。

 

在上个月一场研讨会上，美国知名全球化和亚洲问题专家、经济战略研究所所长普雷斯托维茨(Clyde Prestowitz)曾表示，拜登政府该有一个影响深远的产业政策。“中国有他们的中国制造2025，我们应该有我们的美国制造2025，” 他说。

 

纳什认为，美中在全球范围内维持影响力和领导力的方式是秉持透明和自由竞争的价值理念。他认为美国之前要求北约盟国在国防开支上做到公开透明就是领导力的体现。

 

他认为，美国也该继续针对政府补贴和非关税壁垒等现象追求透明化，确保世界贸易组织能够切实做到这方面的督查工作，以让全世界都能看到各国的产业是如何被保护的。同时，美国也该呼吁国际社会在对外援助方面追求透明化，出去的钱到底流向何方？

 

“美国站出来要求多边组织的透明度，要求对外援助的透明度，要求基建项目的国际竞标有自由竞争的环境，这才是美国展示和保持领导力的最佳方式，” 纳什说。

 

“美版一带一路”怎么做？

 

库格尔曼认为，美国目前仍在美中竞争中占上风，不管是军事实力还是高新科技领域的领先优势。和韦伯一样，他也认为尽管美国近年来在软实力上面临一些挫折，但仍然领先于中国。

 

库格尔曼因此强调，在海外基建投资方面美国该有自己的步调和预期，没必要非得在数量级上和中国平分秋色，毕竟中国在这上面已经领先太多步了。“在基建投资领域取得一些进展的情况下，与其在这上面投入巨资徒劳追赶中国，何不更加专注于保持美国在其一贯领先的领域的竞争优势和相对优势呢？” 库格尔曼说。

 

库格尔曼部分认同韦伯对于美国可以把基建投资做得更好的看法。他说，中国不少一带一路项目的质量收到批评，比如财务不透明、腐败滋生、破坏当地环境、工人权益不达标等等。美国可以针对这些问题提供一个更高标准高质量的选择项。中国在部分地区通过基建项目大造监控系统，输出威权主义，美国在这方面显然也能提供侵入性更小的选择项。

 

和韦伯一样，库格尔曼也认为中国近年来的“战狼外交”给美国开创了机会。库格尔曼举例说，中国在南中国海愈加秀肌肉的蛮力战略给该区域的许多国家敲了警钟，开始质疑“向美国要安全，向中国要钱”的一贯态度是否还该继续。他认为，美国该重点投资像菲律宾这样又对中国产生迟疑又是美国关键区域盟友的国家。

Categories
QuickHit

Ag’s Perfect Storm: Tight Supply, Strong Demand and Weather Uncertainty

Joining QuickHit for the first time is the commodities expert Kevin Van Trump of The Van Trump Report, helping us understand ag’s supply, demand, and clarifying uncertainties. Why are we seeing so much attention to agriculture right now? What’s contributing to the tightness in the ag market? How long will the corn rally last? How about wheat? What can we expect for the foreseeable future? And protein, how delicate is this with all that’s happening with ASF, cyber attacks, etc.?

 

The Van Trump Report, a very large agricultural newsletter and analysis service. Kevin Van Trump started trading in the 90s in Chicago. Switched over, traded Notes, 10 years, five years. And then really got more heavily into ag. He’s from a small rural town outside of Kansas City and I was really interested in corn, beans, wheat, cattle, livestock. They started putting together a newsletter 10, 15 years ago when ethanol started to become more prominent and it started to travel around the circuits with some of the bigger hedge funds and some of the bigger money managers.

 

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This QuickHit episode was recorded on June 2, 2021.

 

The views and opinions expressed in this Ag’s Perfect Storm: Tight Supply, Strong Demand and Weather Uncertainty QuickHit episode are those of the guest and do not necessarily reflect the official policy or position of Complete Intelligence. Any contents provided by our guest are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: There’s a lot of attention on ag right now. And can you just kind of give us a little bit of a set up of what’s happening in the ag markets, everything from the volatility of corn to, you know, what’s happening in wheat, a little bit of kind of protein, a little bit of beef activity. And that sort of thing. Can you tell us just generally why are we seeing so much attention on ag right now?

 

KVT: Well, I think you see the funds take a more proactive risk on approach. You know, just in commodities in general, we’re seeing location from Covid and things of that nature. And most people thought as we ramp back up, we’re going to have a pretty strong demand for, like you said, proteins bring in some of the livestock back on, just demand in general.

 

So we’ve seen more fund interest and more money flow into the space. Like you’ve seen the rebound in crude. You’ve also seen this rebound and in the ag and the commodity world. So China’s got a big appetite. They’ve been a huge, huge buyer of corn and have led the way. Beans as well on the protein side, as you and I will discuss here in a little bit. But yeah, basically, you know, we’ve we’ve gone from a oversupplied market for the last four, five years to all of a sudden we’ve got tight supplies. We’ve got record strong demand and some uncertainty into weather. So, you know, everything all said ripe for a possible rally.

 

TN: And is that tightness? Is that on, say, processing? I know with some of the protein, it’s processing concerns. But what is that tightness? Is it say, weather, drought in Brazil, that sort of thing, too much weather, too much rain, in the Midwest or what’s contributing to that tightness in the market?

 

KVT: Yeah, I think you had, you know, we really rarely get good numbers out of China from a supply or demand, especially a supply standpoint. They were supposedly sitting on a ton of corn and a ton of supply. All of a sudden they come online as a big, big buyer, you know, whether it’s maybe lack of quality with the storage of their corn, maybe the numbers just weren’t there all along. Maybe the supply wasn’t there. But it feels like they want to import the corn down into the southern part of China, maybe get away from.

 

We think Covid really exposed the rail dislocation. And when they had that rail shut down and dislocate, it probably crimped a lot of movement of corn supply and the Chinese government is looking at that and saying, hey, we can’t have that happen again if we’re going to see more possible problems. So they want to be a big buyer of corn from the US. They want to buy as much beans as they can from South America. And so so here we sit trying to juggle that. I think the world wasn’t really prepared for the size of buying that they were going to step in and do.

 

TN: OK. And how long specifically with corn, how long do you think that buying lasts? Is that kind of a three month phenomenon or does that go, say, for years?

 

KVT: Well, Tony is kind of how it played out for us in the soybean market years ago. China was what we would call a price buyer of beans. They would buy beans on the breaks and then they became a quantity buyer of beans, where it didn’t matter if soybeans were traded in five or six dollars a bushel or sixteen or eighteen dollars a bushel. They were going to buy beans every month. And so we see China as a quantity buyer of soybeans.

 

And we’ve predicted… Now, I hate to say this because we’ve made this call before. It’s OK. Own it. That China was going to become a quantity buyer of corn eventually. And like I said, we’ve heard guys in the market say this for the last 20 years and it never really came to fruition. They’ve continued to be a price buyer of corn.

 

We feel we’re at a tipping point and we believe they’re going to continue to be a quantity buyer of US corn for the foreseeable future as they try to transition, open more ethanol facilities, try to transition to cleaner energy. And some of those types of place, I think they’re buying corn longer term.

 

TN: So we’ve hit. It sounds to me like we’ve hit almost a semi-permanent new price level. Is that, would that be fair to say?

 

KVT: Probably not, I would say, how would you say? The grain markets in general and farmers in general. They’re going to plant from fencerow to fencerow. They’ll be planting acres on their back patio if they can, and they’re going to roll out more acres in South America. And so you’re going to see a lot of supply really come on with technology changes that can come on fairly quick.

 

 Even though I think China, you know, is going to be a continued buyer and demand is going to remain strong. I bet we really start to increase some of this production and we’ll probably balance it back out here. So that’s you know, they’ve caught us a little offsides right now. You got the price of corn at seven, close to seven dollars. And then we, barring any weather incidents or craziness that would really upset production, we probably trade here well, and then we start to ramp up supply and balance or back out.

 

TN: Very good. OK, interesting. Can we move on to wheat for a little bit? There’s been you know, we saw wheat come on strong and then come off and there’s expectations of wheat prices rising again. And you’ve covered this in detail in your daily newsletter. Can you talk a little bit about the wheat market dynamics and kind of what you’re seeing there?

 

KVT: Yeah, you know, wheat has become a big follower of corn, so to speak. We’ve seen, especially in China, you’re seeing a lot more wheat substituted into feed rations. So you’re getting a, you’re getting a bigger demand for wheat as a feed ration, but of corn, more to fizzle out. We probably see wheat drop off as well just because its demand is kind of correlated right now to being substituted in for the higher prices and corn. There are some pockets where we have some weather stories.

 

Spring wheat seems to be in short order here in the US. Some of those acres didn’t get planted, probably were planted to corn. You’re seeing those conditions problematic in, say, North Dakota, which is our biggest spring wheat producing state. They’re having problems with the drought and dry conditions. You’re having some pockets of some concern in parts of Canada, Canadian prairies, southern prairies, where also big spring wheat producing areas. So that, you know, spring wheat, maybe a little hot right now. But we see wheat is mainly a follower to corn at the moment.

 

TN: Very interesting. OK, let’s move on to proteins, because I think that’s a really interesting story. We had this cyber attack on the largest beef or one of the largest beef processors in the US this week. And we already had some tightness in the beef market. The inventories, the frozen inventories, from what I learned from your newsletter, were already low, other things. So how delicate is that market and will we see that follow on effects come later into the market or will that be sooner?

