Tuesday links: a geopolitical rift

BooksAn excerpt from Scott Patterson's "Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis." ( from "The Uncertainty Solution: How to Invest with Confidence in the Face of the Unknown" by John Jennings. ( insights from Scott Patterson's "Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis." ( OpenAI-Microsoft ($MSFT) partnership is not without conflict. ( Salesforce ($CRM) is position itself for the AI revolution. ( ($ACN) is planning to spend big on AI. ( inside Goldman Sachs ($GS) is growing. ( this activist investor is facing off with John Malone over Comscore ($SCOR). ( fintech lenders abet widespread PPP fraud? ( are still toting up the costs of Covid-19 pandemic relief fraud. ( Japanese officials are doing to boost the stock prices of depressed companies. ( is reopening its office in Japan. ( Thompson talks with Andrew Yeo about falling global fertility rates. ( registrations in China keep falling. ( consumer inflation ran at 4.0% in May. ( shelter prices will drive the next leg down in CPI. ( a plain vanilla term spread model says about the prospects for a recession. ( on Abnormal ReturnsResearch links: time period sensitivity. ( you missed in our Monday linkfest. ( links: paying for advice. ( you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. ( mediaWhy platform owners keep making the same mistake. ( Athletic is turning its back on its founding ethos. ( is at war with itself. (»»

Category: blogSource: abnormalreturnsJun 13th, 2023

Tuesday links: a geopolitical rift

BooksAn excerpt from Scott Patterson's "Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis." ( from "The Uncertainty Solution: How to Invest with Confidence in the Face of the Unknown" by John Jennings. ( insights from Scott Patterson's "Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis." ( OpenAI-Microsoft ($MSFT) partnership is not without conflict. ( Salesforce ($CRM) is position itself for the AI revolution. ( ($ACN) is planning to spend big on AI. ( inside Goldman Sachs ($GS) is growing. ( this activist investor is facing off with John Malone over Comscore ($SCOR). ( fintech lenders abet widespread PPP fraud? ( are still toting up the costs of Covid-19 pandemic relief fraud. ( Japanese officials are doing to boost the stock prices of depressed companies. ( is reopening its office in Japan. ( Thompson talks with Andrew Yeo about falling global fertility rates. ( registrations in China keep falling. ( consumer inflation ran at 4.0% in May. ( shelter prices will drive the next leg down in CPI. ( a plain vanilla term spread model says about the prospects for a recession. ( on Abnormal ReturnsResearch links: time period sensitivity. ( you missed in our Monday linkfest. ( links: paying for advice. ( you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. ( mediaWhy platform owners keep making the same mistake. ( Athletic is turning its back on its founding ethos. ( is at war with itself. (»»

Category: blogSource: abnormalreturnsJun 13th, 2023

These Are The Best Dividend Stocks, According to Wall Street

There is a maxim on Wall Street that essentially says, “20% of investors who want to make money are in stocks, while the 80% who want to keep their money are in bonds.” This was a broad, wide-brush description that attempted to summarize why the fixed-income market is so much larger than the equities market. […] The post These Are The Best Dividend Stocks, According to Wall Street appeared first on 24/7 Wall St.. There is a maxim on Wall Street that essentially says, “20% of investors who want to make money are in stocks, while the 80% who want to keep their money are in bonds.” This was a broad, wide-brush description that attempted to summarize why the fixed-income market is so much larger than the equities market. However, diversification is a fundamental principle that many investment advisors stress as a risk mitigation strategy. Dividend-paying stocks can be an attractive way for an investor to have one’s cake and eat it too; in addition to potential price appreciation, an annual dividend not only reduces an investment’s cost basis, but can also provide timely additional cash income, especially in the current inflationary climate. The motivations of investors looking to invest in dividend stocks can vary across the spectrum. In rough terms, they can be divided into four (4) categories: Investors who seek to invest in Fortune 500 stocks for long-term growth but with an added income bonus component; Investors seeking capital preservation with a reliable income that compares favorably to bonds; Investors seeking high-yield junk bond alternatives in the dividend stock arena; Investors seeking industrial sector-based income streams (i.e., energy or real estate) with a lower cost entry point and better liquidity than what could be afforded with bonds. Fortune 500 Stocks With an Income Bonus Among Fortune 500 stocks, telecoms offer attractive dividends in addition to good upside potential. Conservative stock investors often have a weak tolerance for the roller coaster prices of high flying stocks that may soar only to crash and burn. The lower volatility of large cap stocks that are included in the S&P 500 or the Dow Jones Industrial Average 30 make for less sleepless nights and better peace of mind for these investors. When appraising large cap stocks, a history of steady, or even better, increasing dividends is often an additional sign of earnings stability and continued future upside. The fact that a company has reached a rate of growth that allows it to pay back investors for their loyalty and support beyond its reinvestment needs for hitting growth targets holds considerable appeal to low risk investors. Additionally, large cap stocks that pay a dividend can get a positive bump in their CAGR (Compound Annual Growth Rate), which can make a difference if they are being assessed for potential inclusion in a mutual fund or ETF against other rivals in the same industrial sector. This is especially true when a dividend per share amount has a history of incremental increases over a span of years, and is calculated in a separate dividend CAGR metric. Verizon Communications One of the longtime analyst darlings among large cap, dividend paying stocks is Verizon Communications (NYSE:VZ). As one of the premier telecommunications companies in the US, Verizon was formed in 2000 from the former “Baby Bell” companies, Bell Atlantic and Nynex, along with GTE. At the time of this writing, Verizon’s yield is 6.63% on an annual $2.66 dividend, paid quarterly. After an industry-wide selloff for all US telecom companies in mid-2023 over concerns about lead in their cables, Verizon has made a 30%+ price increase to its present levels. From a dividend growth perspective, Verizon has logged 1.93% over 12 months, 1.97% over three years, 2.01% over five years, and 2.34% over a decade. AT& T AT&T has the most US subscribers in the telecommunications industry. According to Investopedia, Verizon’s extensive national network and plan flexibility makes it the largest US wireless carrier. Although AT&T (NYSE:T) has the greater number of subscribers, Verizon, which ranks number 2 in subscribers, has a larger market cap ($168 billion vs. $120.7 billion). On the cautionary side, the reduction in household landlines and cable service in favor of cellphones and video streaming has supercharged Verizon’s wireless services, which commensurately account for more than half of its revenues. As a result, Verizon has greater exposure to satellite problems or other wireless related issues than its rivals. Additionally, its high profile has drawn significant institutional stock ownership, which stands at about 62%, with 38% in the hands of only 25 shareholders. As a result, if, say Vanguard Group, which has a sizable 8% stake in Verizon, all of a sudden needed to liquidate a large block of shares, it makes for a larger impact jolt to the stock price than a selloff from smaller retail investors. Nevertheless, Verizon’s FIOS optic fiber system is the core of its 5G network and they proudly advertise that it has been the recipient of the greatest number of consumer awards for customer satisfaction and internet speeds over the past decade. Among analysts’ publications, Morningstar still rates Verizon as its top performing dividend stock as of January, 2024. Longtime competitor AT&T, which has a current yield of 6.58%, is a viable investment alternative to Verizon. It has a larger subscriber base with more hardwired customers and a wider distribution of low-band 5G coverage, albeit slower than Verizon’s FIOS 5G. Income With Capital Preservation Preferred stocks from Global Ship Lease and its rivals in the maritime shipping sector can deliver very attractive yields with mitigated volatility. Preservation of principal with income is a hallmark of bonds. Among the stocks that emulate these traits, preferred stocks often come the closest. Due to their higher dividend payments, they often trade in a more narrow range than their parent company common stocks. Additional bond-like attributes of preferreds include a “par” value redemption price by the issuing company, which may opt to “call” the security after a protection period, and an increased sensitivity to prevailing interest rates. Features unique to preferred stocks may include a preset convertibility ratio option to common stock, no penalties in the event a dividend payment is skipped, and a preferential repayment place in queue should the company go bankrupt, which would be right after bondholders and ahead of common stockholders. Global Ship Lease, Inc. A good example of a solid preferred stock that has maintained a narrow price range and steady income dividend payments is British shipping company Global Ship Lease Inc. 8.75% Series B Cumulative Redeemable Perpetual Preferred Shares (NYSE: GSL.PB). With a par amount of $25 and a historical trading range between $25 and $26, Global Ship Lease’s preferred stock currently is yielding 8.42% at a price of $25.92 at the time of this writing. Sporting a fleet of 65 smaller and mid-sized container ships, Global Ship Lease has a niche in the maritime shipping space that has grown its charter shipping business while only maintaining seven (7) full-time employees. A.P. Moller Maersk One of the most recognized shipping companies in the world, A.P. Moller Maersk transports over 12 million containers annually. To illustrate the relative price stability of GLS.PB, A.P. Moller Maersk (OTCMKTS:AKMBY), one of the oldest and largest maritime shipping container companies in the world, had a 600% price fluctuation from March 2020 to December 2021, exacerbated during 2021, when the Suez Canal blockage from a stuck carrier created a global supply chain crisis. Since that runup, the stock has fallen back down 238% to its current price. By contrast, Global Ship Lease preferred shares essentially stayed in the $25-$26 price range during the same period, and has maintained that steadfastness to the present. In addition, the Federal Reserve’s raising of interest rates to combat inflation had a negligible effect on Global Ship Lease preferreds stock price, nor did it impact the dividend payments, something that cannot be said for some other preferred issues. Conversely, geopolitical events can affect international shipping companies, and Global Ship Lease is not invulnerable. Analysts in general believe that if the Red Sea concerns over the war in Gaza were to be curtailed, shipping rates and the perception of other supply chain threats would also subside, causing a sell off of maritime shipping stocks that could impact a preferred stock like GLS.PB and create a dividend skip, something for investors to bear in mind. Safe Bulkers, Inc. Safe Bulkers Inc.’s fleet of Kamsarmax vessels can haul even more dead weight tonnage per voyage than their Panamax ships. An alternative company with a similar preferred stock that competes in the maritime space on a larger level is Monaco based Safe Bulkers, Inc. Preferred D (NYSE:SB.PD). Their 46 ship fleet includes 11 Panamax and 9 Kamsarmax vessels, and they specialize in dry bulk shipping of iron ore, coal and grain. With an 8% coupon, the preferred also currently trades steadily between $25-26 and its yield is presently 7.86%. Their Series C preferred has been called, but the D series should be around for a long time, unless Safe Bulkers gets a suddenly huge $80-100 million windfall that could finance a redemption. High-Yield Dividend Stocks Iconic brands with high dividends make for widespread loyalty among both institutional and individual investors. Altria Group, Inc. Investors who seek junk bond-like yields often take similar risks when seeking high-dividend stocks. However, there are some solid equities that coincidentally have a fat dividend that has ensured stockholder loyalty for years, and they also have significant institutional ownership that helps to keep their price protected from short sellers. One such example is Altria Group, Inc. (NYSE:MO). With a 200-year history of selling tobacco products, Altria has weathered the negative publicity inherent with tobacco’s medical study links to lung cancer, nicotine addiction, and disfavor from the ESG policies of institutional funds. Nevertheless, Altria’s Marlboro is still an iconic, globally recognized American brand, and the company continues to meet or exceed analysts’ earnings forecasts, even in the wake of moderately reduced revenues. With a 9.67% yield at the time of this writing, Altria Group is certainly in junk bond territory from a yield purview. From a dividend growth perspective, it is also helpful to note that the company has consistently increased dividends a whopping 54 times in 58 years, dating back from when it was Philip Morris, all the way to the present, with a 4.3% hike made just last year. For further comparison, Altria Group 2019 issued notes, which mature in 2039 and carry a 5.8% coupon, are BBB-rated and are trading at roughly 102.50, meaning that their yields are nearly half that of the common stock. This is something that fixed-income investors, who have a much higher entry point than with the stock, are surely factoring into their portfolio allocation decisions. Industry Specific Income Focused Dividend Stocks REITs from Arbor Realty Trust and its rivals are a low cost way for investors to get real estate rent roll recurring income without the hands-on work of a property owner. The ETF and mutual fund markets for dividend stocks have proliferated significantly in the last few decades. Due to the high cost of entry for some industrial stocks, these pooled dividend stock funds have become very popular, and are now segmented by various categories, such as by market cap composition, yield, and industrial sector, to name a few. Energy, transportation, telecommunications, mining, and technology are all industries that have well-known dividend-paying stocks within their sectors. One fundamental sector that has a prohibitively high entry point cost that has become very attractive for portfolios of all types is real estate. To gain access to real estate rent rolls without the intricacies and burdens of managing real estate properties, securities have been created that pool these rent rolls. Diversified ones, such as Real Estate Investment Trusts, or REITs are excellent, low-cost platforms for investors interested in this space. As registered trusts that distribute 90% of their taxable income to shareholders, they are legally exempt from Federal taxes. Arbor Realty Trust Arbor Realty Trust (NYSE:ABR) is a New York-based REIT that was formed in 2003. Unlike some other REITs where capital is invested in hard real estate assets, Arbor’s focus is in real estate collateralized financial products, such as mezzanine and bridge loans, multi-family mortgage loans, and other types of short and medium-term debt instruments. Given that it is a REIT that trades on the New York Stock Exchange, Arbor Realty Trust has a high level of liquidity, especially when compared to brick-and-mortar real estate properties, or even individual debt instruments. Sporting a 14.09% yield at the time of this writing, Arbor Realty Trust’s dividend has been growing at roughly 10.25% annually since 2011. With a dividend payout ratio of 88.85%, analysts’ consensus is that this is a sustainable rate, and would equate to dividend amounts for Arbor doubling in 7.1 years if uninterrupted. Additionally, Arbor has some heavyweight institutional ownership participation, with Blackrock, Vanguard Group, State Street Corp., and Goldman Sachs among the top five largest shareholders. While Arbor Realty Trust may certainly look attractive with its high yield and dividend growth history, there is a caveat: China Evergrande Group China Evergrande Group is one of the largest real estate companies on the planet, and its bankruptcy is causing a financial ripple effect around the globe. The meltdown of Chinese real estate goliath Evergrande (OTCMKTS: EGRNQ) is triggering repercussions across the globe not only in commercial and residential real estate markets, but also in a variety of financial sectors. As such, It remains to be seen as to the extent of its effect on companies like Arbor, which have less tangible assets on their books, and whose capital is more tied to financial products leveraged with real estate. Global Net Lease, Inc. Global Net Lease specializes in commercial property lease-buybacks in New York City. For a REIT with the extra safety of a preferred stock, Global Net Lease, Inc. Preferred A (NYSE:GNL.PA) currently yields 8.62%. Also based in New York, the company manages commercial properties with a specialty niche in lease-buyback transactions. As the preferred stock is a relatively smaller item on Global Net Lease’s total balance sheet yet has priority over the regular REIT dividends, the likelihood of a skipped payment is drastically reduced, although this would entail minimal dividend growth. Dividend stocks certainly offer features that suit the needs of a broad range of portfolio requirements. Investors have a variety of both individual stocks and funds from which they can choose, and should certainly engage in their own research before pulling the trigger on a particular security. For further insights into stocks with upside combined with dividends, see: 4 Analyst Favorite ‘Strong Buy’ Stocks With Dividends Likely Rising This     Sponsored: Want to Retire Early? Here’s a Great First Step Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances? Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free. Click here to match with up to 3 financial pros who would be excited to help you make financial decisions. The post These Are The Best Dividend Stocks, According to Wall Street appeared first on 24/7 Wall St.......»»