 

KVT: No, I think, you know, there’s going to be, there’s massive dislocation right now across the board still, and I think you can see that and we could talk about. I’m sure your follow up into the hog space. But I mean, you’re seeing that with both cattle and hogs. If you recall, back early in Covid, they had to shut down a lot of processing plants because workers were getting sick and they had to take precautions.

 

Now, on the hog and poultry side, as I’m sure as we were going to discuss, those shutting of the plants, whether it be a Tyson or whoever it may have been at the time. I mean, that really backed up supply or the herd. Now, you had producers had to call the herd and they pulled back and reduced the size of the hog or quite a bit or with cattle or things of that nature. Well, then all of a sudden, corn prices and feed prices take off to the upside. And you have a producer or rancher who just really doesn’t want to expand his herd because he’s not certain about the processing plant if they’re going to stay in his local area because it Covid and now he sees corn take off and the feed take off to these extreme highs. You’ve got them caught where there were a little bit short supply and all of a sudden demand coming back like gangbusters.

 

All the restaurants, or people around the world are starting to try to get out and about more. And so, like you said, you guys, you got surging demand right here and you got the supply pipeline dislocated a little cut off size.

 

TN: And then when we see things like ASF, African Swine Flu in China and the calling of the even the breeder hogs, that sort of thing, how global is that dynamic? Does not present pressure on, say, US pork prices or or is that really just a regional Chinese pork price phenomenon?

 

KVT: No, we think it does. I mean, we’ve seen as it creates ripples in China and they try to get on top of it. I mean, it’s a crazy dynamic. They cut their hog order in half. But as they tried to get on top of it, they’ve had to be bigger buyers of importing of pork and the United States has been a beneficiary. And I think that could continue to be the case. You know, God forbid that we were to get a case here in the United States that’s always kind of the last few years, the big wild card in the mix.

 

If we were to spot something like that here in the US, know probably the knee jerk immediately as to the downside. Just because prices probably break because people are going to want to eat the hogs. You’re going to kill a lot. But I think longer term, that creates a supply shortage and we rebound back in the opposite direction. So it could be a double edged sword.

 

TN: OK, so we’ve seen a lot of volatility in these markets. What are you looking for kind of for the remainder of 2021. Do you see these prices elevated, say, until Q3? Do they come off in Q4 or do you see these, the kind of the volatility and elevated prices continuing through the end of the year?

 

KVT: You know, kind of like we talk in crude, we probably see demand outpace supply through Q3, Q4, maybe even a little later if you get some dislocation. In our sector, if you’re talking corn, beans, wheat, things like that, it’s really right now about US weather.

 

In Brazil, they’ve had some real rough patches of dry, dry and hot weather and we continue to see their corn crop get smaller in size. The USDA was talking they had lowered it down to one hundred and two million metric tons for corn. Now they’re talking some guys in the 95 to 90 million metric tons. And so that that’s going to take more corn out of the supply pipeline or are available for exports. And now here in the US, we’ve got the drought that’s lingering and could, it just sit, we’re just right here on this tipping point, Tony, where if it turns hot and dry within the next 60 days, corn, beans and we take off. I’m talking we’ll probably go all time record highs. If you see what I’m saying.

 

So and you remember back to the 2012 drought, the USDA had the crop rated about the same condition as it does right now. Things were similar, but all it takes, Tony, and corn, is for you to get really hot and dry right around the pollination period, which will be the end of June, first week of July somewhere in there. And boy, I tell you what, the market will add a ton of risk premium and, you know, a lot of fireworks take place.

 

So that’s kind of what we positioned ourself for. If we get that story, we take off to the upside because demand’s so strong. OK, so we’re looking for hot and dry potentially in late June, early July. And that would really set things on fire and in ag markets.

 

TN: Right. Very good. Kevin, thank you so much for your time. I really appreciate this. This is a real pleasure to have you here. You know this stuff inside and out and we’re really grateful for all of the insights you’ve given us today. Thanks so much. For everyone watching, please like the video, please subscribe. That helps us out a lot. And we’ll see you on the next one. Thanks very much.

 

KVT: Thanks, Tony. Appreciate it.

Categories
Podcasts

US Banks Accused of Failing the Public

Our CEO and founder Tony Nash is back on the BBC Business Matters for the discussion on US banks and why they are not helping enough during the pandemic, India’s Covid and their vaccine efforts, and Friends the Reunion. 

 

This podcast was published on May 28, 2021 and the original source can be found at https://www.bbc.co.uk/sounds/play/w172xvqbttq78ml.

 

BBC Business Matters Description:

 

Big US banks have been criticised for not doing enough to help ordinary people during the pandemic. The bosses of JP Morgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs were grilled during an appearance before US lawmakers.

Also in the programme, following the deaths of more than 315,000 people from coronavirus, India could fast track the clearance of some foreign vaccines in a bid to speed up vaccination in the country. The BBC’s Rahul Tandon has an extended report on how the country’s rollout is going so far.

Staying in India – we look at the relationship it has with Twitter. The information technology ministry in India has criticised the social media giant after it expressed concern over the potential threat to freedom of expression in the country.

Plus, as the cast of TV sitcom Friends reunite for a one-off special to look back at the making of the show, we discuss why it remains so popular.

 

Show Notes

 

RT: Then from Houston, Texas, we have the founder of Complete Intelligence, Tony Nash. I’m always very reassured to have Complete Intelligence on the program as a man of limited intelligence. Yes.

Tony, does that mean looking ahead and this is not a reflection on the current CEOs, but banks are going to have very different CEOs because it’s not all about the numbers anymore, is it?

 

TN: Well, I think these are smart CEOs, they can handle handle their own. I don’t necessarily think these guys are not skilled enough to handle these topics. These banks handle these topics every day. I think the range of questioning, to be honest, really shows just a lack of focus. These companies are better served when they focus on an issue and go deep on it.

 

RT: What should they be and focus on? What would you focus on?

 

TN: Whether it’s green loans or whether it’s access to finance are such rich topics that they could have spent the entire hearing on. And I think the hearing was really meant for a lot of one liners so that people could be seen in the media more than really a desire to dig deeply into this. So, for example, the the fees that were levied, the saving rate of Americans right now is 21 percent. Normally that’s five percent or seven percent, something like that, but it’s 21 percent.

 

So Americans generally have money. I’m not saying that it wasn’t the overdraft fees were not unfair in some cases, but it’s not as if that was kind of a massive hot button issue really until today. Americans hate banking fees. I think everyone hates banking fees. But I think it was just kind of an opportunistic thing to talk about.

 

What would have been really interesting to talk about is how those major banks, specifically for things like PPY loans, they did not cater to small businesses, OK, they catered to their largest clients.

 

RT: Interesting points that from Tony. What do you think? Tony. Anyway she’s part of the world that you know very well here entering an emerging market that should he said there with this strong man, but that’s something you’ll have to do if you want to grow your business.

 

TN: I think what Twitter has done with government accounts globally is it’s put a label this is from a government account or this is from a person who works for the government. So in the West and I’m sure in the U.K. and other places, you can see, for example, Chinese government spokespeople put out things that are obviously false that Twitter doesn’t police. They have to apply the rules evenly to everybody. So if they’re going to apply these rules to an Indian government official or an American government official, they have to also apply it to a Chinese government official or a Japanese government official. The problem that Twitter has is it is not treating its users equally around the globe.

 

RT: Twitter having to deal with people from countries. You may not be telling the truth. You mentioned China there. But if an Indian member of the government appears to be not telling the truth and Twitter says so, there’s nothing wrong with that. It has does to stand up on that principle now or does it cave in and say to the Indian government, “OK, we’re going to follow that rule because your market so big?”

 

TN: Well, Twitter is supposed to be a non-partizan platform. And so they are intervening as partizans at times, and that’s just not fair.

 

RT: They shouldn’t say anything. Just let people say what they want?

 

TN: I think they label as a government account. And if it’s seen as government propaganda, then either they let it go or they apply it evenly across all government accounts.

 

RT: Tony, if I can come to you firstly in Houston, in Texas, a personal question, I suppose. I mean, have you been vaccinated? Tell us a bit about the vaccination situation where I would imagine it’s quite good.

 

TN: So Texas has about 40 percent of its population vaccinated, and I think it’s 22 million people. So it’s nothing on the scale. I haven’t been vaccinated. I’ve wanted people who’ve needed it to go first. So I’m happy to wait on that so that older people or people at risk or whatever can go first. But the U.S. generally has about 40 percent of the population vaccinated. So things are pretty well advanced here. I was glad to see the U.S. government start to support India about  a week and a half ago or something two weeks ago? I think it was really, really late. I think they should have supported India much, much earlier.

 

RT: Well, I think it’s very admirable that you’re that you’re that sort of attitude that you’ve taken to vaccination. Tony, if you want to get vaccinated in the U.S., what’s the process that you have to go through? One thing that intrigued me was that in India, a country where many people still struggle when it comes to the Internet, the booking system is only online at this particular point in time and only in English. You obviously have large Hispanic community in Texas. Tell us a little bit about how you book it and sort of language abilities that.

 

TN: It’s online in Texas that I haven’t booked again, because I’ve been waiting for all these other populations to clear, but in Texas it has to be in multiple languages. I mean, we have such large communities here, not just Hispanic communities, but Vietnamese communities and other communities. So it has to be in other languages on the site. A look while we’re talking and if I can find it in time, I’ll let you know.

 

RT: Great. But if you can’t go online because, you know, there are many parts of the world, as you know, my parents struggle to go online. Sometimes they struggle with many things, really. But online is one of them. Can you make a phone call in Texas to get it? Is there another way? Can you just walk into a center?

 

TN: I’m not sure if you can just walk in, but there are multiple ways of contact. I’m on the website now, so there are multiple ways to contact. It’s a very, very simple website and it’s a multi-language website. So, yeah, there are multiple ways to get in touch with them with phone number, toll free telephone numbers, even for hearing impaired telephone numbers. So there’s a lot of ways to contact.

 

RT: Can I just say that was Complete Intelligence there from Tony just getting on the website and doing some live reporting for duty. Certainly did a great job at the Olympic Games are being held in Texas, Tony. And they weren’t vaccines available for the local population. And then you had thousands of people coming in, athletes who would get the vaccination. Do you think that would annoy people?

 

TN: I don’t think it would annoy people, I mean, Texas is open, we have sporting events and concerts and everything that are alive now. So I, I think Texans view is, look, if you want to get the vaccine, that’s totally fine. If you don’t want to get it, that’s totally fine. And so, you know, if a lot of people were coming in with vaccines, I think people would be fine with it. I don’t think they would they would be concerned if they knew that infected people were coming in. But if people were coming in, you know, checked with vaccines or without vaccines, I don’t think anybody would really mind either way.

 

RT: Quickly, do you think it’ll go ahead to.

 

TN: The Olympics, yeah, I hope it does, but I’m not optimistic, I mean, I’m going to say no at this point, but I really wish it would. The world needs something positive to focus on, and an Olympics would be an amazingly positive thing for us to focus on that issue.

 

RT: I think we all need something positive to focus on. Which one of you is the big Friends fan or are you both maybe.

 

SR: I like friends, but not a super fan.

 

RT: Tony.

 

TN: That was I was in my 20s when friends was out, so it was just kind of on in the background. It was kind of about people around my age. We had Seinfeld, we had Friends. I mean, the 90s was some really great TV. So it was good. It was a good show.

It was of the time Ross had girlfriends of different races. Ross, his ex-wife was in a same sex couple. Now you know all that stuff. So, I mean, I hear that criticism. But I think at some level, you would always do things differently if you could redo them. But at the time, I think they did a lot. You can’t see history through today’s lenses. You really have to look at it at a contemporary through contemporary lens. And at the time, they were doing a lot of.

 

RT: Yes. Thank you very much to both of you. Let us end the program, whether you like it or not, with a theme tune from friends.

 

Categories
Podcasts

What’s Next For Crude Oil, Gold, And Cryptos?

As US and other markets decouple in terms of recovery trajectories, should investors adjust their portfolio? BFM spoke to Tony Nash, CEO of Complete Intelligence, on the major selldown of cryptocurrencies, as well as his thoughts on oil, gold, and inflation.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/whats-next-for-crude-oil-gold-and-cryptos on May 21, 2021.

 

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Show Notes

 

RK: Well, choppy waters, to say the least. There is a little bit of a mixed day yesterday over in Asia. But right now, to talk more about global markets, we have Tony Nash CEO for Complete Intelligence for more insights here. Tony, good morning and thank you for joining us on the line. Now, it looks like the U.S. and other markets are beginning to decouple in terms of recovery trajectories. How do you think investors should allocate their portfolios according to this scenario?

 

TN: Well, obviously depends on the time, but I think that some action was taken yesterday in the U.S. around Fed comments as people were trying to decipher whether those comments were positive or negative. And today, I think they realized they were actually fairly dovish comments. So the U.S. is positioning itself to grow and other parts of the world say Europe and parts of Asia are still very conservative about opening until, you know, I think with the places that are being fairly conservative about opening, it really depends on investment, really depends on government assistance, monetary policy, you know, these sorts of things.

 

So investing in those markets depends on support that those companies are going to get and how how those investments will perform.

 

LM: Yeah, I’m just wondering, there has been increasing fears about inflation. Is that influencing or changing your views right now?

 

TN: Well, so, you know, we’re realizing that things like like lumber prices, which a lot of people talk about, that’s been a processing issue in sawmills. There’s a lot of raw lumber out there. Those prices in many cases are the same as they were like, say, 10 years ago. OK, it’s the process into their bottom and making issues in a number of other areas. One area that we’re keeping an eye on is crude oil, which I know is important later, of course.

 

And we’re not we don’t expect a dramatic rise in crude oil prices, partly because I still have six million barrels a day on the sidelines right now. So even if we saw a dramatic uptick in travel and other activity, power generation and so on, there’s spare capacity on the sidelines for a lot of countries to be holding down. So we don’t expect to see and short of having production cuts, we don’t expect to see dramatic oil price rises because that that supply will come on the market as needed.

 

RK: Right. And beyond crude, Tony, do you know crude oil in general is quite correlated to inflationary pressures and prices, but beyond crude oil, are you paying attention to any other commodities out there? Because, you know, we’re seeing a surge in all of them. Which ones particularly catch your eye?

 

TN: For industrial metals are the ones that have really rallied from, say, November or December through this month? What we expect is not pricing to continue to stay strong, but the rate of rise will will slow down.

 

OK, so we’ll continue, for example, to see high copper prices, but we don’t expect copper prices to rise at the same rate as they had been for the past five or six months. We see that across the board in a lot of commodities where we have seen really dramatic rises based on, you know, government spending, monetary policy and also uncertainty about the direction of the dollar when these things are positioned in or denominated in U.S. dollars. We’ve also seen over that same time, because it’s so going that in China we saw the Chinese renminbi appreciate pretty dramatically, which made the dollar denominated commodities really cheap.

 

And so there’s been accumulation of those commodities in China, whether it’s food or whether it’s industrial or metals. And we’ve seen that stuff accumulated in China because these things are really kind of pretty cheap for them in China in terms.

 

RK: And one more commodities. Want to get your views on here, Tony, is gold because it’s seen some strengthening over the last few weeks. In fact, you know, it was more towards the high single digits. Now it’s at the one percent range. Do you expect it to break into the green? And what kind of range do you expect for the year?

 

TN: You know, we do expect gold to continue to rise at least through August, August, September. We think that there’s kind of a sweet spot and people take a pause on, say, cryptocurrency. And as people look at some of these other metals and other commodities where the growth opportunity has slowed, we do expect attention to gold as well as kind of other inflation and currency risk type of focus will turn to gold as well. We expect there to rise through those then kind of a pause late Q3 and then we expect that to continue toward the end of the year.

So we’re not looking at a doubling of prices or looking at a know, low double digit type of price rises in.

 

LM: And Tony, twenty twenty one was supposed to be a bumper year for U.S. IPOs. Is it still buoyant or has sentiment turned more south?

 

TN: No, no, even seems like like Robin Hood starting to offer fractional IPO shares on their platform. So where IPO are typically restricted to a select few? We’re starting to see some things happen where where smaller investors are given opportunities in some of these IPO. So we do expect that to continue as long as investors are there to invest in IPO. And we don’t necessarily expect that that will taper off dramatically. We may see some hesitation if we see markets turn south in June, July, but we won’t necessarily see a dramatic taper off to the end of the year.

 

NL: So we have seen the major sell down of crypto currencies. How is the volatility affecting crypto companies like Coinbase and market confidence to gain legitimacy with institutional investors?

 

TN: Yeah, no doubt it’s hurting their credibility because cryptocurrency has kind of become a bit of a mockery over the past week or so, we assume on tweets and a number of other things. But I don’t necessarily believe that crypto currencies are a thing of the past. They haven’t been retired yet, but we do expect to see cryptocurrency is more regulation, more explicit regulation and kind of soft infrastructure around cryptocurrency like Coinbase that goes along with it. They’ll have the infrastructure to be able to help in that crypto investors who along with regulation and do just fine.

 

TN: So I don’t think crypto her dad the new not necessarily realize that they thought they may, but but I do think it’s still something that’s viable within the broad based interests.

 

RK: Thank you so much for your time this morning. That was Tony Nash, CEO of Complete Intelligence. And let’s take a quick look over at the coin prices right now. Bitcoin thing, a little bit of a recovery. It’s up two point six per cent now, forty one thousand dollars and on a year to date basis, up to forty one point six percent year to date, still far off from the 100 percent or 90 percent year to date gains we saw earlier this this year.

We take a look at Etha. It is now two thousand seven hundred and seventeen dollars, or seventy two thousand two hundred eighty dollars a coin up a little bit, point four percent year to date, up 275 percent.

 

NL: Yeah, very quickly as well. Taking a look at a piece of news, the first quarter of 2021 doesn’t appear to be working out in a week’s favor. According to the F.T., Quarterly losses almost quadrupled on year to over two billion dollars.

 

RK: We work not working. Yeah, that’s a headline in the making right there. The losses incurred as so far this year, three point two billion dollars in 2020. Revenue fell almost 50 percent on year from one point one billion to six hundred million dollars. And the company lost around 200000 customers from a year ago. And this, of course, all information, according to the Financial Times, because this is not a public listed company just yet. In fact, they’re looking to try and go public again later this year after their first failed attempt a year to be eighty nine point nine.