Category: blogSource: 247wallstFeb 17th, 2024

20 Fastest Growing Technology Companies in the US

In this piece, we will look at the 20 Fastest Growing Technology Companies in the US. For more companies, head on over to 5 Fastest Growing Technology Companies in the US. In today’s rapidly evolving and interconnected society, technology plays a crucial role in fuelling creativity, revolutionizing sectors, and influencing our everyday experiences. Undoubtedly, technology […] In this piece, we will look at the 20 Fastest Growing Technology Companies in the US. For more companies, head on over to 5 Fastest Growing Technology Companies in the US. In today’s rapidly evolving and interconnected society, technology plays a crucial role in fuelling creativity, revolutionizing sectors, and influencing our everyday experiences. Undoubtedly, technology stands as a significant and expanding economic sector. MGI Research projected that worldwide expenditure on technology, encompassing consumers, publicly traded and privately held businesses, non-profit entities, and government outlays, will increase from $8.51 trillion in 2022 to $11.47 trillion by 2026. This reflects a compound annual growth rate (CAGR) of 7.75% over the five-year period. In 2023, despite facing global economic challenges and geopolitical tensions, the tech industry forged ahead while generating considerable anticipation regarding the capabilities of AI. The potential for the upcoming year is evident. By prioritizing AI in their strategies, technology companies can potentially surpass competitors from other industries, who were once leading the pack; this is why AI deals and partnerships in 2024 could shape the future industry landscape. This involves not only expediting their transformation processes but also strategically repositioning their operations to seize upon swiftly emerging technologies and business frameworks. The United States stands at the forefront of global technology innovation, setting the pace for advancements in various sectors. As of 2023, the United States region held approximately 36 percent of the global market share in the information and communication technology (ICT) sector. The Consumer Technology Association anticipates that retail revenues for the U.S. consumer technology industry will increase by 2.8% in 2024, reaching $512 billion. This projection represents a $14 billion rise from the previous year, indicating a surge in consumer expenditure on technology products and services, as outlined in CTA’s One-Year Industry Forecast. Investors hold an optimistic outlook for the American Information Technology industry, demonstrating confidence in its long-term growth prospects. Over the past three years, earnings for companies within the Information Technology sector have increased by 5.7% annually, while revenues have grown at a rate of 3.1% per year. This indicates a positive trend where these companies are generating more sales overall, leading to increased profits. Analysts are particularly bullish on the Semiconductors industry, forecasting a robust annual earnings growth rate of 24% over the next five years. This marks a significant improvement compared to its previous earnings decline of 1.0% per year. In contrast, the Tech Hardware industry is expected to experience more moderate earnings growth, with an anticipated rate of 5.9% per year over the coming years. Let’s examine some of the major developments shaping the technology landscape in the United States. When discussing technological trends, it’s essential to acknowledge the significant impact of generative AI on the tech market. The global AI market’s value is estimated at $454 billion as of 2022 by Precendence Research and it is expected to hit a value of $2.75 trillion by 2032, growing at a high CAGR of 19% during the forecast period. This innovation gained widespread attention in 2023 following OpenAI’s launch of GPT-4, showcasing impressive capabilities. Presently, nearly all major tech firms are dedicating resources to generative AI, with the initial half of 2023 witnessing a nearly fivefold surge in funding compared to the prior year. Anticipated for 2024 is a further increase in investment in generative AI across diverse sectors, spanning from medical research to entertainment. Every prominent tech corporation, including Google, Amazon, Apple, and Microsoft, is committing resources to pioneering advancements in artificial intelligence (AI). Embark with us on an exhilarating journey through the dynamic realm of the United States’ technology landscape, where 20 visionary companies have left an indelible mark on the digital frontier. From groundbreaking innovations in artificial intelligence to the lightning-fast strides of 5G connectivity, this transformative tapestry weaves together the stories of these trailblazing entities. Amidst the clouds of cloud computing excellence and the harmonious push for sustainability, these companies navigate the ever-shifting winds of government regulations, leaving an enduring imprint on how technology shapes our world and future. With that said, let’s head over to the list of the fastest-growing technology companies in the US. A manufacturing floor filled with robotic arms working on a variety of precision projects. Methodology In order to generate a list of the 20 Fastest Growing Technology Companies in the US by revenue, we sourced a comprehensive list of all energy companies in the US from the Finviz screener. We screened this list to find the top companies in the industry according to their market capitalizations. Once we had obtained the list of the largest technology companies by market capitalization, we extracted companies that had the largest Year over Year (YoY) growth percentage in 2023. Year-over-year (YOY) growth is a key performance indicator comparing growth in one year-long period against the comparable period twelve months before the current year. Unlike standalone monthly metrics, YoY gives you a picture of your performance without seasonal effects, monthly volatility, and other factors. By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders. 20 Fastest Growing Technology Companies in the US 20. Adobe Inc (NASDAQ:ADBE) Year over year growth rate 2023: 10.24% Adobe Inc. (NASDAQ:ADBE), a prominent software company, provides a comprehensive suite of products and services utilized by professionals, businesses, communicators, and consumers for creating, managing, delivering, and optimizing content and experiences across diverse digital media formats. Reporting strong financials, Adobe (NASDAQ:ADBE) achieved a revenue of $19.41 billion in the twelve months ending December 1, 2023, reflecting a commendable 10.24% year-over-year growth. In the last quarter of the same period, the company maintained its growth momentum, reaching a revenue of $5.05 billion with an impressive 11.56% year-over-year growth. Adobe’s stellar performance in 2023 underscores its success in meeting the evolving needs of the digital landscape, solidifying its position as a key player in the software industry. 19. Intuit Inc. (NASDAQ:INTU) Year over year growth rate 2023: 10.76% Intuit Inc. (NASDAQ:INTU) stands at the forefront of the global financial technology revolution, empowering both consumers and small businesses with a comprehensive suite of financial management, compliance, and marketing solutions. The company’s robust performance is evident in its remarkable financials, boasting a revenue of $14.75 billion in the twelve months ending October 31, 2023, showcasing a commendable 10.76% year-over-year growth. The last quarter of the same period saw Intuit achieve a revenue of $2.98 billion, marked by an impressive 14.67% year-over-year growth. However, the company’s commitment to innovation doesn’t stop at financial metrics. In a strategic move, Intuit Inc. (NASDAQ:INTU) has recently announced the integration of a cutting-edge generative artificial intelligence-powered assistant into its products. This forward-thinking initiative aims to deliver personalized AI experiences, further solidifying Intuit’s position as a pioneer in leveraging technology to enhance customer interactions and redefine the future of financial services. 18. Cisco Systems, Inc. (NASDAQ:CSCO) Year over year growth rate 2023: 10.99% Cisco Systems, Inc. (NASDAQ:CSCO) is a technological leader, shaping the Internet with its innovative designs spanning networking, security, collaboration, applications, and the cloud. The company reported robust financials, boasting $58.03 billion in revenue for the twelve months ending October 28, 2023, showcasing an impressive 10.99% year-over-year growth. In the last quarter of the same period, Cisco (NASDAQ:CSCO) maintained its momentum with a revenue of $14.67 billion and a noteworthy 7.60% year-over-year growth. 17. Microsoft Corporation (NASDAQ:MSFT) Year over year growth rate 2023: 11.51% Microsoft Corporation, (NASDAQ:MSFT) is one of the leading and fastest growing technology companies in the US. It is renowned for its development and support of a wide range of software, services, devices, and solutions. Demonstrating its robust financial performance, Microsoft reported a substantial revenue of $227.58 billion in the twelve months ending December 31, 2023, marking an impressive 11.51% year-over-year growth. In the final quarter of the same period, the company continued its upward trajectory, achieving a revenue of $62.02 billion with a notable 17.58% year-over-year growth. Beyond financial success, Microsoft (NASDAQ:MSFT) has also positioned itself as a sustainability leader, exemplified by its recent collaboration with startup Chestnut Carbon. This partnership reflects Microsoft’s commitment to carbon offset credits, aiming to remove up to 2.7 million tons of carbon from the atmosphere — a testament to the company’s dedication to environmental responsibility and innovation. 16. Oracle Corp. (NYSE:ORCL) Year over year growth rate 2023: 12.06% Oracle Corporation, (NYSE:ORCL) a leader in enterprise IT solutions, reported a robust revenue of $51.63 billion in the twelve months ending November 30, 2023, with 12.06% year-over-year growth. The corresponding quarter saw a revenue of $12.94 billion, marking a commendable 5.43% year-over-year growth. In the fiscal year ending May 31, 2023, Oracle achieved an annual revenue of $49.95 billion, reflecting an impressive 17.71% growth. Notably, Oracle (NYSE:ORCL) is advancing its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) with new logistics capabilities, aimed at optimizing global supply chains by enhancing visibility, reducing costs, automating regulatory compliance, and improving decision-making. This underscores Oracle’s commitment to innovating and streamlining enterprise solutions. 15. Salesforce Inc. (NYSE:CRM) Year over year growth rate 2023: 12.08% Salesforce, Inc. (NYSE:CRM) is one of the fastest-growing technology companies in America. It is a prominent provider of customer relationship management (CRM) technology, operates through its comprehensive Customer 360 platform, spanning sales, service, marketing, commerce, collaboration, integration, artificial intelligence, analytics, automation, and more. Demonstrating consistent growth, Salesforce (NYSE:CRM) reported a revenue of $33.95 billion in the twelve months ending October 31, 2023, with a commendable 12.08% year-over-year increase. In the corresponding quarter, ending October 31, 2023, the company maintained momentum, achieving a revenue of $8.72 billion with an 11.27% year-over-year growth. Notably, the company is leveraging the power of generative AI through a partnership with Arada, a leading UAE-based master developer. This collaboration aims to transform data utilization, enhance operational efficiency, and elevate customer experience across Arada’s luxury projects, showcasing Salesforce’s commitment to innovative CRM solutions. 14. Cadence Design Systems, Inc. (NASDAQ:CDNS) Year over year growth rate 2023: 14.83% Cadence Design Systems, Inc. (NASDAQ:CDNS) specializes in electronic system design, providing Custom IC Design and Simulation solutions for circuits, including analog, mixed-signal, custom digital, memory, and RF designs. Serving diverse markets such as 5G communications, aerospace, automotive, and more, the company reported a robust revenue of $4.09 billion in the twelve months ending December 31, 2023, with a noteworthy 14.83% year-over-year growth. In the final quarter of the same period, Cadence Design Systems (NASDAQ:CDNS) achieved $1.07 billion in revenue, marking an impressive 18.75% year-over-year growth. 13. Synopsys, Inc. (NASDAQ:SNPS) Year over year growth rate 2023: 14.98% Synopsys, Inc. (NASDAQ:SNPS) is a key player in electronic design automation (EDA), offering software for designing and testing integrated circuits (ICs). The company reported robust financials with a revenue of $5.84 billion in the twelve months ending October 31, 2023, showcasing a substantial 14.98% year-over-year growth. In the corresponding quarter, ending October 31, 2023, Synopsys maintained momentum, achieving $1.60 billion in revenue with an impressive 24.51% year-over-year growth. In a strategic move, on January 16, 2024, Synopsys (NASDAQ:SNPS) announced a significant development, revealing its acquisition of Ansys in a $35 billion cash-and-stock deal. This move expands Synopsys’ capabilities by incorporating Ansys’ software used in diverse product creation, from airplanes to tennis rackets, exemplifying the company’s commitment to advancing its position in the chip design software domain. 12. Palantir Technologies Inc. (NYSE:PLTR) Year over year growth rate 2023: 16.75% One of the fastest-growing American technology companies, Palantir Technologies Inc. (NYSE:PLTR) specializes in building software for counterterrorism investigations and operations, with three key platforms — Palantir Gotham, Palantir Foundry, and Palantir Apollo. In the twelve months ending December 31, 2023, Palantir reported a revenue of $2.23 billion, reflecting a substantial 16.75% year-over-year growth. The corresponding quarter, ending December 31, 2023, showcased a revenue of $608.35 million, with an impressive 19.61% year-over-year growth. A recent development on February 13, 2024, highlighted Palantir Technologies’ (NYSE:PLTR) partnership with SCSP’s AI Expo on National Competitiveness. This collaborative expo, aimed at fostering innovation and idea exchange, brings together leaders from the private sector, research institutions, the U.S. government, and key allies and partners in a two-day event focused on advancing national competitiveness. 11. Uber Technologies Inc. (NYSE:UBER) Year over year growth rate 2023: 16.95% Uber Technologies, Inc. (NYSE:UBER) operates a dynamic platform that develops and manages technology applications to seamlessly connect consumers with a diverse array of services. Through its platform, Uber facilitates ride services, links users with merchants, offers food delivery options, and integrates with public transportation networks. The company reported robust financials, with a revenue of $37.28 billion in the twelve months ending December 31, 2023, demonstrating a noteworthy 16.95% year-over-year growth. In the corresponding quarter, ending December 31, 2023, Uber sustained its positive momentum with a revenue of $9.94 billion, reflecting a commendable 15.44% year-over-year growth. Among its offerings, Uber (NYSE:UBER) provides a convenient delivery service that empowers consumers to discover local restaurants, order meals, and arrange pick-ups. Additionally, the Freight segment of Uber connects carriers with shippers, offering upfront pricing and streamlining the shipment booking process, showcasing the company’s versatility and innovation in the technology-driven service industry. 10. Workday, Inc. (NASDAQ:WDAY) Year over year growth rate 2023: 17.45% Workday, Inc. (NASDAQ:WDAY) is a leading provider of enterprise cloud applications catering to finance and human resources. Serving approximately 10,000 organizations, the company offers software-as-a-service solutions to address diverse business challenges. Workday reported a robust revenue of $6.98 billion in the twelve months ending October 31, 2023, showcasing a significant 17.45% year-over-year growth. The corresponding quarter, ending October 31, 2023, saw the company achieve $1.87 billion in revenue, reflecting a commendable 16.67% year-over-year growth. A recent strategic development emerged on February 8, 2024, as Insperity Inc. formed a partnership with Workday Inc. (NASDAQ:WDAY). The collaboration aims to jointly develop and sell a new full-service platform tailored for small and midsize businesses, further solidifying Workday’s position in the industry. 9. Fortinet Inc. (NASDAQ:FTNT) Year over year growth rate 2023: 20.09% Fortinet, Inc. (NASDAQ:FTNT) is a leading provider of cybersecurity and networking solutions, delivering its expertise to a diverse range of organizations, including enterprises, communication service providers, security service providers, government organizations, and small businesses. Demonstrating robust performance, Fortinet reported a revenue of $5.30 billion in the twelve months ending December 31, 2023, marking an impressive 20.09% year-over-year growth. In the corresponding quarter, ending December 31, 2023, the company sustained its growth momentum, achieving a revenue of $1.42 billion with a commendable 10.30% year-over-year growth. Fortinet Inc. (NASDAQ:FTNT) recently announced the FortiGate Rugged 70G with 5G Dual Modem, the latest addition to its product lineup. Built on its fifth-generation security processor, this appliance is specifically designed to meet the rigorous demands of industrial environments, showcasing Fortinet’s commitment to addressing evolving cybersecurity challenges in diverse sectors. 8. Atlassian Corporation (NASDAQ:TEAM) Year over year growth rate 2023: 22.39% Atlassian Corporation (NASDAQ:TEAM) stands at the forefront of software innovation, designing, developing, licensing, and maintaining cutting-edge solutions while providing software hosting services. The company’s product portfolio includes Jira Software and Jira Work Management, fostering seamless collaboration, Confluence for content creation and sharing, and Jira Service Management, a robust suite for team service, management, and support applications. Demonstrating a remarkable financial performance, Atlassian (NASDAQ:TEAM) reported a revenue of $3.89 billion in the twelve months ending December 31, 2023, showcasing an impressive 22.39% year-over-year growth. The momentum continued in the last quarter of the same period, with a revenue of $1.06 billion and a commendable 21.47% year-over-year growth. Atlassian’s unwavering commitment to technological excellence positions it as a pivotal player in shaping the landscape of software solutions and services. 7. ServiceNow Inc. (NYSE:NOW) Year over year growth rate 2023: 23.82% ServiceNow, Inc. (NYSE:NOW) emerges as a trailblazer in the digital landscape, positioned as a leading digital workflow company. At the heart of its operations is the intelligent Now Platform, a cloud-based solution infused with artificial intelligence and machine learning capabilities. This innovative platform empowers global enterprises, universities, and governments to seamlessly unify and digitize their workflows, fostering efficiency across industries. Demonstrating exceptional growth, ServiceNow reported a robust revenue of $8.97 billion in the twelve months ending December 31, 2023, reflecting an impressive 23.82% year-over-year growth. The upward trajectory continued in the last quarter of the same period, with revenue reaching $2.44 billion and an outstanding 25.62% year-over-year growth. ServiceNow’s (NYSE:NOW) visionary CEO, Bill McDermott, envisions the company as “building a masterpiece,” emphasizing that the integration of AI represents a once-in-a-generation opportunity. This proclamation solidifies ServiceNow’s commitment to technological excellence and its pivotal role in shaping the future of digital workflows. 6. Palo Alto Networks Inc. (NASDAQ:PANW) Year over year growth rate 2023: 23.89% Palo Alto Networks, Inc. (NASDAQ:PANW) emerges as a global cybersecurity powerhouse, providing cutting-edge cyber security platforms and services. Dedicated to securing enterprise users, networks, clouds, and endpoints, the company employs artificial intelligence and automation to fortify digital environments. Demonstrating robust growth, Palo Alto Networks reported a revenue of $7.21 billion in the twelve months ending October 31, 2023, showcasing an impressive 23.89% year-over-year growth. The positive momentum persisted in the last quarter of the same period, with revenue hitting $1.88 billion and a commendable 20.13% year-over-year growth. Palo Alto Networks (NASDAQ:PANW) made headlines in February 2024 by striking a specialized deal with TruVisor, expanding the reach of its Prisma Cloud platform to Southeast Asia (SEA) partners. This strategic partnership further solidifies Palo Alto Networks’ commitment to advancing cybersecurity solutions on a global scale. Click to continue reading and find out about 5 Fastest Growing Technology Companies in the US. Suggested Articles: Hedge Fund Manager Charles Paquelet’s Top 10 Tech Stock Picks 10 Best Tech Stocks for the Next 5 Years 13 Most Advanced Countries in Computer Technology Disclosure: None. Top 20 Fastest Growing Technology Companies in the US is originally published on Insider Monkey......»»

Category: topSource: insidermonkeyFeb 14th, 2024

20 Richest Countries During the Great Depression

In this article, we will look into the 20 richest countries during the great depression. If you want to skip our detailed analysis, you can go directly to the 5 Richest Countries During the Great Depression. The Great Depression (1929-1939) The 1920s, believed as the era of economic and cultural upsurge, underwent an abrupt change […] In this article, we will look into the 20 richest countries during the great depression. If you want to skip our detailed analysis, you can go directly to the 5 Richest Countries During the Great Depression. The Great Depression (1929-1939) The 1920s, believed as the era of economic and cultural upsurge, underwent an abrupt change in 1929. This economic downturn, known as the Great Depression, initiated by the US stock market crash in October 1929, was a multifaceted interplay of various factors affecting aggregate demand and spending globally. In the late 1920s, the monetary policies set by the state to impede speculation around the stock market backfired, leading to reduced investments. This crash resulted in inflated prices, reduced business spending, and plunging stock values. The US stock market witnessed a dramatic boost in the early 1920s, with the Dow Jones Industrial Average resulting in a 6-fold increase from 1921 to 1929, reaching a peak of 381. However, the high that was supposedly believed as a permanent victory, was abrupted by the decline of October 1929, as reported by the Federal Reserve History. The relentless slide that started with two consecutive declines of 13% and 12% in October, later wiped out the index value to nearly half by mid-November. The Dow Jones Industrial Average continued to decline and reached its lowest level of 41.22 in 1932, witnessing an 89% descent from its peak. It took over 20 years for the index to surpass its high before the crash and reach 381 again in 1954. The economic downturn was further incited by the widespread banking panics, which began in the third quarter of 1930. The beginning of the great depression culminated in fear among people, resulting in mass withdrawals and liquidation of assets. Marking the start of the biggest crisis, the bank failures contributed significantly to the depth and duration of the depression. The economy of the United States shrank 29% from 1929 to 1933, as reported by the Federal Bank Reserves of St. Louis. Unemployment in the country peaked at 25% in 1933, whereas consumer prices declined to 25%. Over 30% of the banking system, around 7,000 banks, failed between 1930 and 1933. The Global Impact of the Great Depression The impact of the Great Depression was not uniform. According to the Hall of Mirrors, by Barry Eichengreen, the global gross domestic product declined 15% from 1929 to 1932. A research study, “The Global Impact of the Great Depression” by the London School of Economics, provides an analysis of the impact of the great depression on 30 countries, by taking into account their monthly variations of severity. The study highlights that although Central Eastern European countries, except Yugoslavia and Bulgaria, witnessed the longest economic recessions, narratives about certain countries needed revision. For instance, Spain was believed to have avoided the depression due to its non-gold-standard monetary policy, which links a country’s currency directly to its gold reserves. Many historians believe that the Gold Standard highly contributed to the length and severity of the great depression. However, Spain still experienced a long-lasting recession, with 45% of the months between January 1929 and July 1935 in recession. On the contrary, Japan witnessed a strong recovery after 1932. However, the study found that the impact of the great depression was higher on Japan than the evidence of annual industrial production suggests. The depression in America and Canada was the longest, while Scandinavian countries escaped the depression relatively early. The study suggests that geography played a significant role in the depression’s severity. Central and Eastern European countries and North American economies endured the longest and strongest recessions. Economies including Canada, Poland, Austria, and Germany faced the highest cumulative damages. The research also highlighted a pattern emerging in concentric circles depicting decreased severity moving outwards from the central point. Countries such as France, Belgium, and several Eastern European nations were closest to the epicenter and hence endured the deepest losses. This was followed by Scandinavia, Britain, and Switzerland, and the outermost circle experienced milder downturns, including nations such as Spain, Italy, and Japan. The only exceptions were New Zealand and Denmark, which endured a long-lasting and severe recession. The Current Economic Landscape After nearly a century, the global economy remains resilient, while still facing a multitude of challenges fueled by the aftermath of the pandemic’s outbreak in 2020 and the current geopolitical tensions in the Middle East and Europe. According to the IMF, global growth is projected to remain steady at 3.1% in 2024, an uptick of 0.2% from October 2023. It is forecasted to reach 3.2% in 2025. The US and China are expected to experience slower growth in 2024, due to tight monetary policies in the US and weaker consumption and investment in China. The Eurozone is expected to witness a rebound from the 2023 growth level. However, the region still faces high energy prices and monetary challenges. On the contrary, Southeastern Economies, India, and Brazil are expected to grow with headline inflation declining to 4.9% globally.  The advanced economies are anticipated to remain resilient, with headline and core inflation expected to drop to 2.6% in 2024. Overall. the global economy presents varied paths of recovery for different nations. Business in the Richest Countries in 2024 While the global outlook presented varied aspects of growth, a glimpse into the richest economies in the world can provide insights into the relative stability and business opportunities in these nations. Luxembourg, Singapore, Switzerland, and the United States are among the top 10 richest countries in the world by GDP per capita in 2024.  Spotify Technology S.A. (NYSE:SPOT), Alphabet Inc. (NASDAQ:GOOG), and Chubb Limited (NYSE:CB) are some of the leading companies in the richest economies in the world. Headquartered in Luxembourg, Spotify Technology S.A. (NYSE:SPOT) is an audio streaming and media services company. On January 31, Steven Cahall, an analyst at Wells Fargo, raised his price target on Spotify Technology S.A. (NYSE:SPOT) to $280 from $250 and maintained an overweight rating. Over the past 3 months, 14 out of 20 analysts have given a buy rating on Spotify Technology S.A. (NYSE:SPOT). The stock has an average price forecast of $240.06 and a high price target of $330.00. As of February 7, the stock has surged more than 63% over the past 6 months. On January 30, Alphabet Inc. (NASDAQ:GOOG) reported its earnings for the fiscal fourth quarter of 2023. The company reported an EPS of $1.64 and surpassed estimates by $0.04. The company reported a revenue of $86.31 billion for the quarter and outperformed estimates by $1.03 billion. Alphabet Inc.’s (NASDAQ:GOOG) revenue for the quarter grew by 13.49% on a year-over-year basis. Chubb Limited (NYSE:CB) is a top financial services company in Switzerland. On January 31, Elyse Greenspan, an analyst at Wells Fargo, maintained an equal-weight rating and raised her price target on Chubb Limited (NYSE:CB) to $255 from $234. Over the past 3 months, 6 analysts have given a buy rating on Chubb Limited (NYSE:CB). The stock has an average price forecast of $255.47 and a high price target of $280.00. Now, let’s look at the 20 richest countries during the great depression. Richest Cities in Every State in the US Methodology To compile our list of the 20 richest countries during the great depression, we utilized the Maddison Project Database 2020. The database is a useful tool that provides historical economic data of countries. It reports the GDP per capita (PPP 2011) and population data for countries. At the time of the great depression, there were approximately 75 countries based on the strict definition of fully independent states. The database provides the historical GDP per capita data for the years 1929 and 1937 for nearly 67 countries. We have utilized the GDP per capita and population data from the database to calculate the GDPs of the countries for the years, 1929 and 1937. Please note that we have selected 1937 as our end year due to the unavailability of data for certain countries for the year 1939. We then calculated the percentage change in GDP from 1929 to 1937 to provide an in-depth insight into the recovery rate and economic resilience of the countries. Finally, we ranked the 20 richest countries during the great depression, based on their calculated GDP in 1937. We have also mentioned the current GDP (PPP) of the countries, as of 2024, to provide insight into their economic growth since the great depression. The 2024 GDP (PPP) of countries is sourced from the IMF Database. By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders. 20 Richest Countries During the Great Depression 20. Mexico GDP (1929): $40.90 billion GDP (1937): $48.07 billion Percentage Change in GDP (1929-1937): 17.53% GDP (2024): $3.42 trillion Mexico is ranked among the richest countries during the great depression. In 1929, the country had an estimated GDP of $40.90 billion. Mexico experienced a 17.53% increase in its GDP from 1929 to 1937 and reached $48.07 billion in 1937. As of 2024, Mexico has a GDP of $3.42 trillion. 19. Brazil GDP (1929): $48.18 billion GDP (1937): $62.28 billion Percentage Change in GDP (1929-1937): 29.25% GDP (2024): $4.62 trillion Brazil ranks 19th on our list. The country reported a GDP of $48.18 billion in 1929 and $62.28 billion in 1937. Its GDP grew by 29.25% from 1929 to 1937. As of 2024, it has a GDP of $4.62 trillion. 18. Australia GDP (1929): $53.65 billion GDP (1937): $62.65 billion Percentage Change in GDP (1929-1937): 16.77% GDP (2024): $1.78 trillion Ranked 18th on our list, Australia reported a GDP of $53.65 billion in 1929 and $62.65 billion in 1937. Its GDP increased by 16.77% from 1929 to 1937. As of 2024, the GDP of the country is $1.78 trillion. 17. Belgium GDP (1929): $64.70 billion GDP (1937): $66.00 billion Percentage Change in GDP (1929-1937): 2.00% GDP (2024): $793.83 billion Belgium ranks among the richest countries during the great depression. In 1929, the country had an estimated GDP of $64.70 billion. Belgium witnessed a 2% increase in its GDP from 1929 to 1937 and reached $66 billion in 1937. As of 2024, the country has a GDP of $793.83 billion. 16. Czechoslovakia GDP (1929): $67.32 billion GDP (1937): $66.28 billion Percentage Change in GDP (1929-1937): -1.54% GDP of Czechia (2024): $564.19 billion GDP of Slovakia (2024): $240.65 billion Ranked 16th on our list, Czechoslovakia reported a GDP of $67.32 billion in 1929. Its GDP shrank by 1.54% from 1929 to 1937. In 1993, Czechoslovakia split into two independent countries, Czechia and Slovakia. As of 2024, Czechia has a GDP of $564.19 billion and Slovakia has a GDP of $240.65 billion. 15. Spain GDP (1929): $96.85 billion GDP (1937): $66.46 billion Percentage Change in GDP (1929-1937): -31.37% GDP (2024): $2.51 trillion Spain is ranked 15th on our list. In 1929, the country reported a GDP of $96.85 billion. Its GDP shrank by 31.37% from 1929 to 1937 and reached $66.46 billion in 1937. As of 2024, the country has a GDP of $2.51 trillion. 14. Netherlands GDP (1929): $70.56 billion GDP (1937): $74.46 billion  Percentage Change in GDP (1929-1937): 5.53% GDP (2024): $1.34 trillion The Netherlands ranks 14th on our list. The country reported a GDP of $70.56 billion in 1929 and $74.46 billion in 1937. Its GDP grew by 5.53% from 1929 to 1937. As of 2024, it has a GDP of $1.34 trillion. 13. Canada GDP (1929): $83.20 billion GDP (1937): $80.86 Percentage Change in GDP (1929-1937): -2.21% GDP (2024): $2.47 trillion Canada is ranked among the richest countries during the great depression. In 1929, the country had an estimated GDP of $83.20 billion. Canada’s GDP declined 2.21% from 1929 to 1937 and reached $80.86 billion in 1937. As of 2024, Canada has a GDP of $2.47 trillion. 12. Argentina GDP (1929): $80.69 billion GDP (1937): $88.69 billion Percentage Change in GDP (1929-1937): 9.92% GDP (2024): $1.30 trillion Argentina ranks 12th on our list. The country reported a GDP of $80.69 billion in 1929 and $88.69 billion in 1937. Its GDP grew by 9.92% from 1929 to 1937. As of 2024, it has a GDP of $1.30 trillion. 11. Poland GDP (1929): $93.98 billion GDP (1937): $93.97 billion Percentage Change in GDP (1929-1937): -0.01% GDP (2024): $1.79 trillion Ranked 11th on our list, Poland reported a GDP of $93.98 billion in 1929 and $93.97 billion in 1937. Its GDP declined by 0.01% from 1929 to 1937.  As of 2024, it reports a GDP of $1.79 trillion. 10. Indonesia GDP (1929): $103.85 billion GDP (1937): $118.78 billion Percentage Change in GDP (1929-1937): 14.76% GDP (2024): $4.72 trillion Indonesia ranks 10th on our list. The country reported a GDP of $103.85 billion in 1929 and $118.78 billion in 1937. Its GDP grew by 14.76% from 1929 to 1937. As of 2024, it has a GDP of $4.72 trillion. 9. Italy GDP (1929): $197.85 billion GDP (1937): $210.13 billion Percentage Change in GDP (1929-1937): 6.20% GDP (2024): $3.29 trillion Italy is ranked among the richest countries during the great depression. In 1929, the country had an estimated GDP of $197.85 billion. Italy experienced a 6.20% increase in its GDP from 1929 to 1937 and reached $210.13 billion in 1937. As of 2024, Italy has a GDP of $3.29 trillion. 8. Japan GDP (1929): $231.79 billion GDP (1937): $290.45 billion Percentage Change in GDP (1929-1937): 25.31% GDP (2024): $6.71 trillion Japan ranks 8th on our list. The country reported a GDP of $231.79 billion in 1929 and $290.45 billion in 1937. Its GDP grew by 5.53% from 1929 to 1937. As of 2024, it has a GDP of $1.34 trillion. 7. France GDP (1929): $309.55 billion GDP (1937): $299.88 billion Percentage Change in GDP (1929-1937): -3.12% GDP (2024): $4.01 trillion France is ranked 7th on our list. In 1929 the country reported a GDP of $309.55 billion. Its GDP shrank by 3.12% from 1929 to 1937. As of 2024, the country has a GDP of $4.01 trillion. 6. India GDP (1929): $386.39 billion GDP (1937): $399.83 billion Percentage Change in GDP (1929-1937): 3.46% GDP (2024): $14.26 trillion India is ranked 6th on our list of the richest countries during the great depression. In 1929, the country had an estimated GDP of $386.39 billion. India’s GDP grew 3.46% from 1929 to 1937 and reached $399.83 billion in 1937. As of 2024, India has a GDP of $14.26 trillion. Click to continue reading and see the 5 Richest Countries During the Great Depression. Suggested articles: Top 20 Most Innovative Economies in Asia 10 Most Innovative Economies in Central and South America 15 Most Powerful Asian Countries in 2024 Disclosure: None. 20 Richest Countries During the Great Depression is originally published on Insider Monkey......»»