 

 

 

Categories
QuickHit

Crude oil: New super cycle or continued price moderation? (Part 1)

Energy markets expert Vandana Hari is back on QuickHit to talk about crude oil. Brent is nearly at the $70 psychological mark and is also a 2-year high. However, demand has not picked up to the pre-Covid levels. Vandana explained what happened here and what to look forward to in the coming year. Also, is crude experiencing supply chain bottlenecks like in lumber and other commodities and how oil demand will pick up around the world?

 

Vandana Hari is based in Singapore. She runs Vanda Insights and have been looking at the oil markets for about 25 years now. The majority of those were with Platts. She launched Vanda Insights about five years ago. The company provides timely, credible, and succinct global oil markets, macro analysis, mostly through published reports. They are also available for ad hoc consultations and research papers.

 

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This QuickHit episode was recorded on May 19, 2021.

 

The views and opinions expressed in this Crude oil: New super cycle or continued price moderation? QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: I want to talk about crude oil, because if we looked a year ago and we saw where crude oil prices were a year ago because of the Covid shock and we look at where crude is today, it’s something like two-year highs or something like that today. And we still have kind of five or six million barrels, we’re consuming about five or six million barrels less per day than we were pre-Covid. Is that about right?

 

VH: Yeah, absolutely. So we have had a Brent flood with the $70 per barrel psychological mark, it has not been able to vault it in terms of, you know, in the oil markets, we tend to look at go-buy settlements. So we’re talking about ICE Brent Futures failing to settle above 70 dollars a barrel? But it has settled a couple of times so far this year, just below, which was two-year highs.

 

And the man on the street, as you quite rightly point out, does end up wondering. And I’m sure people at the pump in the US looking at three dollars a gallon prices that hang on like the global demand is yet to return anywhere close to pre Covid. So why are prices going to two-year highs?

 

So two fundamental reasons. If you talk about supply and demand in the oil markets, the first one is the OPEC – Non OPEC Alliance is still holding back a substantial amounts of oil from the markets. If you hark back to last year when they came together in this unprecedented cutback, almost 10 million barrels of oil per day, cumulative within that group, they said they’re going to leave it in the ground because of the demand destruction.

 

Now, starting January this year, they have begun to so-called “taper.” Yes, people borrowed that as well in the oil market. All over the place. Yeah. So they’re tapering. But they’re doing it very, very cautiously.

 

So where do we stand now? They are still holding back almost six and a half million barrels per day. So basically two thirds of the oil that they took out of the market last year is still, they’re still keeping it under the ground. So that’s one main reason.

 

The second one is a bit, of course, demand has been picking up as countries and globally, if you look at it, I mean, we can talk about individual countries, but globally, you know, the world is starting to cautiously emerge out of Covid-related restrictions.

 

Economies are doing better. So oil consumption is moving up. But but some of, it’s not entirely that. I would say some of the the buoyancy in crude of late, and especially when it was, you know, Brent was a two-year highs, is because of a forward looking demand optimism. And when it comes to that, I think it’s very, very closely connected or I would say almost entirely focused on the reopening of the U.S. economy.

 

TN: OK, so. So this is a forward looking optimism, is it? I know into other areas, like, for example, lumber, which has been there’s been a lot of buzz about lumber inflation is because of the sawmills and with other, say, commodities, there have been processing issues and with, you know, meat and these sorts of things that have been kind of processing issues and bottlenecks in the supply chain. But with crude oil to petrol, it’s not, it’s not the same. Refineries are doing just fine. Is that, is that fair to say?

 

VH: That’s a very good point, Tony, to to just kind of unpick a little bit. Because what happens is when you hear talk of super cycles, commodities, bull run, and then, of course, we have a lot of indexes and people trade those indexes, commodity index, we tend to lump together, you know, commodities all the way from copper and tin, lumber and corn all the way to crude oil and gasoline and gas oil and so on.

 

But, you know, here’s what. You know. We could spend hours talking about this. But, but just very quickly to dissect it, I would say look at it in terms of you have commodities. And I would sort of lump metals and to some extent agricultural commodities in this one Group A and Group B.

 

So as I mentioned earlier, Group B, which is which is oil. Well, crude oil and refined products, to a large extent, the prices are being propped up by OPEC, plus keeping supply locked out of the markets. It’s very different from, as you mentioned, what’s happening in metals and ags and these kind of commodities where it just can’t be helped. So there’s supply chain issues, this production issues all the way from from Chile, where copper production all the way to even here in Malaysia, you know, palm oil, because workers are unable to return fully. Or in terms of even the the packaging, the storage and the delivery of it. So I think there’s a major difference there.

 

Now, the commonality here is, of course, all of these are seeing demand rebound. You know, that I agree as a commonality. Demand is rebounding. But I think it’s very important to remember. And why is it why is this distinction important is that you could argue that, well, if demand continues to sort of go gangbusters in terms of copper, tin, lumber, it will, for the foreseeable future, meet against supply constriction. So you cannot.

 

So accordingly, you can assess what might be the prices of these commodities going forward. They may remain elevated, but it would be wrong, I think, to sort of draw a parallel between that and oil, because in oil, I do believe OPEC non-OPEC are waiting. In fact, I don’t think they can hold their horses any longer, waiting to start putting that oil back into the market. So, you know, keep that distinction in mind.

 

TN: So there’s an enthusiasm there. So let’s say we do see demand kind of come back gradually, say, in the U.S., a little bit slower in, say, Europe. But China is moving along well and say Southeast Asia, east Asia is coming along well. The supply from the OPEC countries will come on accordingly. Is that fair to say?

 

VH: Absolutely. And when you talk about demand, again, I think there’s a sort of a bias in the crude futures markets, which tend to be the leading the direction for the oil complex in general, including the Fiscal markets, is that there’s definitely a bias to looking towards what’s hot right now, at least looking towards what’s happening in the US and getting carried away a little bit. Because when you look at the US, it’s a completely positive picture, right?

 

You base that, you see things around, you see how people are just kind of moving away. You’re removing mask mandates, people are traveling. And, of course, we’re getting a lot of data as well. The footfall in your airports. The other thing about the US is you have good data, right. Daily, weekly data. So that continues to prop up the market. But if you just cast your eye, take a few steps back, look at the globe as a whole. And, you know, sitting here in Asia, I can shed some light about what’s happening here.

 

No country is opening its borders in Asia, OK? People are, for leisure. If people are even not even able to travel to meet their family, you know, unless it’s in times of emergency, unfortunately. So nobody’s traveling. The borders are sealed very, very tight.

 

There is an air bubble, travel bubble between New Zealand and Australia. But, you know, nobody’s bothering to even check what that’s doing to jet demand. What do you think it will imagine? You imagine it will do.

 

And then you have Europe in between, which is, yes, again, it is reopening very cautiously, though. We’ve had the UK Prime Minister, Boris Johnson, cautioning that the travel plans for the Brits might be in disarray because of this so-called Indian variant. I don’t like to use that term, but this virus more transmissible virus variant. So it’s a very patchy recovery. It’s a very mixed picture, which is why I’m not that bullish about global oil demand rebound as a whole. You know, at least the so-called summer boom that people are talking about.

 

TN: Do you do you see this kind of trading in a range for the next, say, three or four or five months or something? Demand come, supply come, demand come, supply comes something like that.

 

So there’s not too much of a shortfall for market needs as kind of opening up accelerates?

 

VH: Very much so. I think, first of all, unfortunately, I mean, as individuals, of course, we like to be positive and optimistic. But with an analyst hat on, we need to look at data. We need to use logic. We need to overlay that with our experience of this pandemic, the past one and a half years.

 

Somehow, we’ve had a few false dawns, unfortunately, during this pandemic. We’ve seen that right from the start. When you remember the first summer, 2020 summer, some people said, oh, the heat and all that, the virus will just die away.

 

So, again, I think we need to be very, very cautious. I do think, unfortunately, that this variance and as you and I were discussing off air earlier, this is the nature of the virus. So I think there’s going to be a lot of stop, start, stop, start. The other thing I see happening is that it’s almost like, I imagine the virus sort of it’s moving around. And even if you look at India now, it’s just gone down in the worst hit states of Maharashtra and Delhi. But now it’s sort of moved into the rural area.

 

So I think sort of, unfortunately, is going to happen globally as well. The other important thing to keep in mind is, is vaccinations, of course, is very, very uneven. You know, the ratio of vaccinated people in each country so far, the pace at which the vaccinations are going and, you know, not to mention the countries, the poorer, the lower income countries.

 

So we’re probably going to see, you know, maybe a bit of start. Stop. Definitely. I don’t think we’re going to see national boundaries opening up to travel any time soon. And then exactly as you pointed out, we have this OPEC oil and then, of course, we have Iranian oil and we can talk about that separately. So there’s plenty of supply.

 

TN: So let’s talk a little bit about, let’s talk a little bit about the Middle East with, you know, first of all, with political risk around Israel Palestine. Is that really a factor? Does that, does that really impact oil prices the way it would have maybe 20, 30 years ago?

Categories
QuickHit

Inflation: Buckle up, it may get worse (Part 2)

Nick Glinsman and Sam Rines are back in this QuickHit episode special Cage Match edition about inflation, part two, where we start looking into things like raw materials cost versus processing and manufacturing bottlenecks. Also discussed are the wage inflation and labor availability and how long these impacts will last. And finally, we start talking about central banks. What will the Fed do? Will it do anything? When will it do it?