Category: topSource: insidermonkeyFeb 10th, 2024

6 Reasons to Avoid Coca-Cola (KO) Immediately

Coke (NYSE: KO) is one of the most established consumer brands in the world. On top of that, they are the largest beverage company in the world, and from the looks of things, people aren’t going to stop drinking things anytime soon. Still, does that mean that Coca-Cola is a good brand to invest in? […] The post 6 Reasons to Avoid Coca-Cola (KO) Immediately appeared first on 24/7 Wall St.. Coke (NYSE: KO) is one of the most established consumer brands in the world. On top of that, they are the largest beverage company in the world, and from the looks of things, people aren’t going to stop drinking things anytime soon. Still, does that mean that Coca-Cola is a good brand to invest in? There are always reasons to either invest or avoid a company, but today, we’re going to look at some of the reasons someone might want to avoid Coca-Cola stock. To compile this list, 24/7 Wall Street used available financial information from Coca-Cola, researched the most breaking news on the company, and used editorial discretion to consider some potential reasons someone may want to avoid investing in the stock. This doesn’t mean that we think Coca-Cola is a bad company to invest in; it just means that if you want a reason to avoid it, they do exist. Let’s get started. 1. They’re Encountering Widespread Boycotts Many Western companies are being boycotted as a mass response to the Israel-Hamas crisis, potentially resulting in decreased sales for Coca-Cola. Maybe one of the biggest reasons to avoid Coke right now is that the company is being boycotted, primarily as a result of the Israel-Hamas conflict. The impact of geopolitical issues isn’t just a one-off thing, either. There is a broader trend where consumer sentiment has become increasingly intertwined with social and political issues, usually to the detriment of large brands. Currently, some of the major brands impacted by the boycotts are Starbucks, Coke, and McDonalds. Before investors get too hesitant, however, it should be made clear that these boycotts haven’t seemed to really impact Coke specifically all that much. The boycotts target American brands by consumers overseas, and while they may be politically impactful, the actual impact on profits doesn’t seem to be noticeable. Coke generates around 65% of its revenue from outside the United States, which would indicate an issue, but the regions where the boycotts are happening aren’t large parts of the revenue stream for the brand. Additionally, many products exist that aren’t widely known to be tied to the brand (Minute Maid, Powerade, and even Topo Chico), which could also impact the effectiveness of the boycotts overall. 2. Insider Sentiment is Low It’s generally not a good sign when your insider team is selling off large portions of stock. Another potential reason to be wary of Coke is certain company insights. Right now, Yahoo Finance lists Coke as having a 46/100 Overall, a 56/100 on Dividends, and maybe most damning, a 12/100 on Insider Sentiment. First, these numbers do have to be taken in some context. The sector average for the overall score is 10/100, so despite not clearing 50, Coke is doing fine compared to its competitors. In Dividends, the sector average is 30, so again, Coke is just ok compared to others. The real issue seems to be coming from Insider Sentiment, where the sector average is 30. Here, Coke clearly has some issues. Looking at this metric alone, it’s tough to know why the company scores so low. According to one source from Simply Wall Street, the last twelve months at the company have signaled quite a few sell-offs, even from big names like James Rober Quincey, the Chairman & CEO. Additionally, insiders didn’t buy many shares, signaling a little internal selling pressure, which is not something you want to see.  3. Consumer Sentiment Towards Beverages Are Changing At a macro level, Coke, the core product of Coca-Cola, could be under threat due to changing consumer preferences. Another red flag for potential Coca-Cola investors is hidden within the shifting nature of consumer sentiment, particularly regarding healthier, more natural products. Health-conscious trends have exploded over the last few years, and Coca-Cola’s image is often tied to sugary and less nutritious drinks, specifically soda. Soda, once unrivaled in the beverage market, is potentially fading, and the new kid on the block could steal Coke’s lunch money. Right now, people are incredibly favoring alternatives like flavored teas, coffees, and especially energy drinks. This shift is particularly noticeable in the American market but still present elsewhere. Coke, traditionally synonymous with sodas, could struggle to adapt. However, it’s not all doom and gloom, and the brand is historically fantastic at pivoting and offering consumers options that align with their temporary trends. Coca-Cola has strategically invested in segments aligning with the health-conscious movement, and brands like AHA and Topo Chico, both owned by Coke, are clearly trying to capture that. 4. They’re Potentially Reaching False Highs A few years of growth could represent a moment to sell, not necessarily a moment to buy in when a stock is at its highest. Looking at the numbers could also give some insight into the near future of the company. After 2020, Coca-Cola has seen a rather steady upward trend regarding share price, with a few exceptions. Additionally, Coke has had an increase in revenue since 2020, showing gains of 17% and 11.25% in 2021 and 2022, respectively. The most recent numbers for Q4 2023 haven’t been released yet, but if there was going to be a noticeable dip from worldwide events, it would be then. If there is an announcement that the company didn’t hit expectations, the growth of the last few years could be halted. Additionally, the old adage of buying low-selling high rings true. Coke is hitting high points right now; is that really the best time to take a position? 5. You Want Rapid Stock Growth Coca-Cola has never been a stock optimized for rapid growth, instead preferring consistent dividends and long-term stability. Coca-Cola has long been hailed as a financially stable institution. Sure, that may be because Warren can’t help but give them free advertising every chance he gets, but it also has to do with how the company is structured. As of 2023, Coca-Cola has increased its dividends for 61 consecutive years, a truly incredible feat. However, the very attributes that make Coca-Cola a reliable investment also have something to do with tempering expectations for explosive stock growth. Coca-Cola’s colossal size and tenure as a brand really position it more as a slow and steady train than a high-upside electrically-charged stock. High-dividend stocks, like Coca-Cola, generally signify a commitment to reliability, not necessarily excitement (just check your parents’ retirement account). For those “thirsting” for excitement, flashiness, and the potential for eye-watering upside, Coca-Cola probably isn’t it, despite what those darned polar bears make it look like. If something a little more exciting with a coin-flip approach to total domination or miserable failure are your vibes, may we suggest whatever Elon Musk has planned next? 6. You Don’t Politically Align With Coke (DEI, etc.) Generally speaking, Coke stays out of politics, but recent trends show an increased desire to invest according to political alignment, especially along hot-button issues like DEI and ESG. In an era where companies are under scrutiny for their social stances, Coca-Cola’s pronounced emphasis on Diversity, Equity, and Inclusion (DEI) initiatives could be a watershed factor for potential investors. While the global push for DEI in corporate landscapes is broadly accepted and viewed as commendable, it has not escaped criticism from certain political entities. Leaked materials, for example, have sparked debates, especially in the context of shifting political landscapes and… heightened responses. For investors who prefer to align their portfolios strictly with their political values, Coca-Cola’s unapologetic commitment to DEI might be a point of contention. ESG, another hot-button issue in certain political spheres, is another potential rift between the values of investors and the companies they are looking to stick with. Coca-Cola doesn’t necessarily use ESG language in its corporate releases, but it does release Sustainability & Business Reports, which cover the same things. Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit. The post 6 Reasons to Avoid Coca-Cola (KO) Immediately appeared first on 24/7 Wall St.......»»

Category: worldSource: nytJan 31st, 2024

Iran Mobilizes To Drive US Troops Out Of Iraq

Iran Mobilizes To Drive US Troops Out Of Iraq Via Middle East Eye, When Iraqi Prime Minister Mohammed al-Sudani arrived in New York City in September for the UN General Assembly, a delicate truce was in balance between the two foreign powers that loom over Baghdad. Iraqi paramilitaries, backed by Iran, had frozen their attacks on US troops in the country. Iraq’s new leader arrived in New York City amid the lull. He was feted on a circuit of swanky receptions with western businessmen and diplomats on the sidelines of the General Assembly, as he pitched Iraq’s oil-rich but corruption-riddled economy as an investment destination. Four months later, the Iraqi leader is condemning Iran and the US for launching deadly strikes in his country and his investment pitch to the global elite at Davos Switzerland is overshadowed by his call for the US military and its coalition partners to leave Iraq. Since the Hamas-led attacks on October 7 and the war in Gaza, Iranian-backed militias have launched at least 70 attacks on US forces in Iraq. Iraqi security forces deploy near the gate of the Green Zone in Baghdad, AFP. In early January, the US hit back with its most powerful response yet, launching a drone strike in Baghdad that killed Mushtaq Taleb al-Saidi, also known as Abu Taqwa, a senior commander in the Popular Mobilization Units, an umbrella organisation of Iraqi state-funded and Iran-aligned, Shia militias. Baghdad hit out at the strike as “a violation of Iraq’s sovereignty”. But no sooner was Iraq chastiszing the US for the strike, when Iran launched a barrage of ballistic missiles into the Iraqi city of Erbil, killing four people, including a prominent Kurdish real estate developer and his one-year-old daughter. Baghdad slammed Tehran’s allegation that the house struck in Erbil was an Israeli Mossad “spy center”. At Davos, Sudani called the strike "a clear act of aggression”. Iraq has recalled its ambassador to Tehran and says it will file a complaint at the UN Security Council. The dual rebukes of Iran and the US underscore the tightrope Baghdad is walking as the war in Gaza seeps out beyond the besieged Mediterranean enclave’s borders. Across the region, Tehran and Washington are flexing their muscles, vying to outflank each other in a deadly proxy war. The shadowy conflict has taken on different flavours that reflect local and geopolitical realities. In Lebanon, the US is trying to de-escalate fighting between Israel and Hezbollah, with both sides wary of being dragged into a wider conflict. Meanwhile, Iran-backed Houthi fighters in Yemen have made themselves targets of US air strikes as a response to their attacks on commercial shipping. But the conflict is perhaps at its most intense, and complex, in Iraq. “The Iraqi government is weak, divided and fundamentally can’t control conflict on its borders from foreign powers,” Renad Mansour, director of the Iraq Initiative at the Chatham House think-tank, told Middle East Eye. “It emerged as the playground of choice, where the US and Iran can fight it out. The risk of escalation here is lower for both. And they can show force and compete for influence.” Syria, through Iraq  For Iran and its Iraqi allies who dominate Baghdad’s government, the war in Gaza has presented an opportunity to drive home their goal of expelling the US from Iraq. A former senior US official and an Iraqi official told MEE that there has been increased coordination between Iranian-backed paramilitaries in Iraq and Lebanese Hezbollah with that aim. According to media reports, a top Hezbollah official, Mohammad Hussein al-Kawtharani, arrived in Baghdad earlier this month to oversee the operations. Iran-backed "Islamic Resistance in Iraq" published a video "targeting Ain Al Assad AB with a UAV". Looks quite similar to the one that was used for attacking Erbil before. — Aleph א (@no_itsmyturn) January 22, 2024 “Instead of attacking Israel, what we are seeing in Iraq are more attacks on US forces,” Andrew Tabler, a former Middle East director at the White House’s National Security Council, told MEE. The pressure building in Baghdad to expel US troops has been underlined by Sudani’s public calls for an exit since the assassination of Abu Taqwa. If he follows through, experts say it would present a strategic victory for Iran. Roughly 2,500 US troops are in Iraq to advise and train local forces as part of a coalition to defeat the Islamic State militant group. They are mainly based in Baghdad and northern Iraq’s autonomous Kurdish region. The latter is especially important for providing logistical support to 900 US troops in northeastern Syria. The US’s legal justification for being in Syria is also based on its agreement with Baghdad. “Erbil is crucial for supporting Syria,” Tabler said, referring to the capital of Iraq’s autonomous Kurdistan region. “The US needs to have the ability to move troops and supplies on the overland route between the Iraqi frontier and Syria.” Speaking in Davos on Thursday, Sudani said that “ISIS is no longer a threat to the Iraqi people,” and that "the end of the international coalition mission is a necessity for the security and stability of Iraq”. The Biden administration and Baghdad were already negotiating the future of the US-led coalition in Iraq before the war in Gaza erupted, a former senior US official told MEE, but the war changed Washington’s approach to the talks. “It doesn’t look good to be discussing a drawdown when the Iranians are attacking US soldiers with missiles and drones. So there is a sense from the administration that we need to pause these talks.” While the US continues to conduct small-scale raids against IS cells in the region, Washington views its military footprint in northeast Syria as a key counterweight to Iran and Russia, which back the Bashar al-Assad government in Syria. “The US mission in northeast Syria depends on Iraq,” Joel Rayburn, a former US special envoy for Syria, told MEE. 'Same foxhole' The US military presence in Iraq has ebbed and flowed since the invasion 20 years ago. In 2011, the US pulled all of its forces from Iraq, only for them to return in 2014 at the invitation of Baghdad to fight IS. But in that period, Shia paramilitaries backed by Iran emerged as the most powerful armed groups in Iraq. Trained and funded by Iran, the Popular Mobilisation Units also fought IS. Some groups, like Kata'ib Hezbollah, have been at the forefront of attacks on the US in Iraq. The group’s founder, Abu Mahdi al-Mohandes, was killed in the same US strike that assassinated the Iranian commander, Qassem Soleimani. Via Fox News Today, the PMUs boast more than 150,000 fighters. They maintain vast patronage networks and many are incorporated into Iraq’s official state security apparatus, with the Iraqi government paying their salaries. They have been accused of kidnappings, assassinations and suppressing peaceful protests. The inability of successive Iraqi governments to rein in the sweeping powers of the PMUs has sown discord between Baghdad and Washington. Not only have US forces come under attack from the paramilitary groups, but Washington funds Iraq’s security system. In 2022, Iraq received $250m in military aid from the US. Despite sporadic outbursts of fighting between the paramilitaries and Iraq’s security services, “the cost of going against the militias for the Iraqi government is far higher than the cost of keeping them,” Abbas Kadhim, head of the Iraq Initiative at the Atlantic Council, told MEE. “For Washington, it's an urgency because they are under attack, but it’s not a crisis for the Iraqi state. The militias are fighting in the same foxhole as the Iraqi government.” Pay raise for Iranian militias Sudani is supported by the Coordination Framework, a coalition of Tehran-backed Shia political parties that are tied to many of Iraq’s paramilitaries. While Sudani negotiated a six-month truce that saw attacks on US forces in Iraq stop, the PMUs have gained more influence under his rule, experts say. “Iran-backed militias have a more visible presence on Baghdad’s streets during Sudani's tenure,” setting up new checkpoints, Michael Knights, a fellow at the Washington Institute for Near East Policy, wrote, adding that they have also deepened their business activities. This year, Sudani’s government passed a three-year budget that allocated $700m more dollars to the PMUs, which will allow them to add almost 100,000 new fighters to their ranks, according to analysts. But current and former US and Iraqi officials say Baghdad wants to maintain good relations with Washington. Sudani has framed his call for quick exit of US-led coalition troops as necessary to preserve “constructive bilateral relations” with the US, which he told Reuters could include training and advising Iraqi security forces. His comments are a reflection of the unique ties Baghdad maintains to both Washington and Tehran. The dollar trap Iran and Iraq share a thousand-mile border.  The two Shia-majority countries have an estimated ten million border crossings annually, with many Iranian pilgrims visiting shrines in Karbala and Najaf. Iraq is the second most important destination for Iranian exports and is dependent on Iran for about 35 to 40 percent of its power needs. Iran has never shied away from flexing its economic weight over its neighbor. But Iraq’s finances are also intricately tied to the US. The second largest producer in the Organization of Petroleum Exporting Countries, Iraq depends on its oil revenue to fund its government - including to pay the salaries of Iranian-backed paramilitaries. The proceeds from Iraq’s oil sales are deposited in the US Federal Reserve Bank of New York. A recent US crackdown on money laundering in Iraq has helped fuel a currency crisis in Iraq, showcasing the immense sway Washington has over Iraq’s finances because of its dependence on the dollar. The US has also backed Sudani’s appeal for international investments in Iraq. When Baghdad threatened to expel US-led coalition forces from Iraq after the 2020 assassination of Soleimani, the Trump administration threatened to cut Iraq’s access to its dollar reserves and stop issuing sanctions waivers for Iraq to buy Iranian energy, former US officials familiar with the talks told MEE. The same officials say that cudgel is an option the Biden administration retains if demands for a US exit grow, but some question whether the administration would use it, after trying to reset relations with Baghdad after the tumultuous Trump years. “The US can’t be expelled from Iraq if it doesn’t want to be,” Rayburn, the former US special envoy for Syria, told MEE. “If the US doesn’t have a military presence in Iraq, then the US need not do other things on behalf of the Iraqi government. Like facilitating dollar supply from the Federal Reserve, protecting against lawsuits, and issuing sanctions waivers,” he said. While Iranian-backed militias want to expel the US from Iraq, experts say even the most hardline groups like Kata'ib Hezbollah benefit from Iraq’s economic links to the West. “Even the most anti-American leaders in Iraq realize they need some kind of relationship with the US,” Mansour told MEE. “Iraq is a lifeline for Iran. Its access to US dollars and financial markets is key.” Kadhim, at the Atlantic Council, believes the focus among policymakers in Washington to merely protect US troop presence in Iraq is shortsighted. “Of course, Iran’s ideal goal is to get the US out of Iraq completely, but their practical goal is to make the US presence a liability,” which he says, the Iranians have already achieved. “Basically, you have a small number of US troops in Iraq sequestered to their barracks. They can’t even go to town,”   he said. “In the long run, someone is going to ask why are we here.” Tyler Durden Mon, 01/22/2024 - 23:00.....»»