 

For those who prefer to listen to a podcast, here’s the Spotify link for you: https://open.spotify.com/episode/3CK3SNwMK97oWLy1DMRQnD?si=uV1As8VsTxSVrQNE0iYuiA You can also find us in other podcast audio streaming services. Just search “QuickHit”. Thank you!

 

Part one covered a lot around specific commodity inflation and why it’s happening.

 

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This QuickHit episode was recorded on April 28, 2021.

 

The views and opinions expressed in this nflation: Buckle up, it may get worse QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: What the people in the middle. So the manufacturers, what capacity do they have to absorb these price rises? What are you guys seeing when you talk to people when you read? Are you seeing that manufacturers can absorb the lumber prices, the copper prices and other things, or are they passing that directly along?

 

NG: Sorry, Sam. I’m jumping in here. The beauty of that question right now is there was a major headline, the Financial Times talking about margin compression of how US corporates are going to be increasing prices. It was today. You have the likes of Chipotle. We’ll go on to that. That’s a labor cost issue. But the other company, you know, J&J, various bare necessities manufacturers for nappies for kitchenware also they’re saying they’re going to have to put price pressure through to the consumer and as we were discussing just before we started, there’s the elasticity of price increases is very high.

 

The elasticity of price decreases is extremely low. And I would contend that this becomes a rolling, snowball effect as these prices get passed through to the consumer. There are other costs that will be passed through to which we can talk about later on labor side. But this clearly, one of the signals that our well worth watching, on the margins in the corporate reporting, and all of them are suggestive of higher prices to the consumer.

 

Then you look at the ISM prices paid. I have a chart, a model that looks at that versus the CPI. And if that sticks to what it’s done over the last couple of decades, it’s indicative of CPI, actually, the big figure having a getting up to somewhere around four, maybe even higher.

 

TN: Which was kind of a China 2011 scenario of four to six percent CPI.

 

NG: Correct. But also also the the process of decoupling, as long as it may be, that process has created a demand because of the supply shock.

 

There’s a supply shock in the system. The demand is adjusting there, too, so that work as additional demand to fill in the gaps, so if the decoupling replacement process is long standing, the demand is still there, it’s a matter and then catching up. There’s a price disparity caused by that.

 

TN: Yeah, we definitely have a mismatch, at least in the short term. And will those supply chains catch up? That’s a real question. Sam, what’s your view on that in terms of manufacturers being able to absorb these cost and margin pressures?

 

SR: So I’ll jump to the housing market as my example, which I think is one of the more interesting ones filtering, filtering through down into lumber.

 

A very close friend of mine in Houston is delaying the start of one hundred and ninety homes that were supposed to be going into, well… He has the pads laid. He won’t build those homes until lumber prices go down. It’s the largest backlog he’s ever had. And that got us talking and kind of working through the market. And when you look at the market for pine studs in the US, it’s an intriguing look into kind of where the cost pressures are coming through, where mills are making mills that make the two by fours are making an absolute fortune off of the disruption.

 

But if you own a pine stand of several thousand acres, the tree that you are cutting off of it is the exact same price that it was a year ago. You have seen none of the prices at all.

 

TN: So there’s not a supply, a raw materials supply issue. It’s a processed materials issue.

 

SR: Yes. Exactly. So it’s the supply chain breaking down. You didn’t have enough. You didn’t have the mills up and running for a couple of months. You had about 40 percent of the capacity offline. And that created a shock to the system that eventually will be sorted out at some point.

 

We didn’t destroy any capacity for two by fours. We’re building even at the current rate, we’re building one point seven million homes. That’s nowhere near what we were doing in 2005. And yet lumber is four times where it was. So, yeah.

 

NG: May I ask a question because you’re obviously in touch with that level on a micro basis? So one of the things that I’ve been told by several different sources is they don’t disagree with your number coming down eventually. The problem the homebuilders now have is labor shortage.

 

SR: That might be a problem in the northeast. That might be a problem in a kind of coastal problem in the US, where I have fewer contacts in construction. But in the south, there’s no labor shortage. Wages are still very strong. You have some projects that were delayed for large oil which created a supply of able bodied plumbers, electricians, where there’s a shortage elsewhere. So I would say that’s probably very true for parts of the country.

 

There’s anecdotally, Beth. Beth Iron Works? One of the major boat docks in the north, northeast is driving around an RV trying to recruit people to come, trying to recruit welders. That was a problem before Covid that was and will remain a problem. The trades will be a big issue. Common labor, particularly in the South, does not appear to be an issue. That is an issue in the north.

 

NG: I’ve heard it’s an issue in Florida, actually, which is back to you point about coasts. Sorry, I interrupt.

 

TN: We’re in Texas. It’s the Promised Land. I mean, I think you…

 

NG: Would agree with you on that one.

 

TN: OK, so we’ve gone long. I know these are very detailed issues, but I’m going to ask another question. I did ask for some questions over Twitter.

 

So one of them came in from Brent. This was around supply chain disruptions, which we’ve already talked about. There’s another from Jerrett Heath. He says, “Will it be velocity or magnitude that causes the Fed to react to inflationary pressures?”

 

So what do you guys think? Are we going to see kind of the magnitude inflation push the Fed to react or what’s going to push the Fed to react to start to taper a little bit, if they do at all?

 

NG: I would say both at the same time. My great fear is that there is, and this was actually covered by the Wall Street Journal, but I’ve written and spoken about this as well. I sit there looking at the Fed becoming reactive rather than proactive, and the punch bowl analogy is gone, and that worries me enormously because they have great confidence in something that they’re forecasting as transitory and we know what their forecast record is, and if you really want a bad forecast record, just go to Frankfurt and see what the ECB is all about.

 

Now, it’s interesting to me that the conventional wisdom, the consensus forecast is for tapering to the end of this year as opposed to next year. It seems like the more people talk about the inflation pressure, the greater it is. But I wonder whether we will get tapering. That’s what worries me about the Fed.

 

I’ve been really working hard on looking at what Claudia Sahm has written and said over the last couple of weeks. She wrote an op ed in The New York Times and Bloomberg. She’s said… She’s an ex-economist for the FOMC and the Board of Governors, actually. And you get the feeling that the priorities are unemployment with equity, racial equity as opposed to equality. Furthermore, you get the feeling that financial stability… Both of those more important than inflation.

 

Now, if that’s the case and we start to see any signs of a taper tantrum, I worry that this Fed is going to do a proactive. Either stop the idea of tapering or do a twist or something that eases this market. I think they’ve got themselves, we have a very political Fed that, if it’s reactive by nature, it could be procyclical by action. And that’s where I find I really worry about it.

 

Then, we’ve got Powells term expiry February. Well, Lail Brainard is one of Janet Yellen’s favorite people. And if she gets in, we’re going full MMT. So those are my concerns about the tapering, its focus on financial stability and the risk that reactive policy will be procyclical.

 

TN: Interesting. OK, that’s great. Thank you. Sam. Help me understand, what’s your point of view on this? What gets the Fed to react and how do they react?

 

SR: Yeah, so I would go with neither of those will get the Fed to react. It’s not a question of should they or, you know, what they think they should do. But it’s a question of will they. And they won’t react to inflation. They do not care about the magnitude. They do not care about the velocity. And they won’t care for at least another nine months because we know the combination that they’re going to look through, the combination of basic facts and supply chain disruptions, at least through the end of the third quarter. They do not care. And then they will start the clock on their four quarters of inflation above or at two percent, and they want full employment before they raise. That’s four percent at least on measured unemployment.

 

So I would say, it, whatever you want to look at for inflation numbers, they don’t care. And maybe they should, but they don’t.

 

TN: So they don’t care yet. Or they don’t care period?

 

SR: They don’t care, period, until it’s been until it’s been a year of around 2 percent in this summer and fall don’t matter to them.

 

NG: Let me add one or it’s too late.

 

SR: Yes.

 

NG: I’m with you. You and I seem to agree. I mean, that is exactly the impression I got from Claudia Sahm’s words. I mean it was just straight up. And that’s where I worry, you know, I have a huge respect for Lail Brainard. She is a very, very accomplished economist. But she’ll go full MMT is what Janet Yellen wants. It’s what the Democrats want and I really worry about that.

 

Plus, you combine this with here we go back to Larry Summers. You combine this with this fiscal effort and one thing that, so in American terminology, progressive policies typically have historically been inflationary. In English terminology, is what I am, these socialist policies have a history of inflation. More government intervention, more pushing against the string of inefficient allocation of resources. Labor restrictions, minimum wage, universal basic income. It all leads to in one direction.

 

So I agree with you, Sam. I think the Fed doesn’t care and I think, hence, the reactive. When they react, it’s going to be, in my view, potentially too late. It’s already started.

 

TN: So I just sent out on Twitter a chart that Sam published about three weeks ago from another source on the negative impact of fiscal stimulus, and as we end up ’21, like in Q3, Q4 of ’21, that fiscal stimulus starts to have a negative impact. And certainly in ’22, the US fiscal stimulus has a negative impact.

 

So, you know, there are a number of things to worry about, not just with inflation, but with the efficacy of some of this fiscal stimulus that’s going into the market.

 

So with that, I want to thank both of you guys. Honestly, we could talk about this for hours. I would love to have this discussion with you guys again, you know, even in a couple of weeks to talk about other issues. So let’s see where this goes. But thank you so much. Thank you very much for your time on this. I really appreciate it.

 

We’ll get this out as quickly as possible. Thanks to everyone who’s watching this. Thanks for everyone who submitted questions. For those who did submit questions, for the questions we used, we’ll give you guys a month of CI Futures and look forward to the next time. Thanks for joining us.

 

Categories
QuickHit

Inflation: Buckle up, it may get worse (Part 1)

Nick Glinsman and Sam Rines are back in this QuickHit episode special Cage Match edition about inflation. Where are we in the inflation and what is the horizon? Both guests have different views and they explain exactly why they have such views. And what about China’s manipulation of CNY through hoarding metals and commodities? Is that a valid way of looking at inflation?

 

Part 2 of this discussion can be found here: https://www.completeintel.com/2021/05/06/quickhit-inflation-part-2/

 

Want the audio version? Play this on Spotify or find us in other podcast players. You can also find us in other podcast audio streaming services. Just search “QuickHit”.

 

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This QuickHit episode was recorded on April 28, 2021.

The views and opinions expressed in this nflation: Buckle up, it may get worse QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: Today we’re talking about inflation. It’s been on everyone’s mind for the last couple months and we’ve got two macro geniuses to talk to us about it today. We’ve got Nick Glinsman from EVO Capital and we’ve got Sam Rines from Avalon.

 

We look at copper. We look at a lot of these indicators of inflation and it’s been on everyone’s mind over the last few months. A year ago, people were worried about deflation. Now the worry is inflation. Obviously we’ve seen a lot of monetary and fiscal policy in the interim.

 

So, Nick, can you give us your view on where we are with inflation and what that looks like over what horizon? Is it months? Is it five years? Is it, you know, how does this play out?

 

NG: The horizon is a little bit tougher. But my my thesis is based on looking back at historical precedence and I focused on the LBJ Vietnam War spending, combined with his great society fiscal spend, which ultimately led in the early 70s Paul Volcker’s fame containing huge inflation there was at that period.

 

And I’m sitting here having spent the last year but actually building this thesis up for a couple of years thinking that the equivalent of the Vietnam expenditure is Covid and the relief spending that’s been has combined Trump and now Biden, and then the great society equivalent would be Biden’s green infrastructure spending which, I slightly tongue-in-cheek called the green ghost plan, which is enormous. Amazing.

 

When I find myself agreeing with Larry Summers on inflation. I think his odds of a third in terms of this creating inflation, I would suggest a higher. In terms of timeline, it took five to seven years for the inflation to really kick in during the 60’s leading to Volcker. I think this time around, it will be much quicker due to the differences, a lot of globalization and supply chain management.

 

TN: Sam, can you kind of give us your view of where we are in inflation and what’s the duration that you kind of expect this to play out?

 

SR: I have a very different view. If you look at the lumber market, copper, et cetera, these are things that tend to sort themselves out rather rapidly. Being in Houston, the best cure for high prices and energy is high prices. We will pump more if oil ever goes to 80. It’s very similar with lumber and copper. Most of the mills are becoming much more efficient in lumber, for instance.

 

So we will see that begin to roll over and that will roll over in a very meaningful way as we begin to work through these supply chain issues that we know are coming in the summer and we know are probably going to persist in the fall. But as we get into the fall and we get into early 2022, even if we have a couple trillion dollars infrastructure, it’s going to be spread over the better part of 10 years infrastructure.

 

It’s not a fast spend and it will not save us from the fiscal cliff. It will not save us from the lower employment numbers that we’ve been seeing on an overall basis. Yes, unemployment is moving lower, but employment is not keeping up with the employment figures.

 

Once the economy begins to have to stand on its own two legs, even if it has a touch of a tailwind from the government, it’s still going to be very difficult to continue to see consumption going through the roof, continue to see the types of disruptions that we’ll see for the next six to nine months in terms of supply chain that will have one-off price implications.

 

But that to me says we’re probably getting towards the peak of the sugar high as we get into the summer and the other side of the sugar high is going to be very painful in terms of going back to a one and a half to two and a half percent growth rate in the US inflation that will be very difficult to get higher simply because it’s difficult to have sustained disruptions in supply and demographics that aren’t changing anytime soon. So we will continue to have a number of those headwinds. And I think that’s what the US 10-years is telling you, US tenure at 1.5 is telling you that the market’s looking through this summer and saying the next decade doesn’t look as good as the last decade in a lot of ways.

 

It’s something to at least keep in the back of our minds that the Fed doesn’t have great control over the 10-year. The fed has great control over zero to two-year timeframe. But nothing beyond that.

 

TN: Okay, so let’s look at common areas. It seems to me that both of you see inflation continuing to rise maybe not in terms of the rate of rise but certainly continue to rise until, let’s say say Q3 Q4? Do we at least have comic around there?

 

SR: Yeah.

 

NG: Yes, absolutely.

 

TN: When we look at some of the the pressures in inflation, part of my assertion has been, and I’m sure you’re both going to tell me I’m wrong, but as we’ve seen the CNY strengthen, my hypothesis has been with a strong CNY, Chinese manufacturers are stocking up on industrial metals, food, other things because it’s in dollar terms. They can get it pretty cheaply and they’re waiting for CNY to devalue again when their buying power will decline.

 

What I’m hearing is that a lot of these things are really going to China to be hoarded and as a play on a potentially devaluing CNY. What do you think of that hypothesis aligned with a lot of the central bank easing? Is that a valid way of looking at inflation? Meaning this is stockpiling more than it is demand pull?

 

NG: My view on China is that, if you look at food firstly, there is a food shortage crisis. And we all know what the CCP are most scared of, which is society unrest. And we can take the examples of the Arab Spring, food is the key. But I also wonder whether the Chinese are stockpiling in anticipation of decoupling? I think of rare earths, of which they have a large control of the refining thereof being problematic. Semiconductors, there is an issue there.

 

So if I extrapolate further, my view is I think the supply chain issues are much longer standing now because of various geopolitical forces creating a decoupling with China for sure. And we have this Anglosphere grouping that’s clearly beginning to take shape, which now looks like that will include India because of the health crisis there.

 

If we look at that, then the question is what happens with Europe? Again, I think that’s part of the supply chain problem whilst they decide which site they go to. Is it china-centric or is it anglers-centric?

 

So I think the supply chain issue is much longer standing, hence I suspect that we’ve got China positioning, because nothing goes on which in China without the government knowing about it, quite frankly. In terms of anticipating a supply chain issue, because all the commodities they’re importing they’re short off.

 

TN: Okay, Sam, first of all, what do you think about my hypothesis and then Nick’s qualification around the supply chain issues being much longer term on the back of decoupling?

 

SR: I would take the argument that decoupling isn’t an action. It’s a process, and the process takes a very, very long time. And that creates in my mind a much longer time frame for the United States to build out its portion of the supply chain, for instance semiconductors, et cetera. So I would say I don’t disagree that there is a decoupling underway. In my opinion or my argument would be that it will take much longer than a few years to really get that process to move and it’ll be particularly under this administration a much more diplomatic and less blunt force tools than we’ve seen in the past being used. So I don’t disagree with the supply chain eventually being at least somewhat disentangled from China. I would just argue that it will take quite a while to really begin to become an issue unto itself.

 

On your point that China stockpiling, that does appear to be happening. It does appear to be a hedge against a weaker CNY to come including with lumber. One of the reasons that lumber prices are spiking is because China’s buying a lot of lumber in the US. That is a significant problem. And I would point to, when they stop stockpiling, that tends to have a significant effect on the price of commodities in the opposite direction. We’ve seen that with copper a couple of times during their infrastructure builds.

 

The interesting thing right now is you’ve actually seen a pullback from infrastructure spending. From the peak in China, they’ve begun to do their form of policy tightening on that front already. Suspected will continue at least on the margin and that will be a significant headwind for those commodities that have been stockpiled when less of them are being used on the margin as well. So that that does play into a 2022 disinflationary type environment versus 2021.

 

TN: Given that we have all these different pressures, whether it’s supply chains, whether it’s stockpiling, whatever it is, what the people in the middle, so that the manufacturers, what capacity do they have to absorb these price rises? What are you guys seeing when you talk to people, when you read? Are you seeing that manufacturers can absorb the lumber prices, the copper prices and other things? Or are they passing that directly along?

Categories
Visual (Videos)

Supply Chain Innovation, Transformation, and Sustainability

How can leaders and finance teams enable business growth, innovation, and resilience through supply chain management (SCM) and digital transformation? And, how does sustainability affect supply chains? To answer these questions, we spoke with Jon Chorley, Chief Sustainability Officer and Group Vice President of Oracle, and Tony Nash, CEO & Founder of Complete Intelligence.

 

This video interview first appeared and originally published at https://www.cxotalk.com/video/supply-chain-innovation-transformation-sustainability on April 17, 2021.

 

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The conversation includes these topics:

 

Jon Chorley is group vice president of product strategy for Oracle’s supply chain management (SCM) applications and leads the team responsible for driving the business requirements and product roadmaps for these applications. Chorley is also the chief sustainability officer for Oracle.

 

Tony Nash is the CEO and Founder of Complete Intelligence. Previously, Tony built and led the global research business for The Economist and the Asia consulting business for IHS (now IHS Markit).

 

 

Show Notes

 

Michael Krigsman: We’re discussing supply chain innovation and transformation and sustainability with Jon Chorley of Oracle and Tony Nash of Complete Intelligence. Jon, tell us about your role at Oracle.