Category: dealsSource: nytJan 23rd, 2024

Markets are in a "new geopolitical regime," and the old playbook won"t work, BlackRock says

"Geopolitical fragmentation is one of the reasons we see persistent inflation pressures – and policy rates staying above prepandemic levels." Chinese President Xi Jinping and US President Joe Biden.Chip Somodevilla/Getty Images Markets have entered a "new geopolitical regime," and the old playbook no longer applies, BlackRock said. The fracturing global order is now a persistent structural risk for markets, strategists said in a note. The new regime will also bring more investment into sectors like clean energy and defense. Trade wars. A pandemic. Russia invades Ukraine. Chaos grips the Middle East.The world has faced an avalanche of crises in the past few years, and it's tipped markets into a new era, where geopolitics have become a persistent risk, according to BlackRock."Greater geopolitical volatility – and the rising number of violent conflicts worldwide – increase the risk of a more disorderly and less predictable path. Yet as broad stocks and other assets move on quickly from geopolitical events, we worry they may not be appreciating that we have entered a new geopolitical regime," analysts led by Wei Li said in a note on Monday. "The old playbook no longer applies, in our view."The warning comes as the S&P 500 and Dow Jones Industrial Average have set fresh record highs, while markets grow increasingly optimistic that the US will avoid a recession in the near term.But stocks and bonds may not be able to shrug off international flare-ups as easily as they once did. "Geopolitical fragmentation is one of the reasons we see persistent inflation pressures – and policy rates staying above prepandemic levels," Li said.The war-fueled inflation risks have already begun raising red flags in some corners of the market, as Red Sea attacks boost the cost of shipping, stoking goods inflation.Bets on the Fed cutting rates in March have dropped to 40% from 75% a month ago, according to the CME FedWatch Tool. And chances of escalation in the Middle East remain high, Li added. With increasing political angst, supply chains are becoming longer too. That's because countries like Mexico and Vietnam are acting as intermediary trading partners between different blocs of power.Those countries would benefit from an increasingly fractured world, but are still lacking the critical infrastructure to fully reap those benefits.Also on the burner is the US-China rift, with Taiwan remaining a "significant flashpoint," after recent elections favored the Democratic Progressive Party, which has taken a harder line against Beijing. "We think intense, structural competition between the US and China is the new normal, especially in defense and technology," Li wrote.The new regime will also bring more investment into sectors like tech, clean energy, defense as countries invest in their geopolitical goals, she added.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 22nd, 2024

The world is in a "geopolitical recession". Here"s what that means for businesses.

"Every single business in every single geography finds themselves caught in the crossfire of geopolitics — that's new." Getty Images The world has entered a "geopolitical recession" as global power dynamics shift. The US-China rift is impacting business more than at any other time in history, experts said on Goldman Sachs podcast. "Every single business in every single geography finds themselves caught in the crossfire of geopolitics — that's new." The geopolitical pot is bubbling with US-China tensions, a Russia-Ukraine war, and intensifying conflict in the Middle East.The rise in geopolitical tumult is increasingly a concern for markets and the economy, experts said on a Goldman Sachs podcast. According to one political scientist, the rising level of conflict has tipped the world into a "geopolitical recession" as global leadership shifts and power dynamics become warped. "It's what I consider a geopolitical recession," Ian Bremmer from Eurasia Group said in a Goldman Sachs "Exchanges" podcast. "The institutions that we have globally, [which are] meant to create a level of governance, no longer align with the underlying balance of power of the world." Driving the geopolitical downturn is the rising power of China and the Global South, while Japan and Europe slip into a decline. And as that political drama unfurls, it's rippling across economies."Every single business in every single geography finds themselves caught in the crossfire of geopolitics — that's new," Jared Cohen, Goldman Sachs' president of global affairs, said in the episode. "Unless you're in the energy sector or tech sector, you were largely immune from those geopolitical dynamics."Cohen explained that in the era of hyper-globalization that governed the global economy, the "geopolitical center of gravity" was largely in the Middle East. But after COVID-19, the locus of that tension migrated to the Washington-Beijing rift.Also adding to the uncertainty on a global scale is that the most predictable state actors have gone "off script," which has created a deficit of credibility."We used to be able to count on the US and China having the economic interests drive the geopolitical outcomes. Now it's reversed," Cohen said. "Domestic circumstances in both countries are driving geopolitical aspirations that are in turn impacting medium and long term economic situations."That's infused new volatility into geopolitics which has hit businesses more than any other time in history.Geopolitical challenges continue to shake markets, with the latest developments in the Middle East giving oil prices a sharp boost on Friday, and the Red Sea attacks risk re-triggering a spell of global inflation as shipping costs are soar.Read the original article on Business Insider.....»»

Category: worldSource: nytJan 12th, 2024

Global Security In 2024: 5 Contextual Trends, 10 Possibilities

Global Security In 2024: 5 Contextual Trends, 10 Possibilities Authored by Gregory Copley via The Epoch Times, It is more than probable that 2024 will create a confluence of major strategic trends, which could increase the likelihood of formal, kinetic conflict and continued global economic decline... Each year of the past three decades has seemed like a pivotal year in the evolution of the post-Cold War global strategic architecture, and, indeed, that has been the case. But 2024 promises to provide a number of highly significant watersheds in the progress of that new global framework. We should review the major concerns in priority order, in terms of the known probable events and their consequences, bearing in mind that some “uncertain” factors will move into the “certain” column during the year. The interactions from events will, to an extent, develop in accordance with their coincidence with other events. Note that all pivotal events interact with each other; nothing is evolving in isolation. What is significant, though, is that there are globally pervasive socio-economic trends that provide an additional contextual layering or background. These are the result of the accretion of event trends underway for decades. These should be taken as part of the framework for 2024’s geopolitical pivot points. These include the following: By the early 21st century or even the late 20th century, the exhaustion of the urban-industrial republican reforms began around the late 17th century and created several hundred years of growth, wealth, and the modern form of democracy. The maturity and exhaustion of these societies are now starting to give way to increasingly autocratic governance and lowered national productivity. The pattern of global population decline, already well underway everywhere except India and Africa (and foreseeable there in the coming decades), is causing a major drop in wealth and population health, and requires the consideration of new economic models geared to declining market sizes and declining technological innovation levels. A peaking and subsequent decline in the appeal and efficiency of major urban agglomerations is impacting political power centralization. The overwhelming and deepening decline in prestige—and therefore coercive capability—of literally all major powers in the world has ushered in an era of distrust, a lowered efficacy of military alliances, and a willingness by governments to “go their own way,” increasing the prospect for “unintended consequences,” including unanticipated conflict. The continued decline, with no reverse at present foreseeable, in the pace of scientific and technological breakthroughs or disruptive events, and a decrease in the volume and efficacy of research and development funding and marketplace trust in “scientific saviors.” Against this background, one must consider more immediate consequences that could possibly come to fruition in 2024, such as the following (and their timeline and priority could change as incidents trigger responses): Communist China The deep, ongoing economic collapse of communist China is leading to strategic consequences at the domestic, regional, and global levels. This could include reactive, high-risk military action by China against other states, particularly Taiwan and Vietnam, in 2024, if Chinese leader Xi Jinping were to retain power. That could result in major escalation and broadening of such conflicts, resulting in the further reduction of the Chinese regime and the removal of the Chinese Communist Party (CCP). Taiwanese military personnel drive a CM-25 armored vehicle across the street during the Han Kuang military exercise, which simulates China’s People’s Liberation Army (PLA) invading the island in New Taipei City, Taiwan, on July 27, 2022. (Annabelle Chih/Getty Images) Alternately, Xi’s removal from power in 2024 could result in a stabilized but greatly chastened and impoverished mainland Chinese society in which the CCP could retain carefully balanced control. It is also possible that an unchecked military action initiated by Xi could then trigger his removal by the Party. The prospect, at the beginning of 2024, was that the growing rift between Xi and the People’s Liberation Army (PLA), as well as the growing Party and public confrontation of Xi, may preempt action by Xi. US Presidential Election The U.S. presidential election of November 2024 will clearly impact U.S. domestic harmony and international actions, as well as the trend path of the power of the U.S. dollar globally. With the probability of a decline in prestige and power projection capability of both the United States and China, the question arises as to which power will attempt to fill the power vacuum during the transitional phase-out or reduction of the Pax Americana phase of the “rules-based world order.” Will the United States accelerate or slow the pace of economic vulnerability due to its debt service crisis? And what could trigger a global debt crisis? Balance of Power in Middle East, North Africa The overflow of the Ethiopian civil war, the Sudanese civil war, and Egypt’s socio-economic crisis into global politics impacting the Red Sea/Suez sea lane is intimately linked with the restructuring of the Middle Eastern and North African (particularly the Horn of Africa) balance of power. This will be accompanied by a stabilization in the Levant through a conclusive outcome to the Gaza war (albeit not with an end to sporadic conflict between Israel and its immediate neighbors). Meanwhile, a change of power in Ethiopia could substantially alter the Red Sea/Suez Canal trade route in positive terms. It could lead to a regional accord with Egypt to dramatically transform the region. Israel–Hamas War The consequences of the Israel–Hamas war as a wider phenomenon, particularly impacting the actions of Turkey and Iran, and subsequently their relationship with Russia, has the potential impact on the Russian-controlled International North-South Transport Corridor (INSTC) and the rise of India as a stand-alone strategic pretender. The Iranian involvement in the Hamas conflict may have brought the Iranian clerical leadership under possibly terminal pressure despite the INSTC alliance, which had promised the clerics security under a Russian blanket. Russia–Ukraine War A negotiated end to the Ukraine–Russia war, possibly by spring 2024, but certainly by the end of 2024, may lead to the possible scaling back of U.S. dollar-based sanction weapons to recover ground lost to the BRICS-plus (Brazil, Russia, India, China, South Africa, plus new members) bloc and others that felt threatened by U.S. unilateralism in sovereignty intervention through the dollar. That may well depend on the outcome of the U.S. presidential election. Venezuela–Guyana Dispute The impact of the Venezuelan escalation of its conflict with Guyana has the potential to cause the United States to refocus on the Americas, coupled with a potential slowing of the anti-dollar trend among BRICS-plus bloc member states. A man walks by a mural campaigning for a referendum asking Venezuelans to consider annexing the Guyana-administered region of Essequibo in Caracas, Venezuela, on Nov. 28, 2023. (Federico Parra/AFP via Getty Images) The question is whether this is occurring too late for the United States to take advantage of the possible opportunity, largely because of the mass dollar debt owed by the U.S. government, and because of the U.S. political addiction to the weaponized use of sanctions depending on the use of dollars as a tool to punish adversaries, disregarding the long-term build-up of concerns among U.S. allies and trading partners that the weapon could be used against them. Africa There is a move toward comprehensive rejection of foreign great power dominance in Africa. That is occurring because of the decline in great power resources and budgets and, in particular, because of the declining prestige and influence of those external powers. At the same time, African frustration with imported geopolitical models, including artificial borders, is being matched by the growth, or return, of African philosophical and cultural approaches to governance. All of this, coupled with European and North American governance issues, will interact with the global population movement crisis. Green Energy There is a slowing down—because of declining prosperity—of trends to end fossil fuel dependence and artificially stimulate pseudo-green technologies while markets move back into a moderating position on energy sources. Key Western governmental initiatives to create an artificial market for green and pseudo-green energy technologies for political purposes are now, in 2024, facing increasing societal resistance due to the declining economies and increasing difficulty in sustaining wealth levels, despite governmental initiatives to control the market. Technological Developments The continued decline in the pace of scientific and technological advancement rates, already mentioned in the contextual trends as being in evidence since the early years of the 21st century, will still see key areas advance incrementally, but with fewer breakthrough technologies occurring, and at a higher cost per incident. This is likely to see societies—and armed forces—opting for a mix of practical, older technologies and practices despite governments often attempting to legislate the obsolescence of valid existing technologies. In the military sense, the attempts to evolve older weapons systems (such as the U.S. F-15 fighter, the B-52 bomber, the M1 Abrams tank family, 1960s-based hypersonic capabilities, and anti-satellite weapons) are symptomatic of the process. Societal Polarization The further polarization of many “modern” societies under modern forms of democracy is likely to be evident, particularly in the United States, Canada, Western Europe, Australia, and possibly India. Significantly, none of these societies has legal mechanisms available to overturn such societal polarization and the increasing paralysis and exhaustion of the state apparatus. This means that unprecedented catalysts—possibly outside their respective constitutions—must occur for each of these types of societies to change in order to cope with the necessity to create new models and shed old obligations, or else state paralysis and polarization are likely to continue. All of these trends are part of the natural cycle of societies. Still, we see them now in the light of modern communications technologies, and we are seeing them harmonizing on a global level. Initial responses have been to attempt to stem the pace of collapse rather than to look at strategies for the emerging era beyond the short-term uncertainties. Tyler Durden Sat, 01/06/2024 - 22:10.....»»

Category: smallbizSource: nytJan 6th, 2024

Is It Time To Rethink American Support For Israel?

Is It Time To Rethink American Support For Israel? Authored by Joe Buccino via RealClear Wire, In the eleventh week of its war with Hamas, Israel, undeterred by U.S. admonitions, continues to demolish an already-shattered Gaza. As senior American officials come in and out of Tel Aviv to meet with Netanyahu’s government, a glaring question looms unanswered: How much influence does America gain from its ardent, often unquestioning support for Israel? With more than $300 billion in military aid since World War II, the U.S. commitment to Israel is not just a matter of foreign policy, but a reflection of our national values and strategic interests. As Israel renders Gaza a dystopian hellscape in the face of international outrage, it is crucial to scrutinize this flow of funds, not only in dollars but in terms of international standing and moral authority. Since its 1948 foundation, the U.S. has given Israel far more in military aid than any other nation. Uncritical U.S. support for Israel began with America’s 33rd president, Harry Truman publicly recognizing the state 11 minutes after its creation and continued through the successive 13 American presidencies. For most of the intervening 75 years, a country smaller than Massachusetts and roughly one-fifth the size of Kentucky has been the top recipient of financial American military assistance. The U.S.-Israel partnership is rooted in several geopolitical and domestic considerations, among them the identification with a democracy - though recently Netanyahu’s right-wing coalition threatens notation. Dwight Eisenhower, replacing Truman in the White House in 1953, saw the Jewish State as a nation that largely shares American social values in a part of the world that primarily does not. Ike clung tight to Prime Minister David Ben-Gurion and the halls of American power followed. Lyndon Johnson, ascending to the role of America's 36th president following JFK's assassination in 1963, held perhaps the strongest emotional attachment to Israel of any American president. A deep-rooted historical and religious conviction in the rights of the Jewish people to establish a state in their ancestral territories animated LBJ. Israel served as a central plank in Nixon’s foreign policy when he assumed office in 1969. Nixon’s National Security Advisor and Secretary of State Henry Kissinger established Israel as an anchor of American power in the Middle East, an ally with a cutting-edge military force in the world's most volatile region. The majority of U.S. support is provided through military equipment grants, and from 1950 to 2020, the United States sourced the overwhelming majority of all IDF equipment. The Pentagon and State Department grant Israel access to the world's most sophisticated military technology, including the F-35 Joint Strike Fighter. Israel is the only Middle Eastern state to purchase the fifth-generation fighter jet. Israel has a fleet of 50 F-35s, purchased with U.S. assistance, with 25 more on the way. Another factor in America’s tie with Israel - a critically important one among D.C. decision-makers - is the decades-long outsized influence of pro-Israel lobby groups. Such groups funnel far more funds to congressional candidates than any other group - more than six times that of the gun rights lobby. For decades, American presidents have declared our tie to Israel "unshakeable," D.C.'s commitment to the Jewish state "ironclad," and American support to Israel as long-term. Israel has served as the beneficiary of all this unwavering assistance: without U.S. weapons, Arab nations would have long ago carved Israel up. The flow of money continued without ebb In the face of significant settlement expansion in the West Bank. The American spigot continued to pour billions in the face of Netanyahu’s judicial overhaul bill that limited the power of Israel’s High Court and plunged the country into division and chaos. Unblinking American support for Israel is clear. What's less clear is how all this support advances American interests. Such significant support over such a lengthy period would presumably have offered the D.C. the ability to influence Israel. That does not seem to be the case. President Biden criticized Israel over its indiscriminate bombing that has thus far flattened large swaths of Gaza. National Security Advisor Jake Sullivan publicly called on the IDF to shift to a more precise, targeted phase of fighting. Israel has thus far resisted this pressure, continuing with the aerial bombardments versus intelligence-driven ground assaults. As the international community laments the devastation in Gaza, the war threatens to damage American standing in the world. Netanyahu also refuses to accept a role for any Palestinian body in the governance or security of Gaza after Hamas, insisting instead that Israel will exert control over the enclave. This places Israel at odds with the Biden administration which wants Palestinians to govern Gazans. The White House hopes a Palestinian-led arrangement will eventually lead to an improvement in political and economic conditions. Israel refuses. Despite these stark contrasts, U.S. administration officials publicly downplay any rift with the Netanyahu government on this or any other issue. In the months ahead, America's hug of Israel will likely harm U.S. standing in the Arab world. The gruesome images of wounded Gazan children destroyed hospitals, and broken wasteland will grow etched in the psyche of the region. Meanwhile, Netanyahu will likely continue leading administration officials around by the nose. After the protests in American streets die down and college campuses move on, the Arab streets will remember. The long-term harm to American interests in the region is unknowable. One casualty may be the efforts, begun under the Trump administration and beginning to show great promise just this past September, to build a regional security architecture of Sunni Arab militaries that will allow the Pentagon to shift assets to the Indo-Pacific, the priority region for American national security resourcing. The United States' longstanding and unquestioning support for Israel, exemplified through extensive military aid and political backing, demands a thorough reevaluation. While this partnership has historical and geopolitical roots, the adjudication of the war in Gaza raises questions about the alignment of American interests and values with the actions and policies of the Israeli government. The imperviousness of Israel to U.S. influence risks America's standing in the international community, particularly in the Middle East. The time has come for the United States to demand more accountability and alignment with its principles in exchange for its support, redefining a relationship that is respectful of Israel's sovereignty and mindful of the broader implications for U.S. foreign policy and international reputation. Joe Buccino is a retired U.S. Army colonel who served as U.S. Central Command communications director from 2021 until September 2023. He deployed to combat in the Middle East five times in his career. His views do not necessarily reflect those of the U.S. Department of Defense or any other organization. Tyler Durden Fri, 12/22/2023 - 23:30.....»»