 

Jon Chorley: I run the supply chain management strategy group at Oracle, responsible for our overall investment priorities and directions for our supply chain solutions. I also have the chief sustainability officer role at Oracle where I help coordinate all of our sustainability policies and practices for the Oracle Corporation and help drive some of those ideas and thoughts into the products and services we deliver to the market.

 

Michael Krigsman: Tony Nash, tell us about the focus of your work.

 

Tony Nash: Complete Intelligence, we’re a globally integrated and fully automated artificial intelligence platform for cost and revenue proactive planning. We do forecasting for enterprises and markets in areas like continuous cost budgeting, continuous revenue budgeting, automation of certain, say, forecasting tasks. We also offer agile budgeting and forecasting.

 

We measure our error rates, so that’s important that someone is planning, especially around supply chain. We’re trying to help people reduce the risks around their future costs.

 

Supply chains are very complex: time, cost, quality, all sorts of considerations. Our focus is on the cost element of it, and there are many other things and why we’re working with Oracle. They have so many other things to bring to the table that try to complement them on that side.

 

Michael Krigsman: You met Jon through the Oracle startup program. Just briefly tell us about that.

 

Tony Nash: Oracle for Startups program is a fantastic way for early-stage companies to integrate with the Oracle ecosystem. There is the Oracle technology product side of it, but there is also meeting people like Jon, meeting people like his colleagues, and the Oracle marketing team, Salesforce, and product teams. Amazing opportunities to understand how an organization like Oracle works and how a company like Complete Intelligence can come alongside them and enhance Oracle’s end customer experience for the better.

 

 

How did supply chains function during the disruptions of 2020?

 

Michael Krigsman: Jon, during the last year, supply chain became a household topic for pretty much everyone.

 

Jon Chorley: Yes.

 

Michael Krigsman: What did the last year tell us about the nature and the reality of supply chains?

 

Jon Chorley: Well, that they’re central to everything that makes the modern world. When you see an empty shelf and realize it’s an issue with the supply chain. Or you see a run on a product as some shortage or some challenge in some way. People now understand that the complicated infrastructure that brings those products to them is the supply chain.

 

As we’ve gotten into the more recent months where we’re looking at the vaccine distribution, people understand that yes, it’s a technical problem to produce the vaccine, but it’s also a supply chain problem to get it in people’s arms.

 

All of those things, I think, have helped take the supply chain from the back office, from the folks like Tony and I who work in it day-to-day, into the board room, which I think is very important. But also into the dining room. People now understand the importance and centrality to efficient supply chains.

 

Michael Krigsman: Jon, give us some insight into the kinds of weaknesses that this last year exposed in how we handle supply chains.

 

Jon Chorley: I think that there are a couple of areas there that I’d point out. One is we had a very uncharacteristic demand shock. There was a real change in short-term demand.

 

Some of that was upside. A lot of charcoal sold to power the grill. A lot of toilet paper.

 

Some of it was downside. Restaurants challenged, hospitality, and so on.

 

Those demand shocks forced people to look at different ways to look at their traditional forecasts. That is supportable by the kind of technology Tony and I can help deliver, but it does require people to look carefully at how they’re forecasting their demands. That’s one angle.

 

Another angle, I would say, is the overall concern about resiliency. A lot of folks looked at ways of single sourcing, for example. Maybe relying on goods out of Western China, for example.

 

All of those things had a lot of challenges, and that forced people to look at, was the single-sourcing strategy driven by cost only the right answer? Did they need to look at A) maybe simplifying their product lines a little bit, so they had more flexibility, and B) looking at alternate sources of supply? I think resiliency came a lot more to the fore.

 

Tony Nash: We’ve had even companies like semiconductor companies (who have been based in Asia) start to build facilities in the U.S. so that they can regionalize some of those supply chains and de-risk the downturn impacts of future shocks like this. Electronics manufacturers, other people who are assembling goods, or even some primary goods, are regionalizing their supply chains so that they don’t see huge impacts or any future issues like COVID or other shocks.

 

There’s at least a little bit of a buffer by region, which saves. It’s greener in terms of saving on the sea freight fuel and that sort of thing, but it also helps cushion any shocks on the supply side so consumers can get what they need when they need it.

 

 

Challenges associated with overseas manufacturing operations

 

Michael Krigsman: Jon, I’ve heard you talk in the past about the inherent challenge of manufacturing goods overseas (in China, for example) and the timeliness of getting them here in the U.S.

 

Jon Chorley: It has a lot of advantages in terms of costs, scale, and so on. But it does bake into your supply chain a certain fixed amount of time. That is fine if you have predictable demand. But if you have variable demand, it becomes a lot trickier to manage.

 

The same is true really of the innovation cycles. The speed with which you may want to innovate can be constrained by working those things from points of consumption (let’s say Europe, North America) and points of production (let’s say the East, China, Vietnam, and so on). Those are factors folks are considering.

 

I think, in some areas, certainly advances in things like automation and technologies like 3D printing, rapid prototyping, those things are changing the equation a little bit in terms of what constitutes the most cost-effective or the most efficient, or the most responsive approach to manufacturing. I think you’re going to see those factors gradually have more and more of a play as people develop new ways to balance those equations.

 

Tony Nash: Michael, that’s interesting because, as we look at how the history of supply chains have evolved from keeping POs on 3×5 notecards 30 years ago to the digitization of that, it started with EDI (electronic data interchange) from, say, the ocean lines and the airfreight firms so that you knew where your package was, all the way down to today where you have everything kept, let’s say, in a bill of material within an ERP system or a supply chain system.

 

What people have been doing for the past few years is really bill of material versioning, where you’re running scenarios on the same product configuration, of bill of materials for multiple locations, to understand where they should make a certain good. Those considerations are allowing people flexibility. They can make the time and cost tradeoffs to look at when they can have goods in a market, whether it’s seasonality or whether it’s some disruption or whether it’s some demand pop for some reason people may not know. Allowing people to run multiple bills of material or versions of bills of material allows them the flexibility to identify what they should produce where and what it should be made of.

 

Michael Krigsman: It sounds like this is a data and analytics problem.

 

Tony Nash: It is, and the way things have been done typically is, as a manufacturer, you sign a longer-term agreement for your raw materials with a vendor. They provide that for you to a certain point. You make it in factory A somewhere and then ship it out. Of course, there is not necessarily a single factory for any large company, but it’s a well-worn path.

 

We’ve had an atomization of that with mini manufacturing, or regional manufacturing, flexible manufacturing, so people can have localized versions or, like I said, seasonality. These sorts of things. Manufacturing and finance teams can only make those types of decisions with data and with automation. It’s a simpler way on how to make better business decisions.

 

 

Digital tansformation and sustainability in supply chain

 

Michael Krigsman: You need clarity around the goals and the strategy. You need the right kinds of data. Then you need the cultural willingness to innovate and do things differently. Is that an accurate way of summarizing?

 

Jon Chorley: I agree. I think you need to have some idea of where you’re going. Although, that probably is going to change. But you need to have that idea. You need to have the information, as Tony has discussed, that helps you navigate that path.

 

Then you need to be able to course-correct because we live in the real world, and nothing quite goes the way you expect it to. You need to be able to constantly course-correct.

 

Like I say, if you have a great set of headlights, you can see what’s coming. You’re coming to a cliff. If you have no brakes and no steering wheel, it’s a huge problem you’d rather not know.

 

The ability to course correct is like having brakes and a steering wheel. You need to be able to make those adjustments as things change around you. That means flexible systems, flexible processes, a willingness to look at new ways of doing things, cultural changes. All of those things become important.

 

Michael Krigsman: Tony, I have to imagine you spend a lot of time thinking about the sources of data as well as the machine learning models and other types of models that you create.

 

Tony Nash: I get excited about things like data governance, but most people don’t. I get excited about it because I understand that it helps to have much better forecasting applications and tools to make those decisions.

 

Yes, we’re thinking about the granularity, the frequency, the level of detail people have. Are they using the data that they have to make decisions today because it’s not just, let’s say, a cultural change of let’s rely on automation of things like forward-looking views or forecasting or proactive planning? It could also be a cultural change: are we looking at our data to make our decisions? How much of our data are we looking at? Are we looking at maybe the error rates of the way we plan? Are we looking back on that from time to time?

 

Although that may seem mundane and small, it’s actually very big for things like digital transformation because you have to take inventory of what you’re doing today so you can plan where you’re going tomorrow. As Jon said, it’s never going to go exactly to plan – never. I wish it would, but it never does. You have to understand yourself well today so that you can identify what’s possible.

 

Michael Krigsman: Jon, we’ve been talking about the complexities of supply chain. Let’s shift gears slightly and talk about the complexities of sustainability. How does sustainability intersect supply chain?

 

Jon Chorley: Most people would agree that supply chains are about making and moving physical goods around the world. That is a huge part of what’s impacting the environment. It’s a huge impact on sustainability.

 

The way we design those supply chains, historically, has been what I would call a linear supply chain. Which is we make a product, we sell a product, we forget the product. We then make another product, sell that product, and forget that product. It’s a fire and forget mentality, if you like – to some degree.

 

If we want to be sustainable, we need to think about the full lifecycle of those products and how they get recycled back into the forward supply chain. As we progress into the future and start thinking about these things more — and we’re required to by the markets, by regulations (potentially), and by what constitutes good business — we will increasingly move towards adjusting our supply chains to be more circular. That is, looking at the full lifecycle of the product.