Category: dealsSource: nytDec 22nd, 2023

Escobar: Yemen Ready To Stare Down A New Imperial Coalition

Escobar: Yemen Ready To Stare Down A New Imperial Coalition Authored by Pepe Escobar, No one ever lost money betting on the ability of the Empire of Chaos, Lies and Plunder to construct a “coalition of the willing” whenever faced with a geopolitical quandary. In every case, duly covered by the reigning “rules-based international order”, “willing” applies to vassals seduced by carrots or sticks to follow to the letter the Empire’s whims. Cue to the latest chapter: Coalition Genocide Prosperity, whose official – heroic – denomination, a trademark of the Pentagon’s P.R. wizards, is “Operation Prosperity Guardian”, allegedly engaged in “ensuring freedom of navigation in the Red Sea.” Translation: this is Washington all but declaring war on Yemen’s Ansarullah. An extra US destroyer has already been dispatched to the Red Sea. Ansarullah sticks to its guns and is by no means intimidated. The Houthi military have already stressed that any attack on Yemeni assets or Ansarullah missile launch sites would color the entire Red Sea literally Red. The Houthi military not only reaffirmed it has “weapons to sink your aircraft carriers and destroyers” but made a stunning call to both Sunnis and Shi’ites in Bahrain to revolt and overthrow their King, Hamad al-Khalifa. As of Monday, even before the start of the operation, the Eisenhower aircraft carrier was around 280 km off the closest Ansarullah controlled latitudes. Houthis have Zoheir and Khalij-e-Fars anti-ship ballistic missiles with a range of 300 to 500 km. Ansarullah Supreme Political Council member Muhammad al-Bukhaiti felt compelled to re-stress the obvious: “Even if America succeeds in mobilizing the entire world, our operations in the Red Sea will not stop unless the massacre in Gaza stops. We will not give up the responsibility of defending the Moustazafeen (oppressed ones) of the Earth.” The world better get ready: “Aircraft carrier sunk” may become the new 9/11. Shipping in the Red Sea Remains Open Weapons peddler Lloyd “Raytheon” Austin, in his current revolving door position as head of the Pentagon, is visiting West Asia – mostly Israel, Qatar and Bahrain - to promote this new “international initiative” for patrolling the Red Sea, the Bab al-Mandeb strait (which links the Arabian Sea to the Red Sea) and the Gulf of Aden. As al-Bukhaiti remarked, Ansarullah’s strategy is to target any ship navigating the Red Sea linked to Israeli companies or supplying Israel – something that for the Yemenis demonstrates their complicity with the Gaza genocide. That will only stop when the genocide stops. With a single move - a de facto maritime blockade – Ansarullah proved that the King is Naked: Yemen has done more in practice to defend the Palestinian cause than most of the key regional players put together. Incidentally, they were all ordered by Netanyahu in public to shut up. And they did. It’s quite instructive to once again follow the money. Israel has been hit very hard. The port of Eilat is virtually closed, and its income fell by 80%. For instance, Taiwanese shipping giant Yang-Ming Marine Transport Corporation originally planned to re-route its Israel-bound cargo to the port of Ashdod. Then it cut off any shipments to any Israeli destination. It’s no wonder Yoram Sebba, President of the Israel Chamber of Shipping, revealed himself to be puzzled by Ansarullah’s “complex” tactics and “unrevealed” criteria that have imposed “total uncertainty”. Saudi Arabia, Egypt and Jordan have also been caught in the Yemeni net. It's crucial to keep in perspective that Ansarullah only blocks ships that are going to Israel. The bulk of maritime shipping in the Red Sea remains wide open. So shipping giant Maersk’s decision not to use the Red Sea, alongside other global shipping behemoths, may be pushing the envelope too fast – as in nearly begging for a US-led patrol to be in effect. Enter CTF 153 So far, on one side we have Yemen virtually ruling the Red Sea. On the other side, we find UAE-Saudi-Jordan tandem, in the form of an – alternative - cargo land corridor set up from the port of Jebel Ali in the Persian Gulf across Saudi Arabia to Jordan and then Israel. The corridor uses logistical tech from Trucknet: that’s truck-based overland connectivity in practice, reducing transport time from 14 days via the Red Sea to a maximum of 4 days on the road, 300 trucks a day, everyday. Jordan of course is in, operating the trans-shipment from the UAE and Saudi Arabia. The overarching framework for all this is the One Israel  plan, enthusiastically promoted by Netanyahu, whose key aim is a link with the Arabian peninsula and most of all the NEOM tech metropolis to be built theoretically up to 2039 in the northwestern Tabuk province in Saudi Arabia, north of the Red Sea, east of Egypt across the Gulf of Aqaba, and south of Jordan. NEOM is MbS’s project to modernize the country, which is incidentally bound to feature Israel-operated AI cities. This is what Riyadh is really betting on, much more than developing closer relations with Iran under the framework of BRICS+. Or to care about the future of Palestine. On the planned naval blockade of Yemen though, the Saudis were way more circumspect. Even as Tel Aviv directly asked the White House to do something, anything, Riyadh “advised” Washington to exercise some restraint. Yet as few things matter most for the Straussian neocon psychos who currently direct US policy than to protect the trade interests in the Red Sea of its aircraft-carrier in West Asia, the decision to set up a “coalition” was all but inevitable. Enter the latest – actually fourth - incarnation of the Combined Maritime Force (CMF): a multinational coalition from 39 nations established in 2002 and led by the US Fifth Fleet in Bahrain. The task force already exists: it’s CTF 153, focusing on “international maritime security and capacity building efforts in the Red Sea, Bab al-Mandeb and Gulf of Aden”. That’s the basis for Coalition Genocide Prosperity. Members of CTF 153 include, apart from the usual suspects US, UK, France and Canada, Europeans such as Norway, Italy, Netherlands and Spain, superpower Seychelles and Bahrain (the Fifth Fleet element). Saudi Arabia and UAE, crucially, are not members. They know, after a seven-year war, when they were part of another “coalition” (the US was sort of “leading from behind”) what it means to fight Ansarullah. All Aboard the Northern Sea Route If the Red Sea situation turns really red, it will instantly shatter the Riyadh-Sanaa ceasefire. The White House and the US Deep State simply do not want a peace deal. They want Saudi Arabia at war with Yemen. The Red Sea turned red will also send the global energy crisis into a tailspin. After all at least four million barrels of oil and 12% of total global seaborne-trade to the West transits the Bab al-Mandeb every single day. So once again we have graphic confirmation that the Empire of Chaos, Lies and Plunder only calls for ceasefires when it’s losing badly: see the Ukraine case. Yet no ceasefire in Gaza - supported by the overwhelming majority if UN member-states – runs the risk of metastasizing into an expansion of the war in West Asia. That may fit into the clumsy imperial rationale of setting West Asia on fire to disturb China’s commercial BRI drive and the entry of Iran, Saudi Arabia and UAE into the expanded BRICS next month. Simultaneously, and in tune with the absence of real strategic planning in Washington, that does not take into consideration an array of appalling, unintended consequences. So according to imperial optics, the only path ahead is further militarization - from the Mediterranean to the Suez Canal, the Gulf of Aqaba, the Red Sea, the Gulf of Aden, the Arabian Sea and the Persian Gulf. That fits exactly into the framework of the War of Economic Corridors. An axiom should be set in stone: Washington would rather bet on a possible, deep global recession than simply allowing a humanitarian ceasefire in Gaza. The recession may well turbo-charge a widespread economic collapse of the collective West, and an even more rapid rise of multipolarity. To offer much needed relief of so much insanity: almost casually, President Putin recently remarked that the Northern Sea Route is now becoming a more efficient maritime trade corridor than the Suez Canal. Tyler Durden Thu, 12/21/2023 - 23:40.....»»

Category: worldSource: nytDec 22nd, 2023

Futures Drop As Torrid November Rally Fizzles Ahead Of Jobs Data Deluge; China Stocks Hit Five Year Low

Futures Drop As Torrid November Rally Fizzles Ahead Of Jobs Data Deluge; China Stocks Hit Five Year Low US equity futures, most European bourses and Asian markets as well as global bonds all retreated after five consecutive weeks of gains, as traders paused to digest November’s blockbuster rally and to consider the case for interest rate cuts, which they aggressively priced in after Powell's "not as hawkish as feared" fireside chat on Friday. As of 8am ET, S&P futures were lower by 0.3%, dropping back below the 4,600 unwinding a portion of Friday session rally (which however left hedge fund bruised and battered as the most shorted stock soared much more than the HF VIP basket); USD is stronger and commodities are weaker: crude futures are lower by around 0.4%, adding to Friday losses; 10-year Treasury yields added five basis points to 4.25%. Despite the rise in the DXY, Bitcoin surged past $41,000, while gold briefly touched an all time high. With the Fed in its blackout window, the macro data releases will be the key focus; no treasury auctions this week. Today, that focus is on factory orders and durable/cap goods; this week we get a deluge of labor data starting with the latest reading on US job openings (or JOLTS) tomorrow, followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday. In premarket trading, Spotify shares rose 1.7% after the company said it will reduce headcount by about 17%, at least the third time this year the streaming service has cut jobs. Roche Holding AG gained after the Swiss drugmaker agreed to buy Carmot Therapeutics Inc. for as much as $3.1 billion in a deal that would give it access to experimental medicines in obesity and diabetes. Cryptocurrency-linked stocks rallied in premarket trading on Monday as Bitcoin extends gains to surpass the $42,000 mark, its highest level since April 2022. Shares of Hawaiian Airlines shares soared 181% after rival Alaska Air agreed to purchase the carrier for $1.9 billion. Here are some other notable premarket movers: Carvana rose 4.5% after JPMorgan upgraded the online used-car dealer to neutral from underweight. The broker said the upgrade reflects improvements in “productivity, costs, and culture.” Lululemon shares decline 2.0% after Wells Fargo downgraded the athletic-apparel brand to equal-weight from overweight, noting the valuation is “no longer cheap.” The broker also removes the stock from their Top Picks list, replacing it with Nike. Uber Technologies, Jabil and Builders FirstSource all rise in premarket trading as the companies are set to join the S&P 500 Index. Virgin Galactic fell 14% after Richard Branson told the Financial Times that he doesn’t plan further investments in the space tourism startup he founded. A slew of economic reports this week culminating with Friday's jobs report are expected to shed light on the state of the US labor market and whether markets are prematurely excited that softer economic conditions can open the door to Federal Reserve rate cuts. Soft-landing hopes built on an economy at “stall speed” look fragile, leaving the market open to risks of a deeper contraction, JPMorgan strategists led by Mislav Matejka warned in a note, although they have been saying the same thing for so long nobody cares any more. Optimism around a peak in interest rates pushed the 10Y  TSY yield down 60 basis points in November from a 16-year high of 5% the previous month, and brought a gauge of the securities into positive territory for the year. The S&P 500 advanced about 9%, one of its best November rallies in a century. “While yield declines were warranted, the magnitude is too big given the recent data releases,” said Piet Christiansen, chief strategist at Danske Bank. “I think the market is too aggressive about rate cuts.” As noted on Friday, bond traders doubled down on wagers that the Federal Reserve will cut interest rates as soon as next March even after Fed Chair Jerome Powell reiterated it’s premature to speculate on easing. Late last week, the swaps markets saw an 80% chance of a reduction in March and are fully pricing in a cut in May; March odds have since eased modestly. Those bets are set to be tested tomorrow, with the latest reading on US job openings (or JOLTS) for October. That report will be followed by ADP’s National Employment Report on Wednesday and non-farm payrolls on Friday. “Still-robust demand and labor-market dynamics in the US” should keep traders wary that inflation can keep cooling, according to Barclays Plc strategists including Ben McLannahan. “Further falls in inflation will be more difficult from here,” they wrote in a report. European stocks reversed earlier gains, trading about 0.1% lower as oil stocks underperformed most sub-sectors on Europe’s Stoxx 600 index. The Stoxx Europe 600 Energy index drops as much as 2% after Citi cited pressure on oil prices coming from more spare capacity and UBS flagged demand concerns. Citi analysts including Alastair Syme expect further oil price easing to low $70s by end-2024 in the face of growing spare capacity. The mining sector was the biggest underperformer amid falling iron ore prices. Here are Monday’s biggest movers: Rolls-Royce shares gain as much as 4.1% as JPMorgan upgrades the plane-engine maker to overweight and Goldman Sachs reinstates its buy rating, adding to a chorus of bullish views UCB rises as much as 7.8% after it announced that the EU has granted marketing authorization for Zilbrysq (zilucoplan) as an add-on to standard therapy for generalized Myasthenia Gravis Wolters Kluwer rises as much as 4% and hits new all-time high. The German software and services provider is set to join the Euro Stoxx 50, replacing UK gambling firm Flutter 888 shares gain as much as 18% after the Sunday Times reported Playtech made an unsuccessful £700 million ($890 million) bid in July for the William Hill owner DS Smith gains as much as 2.7% after Barclays upgraded its recommendation for the UK paper and packaging firm to overweight, calling it “one of the cheapest stocks in global packaging” ITM Power jumps as much as 13% after the clean-fuel company reiterated its FY guidance. Analysts welcomed its update, which contrasts with recent profit warnings from sector peers Nokia shares fall as much as 4.1% amid speculation that the telecom equipment maker could be removed from AT&T’s 5G equipment vendor list; rival Ericsson meanwhile gains as much as 2.7% European mining stocks fall as much as 2% as iron ore prices drop after inventories rose and the steel market moved into the typically slower winter season across northern China IMCD slips as much as 2% after JPMorgan cut its rating, noting that it doesn’t see earnings of chemical distributors’ in 2024 being “positively levered” to a possible macro recovery Earlier in the session, Asia’s equity benchmark dropped, led by losses in Chinese and Hong Kong stocks as investors looked for fresh catalysts after a strong rally in November. Indian equities headed for a fresh record after Prime Minister Narendra Modi’s victories in three key state elections boosted expectations of policy continuity. The MSCI Asia Pacific Index declined 0.2%, after rising as much as 0.7% earlier. Stocks in Japan slid as the yen strengthened while Chinese shares extended declines. China Evergrande rallied 9% in Hong Kong after the distressed developer won breathing room to strike a restructuring agreement with creditors. That wasn't enough to help boost Chinese stocks, however, and the CSI 300 Index closes down 0.7% at the lowest level of 2023 - which was also a fresh 5 year low - on Monday.. ... as traders remain concerned about the health of the world’s second-largest economy despite Beijing’s recent push to shore up the market. Hang Seng and Shanghai Comp traded indecisively as PBoC Governor Pan’s repeated support pledges were offset by a substantial net liquidity drain and geopolitical frictions in the South China Sea, while attention was also on Evergrande’s windup hearing which the Hong Kong court adjourned to January 29th to give the Co. some breathing space to work on its restructuring proposal. Australia's ASX 200 was higher with gains led by the yield-sensitive sectors such as tech and real estate, while gold miners were boosted after the precious metal initially surged above USD 2,100/oz and printed a fresh record high before fading the majority of the early spike. Japan's Nikkei 225 lagged and briefly approached the 33,000 level to the downside with pressure from recent currency strength. Putting today's weakness on context, Asian stocks headed into December on the back of a 7.7% rally last month, their best monthly gain since January, as investors pile into bets that the Federal Reserve may cut interest rates by mid next year. Optimism also remains that China will continue its policy support for its struggling economy. Historically, regional equities tend to have a quiet December with average rise in the past 10 years seen at around 0.9%, according to data compiled by Bloomberg.   In FX, the Bloomberg Dollar Spot Index rose 0.2% reversing part of Friday's steep losses. The Swiss franc is one of the worst performers, falling 0.5% versus the greenback after data showed inflation slowed more than expected in November. In rates, Treasuries are cheaper with losses led by the front-end and belly across the curve, flattening 2s10s and 5s30s spreads. There is no strong catalyst for price action according to Bloomberg analysts, as Treasuries follow similar bear flattening across German curve, unwinding a portion of Friday’s sharp rally. US yields cheaper by up to 6bp across front and belly of the curve with 2s10s, 5s30s spreads flatter by 1.2bp and 4bp on the day; 10-year yields around 4.245%, cheaper by 5bp on the day and lagging bunds and gilts by 5bp and 2bp in the sector. Focus on the session includes factory orders, while Fed speakers are now in a self-imposed quiet period ahead of Dec. 13 policy announcement. The Dollar IG issuance slate is empty so far; this week’s issuance forecast is $15b to $20b, with bond sales expected to be front-loaded with Monday anticipated to be the busiest day of the week. No coupon issuance scheduled for this week with next Treasury auctions being next week’s 3-, 10- and 30-year sales. In commodities, oil prices extended their recent CTA-driven decline, with WTI falling 0.5% to trade near $73.70. Meanwhile, European natural gas prices declined amid persistent low demand for the fuel kept supplies intact. Benchmark futures fell as much as 4.9%, breaking two consecutive days of gains for the contract. Gold surpassed $2,130 an ounce before giving up gains for the day. Bitcoin climbed past the $41,000 level to the highest since April 2022. US economic data includes October factory orders, durable goods orders at 10am. Fed members are now in self-imposed black-out period for speaking ahead of Dec. 13 policy announcement Market Snapshot S&P 500 futures down 0.3% to 4,588.00 STOXX Europe 600 down 0.3% to 465.03 MXAP little changed at 161.80 MXAPJ up 0.1% to 503.65 Nikkei down 0.6% to 33,231.27 Topix down 0.8% to 2,362.65 Hang Seng Index down 1.1% to 16,646.05 Shanghai Composite down 0.3% to 3,022.91 Sensex up 2.1% to 68,881.89 Australia S&P/ASX 200 up 0.7% to 7,124.65 Kospi up 0.4% to 2,514.95 German 10Y yield little changed at 2.37% Euro little changed at $1.0877 Brent Futures down 1.3% to $77.88/bbl Gold spot up 0.2% to $2,075.57 U.S. Dollar Index little changed at 103.29 Top Overnight News Defaults by Chinese borrowers have surged to a record high since the outbreak of the coronavirus pandemic, highlighting the depth of the country’s economic downturn and the obstacles to a full recovery. A total of 8.54mn people, most of them between the ages of 18 and 59, are officially blacklisted by authorities after missing payments on everything from home mortgages to business loans, according to local courts. FT ALK (Alaska Air) said it would buy HA (Hawaiian Holdings) for $18/shr. in cash in a deal worth $1.9B (including ~$900M of net debt), a significant premium to HA’s Fri close of $4.86/shr. BBG US goods deflation is in place and will likely continue for the foreseeable future (given that supply chains are back to normal while monetary tightening curbs demand), a trend that should help bring overall inflation back to the Fed’s 2% target as soon as the second half of 2024. WSJ Israel expanded its offensive, with a ground invasion of southern Gaza expected. A US Navy ship responded to a flurry of drone and missile attacks against commercial ships in the Red Sea. The US said it’s working to restart hostage release negotiations. BBG A Hong Kong judge has delayed a decision on Evergrande’s liquidation, an unexpected move that gives the Chinese property developer until next month to come up with a restructuring plan that satisfies its creditors. FT Indian refiners have resumed Venezuelan oil purchases through intermediaries, with Reliance (RELI.NS) set to meet executives from state firm PDVSA next week to discuss direct sales following the easing of U.S. sanctions on the South American country. RTRS Speaker Johnson has proven to be a surprisingly staunch supporter of Washington providing more financial aid to Ukraine. WSJ US corporate profits are beginning to rebound, a trend that could help prevent the US from experiencing a recession. WSJ Spotify is preparing to cut 17% of its workforce, or about 1500 people, as the company looks to bolster margins and profitability. WSJ A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed with an initial positive bias after last Friday’s gains on Wall St owing to a decline in yields amid increased Fed rate cut bets for next year despite the pushback from Fed Chair Powell, although the upside was capped in the region after quiet macro newsflow from the weekend and ahead of this week’s key events including central bank rate decisions and a slew of data releases. was higher with gains led by the yield-sensitive sectors such as tech and real estate, while gold miners were boosted after the precious metal initially surged above USD 2,100/oz and printed a fresh record high before fading the majority of the early spike. lagged and briefly approached the 33,000 level to the downside with pressure from recent currency strength. Hang Seng and Shanghai Comp traded indecisively as PBoC Governor Pan’s repeated support pledges were offset by a substantial net liquidity drain and geopolitical frictions in the South China Sea, while attention was also on Evergrande’s windup hearing which the Hong Kong court adjourned to January 29th to give the Co. some breathing space to work on its restructuring proposal. Top Asian News Chinese Center for Disease Control and Prevention requested that the elderly and patients with underlying diseases and children avoid public gatherings, while it advised the public to wear masks in crowded places such as public transportation. It also stated that some public cultural venues, museums and indoor attractions can implement measures to avoid high density of people. PBoC Governor Pan reiterated a pledge to defend the housing market's healthy operation and said China's financing structure needs to be improved, while he vowed to handle actions disrupting market order and vowed low-cost funding aid to affordable home projects. BoJ’s Noguchi said Japan has yet to achieve a wage-driven rise in inflation and said they must see price rises backed by sustained wage increases to achieve the 2% price target, according to Reuters. A bombing attack killed four people and wounded several others in the Philippines’ southern city of Marawi City in Mindanao, while it was later reported that Islamic State claimed responsibility for the bombing. China’s internet companies including Didi (DIDIY), Tencent (700 HK/ TCEHY) and Alibaba (9988 HK/ BABA) are reportedly drawing complaints amid growing system failures; industry experts call for strengthened oversight, according to Global Times European equities are mixed, Eurostoxx50 -0.2%, with trade ultimately choppy throughout the session. The FTSE 100, -0.5%, underperforms, largely hampered by losses in Basic Resources and Energy. European sectors are mixed with Retail and Media to the upside, though the overall breadth of the market is narrow; Basic Resources and Energy are the main underperformers, largely a factor of losses in base metals and lower oil prices respectively. Stateside futures are trading on the backfoot, ES -0.3%, amid a mixed risk tone in European trade; with the RTY, +0.3%, outperforming. Top European News ECB’s Nagel said it is way too early to declare victory over inflation and noted that inflation in the Eurozone will carry on declining in the months ahead but at a slower pace, according to Kathimerini. ECB's de Guindos says recent inflation data is good news and it has been a "positive surprise"; too early to declare victory. Riksbank Minutes: monetary policy has reduced demand in the Swedish economy and contributed to an easing of inflationary pressures; monetary policy needs to remain contractionary, however, it is now appropriate to leave the policy rate unchanged. Bremen says In my overall monetary policy assessment, the prospects for inflation and economic activity weigh more heavily than the continued weak krona. German Economic Minister Habeck cancelled his COP28 trip to focus on budget talks. French Interior Minister said one person died and two were injured from an attack by a suspect on tourists, while the suspect was said to be motivated by the Gaza situation and was on the French security services watch list, as well as known for psychiatric disorders. S&P affirmed France at AA; Outlook Negative and affirmed Poland at A-; Outlook Stable, while Fitch affirmed the UK at AA-; Outlook Stable, affirmed Ireland at AA-: Outlook Positive and raised Greece from BB+ to investment grade status of BBB-; Outlook Stable. FX The Dollar index has kicked off the week on a firmer footing as yields eased off Friday’s highs and risk gradually soured overnight and into early European hours. EUR/USD is slightly more cushioned vs G10 peers (ex-USD) following last week’s decline on dovish ECB commentary coupled with the softer-than-forecast regional CPI data across the bloc. Japanese Yen is now flat intraday following the notable rise on Friday on the back of narrowing rate differentials – dipping from a 148.34 high towards a 146.65 low against the Dollar. Swissy is the G10 laggard this morning following the region's CPI metrics which printed sub-forecast across the board in the release before the SNB’s quarterly decision later this month. Aussie, Loonie and Kiwi are hit by the broader risk mood, with the AUD and CAD narrowly lagging amid their commodity links. PBoC set USD/CNY mid-point at 7.1011 vs exp. 7.1271 (prev. 7.1104). Fixed Income Core benchmarks are essentially unchanged at the time of writing, and reside towards the mid-point of circa. 40 tick parameters in EGBs. Bunds were lifted to the 133.44 session peak in the wake of domestic Import/Export data, though the move proved fleeting. USTs are just over 10 ticks shy of Friday’s peak and a touch softer on the session as yields, particularly at the short-end, lift and pause for breath during the Fed blackout & pre-data. Commodities Crude futures, WTI, -0.6%, lose further ground in a continuation of the price action seen since last week’s OPEC+ meeting which ultimately underwhelmed markets as voluntary supply cuts by OPEC+ members have raised doubts about their implementation; the complex has bounced off lows though very much within ranges. Spot gold surged at the open to record levels, surpassing USD 2,100/oz before waning back to levels under USD 2,075/oz, with the rally primarily driven by traders betting on the Federal Reserve cutting interest rates early next year. US Department of Energy said on Friday that oil companies will return 4mln barrels of oil to the US SPR by February from the previous exchange and the US seeks to buy up to 3mln more barrels of oil for SPR for February delivery. US, UK and EU are to tighten compliance and increase leverage for buyers to keep getting discounted oil, while they jointly reached out to Liberia, the Marshall Islands and Panama to warn of increased circumvention of the Russian oil price cap. Kuwait Oil Company said several were injured after a limited fire broke out at an oil line, although production was unaffected. Canada’s First Quantum notified buyers that the Co. will not be able to meet agreements due to a force majeure. UBS forecasts Gold at USD 2250/oz by end-2024 Kazakhstan daily oil output recovered to 230.5k tons on Dec 3rd after falling amid CPC shipping disruptions, according to data cited by Reuters. Geopolitics: Israel-Hamas Israel’s military chief said the operation in southern Gaza will match the operation in northern Gaza where they fought strongly and thoroughly, while an Israeli military spokesman said forces are operating on the ground against Hamas centres in all of Gaza, according to Reuters. Hamas deputy chief said Israeli hostages will not be freed unless there is a ceasefire, and all Palestinian detainees are released, while the Hamas armed wing said they bombarded Tel Aviv with a barrage of missiles. A Mossad team was in Doha on Saturday for discussions with Qatari mediators on restarting the Gaza truce in which talks focused on the potential release of new categories of Israeli hostages and new truce parameters. However, it was later reported that Israeli PM Netanyahu’s office said the Mossad team was recalled from Qatar due to deadlock in negotiations over Gaza and that Hamas did not meet its obligation to free all children and women hostages on the list it approved. Israeli military spokesperson said several humanitarian trucks entered Gaza after being security cleared on the Israeli side of the border, while the spokesperson added that this will be a long war and not bound by time, according to Reuters. Israel’s army said a launch was identified from Syria towards Israeli territory and the army responded by targeting the launch site, while it was also reported that Iran said two Revolutionary Guards were killed in an Israeli attack in Syria, according to Reuters. US Pentagon said it is aware of reports regarding an attack on USS Carney and several commercial vehicles in the Red Sea, while the US said that USS Carney engaged and shot down a drone launched from Houthi-controlled areas in Yemen. It was separately reported that the Yemeni Houthi group said its navy targeted two Israeli ships although Israel’s military said the ships targeted had no connection to the state of Israel, while AFP reported that a UK-owned ship passing through the Red Sea was hit by rocket fire. US carried out a self-defence strike in Iraq against an imminent threat at a drone staging site, according to a US military official. US Vice President Harris said international humanitarian law must be respected in the Gaza war and too many innocent Palestinians have been killed, while she added that Israel has a legitimate military objective against Hamas but must do more to protect civilians. There were also comments from Secretary of Defense Austin who said protecting civilians in Gaza is a strategic imperative for Israel, as well as noted that the US will remain Israel’s closest friend and won’t let Hamas win. UK Foreign Secretary Cameron will travel to Washington D.C. on Wednesday and will conduct bilateral meetings with US Secretary of State Blinken, as well as meet congressional figures, while the focus of discussions will be support for Ukraine and to work to de-escalate tensions in the Middle East, according to Reuters. Islamic Jihad said Britain announced the participation of its air force in intelligence missions in Gaza as an effective participation in the aggression, according to AJA Breaking via social media platform X. Turkish President Erdogan said the chance for peace in the conflict is lost for now due to Israel’s uncompromising approach, while he added that Hamas is not a terrorist organisation and nobody should expect him to define them otherwise. Furthermore, Erdogan said a contact group of Muslim countries is ready to prepare a roadmap for the resolution of conflict in Gaza after talks with Western powers. Israel General says ground forces have almost completed their mission in Northern Gaza strip Other NATO Secretary General Stoltenberg said NATO should be ready for bad news from the Ukrainian front as Kyiv continues to defend against Russia’s invasion, while he added that they have to support Ukraine in both good and bad times, according to an ARD interview cited by Politico. China's military said a US combat ship illegally entered waters adjacent to the Second Thomas Shoal and that the US deliberately disrupted the South China Sea, while it added the US seriously violated China's sovereignty and undermined regional peace and stability. Philippines Coast Guard said it is to conduct patrols in the vicinity of the Whitsun Reef and it is monitoring the illegal presence of more than 135 Chinese maritime militia vessels at a reef in the South China Sea. North Korea said interference with its satellite operation would be considered a declaration of war and that North Korea would respond to any US interference in space by eliminating the viability of US spy satellites. North Korea also stated that its laws stipulate mobilisation of war deterrence if an attack against its strategic assets becomes imminent, according to KCNA. North Korea said US sanctions violate international law and that it will retaliate against the US, Japan and Australia for sanctions against its satellite launch, while it said it will take countermeasures against individuals and organisations that impose and enforce sanctions, according to KCNA. Furthermore, North Korea warned a “physical clash and war” have become a matter of time after the scrapping of a key military pact designed to reduce tensions with South Korea, according to The Telegraph. Venezuela on Sunday approved a referendum called by the government of President Maduro to claim sovereignty over an oil- and mineral-rich area of Guyana, according to AP News. Ukrainian drone attacked an oil depot within Russian-controlled Luhansk, via Ria US Event Calendar 10:00: Oct. Cap Goods Orders Nondef Ex Air, prior -0.1% 10:00: Oct. Cap Goods Ship Nondef Ex Air, prior 0% 10:00: Oct. -Less Transportation, prior 0% 10:00: Oct. Factory Orders Ex Trans, prior 0.8% 10:00: Oct. Factory Orders, est. -3.0%, prior 2.8% 10:00: Oct. Durable Goods Orders, est. -5.4%, prior -5.4% DB's Jim Reid concludes the overnight wrap All roads this week point to payrolls on Friday with the usual build up via JOLTS (tomorrow) and ADP (Wednesday). Elsewhere in the US the Services ISM is out tomorrow (we will also watch the employment sub component ahead of payrolls), and the initial read on inflation expectations in the University of Michigan confidence sentiment release (Friday) will be of note after 5-10yr expectations ticked up to a decade high of 3.2% last month. Remember the Fed are now on a blackout period ahead of next week's FOMC so some of the big catalyst for moves of late, i.e. Fed speakers, won't be there. Around the globe, other highlights include a few important releases in Germany including the trade balance (today), factory orders (Wednesday) and industrial production (Thursday). Industrial production indicators are also due in France and Italy. Retail sales data is out for the Eurozone on Wednesday. In China, the Caixin services PMI (tomorrow) and trade balance figures (Thursday) are the highlights. Tokyo CPI is out just before midnight tonight From central banks, Lagarde and Guindos speak today with the RBA (tomorrow) and Bank of Canada (Wednesday) expected to hold rates by the consensus although our economist is an outlier and predicts a hike in Australia . For the full week ahead the day-by-day calendar is at the end as usual. Digging a bit deeper into the US employment picture, our US economists expect headline and private payrolls to come in at +130k with consensus at +180k and +160k respectively. The returning post-strike autoworkers will boost the data by around +30k. Unemployment is expected to hold steady at 3.9% by DB and the consensus, although our economists see the risks tilted to a 3.8% print. One thing our economists look carefully at is the diffusion index that shows the breadth of job gains. It's currently at 52%, its lowest rate since the pandemic. They show that 70% of the private job gains in the last year come from only two sectors, namely leisure and hospitality and private education and healthcare. Outside of that job creation in the last 12 months is a very lowly 0.7% and just 0.2% over the last 6. Staying with US labour markets, the JOLTS data tomorrow is also important even if it's October data. As our economists point out, while the hiring and quits rates were at or below their 2019 averages in September, the layoffs and discharges rate remained near historical lows. So that gap is keeping labour markets tight for now. Our base case is that the demand for labour eases in the next few months. Asian equity markets are mostly trading lower as I type. The Nikkei (-0.72%), Hang Seng (-0.60%), CSI (-0.27%) and Shanghai Composite (-0.14%) are slipping while the KOSPI (+0.39%) is bucking the negative trend this morning. S&P 500 (-0.12%) and NASDAQ 100 (-0.28%) futures are also edging lower. 2 and 10yr Treasuries are back up +5-6bps this morning after a very strong rally last week as we'll see below. Gold is up just under a percent and looking set for its highest close ever and Bitcoin is up over +3% and to the highest since April last year. In stock specific news, shares of Evergrande Group rose over +9.0% as a court hearing of the world’s most-indebted property developer over its possible liquidation was surprisingly postponed to January 29, 2024. Recapping last week now, markets continued their strong performance as positive data added to growing investor confidence that the next move for central banks will be a dovish pivot. In fact, last week saw the close of the best month for a global 60:40 portfolio of equities and bonds since the positive vaccine news in November 2020. Supporting last week’s rally was encouraging inflation data on both sides of the Atlantic, an upward revision of US GDP for Q3 that showed annualised growth of +5.2% (previously +4.9%), and some dovish Fedspeak . The rally was most pronounced in fixed income. After a brief stumble on Thursday, it continued on Friday as markets proved unphased by Fed Chairman Powell’s statement on Friday that the Fed was ready to tighten if needed. Instead, markets elected to focus on his comment that policy is “well into restrictive territory”. Fed funds futures moved to price in 134bps of cuts by December 2024, up from 90bps at the start of the week. This meant that 2yr Treasury yields fell -41.1bps (and -14.2bps on Friday) to their lowest level since June. 10yr yields were down -27.1bps (-13.0bps on Friday), their sharpest weekly decline since January and hitting their lowest level since the first week of September . The stream of good news was also echoed in Europe, most notably with the November inflation numbers on Wednesday and Thursday, which saw Eurozone inflation slow to 2.4% (2.7% exp), its lowest since July 2021. With disinflation playing out faster than the ECB expected, markets raised their expectations of ECB rate cuts to price in 69bps of rate cuts by June 2024, up from 28bps at the start of last week. You can read our European economists’ take on the inflation numbers here. Off the back of this, 10yr bund yields fell -28.2bps last week (and -8.5bps on Friday) hitting their lowest level since June. The more interest-rate sensitive 2yr bund yields fell -39.0bps (and -13.4bps on Friday), to their lowest level since May. The fixed income rally boosted risk appetite, though the +0.77% weekly rise for the S&P 500 (+0.59% on Friday) was remarkably its smallest gain in five weeks. The gains were broad-based, with the NASDAQ slightly underperforming (+0.38% on the week; +0.55% on Friday) and with the Magnificent Seven mega cap index down -1.19% (-0.24% Friday). Small cap stocks enjoyed the risk-on tone after rising +3.05% last week (and +2.96% on Friday). Over in Europe, the STOXX 600 posted a solid gain of +1.35% week-on-week (and +0.99% on Friday). Finally, in commodities, gold enjoyed a strong week, soaring +3.57% (+1.73% on Friday) to a new all-time high of $2,072/oz. Meanwhile, the confirmation of OPEC+ cuts into 2024 did little to drive upward price momentum in oil, as markets remained doubtful over compliance to the new “voluntary cuts”. Brent crude fell -2.11% to $78.88/bbl, though its -4.77% fall on Friday was exaggerated by a shift in the benchmark month. WTI crude fell -2.49% to $74.07/bbl (and -1.95%% on Friday). Tyler Durden Mon, 12/04/2023 - 08:20.....»»

Category: worldSource: nytDec 4th, 2023

US Futures Rise As November Surge Closes Strong, Oil Jump Ahead Of Fresh OPEC+ Output Cut