 

That begins with how you design it. That’s going to be a fundamental change in the way we think about all supply chains.

 

Advice on supply chain transformation for business leaders

 

Michael Krigsman: As we finish up, Tony, can you offer advice to business leaders and finance teams who are listening to this who say, “Yes, we want to change, transform our supply chain, but where do we even begin? It’s such a daunting challenge.”

 

Tony Nash: I would say, really start with the easy stuff. Get some successes. Do a pilot. Then you can accelerate it very quickly.

 

Data scales very quickly. Technology scales very quickly. But your team may be uncomfortable with digital transformation, especially around supply chains. Help them see some quick wins and then push forward as quickly as possible after that.

 

Michael Krigsman: Jon, you discussed earlier the cultural dimensions of supply chain transformation. It’s really important, so just share some further thoughts on that and advice that you have for folks who are listening.

 

Jon Chorley: I think any change is at least as much cultural as it is technological, and the people who implement those changes are key to its success. I think part of what’s needed is a willingness to understand that the way you did things in the past may not be the way you need to do things in the future.

 

Quite often companies, for example, feel that they have a certain special way of doing a process that’s absolutely required, and they hold onto that even though there is really no business differentiation for them to do it that way. They’ll invest a lot of time and energy to duplicate that on a new platform.

 

We always encourage people to step back a little bit and leave behind some of those preconceptions. Not everything is your secret sauce. Your secret sauce is a little bit on the top. It’s not stuff on the bottom.

 

Leave behind those preconceptions. I think that’s probably the single biggest cultural shift.

 

Then the other point we mentioned earlier is board support. I think that’s top-down. Having that support from the upper levels of the business is critical to any large-scale transformation.

 

I think the great thing, if there is a great thing from 2020, is that boards are aware now of the criticality of supply chains in their business and are probably more open to those kinds of conversations. Those difficult conversations from supply chain professionals with their board. Now is the time. The folks that make the investments now are the folks who are going to benefit from the uptick that we all hope is coming.

 

Michael Krigsman: Jon Chorley and Tony Nash, thank you both for sharing your expertise with us today.

 

Jon Chorley: All right.

 

Tony Nash: Thanks, Michael.

 

Jon Chorley: Thank you so much. Great talking with you all.

 

Tony Nash: Thank you.

Categories
Podcasts

Could This Be The Tail End Of The Bull Run?

In this BFM The Morning Run episode, Tony Nash explains what’s happening in the US markets, particularly the tail end of the bull run. Will value stocks improve now as compared to the growth stocks? How about stay-at-home stocks VS cyclicals? Also discussed are currencies, USD against the Japanese Yen and Chinese Yuan, and the labor market.

 

This podcast first appeared and originally published at https://www.bfm.my/podcast/morning-run/market-watch/could-this-be-the-tail-end-of-the-bull-run on April 1, 2021.

 

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Show Notes

 

WSN: Good morning, Tony. Now, is it likely that the U.S. indices will run out of steam for the moment? I mean, pausing to take stock of the earnings, are equity markets gravitating to what’s stay at home stocks or cyclicals?

 

TN: The problem with where we are now is that all value was stretched. Monetary policy and stimulus have really pushed money into equity markets as the remaining stimulus checks are distributed, meaning a lot of those stimulus checks are in the mail right now in the post going to homes in the US. So there’s a lot of investment expected and pushing against maybe the downdraft in equity markets. So I don’t think it’s really a question of stay at home versus cyclicals. It’s really a question of where is that value?

 

I don’t think it’s a sector question. It’s really an individual stock picking question. And that’s the problem. It’s not a sector market. It’s not a market wide phenomenon. We really have to understand where there is value because we’re in the very tail end of a bull market.

 

PS: Previously, it was the long and now five year Treasury treasuries are inching up. What impact will an upward shift of the whole yield curve have on equities?

 

TN: I think we’re seeing equities try to climb higher, but we’re not quite getting. The five year is up over five percent today on an incremental basis was up five point six percent. The 10 year is up two point three percent today. So, you know, there are a lot of risks out there. Ongoing Covid risk. France just closed down again today. There are geopolitical risks with the US and China and other geopolitical risks, of course, Syria and so on.

 

Iran, business supply chain risks. So, you know, with yields rising and the pressure on equity markets to rise as well, we believe that there’s going to come a point where equity markets break and we’re going to start to see see a decline in equity markets. So yields will rise in the U.S. and equity markets will inevitably decline, and that will likely bring some other global markets with it.

 

WSN: OK, Tony, let’s shift the conversation to currencies, because the U.S. dollar has really made some strident gains against both the Chinese yen and the Japanese yen. I just want to know, why are these two currencies taking such a beating in particular?

 

TN: Well, both currencies strengthened quite a bit in Q3 of twenty twenty and stayed strong until recently. CNY had been below seven and a bit well actually just above seven and it climbed to almost six point four versus the US dollar. So there’s been a lot of strength in both, as you say, Chinese and Japanese currencies. What’s happened while we’ve had those depreciated currencies is an accumulation of inventories of commodities like industrial metals. We’ve seen the copper price rise dramatically, for example.

 

And so as we see treasuries rise in the US, and that brings dollar strength, we’re seeing those manufacturers and those guys who’ve been building their commodity inventories in East Asia really slow down on those purchases and their future commitments. So we’ll likely see a lot of those currencies stabilize and weaken a bit more we don’t expect. A dramatic weakening from here, we don’t expect the US dollar to appreciate dramatically more, say, for the next few months. So we’re kind of in a range, we believe, for both.

 

We do see the CNY, for example, devaluing to say six point six to six point seven. And then, you know, we’ll kind of stabilize in that range unless there’s a dramatic impact.

 

PS: So a correction is in inventory levels readjust. Can I just shift your attention to oil? Because oil prices are at levels near the break even point for US shale producers. Are you expecting to see a resumption of shale activity this year?

 

TN: Well, yeah, we you know, living in Texas, we see a lot of shale activity here. So we do expect it to start slowly. But that business runs in a way where if we’re chasing price, more of those shale firms will come online pretty quickly, actually. So, you know, with the ability for shale to turn off and turn on so quickly, we believe that the prices will be range bound if there’s upward price pressure, you know, all things held equal.

 

If there’s you know, if there isn’t a major geopolitical issue in the Middle East or isn’t a major geopolitical issue in Asia or something, we think that will be fairly wrage range bound as those as those guys come back online. The shale producers.

 

WSN: Meanwhile, Tony, U.S. numbers, job numbers excuse me, are out on Friday. Are they expected to show a robust recovery in labor markets, in your opinion? Like what sectors grew the fastest in terms of employment?

 

TN: Well, you know, we’re starting to see quite a lot more capacity in airlines, although we don’t expect a lot of hiring there. The services around, say, travel and hospitality, they were devastated in twenty twenty. And we expect some of those jobs to come back online. We expect to see some restaurant jobs, some of those services jobs to come back online. That’s where we typically see these things come back first, relatively kind of lower wage, but more flexible workforces.

 

And so we’ll see activity there first. Tourism in the US obviously still isn’t up to what it was, but we have started to see some impact back in tourism. So I would expect to see some some interesting numbers there.

 

WSN: OK, thank you for your time. That was Tony Nash, CEO of Complete Intelligence, sadly reminding us that this is maybe the tail end of the bull run that we had been enjoying.

 

It was a very short one, is that it honestly, in March 2020 when markets collapsed and then because of the concerted, synchronized monetary policies that we saw around the world, central banks really pushing rates to ultra low equity markets rallied and rallied till now.

 

So he thinks we’re in the tail end and we should stop beginning to look at value stocks as opposed to growth stocks.

 

PS: And I think specific sector specific stocks, in fact, actually.

 

WSN: Yeah.

 

PS: It’s kind of very good.

 

Go for the jugular on specific things.

 

WSN: Yeah. I think you really do need to take a very bottom up approach as opposed from the top down approach. If you’re talking about the tail end of a bull cycle, what is also worrying is that he does say that with increasing yields in the U.S. and even on the shotted to bonds, which is the five year bonds, lightly equity markets, those are going to face another round of correction. And it’s not just going to be the U.S. it’s going to be other global markets as a result, because let’s face it, we take the cue from the U.S., right?

 

PS: Yeah.

 

WSN: If there is a shock there, there’s a shock around the world.

 

But what does it mean for Malaysia markets? Because yesterday we had a really terrible, terrible day.

 

And when I look at Bloomberg now and I’m trying to understand what caused the decline, it was really very much glove driven. Topcliffe hoteling, super Max, all coming under selling pressure as a result, took the index along with it, saying it was also the case for the telco sector. Zaatar was also down. Maxi’s was also down. There was actually no stock among the IBM, Kilsyth, the three component stocks, none were in the green. So clearly bad day.

 

We were down two point to two percent. And on original, on a year to day basis, we are actually down more than three percent.

 

PS: It’s incredible. I think also the conversation about currency is going to play. So we were talking to Tony about Japan and China. You heard and we saw disconsolately in Turkish I now emerging market currencies are going to all kind of a fall out in the short term.

 

WSN: Is there going to be a question of, you know, shift from emerging markets into developed markets? That’s the big question. But in about a few minutes, in light of April Fool’s Day, we’ll be speaking to resolve. Then Gizzle, comedian and the co-founder of Crack House Comedy Club. Stay tuned for that BFM eighty nine point nine.