US Futures Rise As November Surge Closes Strong, Oil Jump Ahead Of Fresh OPEC+ Output Cut US equity futures, European bourses and Asian markets all advanced, and Treasuries steadied at the end of a blistering November run after more dovish comments from hawkish Fed officials this week, and as investors waited for a key US inflation metric for further evidence that price pressure are cooling.  As of 7:55am ET, S&P futures rose 0.3% while US 10-year yields climb 3bp to 4.29%. Treasuries paused their strongest monthly gain since 2008, with yields on 10-year paper up four basis points at 4.30%. The dollar bounced 0.4% at the end of its worst month in a year, sending all major developed- and emerging-market currencies lower. The euro traded down 0.5% versus the greenback as the pace of price growth in the region cooled. Today’s macro focus will be the PCE, Personal Income/Spending and Initial Jobless Claims. The PCE release today will provide us with more details on the disinflation trend in Q4: Consensus sees core PCE printing 3.5% YoY vs. 3.68% prior. Eyes will also be on OPEC+ today as the group may consider a production cut at today’s meeting: RTRS sources said OPEC+ ministers agreed for a preliminary cut for over 1mn bpd. In premarket trading, megacap tech are leading gains morning, with TSLA +65bp and GOOGL + 29bp. Salesforce jumped about 9% after the application software company’s third-quarter results and profit forecasts beat estimates. Here are some other notable premarket movers: HP Enterprise shares are up about 3% and are set to extend gains for a second session as Morgan Stanley raised its recommendation following results. ImmunoGen shares are halted after AbbVie (ABBV) agreed to buy the company. Stock is set to resume trading at 8 a.m. Nutanix gains about 9% as strong demand fueled a quarterly sales beat. Okta Inc. is down about 2% after a pair of analysts issued downgrades following the company’s breach disclosures. Pure Storage slumps 17% after the technology company’s outlook disappointed. Snowflake climbs about 7% after the US cloud-software company posted 3Q results that beat expectations and the firm gave an outlook that is seen as strong. Synopsys shares are up 2% after the maker of electronic design automation software reported fourth-quarter results that beat expectations. Easing inflation and signs of a milder-than-expected slowdown in the US economy have sent Treasuries, agency and mortgage debt to their best month since the 1980s, triggering a November surge that pulled along assets from stocks to credit to emerging markets. Oil gained following a Reuters reports that OPEC+ has reached a preliminary agreement on an additional output cut of more than 1mb/d. Details of how the cut will be distributed are yet to be finalised, but it is important that Saudi Arabia appears to have been able to maintain the unified stance from OPEC+ -- at least long enough to move through the seasonally low demand period of 1Q24. Front-month Brent crude is up is up 2% at $84.69 a barrel. Data due Thursday is forecast to show the Fed’s preferred inflation metric — the personal consumption expenditures price index — decelerated in October to the slowest annual rate since early 2021. “Momentum on the other side of the pond is likely to remain bullish rates,” wrote Evelyne Gomez-Liechti, a multi-asset strategist at Mizuho International Plc in London. “The PCE inflation data for October is most likely going to echo what we already saw in the October CPI and PPI reports and add to the soft-landing narrative.” Now, traders are looking to a speech by Fed Chair Jerome Powell on Friday. “Upcoming Fed communication could continue to stress the need hold rates steady for some time,” said Hauke Siemssen, rates strategist at Commerzbank AG. “We expect the air to be getting thinner for further bond market performance ahead of the usual supply wave early next year.” European stocks are in the green with the Stoxx 600 rising 0.4%, set for their best month since January. Energy, financial and insurance shares are leading gains; oil stocks are the top performers on Europe’s Stoxx 600 index, as OPEC+ producers prepare to discuss additional output cuts of about one million barrels a day.  The euro sank after weak French economic data and a Euro-zone inflation print that came in lower than the estimates of all economists in a Bloomberg poll. Traders are now fully pricing in a rate cut from the ECB by April after data showed euro-area inflation slowed more than expected in November.  Here are some of the biggest movers on Thursday: VAT Group shares climb as much as 5.6%, to the highest level since January 2022 after the Swiss chipmaker announced it will end its short-time work scheme in the country’s production sites. Leonardo shares rise as much as 4.8%, the most intraday since Oct. 9, as JPMorgan reinstates full coverage of the aerospace and defense company with an overweight rating. A recovery in end markets and “self-help” can drive the shares higher in coming years, according to the analysts. ABB shares climb as much as 1.9%, touching the highest level since August, as the Swiss industrial conglomerate’s new revenue and margin targets came in ahead of estimates. The update will trigger low to mid-single digit percentage upgrades to 2025 consensus expectations, according to Citigroup. ASR Nederland and NN Group both soar by as much as 15% as ASR’s settlement of a long-standing miss-selling case removes a major overhang for the company and provides optimism of a resolution for its Dutch peer NN. Outokumpu shares surge as much as 14%, the most in almost 13 months, after the Finnish steelmaker announces an extension to its partnership with AM/NS within the Americas region, which Morgan Stanley says removes a key overhang. ASML shares drop as much as 1.8% after the Dutch chip-equipment maker said Christophe Fouquet will become CEO when Peter Wennink retires next year. Chief Technology Officer Martin van den Brink, who worked at the firm since its foundation in 1984, will also retire. Dr Martens shares plummet as much as 27%, dropping to the lowest intraday level on record, after the bootmaker’s first-half revenue missed estimates. The company also said that improvement in the US business will probably take longer than expected. Analysts viewed the results as weak overall, with Morgan Stanley attributing the miss mainly to industry-wide destocking across the Americas wholesale channel. OCI falls as much as 9.3% after being downgraded to hold from buy at Jefferies, which said that natural gas supply is becoming ample, potentially hurting profits from company’s planned investments. Future plc drops as much as 8.5% after Canaccord Genuity downgrades the media company to sell from hold, saying there is material risk of downgrades to consensus. It is the stock’s only negative analyst rating. Elekta shares fall as much as 7.1%, the most intraday in six months, after the Swedish medical equipment firm reported second-quarter results, with analysts noting some weakness in the company’s outlook comments and a strong share-price performance ahead of the release. Siltronic shares fall as much as 5.7% after the German silicon wafer manufacturer says chip inventories will remain high for at least the first half of 2024. The company also set mid-term sales growth targets that Jefferies said were slightly below consensus expectations. Earlier in the session, Asian stocks gained, with investors in Chinese shares shrugging off a weak set of economic data on expectations that Beijing will ramp up support for the flagging economy. The MSCI Asia Pacific Index rose as much as 0.2%, buoyed by Chinese tech giants such as Tencent, with the gauge headed toward its best month since January. Japanese shares fell for a fourth day as the yen strengthened, while Korean stocks advanced after the Bank of Korea held its key interest rate. Hong Kong’s Hang Seng Index rebounded from the lowest level in a year after activity in China’s manufacturing and services sectors shrank in November, adding to expectations of further government support for the economy. Chinese President Xi Jinping’s first visit to Shanghai in three years was also seen as a positive for the tech sector. The relief rally in Chinese stocks could extend into early 2024 on “easing US-China tensions, China’s easing deflation, revenue growth pickup and further cost and interest expense cuts by enterprises lending support to non-financial margins,” JPMorgan & Chase Co. strategists including Wendy Liu wrote in a note. Hang Seng and Shanghai Comp were indecisive with only brief pressure seen after the PMI data showed a steeper contraction in China’s factory activity which raises the prospects for further supportive measures. Japan's Nikkei 225 swung between gains and losses amid recent currency strength and with better-than-expected Industrial Production offset by softer Retail Sales. Korea's Kospi was just about kept afloat following the unsurprising decision by the BoK to keep rates unchanged and noted that it will maintain a restrictive policy stance for a sufficiently long period of time. Australia's ASX 200 was choppy after mixed data in which Building Approvals topped forecast and Private Capital Expenditure missed estimates. In FX, the Bloomberg Dollar Spot Index rose as much as 0.4%; but for the month it is poised to fall around 3%, its worst month in a year. The euro fell 0.5% as German yields slid as markets pulled forward expectations for ECB rate cuts, now fully pricing in the first rate cut by April 2024. Investors have become confident that the Fed has ended its monetary tightening campaign, and have turned their focus on rate cuts for next year, which has weighed on the dollar and boosted Treasuries. “A medium-term US dollar weakening trend is already underway,” Wells Fargo strategists including Aroop Chatterjee wrote in a research note. “The US dollar owes its recent strength to the high levels of US real rates — above 2% across much of the curve. We expect these to head toward more normal levels as the economy slows and disinflation continues” In rates, treasuries were slightly cheaper across the curve with losses led by long-end, extending Wednesday’s steepening move. US 10-year yields around 4.295%, cheaper by 4bp on the day with bunds outperforming by 3bp in the sector; continued long-end underperformance steepens 2s10s spread by 2.5bp while 5s30s is only slightly wider vs Wednesday close. 10-year touched 4.246% during Asia session, lowest level since September, extending retreat from October’s multiyear high near 5.02% that has fueled the market’s biggest monthly advance since 2008 (3.9% through Nov. 29). Core European rates outperform after French November inflation slowed more than expected. In commodities, crude futures advance as the OPEC meeting gets underway, with WTI rising 1% to trade near $78.70. Spot gold falls 0.3%. To the day ahead now, and the main data highlight will be the flash CPI release for the Euro Area in November, which printed below the lowest estimate as European inflation slides, along with the unemployment rate for October. In the US, we’ll get the weekly initial jobless claims, PCE inflation, and personal income and spending for October. Central bank speakers include ECB President Lagarde, the ECB’s Panetta and Nagel, the Fed’s Williams, and the BoE’s Greene. Otherwise, the COP28 summit begins today, and there’s also the OPEC+ meeting taking place. Market Snapshot S&P 500 futures up 0.1% to 4,565.75 STOXX Europe 600 up 0.2% to 459.86 MXAP up 0.4% to 162.25 MXAPJ up 0.3% to 505.27 Nikkei up 0.5% to 33,486.89 Topix up 0.4% to 2,374.93 Hang Seng Index up 0.3% to 17,042.88 Shanghai Composite up 0.3% to 3,029.67 Sensex little changed at 66,932.47 Australia S&P/ASX 200 up 0.7% to 7,087.33 Kospi up 0.6% to 2,535.29 German 10Y yield little changed at 2.41% Euro down 0.3% to $1.0936 Brent Futures up 0.8% to $83.80/bbl Gold spot down 0.1% to $2,041.77 U.S. Dollar Index up 0.34% to 103.11 Top Overnight News Occidental Petroleum is in talks to buy CrownRock, a major energy producer in the west Texas area of the Permian basin, continuing a frenzy of deal making in the oil patch. A deal for the closely held company, which could be valued well above $10 billion including debt, could come together soon assuming the talks don’t fall apart or another suitor doesn’t prevail, according to people familiar with the matter. WSJ Elon Musk told advertisers who have halted spending on X due to his endorsement of an antisemitic post to “go F” themselves, deepening a rift between the billionaire and the companies that generate most of the social media platform’s revenue. FT China’s NBS PMIs for Nov fall short of expectations, with manufacturing coming in at 49.4 (down from 49.5 in Oct and below the Street’s 49.8 forecast) and services sliding to 50.2 (down from 50.6 in Oct and below the Street’s 50.9 forecast). FT WMT shipped 25% of all its US imports from India between Jan and Aug of '23 vs. just 2% in '18 as the firm moves its supply chain away from China (imports from China went from 80% to 60% of the total). RTRS China Evergrande seeks to avoid liquidation with a last-minute debt restructuring plan, but creditors are unlikely to accept the new proposal. RTRS France’s CPI falls by more than expected in Nov, coming in at +3.8% (down from +4.5% in Oct and below the Street’s +4.1% forecast). RTRS Eurozone CPI sinks by more than anticipated in Nov, with headline coming in at +2.4% (down from +2.9% in Oct and below the Street’s +2.7% forecast) and core +3.6% (down from +4.2% in Oct and below the Street’s +3.9% forecast). BBG Israel and Hamas agreed to extend their truce for at least another day in an announcement just minutes before it was set to expire. Antony Blinken will discuss the path forward with the Israeli government today. BBG Henry Kissinger, the former US secretary of state, died at the age of 100. He defined American foreign policy in the 1970s with his strategies to end the Vietnam War, and remained China’s preferred go-between with Washington until his death. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks were mixed and indecisively capped off this month’s notable gains as the Israel-Hamas truce hung in the balance before the announcement of a last-minute one-day extension, while participants also digested a slew of key data releases including disappointing Chinese official PMI figures. ASX 200 was choppy after mixed data in which Building Approvals topped forecast and Private Capital Expenditure missed estimates. Nikkei 225 swung between gains and losses amid recent currency strength and with better-than-expected Industrial Production offset by softer Retail Sales. KOSPI was just about kept afloat following the unsurprising decision by the BoK to keep rates unchanged and noted that it will maintain a restrictive policy stance for a sufficiently long period of time. Hang Seng and Shanghai Comp were indecisive with only brief pressure seen after the PMI data showed a steeper contraction in China’s factory activity which raises the prospects for further supportive measures. Top Asian News Taiwan is closely monitoring China's respiratory illnesses outbreak and will adjust epidemic prevention measures when needed. BoK kept its base rate unchanged at 3.50%, as expected, with the decision unanimous and four out of the seven board members said the door to a rate hike should remain open. BoK said uncertainties to the growth path are high with the economy facing heightened geopolitical risks and restrictive monetary policies abroad, while it will maintain a restrictive policy stance for a "sufficiently long period" of time (prev. "considerable time") until the board is confident inflation will converge to the target level. Furthermore. Governor Rhee said the current policy rate is sufficiently restrictive and that restrictive monetary policy could stay for longer than six months. Hong Kong Exchange consultation paper on severe weather: severe conditions will no longer have automatic consequential impact on the continuity of trading European bourses currently post modest gains, Euro Stoxx 50 +0.2%, despite spending the majority of the morning in the red; with the FTSE 100 outperforming, +0.6%, boosted by broader Crude price action pre-OPEC+; DAX 40 is lifted by SAP, +1.1%, as a read-over from Salesforce earnings. European sectors are mixed, though with a positive tilt; Energy significantly outperforms whilst Autos lag. Stateside futures, NQ & ES +0.2%, tilt higher in-fitting with the European bias as markets await US PCE data. Top European News German Finance Minister Lindner said Germany faces a EUR 17bln gap in the 2024 budget. Dutch NSC party said it is not ready to negotiate on joining the Cabinet with far-right leader Wilders, according to ANP. ECB to, as usual, temporarily pause PEPP purchases (reinvestments) in anticipation of significantly lower market liquidity towards the end of this year. The last trading day before 19th December 2023, and purchases will resume on 2nd January 2024. BoE Monthly Decision Maker Panel (3rd-17th Nov): One-year ahead CPI inflation expectations decreased to 4.4% in November, down from 4.6% in October, expected year-ahead wage growth remained unchanged at 5.1%. The three-month moving average fell by 0.2 percentage points to 4.6% in the three months to November. Three-year ahead CPI inflation expectations increased 0.1 percentage point to 3.2% in November. ECB will discuss QT in December, via Econostream citing an ECB insider; some preference for coming to a QT decision next year as it means less once in 2024. Lagarde will not try to delay the discussion indefinitely. Will not take many meetings to come to a decision on PEPP, given broad agreement currently. PEPP change is expected, liquidity is high; unworried by how markets will take the change. ECB’s Panetta says ECB needs to avoid "useless damage" to the economy and financial stability that would end up also putting price stability at risk; ECB may be able to ease monetary conditions if persistently weak output accelerates decline in inflation; Monetary tightening has not yet had full impact, it will continue to dampen demand in the future FX Dollar resumes recovery rally with a firm fillip from the Euro post-EZ inflation data and pre-US PCE/IJC. DXY towards top of 103.35-102.71 range and EUR/USD hovering near bottom of 1.0910-84 band. Pound and Yen suffer contagion, with Cable sub-1.2650 and USD/JPY above 147.50 compared to 1.2700+ and 146.85 at one stage. Loonie underpinned between 1.3568-1.3616 parameters as oil rebounds in advance of Canadian GDP metrics. PBoC set USD/CNY mid-point at 7.1018 vs exp. 7.1273 (prev. 7.1031). Banxico Governor Rodriguez said they do not see a rate cut in the December decision but it is possible they could begin a discussion of rate cuts in meetings early next year. Fixed Income Debt futures wane after short squeeze fizzles out. Bunds hit brakes just ahead of 133.00 as cool EZ inflation data pre-empted. Gilts undermined by extra DMO issuance and probing 97.00 to downside. T-note near base of 110-05+/14 range awaiting US PCE and IJC. UK DMO Gilt Auction Calendar: December 2023-March 2024. Two Gilts (2053 & 2034) to be sold at the additional auctions on 13th & 19th December; The gilts to be issued at auctions on 5, 6 and 12 December 2023 were previously announced on 31 August 2023. The auctions on 13 and 19 December 2023 were added to the calendar at the remit revision published on 22 November 2023 Commodities WTI and Brent, +1.9%, extend gains following reports that OPEC+ has a preliminary agreement for additional oil output cuts in excess of 1mln BPD, according to Reuters; reminder the JMMC commences at 08:30EST and the OPEC+ gathering at 09:30EST. Spot Gold is marginally lower, owing to the firmer Dollar, though with overall trade rangebound ahead of US PCE, base metals are mixed/flat following on from weaker Chinese PMI data and the FX influence. OPEC "proposal is around Saudi Arabia extending the voluntary cuts of 1 million bpd and then on top of that other states may add additional cuts", via Energy Intel's Bakr OPEC+ has a preliminary agreement for additional oil output cuts in excess of 1mln BPD, via Reuters citing a delegate; Talks around an OPEC cut of more than 1mln BPD will depend on how much could be contributed by members states, Energy Intel reports; adds almost all member states appear to be aligned that a deeper cut is needed Updated OPEC Timings for today: OPEC meeting at 10:00GMT/05:00EST, JMMC meeting at 13:30GMT/08:30EST, OPEC+ meeting at 14:30GMT/09:30EST, according to EnergyIntel's Bakr OPEC/OPEC+ meetings expected to occur as scheduled on Thursday, via Reuters citing sources; OPEC+ continues to discuss additional oil output cut for early-2024 OPEC+ additional output cut discussions range from 1-2mln BPD, according to Reuters sources OPEC+ reportedly mulls new oil production cuts amid the Middle East conflict with Saudi Arabia favouring a curb of up to 1mln BPD, while other members oppose downgrading quotas with Nigeria and Angola resisting a downgrade of their individual quotas and the UAE is also reluctant to cut output. Furthermore, it was stated that a rollover of most existing output curbs is the most likely scenario but talks are continuing, according to WSJ citing delegates. Kazakhstan Energy Ministry said oil output was down 34% at Karachaganak oilfield on November 29th due to the Black Sea storm. Oil loadings from Novorossiysk and CPC terminals remained shut on Wednesday amid a storm with the November plan for Novorossiysk delayed by over 1mln tons, according to Reuters sources. First Quantum (FM CA) announced the suspension of 7,000 contract employees due to force majeure at its Panama mine. Geopolitics: Israel-Hamas Israeli military said the truce will continue in light of mediators' efforts to release more hostages and Hamas also confirmed that it agreed to extend the truce for a seventh day, according to Reuters. Sources in Israel's war council earlier noted that Hamas's list of the new batch of hostages to be released did not meet the agreed criteria and Israel officials warned fighting will resume if Hamas does not present a new list by 07:00 local time (05:00GMT/00:00EST), while Hamas confirmed Israel rejected its proposed hostage release and it told its fighters to be ready for renewed battles if the truce with Israel was not extended, according to Al Jazeera, Al Arabiya and Reuters. Israeli prison service announced it released 30 Palestinians in the sixth round of Gaza truce swaps on Wednesday. UK Defence Minister Shapps is sending a warship to the Gulf region amid fears of a ramp up in Iranian missile attacks. The warship will protect against drone threats and ensure safe flow of trade, according to the Telegraph. China issued a position paper on the Israeli-Palestinian conflict which stated that the UN Security Council should respond to the general call of the international community for a comprehensive ceasefire to be put in place to stop the fighting. Furthermore, China's Foreign Minister Wang Yi said a spillover of the Israeli-Palestinian conflict to the entire Middle East region should be avoided by urging countries that have an impact on the parties to play an active role, while he added that China is to send another batch of emergency humanitarian supplies to Gaza to alleviate the humanitarian situation. "Sirens in the Upper Galilee in northern Israel after a march crept in from southern Lebanon", according to Al Arabiya United Nations Interim Force In Lebanon says Israel retaliated to cross-border fire from Lebanon "Estimates in Israel indicate that tomorrow is the last day of the truce in Gaza", according to Al Arabiya citing Israeli Press Yedioth Ahronoth Geopolitics: North Korea North Korean leader Kim inspected satellite photos of a US naval base in San Diego and Kadena air base in Japan, while North Korea said it will never sit face-to-face with the US for negotiations, according to KCNA. US Event Calendar 08:30: Nov. Initial Jobless Claims, est. 218,000, prior 209,000 Nov. Continuing Claims, est. 1.87m, prior 1.84m 08:30: Oct. Personal Income, est. 0.2%, prior 0.3% Oct. Personal Spending, est. 0.2%, prior 0.7% Oct. Real Personal Spending, est. 0.1%, prior 0.4% 08:30: Oct. PCE Deflator MoM, est. 0.1%, prior 0.4% Oct. PCE Core Deflator YoY, est. 3.5%, prior 3.7% Oct. PCE Core Deflator MoM, est. 0.2%, prior 0.3% Oct. PCE Deflator YoY, est. 3.0%, prior 3.4% 09:45: Nov. MNI Chicago PMI, est. 46.0, prior 44.0 10:00: Oct. Pending Home Sales YoY, est. -8.8%, prior -13.1% Oct. Pending Home Sales (MoM), est. -2.0%, prior 1.1% Central Bank speakers 09:15: Fed’s Williams Speaks on Innovations in Central Banking DB's Jim Reid concludes the overnight wrap Morning from Zurich where it is currently snowing. I know that as the hotel gym is 200 meters away from the hotel and I've finished this off on an exercise bike here this morning. That was a long 200 meters dressed in just gym kits! For markets the sun has shined almost every day this month and as we arrive at the last day, bonds have continued their extraordinary performance over November, driven by growing hopes for a soft landing and a dovish central bank pivot. That excitement meant that we saw another strong rally yesterday, with the 2yr Treasury yield (-8.8bps) falling to its lowest level since July, at 4.65%, whilst other records were being set across the board. For instance, Bloomberg’s global bond aggregate is currently on course for its best month since December 2008, and the US bond aggregate is on course for its best month since May 1985. That said, equities struggled to gain much traction yesterday after an equally dizzying run, with the S&P 500 paring back its initial gains to close down -0.09%. The main catalyst for this rally was another round of downside surprises on inflation. In particular, the preliminary German CPI reading for November fell to just +2.3% on the EU-harmonised measure (vs. +2.5% expected), which is the lowest it’s been since June 2021. Earlier in the day, we also had a downside surprise from Spain, where CPI fell to +3.2% (vs. +3.7% expected). So all that has set us up nicely for the Euro Area-wide release this morning. That good news narrative was then supported by some robust data from the US, which saw the strong Q3 GDP performance revised up even higher. The latest estimate showed annualised growth at a +5.2% rate (vs. +4.9% before), and it also included downward revisions to PCE and core PCE inflation, which is the measure the Fed officially targets. Specifically, the Q3 PCE number was revised down a tenth to +2.8%, and core PCE was also revised down a tenth to +2.3%. So all other things being equal the revisions were in a soft landing direction. Today’s PCE and personal spending data for October will give us more colour on where in Q3 these revisions came and the read through for Q4. This data meant that investors grew even more excited about near-term rate cuts, with futures pricing in the most dovish path in months. For instance, a March rate cut by the Fed was seen as a 50% chance at the close, and a cut is now fully priced in by the May meeting. It’s a similar story at the ECB as well, with a cut now fully priced by April. So when it comes to market pricing, a Q1 rate cut has gone from being a complete out-of-consensus view only a month ago, to a serious proposition now. It will be fascinating to see what Mr Powell makes of all this tomorrow. This rally all started at the last FOMC meeting on 1 November with him repeatedly noting that financial conditions had tightened "significantly". This shifted the market’s attention from a slight chance of hikes to cuts. Since then this trade has taken a life of its own. With bonds and equities performing so strongly over the past month, it will be very interesting if Powell endorses or pushes back on it. With rate cuts seemingly coming closer, sovereign bonds rallied very strongly on both sides of the Atlantic, particularly at the front end. For instance, yields on 2yr Treasuries (-8.8bps) fell to their lowest level since July, at 4.65%, and those on 10yr Treasuries (-6.6bps) were at their lowest since September, at 4.26%. In Europe, there was a similar rally, with yields on 10yr bunds (-6.4bps), OATs (-6.4bps) and BTPs (-8.2bps) all seeing a considerable decline. In fact for 10yr bunds, that left them at 2.43%, which is the lowest they’ve been since July . Whilst hopes were growing about a soft landing, risk assets struggled to gain much traction despite a strong performance at the open. Some of that weakness followed comments from Richmond Fed President Barkin, who struck a more hawkish tone than recent Fed speakers. He pointed out that “if inflation is going to flare back up, I think you want to have the option of doing more on rates. That said, other Fed speakers avoided such hawkish signals. Atlanta Fed President Bostic expressed confidence that the “the downward trajectory of inflation will likely continue”, while Cleveland Fed President Mester said that “monetary policy is in a good place”. Back in Europe, we heard from Greek central bank Governor Stournaras that the first rate cut could come in mid-2024 but that pricing of an April ECB cut seemed a bit optimistic. So some pushback against increased market pricing of cuts coming from one of the more dovish ECB voices. Equities started the day on the front foot but then lost ground, with the S&P 500 falling back from a gain of +0.72% to close -0.09% lower. The Dow Jones (+0.04%) and the NASDAQ (-0.16%) were also near-flat on the day, with one outperformer being the small-cap Russell 2000, which rose +0.61%. Bank stocks were also a notable outperformer, with the S&P 500 banks index (+1.46%) rising to its highest level since mid-August . European risk assets outperformed their US counterparts yesterday, with the STOXX 600 advancing +0.45%, whilst the DAX was up +1.09% to its highest level since early August. That was echoed in the credit space too, where the iTraxx Crossover (-10.2bps) moved to its tightest since April 2022, at 367bps. The moves came as we also got some better-than-expected sentiment data, with the European Commission’s economic sentiment indicator ticking up for a second month running to 93.8 (vs. 93.6 expected), having previously been on a run of five consecutive declines. In the commodities space, oil prices gained ahead of today’s OPEC+ meeting, with Brent crude up +1.74% to $83.10/bbl and WTI up +1.90% to $77.86/bbl. Today’s OPEC+ meeting had previously been scheduled for last weekend but was delayed amid negotiation difficulties over potential new output cuts. The WSJ reported yesterday that the alliance was considering new production cuts of as much as 1mmb/day. In our 2024 World Outlook mentioned at the start, our oil analyst noted that, with subdued oil demand growth and rising non-OPEC production, the global oil market would move into an oversupplied position in early 2024 if there were no further OPEC+ output cuts . Moving on to Asia, equity markets are trading in a tight range this morning even with the downbeat China PMIs highlighting the sustained softness in the world’s second biggest economy. In terms of specific moves, the Hang Seng (+0.18%), the CSI (+0.24%) and the Shanghai Composite (+0.16%) are trading slightly higher on the hopes for more policy support. Elsewhere, the Nikkei (+0.03%) is reversing its opening losses while the KOSPI (+0.04%) is also fairly flat following the Bank of Korea’s decision to keep its interest rate unchanged at 3.5%. S&P 500 (+0.13%) and NASDAQ 100 (+0.20%) futures are looking to wrap up a stella month in style . Coming back to China, the official factory activity measure shrank for the second consecutive month in November, slipping to 49.4 (v/s 49.8 expected) from 49.5 in October, dragged down by insufficient demand. Additionally, the official non-manufacturing PMI dropped to 50.2 in November (v/s 50.9 expected) from 50.6 in October, recording its weakest level since December 2022. Elsewhere, retail sales in Japan rose at its slowest pace so far this year, increasing +4.2% y/y in October (v/s +6.0% expected) compared to a revised +6.2% gain in September. Meanwhile, industrial output rebounded +0.9% y/y in October, exceeding market forecasts for a +0.4% increase and after a -4.4% drop in the previous month. Staying with data, there was some more positive data from the UK yesterday, where mortgage approvals rose to 47.4k in October (vs. 45.3k expected), ending a run of three consecutive declines. That was above every economist’s estimate in Bloomberg’s survey, and it adds to the theme of better-than-expected UK data over the last week, including the flash PMIs and the GfK’s consumer confidence reading. To the day ahead now, and the main data highlight will be the flash CPI release for the Euro Area in November, along with the unemployment rate for October. In the US, we’ll get the weekly initial jobless claims, PCE inflation, and personal income and spending for October. Central bank speakers include ECB President Lagarde, the ECB’s Panetta and Nagel, the Fed’s Williams, and the BoE’s Greene. Otherwise, the COP28 summit begins today, and there’s also the OPEC+ meeting taking place. Tyler Durden Thu, 11/30/2023 - 08:14.....»»

Category: dealsSource: nytNov 30th, 2023

Russia Takes Control Of Iraq"s Biggest Oil Discovery For 20 Years

Russia Takes Control Of Iraq's Biggest Oil Discovery For 20 Years By Simon Watkins of Preliminary estimates suggested that Iraq’s Eridu oil field holds between 7-10 billion barrels of reserves. Senior Russian oil industry sources spoken to exclusively by last week said the true figure may well be 50 percent more than the higher figure of that band. In either event, the Eridu field - part of Iraq’s Block 10 exploration and development region – is the biggest oil find in Iraq in the last 20 years, and Russia wants to control all of it, alongside its chief geopolitical ally, China. This is in line with Moscow and Beijing’s objective of keeping the West out of energy deals in Iraq to keep Baghdad closer to the new Iran-Saudi axis and to “end [the] Western hegemony in the Middle East [that] will become the decisive chapter in the West’s final demise,” as exclusively related to The approval last week by Iraq’s Oil Ministry for Inpex – the major oil company of key U.S. ally Japan – to sell its 40 percent stake in the Block 10 region that contains the huge Eridu discovery leaves the way clear for Lukoil to take total control of the entire oil-rich area. Lukoil had held a 60 percent stake in the entirety of Block 10, with the remainder held by the Japanese firm. However, from March it has been looking for ways to push Inpex out of the Block, and with it the last remnants of Western influence in the area. March saw Iraq’s state-owned Dhi Qar Oil Company (DQOC) formally approve the development of Block 10’s reserves, including for the whole Eridu field. Block 10 lies in the southeast of Iraq, approximately 120 km west of the key oil export route from Basra, and just south of the huge oil fields in and around Nassirya. The contract for Block 10 awarded to Lukoil and Inpex back in 2012 in Iraq’s fourth licensing round gives a relatively high remuneration per barrel rate of US$5.99, although at that point the vast Eridu field had not been discovered. In 2021, after some preliminary testing, Iraq’s Oil Ministry said it expected peak production of at minimum 250,000 barrels per day (bpd) from Eridu by, at that point, 2027. The senior Russian oil industry sources exclusively spoken to by last week, believe peak production could run at least 100,000 bpd higher than the previous figure, contingent on whether the new reserves estimates are correct, although given delays in development since 2021, the date at which that will be achieved is now toward the end of 2029. Back in 2021 – at least before the U.S. formally withdrew from Iraq by ending its ‘combat mission’ there at the end of December – it was clear that Washington knew what Russia and China were up to long term in the country, and how the U.S. was being manipulated by Iraq. In a moment of insight, the then-U.S. Deputy Assistant Secretary of Defense, Dana Stroul, said: “It’s […] clear that certain countries and partners would want to hedge and test what more they might be able to get from the United States by testing the waters of deeper co-operation with the Chinese or the Russians, particularly in the security and military space.” This view could equally have been aimed, not just at Iraq, but also at most other countries in the Middle East at that time - most notably Saudi Arabia, and the UAE. That said, this profound insight had no effect on Washington at that point, and posed no impediment at all to either Russia or China’s continued drive to entirely push the U.S. out of the Middle East, as analysed in depth in in my new book on the new global oil market order. For Iraq, the endgame has been apparent from Russia’s effective takeover of the oil and gas industry of the country’s troublesome semi-autonomous region of Kurdistan in the north. This occurred in the chaos that followed the brutal put-down of the region after 93 percent of its inhabitants voted for full independence from Iraq in September 2017. Russian control over Iraqi Kurdistan was secured via the state’s corporate proxy, Rosneft, through three means, as also analysed in full in my new book. Subsequent to this, Russia has manipulated the region into such a toxic standoff with the central Iraq government in Baghdad that the final stage of the plan to effectively incorporate the Iraqi Kurdistan region into the rest of Iraq, is now proceeding at full throttle. Given this, Russia and China are now moving to secure their dominance over the rest of Iraq, with the removal of Inpex from the vast Eridu field being only the latest example of their broader strategy at work. Multiple field exploration and development deals, plus countless lower-profile ‘contract-only’ agreements, with Russian and Chinese firms allow the two countries plenty of scope to leverage these out into a harder geopolitical presence across the country, including into the very fabric of its key infrastructure. At a recent Iraq Cabinet meeting, it was agreed that the country should now give its full support to rolling out all aspects of the wide-ranging ‘Iraq-China Framework Agreement’ signed in December 2021, but agreed in principle more than a year before that. This agreement is very similar in scope and scale to the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’, as first revealed anywhere in the world in my 3 September 2019 article on the subject and fully examined in my new book. A key part of both deals is that China has first refusal on all oil, gas, and petrochemicals projects that come up in Iraq for the duration of the deal, and that it is given at least a 30 percent discount on all oil, gas, and petrochemicals it buys. Another key part of the Iraq-China Framework Agreement is that Beijing is allowed to build factories across the country, with a corollary build-out of supportive infrastructure. This includes - importantly for its ‘Belt and Road Initiative’ – railway links, all overseen by its own management staff from Chinese companies on the ground in Iraq. The railway infrastructure in Iraq will be completed out after the network in Iran has been finished, and this began in earnest in late 2020 with the contract to electrify the main 900-kilometre railway connecting Tehran to the north-eastern city of Mashhad. As an adjunct to this, plans were put in place to establish a Tehran-Qom-Isfahan high-speed train line and to extend this upgraded network up to the north-west through Tabriz. Tabriz - home to several key sites relating to oil, gas, and petrochemicals, and the starting point for the Tabriz-Ankara gas pipeline – is to be a pivot point of the 2,300-kilometre New Silk Road that links Urumqi (the capital of China’s western Xinjiang Province) to Tehran, and will connect Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan along the way, before it then runs into Europe, via Turkey.  These plans, in turn, link into corollary plans by Russia and China to turn the entire southeast region of Iraq - that culminates with the major oil export hub of Basra - into a region criss-crossed by Russian- and Chinese-controlled oil and gas fields and transportation hubs, as also analysed in full in my new book. One such cornerstone deal was Baghdad’s approval of nearly IQD1 trillion (US$700 million) for infrastructure projects in the city of Al-Zubair just to the south of Basra. The city’s Governor at the time the deal was struck, Abbas Al-Saadi, said China’s heavy involvement in the projects was part of the broad-based ‘oil-for-reconstruction and investment’ agreement – part of the general ‘oil-for-projects’ idea signed by Baghdad and Beijing in September 2019. The Al-Zubair announcement came shortly after the awarding by Baghdad of another major contract to another Chinese company to build a civilian airport to replace the military base in the capital of the southern oil rich Dhi Qar governorate. The Dhi Qar region includes two of Iraq’s potentially biggest oil fields – Gharraf and Nassiriya – and China has said it intends to complete the airport by 2024. This region is also to the immediate north of the huge Eridu oil field and to the northwest of Basra. The airport project will include the construction of multiple cargo buildings and roads linking the airport to the city’s town centre and separately to other key oil areas in southern Iraq. This, in turn, followed yet another deal that will involve Chinese companies building out Al-Sadr City, located near Baghdad, at a cost of between US$7-8 billion, also within the framework of the 2019 ‘oil-for-reconstruction and investment’ agreement. Tyler Durden Wed, 11/29/2023 - 21:00.....»»

Category: personnelSource: nytNov 29th, 2023

FREYR Battery (NYSE:FREY) Q3 2023 Earnings Call Transcript

FREYR Battery (NYSE:FREY) Q3 2023 Earnings Call Transcript November 9, 2023 FREYR Battery beats earnings expectations. Reported EPS is $-0.07, expectations were $-0.4. Operator: Thank you for standing by. My name is Jessica and I will be your conference operator today. At this time, I would like to welcome everyone to the FREYR Battery Third […] FREYR Battery (NYSE:FREY) Q3 2023 Earnings Call Transcript November 9, 2023 FREYR Battery beats earnings expectations. Reported EPS is $-0.07, expectations were $-0.4. Operator: Thank you for standing by. My name is Jessica and I will be your conference operator today. At this time, I would like to welcome everyone to the FREYR Battery Third Quarter 2023 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Jeff Spittel, VP of Investor Relations. Please go ahead. Jeffrey Spittel Hello and welcome to FREYR Battery’s third quarter 2023 earnings conference call. With me today on the call from are Birgir Steen, our Chief Executive Officer; Oscar Brown, our Chief Financial Officer; Jan Arve Haugan, our Chief Operating Officer; Jeremy Bezdek, Executive VP of Corporate Development and President FREYR Battery US. During today’s call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside FREYR’s control and are difficult to predict. Additional information about risk factors that could materially affect our business are available on FREYR’s S-1 and annual report on Form 10-K filed with the Securities and Exchange Commission, which are available on the Investor Relations section of our website. With that, I’ll turn the call over to Birgir. Birgir Steen: Thanks Jeff and hello to everyone, for joining today’s call. We’ll start today with an overview of what we believe is FREYR compelling equity story where value propositions based on the premise that electrification is both inevitable and reliable mass deployment in batteries. But in today’s higher-for-longer cost of capital environment, the companies who will emerge as the next leaders of the energy transition, must balance growth aspirations with rigorous financial discipline. Our team at FREYR is unified in that vision of the business and we’re committed to build upon a unique competitive position with that approach. With that in mind, we’re excited about the opportunities we have to establish FREYR as a leading developer and scaler of battery technologies across the energy storage and electric mobility sectors. Tesla asserted earlier this year, the long-term growth potential in our core markets is profound and aligned with decarbonization initiatives. Western Energy Security that a plummeted public policy highlighted by the Inflation Reduction Act in the US. As stewards of your precious capital, our responsibility is to maintain the liquidity we need to convert these opportunities, which are punctuated by growing universe of real options into lasting shareholder value. We intend to do that by protecting our strong balance sheet and deploying capital selectively, while we advance our ongoing transformation initiatives. Diversifying on the technology spectrum and battery value chain, maximizing the IRA incentives and finally developing our highest return projects. Turning to slide four. Let’s review our key messages this quarter. As you saw on this morning’s release, we’re contending with the delay in our progress to fully automated reduction at the CQP and we have implemented a detailed plan to address the complex challenge of scaling the 24M semi solid platform. In light of the current CQP calendar, the US team has rescaled Giga America to pursue the full scale project on two parallel tracks. Track one is based on the 24M semi solid technology. Track two is to leverage conventional technology. As Jeremy will document shortly, these two tracks are not mutually exclusive options for the Giga America site and they’re aligned with our strategy of expanding on the battery technology spectrum. Turning to the Giga Arctic project. We have elected to minimize spending in 2024, while our work continues at the CQP, and while we engage with Norwegian and European government stakeholders to establish framework conditions that place the project on globally competitive economic terms. Moving to slide five. The playbook to navigate today’s high volatility environment as it follows. We’re initiating a cost rationalization program to reduce our total run rate cash spending by over 50% in 2024, which will extend our liquidity runway to two-plus years. Oscar will elaborate on it short. While we safeguard our balance sheet, we won’t be able to move as quickly as we’d like in the front, but I want the following point to be clear. FREYR is not going into hibernation. We’ll continue our important work at the CQP where we will hold our vendors and partners jointly accountable for our progress. We’re pursuing conventional technology partnerships which will mitigate the risk to the business and open new opportunities. We will continue to fund critical initiatives that we believe will generate value for our shareholders, and we will advance the key priorities while we maintain the strategic flexibility that the necessary to drive in today’s high volatility dynamic. To slide six. Here, the latest on the CQP. The timeline to achieve automated production of inspect cells has pushed beyond our previous goal of the fourth quarter 2023. Commissioning of the casting unit cell assembly equipment, which is highly complex proving to be more difficult and time consuming than we previously envisaged. We’re attempting to scale a new battery technology with intricate next-generation equipment, which has and will continue pose engineering challenges. Our response to these challenges to implement a plan to prevent further delays. We have implemented changes in project governance. We’re heightening coordination with our vendors and ecosystem partners, and we are elevating the involvement of our battery subject matter experts and other relevant partners inside and outside FREYR. This initiative is spared by the formation of the technology advisory board, comprised of some of the industry’s foremost minds, including Dr. Dan Steingard, FREYR Board member and co-director of the Columbia University Electric Chemical Energy Center. Dr. Steingard and his fellow advisory board members by drawing on their collective wealth of commercial operating experience to assist our team at the CQP. Let’s go to slide seven for a brief overview of technology strategy. Our strategy has always been to establish FREYR business across the technology spectrum and into value creative adjacencies within the battery technology chain. And we are working on that front. We’re pursuing conventional technology partnerships to complement 24M semi solid to unlock avenues to financing and commercial development and potentially accelerate project development timelines. Conversations we’re having are exciting and are a testament to the unique position we’re establishing in the marketplace as an industrial partner of choice. The pursuit of technology diversification is intended to be complementary and add to 24M semi solid and in no way diminishes our excitement about 24M’s potential as a fit-for-purpose solution across a variety of growing use cases. Although, scaling the 24M platform at the CQP is proving to more challenging and we anticipated, we believe we have the financial organizational resources to do it and we believe that it’s a worthwhile investment of our time. Now I’ll turn to slide eight in Giga Arctic. We announced this morning that we’re minimizing spending on Giga Arctic in 2024 because we need to prioritize the liquidity during the CQP scale-up and focus on capturing IRA incentives in the United States. We value our partners and supporters in Mo i Rana, where the CQP remains our first operating assets and the technological heart of the company. The higher-for-longer interest rate environment and introduction of the IRA have changed the business case for Giga Arctic. We must operate within reality. And today the project is no longer in competitive economic terms, but the opportunities that we have in the US. As stewards of your capital, we have a fiduciary obligation to invest in our highest return projects and we intend to fulfill that duty by making sensible business decisions. While we minimize spending on Giga Arctic in 2024, we’ll continue to work with stakeholders in the region European governments to develop framework conditions that are competitive with the IRA, with Canada’s variable cost offsets under capital spending initiatives in countries and in the rest of the world, all of which are required to counter China’s structural cost advantages and dominant market share across the battery supply chain. We look forward to engaging locally to promote the virtues of establishing decarbonized battery production here in Norway. In interim, we will spend the previously committed CapEx to Giga Arctic to secure the asset to serve the option value of the project. And with that, I’ll turn the call over to Jeremy. Jeremy Bezdek: Thank you, Birgir. Please take a look at slide nine for the Giga America update. As we highlighted in the second quarter earnings call in August, continued feedback from potential investors related to the Giga America financing has stressed the importance of technology validation at the customer qualification plan. The CQP delays that Birgir mentioned have impacted our ability to close the Phase 1A two-line fast track project financing within the previously discussed timelines. With that, the Giga America team has decided to take a refreshed look at the project and the business case. The value of the time advantage related to the fast track project has decreased significantly, leading us to make the decision to terminate the two-line project. We see significant value in adjusting our focus to the larger project, Phase 1B. That was the original plan for the site. We believe that with validation at the CQP to come, we have the right roster of potential investors to secure the equity financing for a 24M based production facility in Georgia. Additionally, the larger project aligns well with our DOE financing plan that Oscar will discuss. We are now working toward a potential FID of the larger 24M base project, along with potential DOE and equity financing, some point late in 2024. Additionally, we are pursuing a second track for Giga America as Birgir mentioned. We are currently in multiple conversations with potential conventional technology partners around advancing a project, utilizing that conventional technology at the Georgia site. Due to the lack of technology risk involved with that option, timing of both FID and startup production could provide us an earlier entry into the US market. Our plan involves making a technology and partner selection in the near-term, and we will announce that decision when that selection is made. We are excited about the opportunity to get into the US market with production assets sooner, and the site in Georgia is large enough to accommodate both a conventional and the 24M production facility with plenty of room to spare. We look forward to providing you more updates on both tracks as we progress through the end of the year and into 2024. I will now turn it over to Oscar to provide a general finance update as well as an update on the redomicile affiliation efforts. Oscar? Oscar Brown: Thank you, Jeremy. On slide 10, we provide an update regarding our announcement to redomicile from Luxembourg to the United States. This move dramatically expands our opportunity for equity index inclusion. Today, only an estimated 3% of our shares are held by index funds paired with a peer average of over 20%. Redomiciling has the potential to drive incremental holdings of up to 45% of our current market capitalization if we were held by all the index funds we would qualify for, as well as associated actively managed funds who benchmark against those indices. Moving our domicile to the US also has the added benefit of aligning flare with the country that has offered the highest bids for battery manufacturing at scale in the world, as well as the world’s largest market for our products. The US and Delaware have well understood corporate governance and disclosure requirements, and we will still be able to maintain our European strategies alongside our US efforts. The transaction to move from Luxembourg to the US requires an extraordinary shareholder meeting, which is now set for December 15th for shareholders of record as of October 25th. The transaction requires 50% of our outstanding shares to vote in order to ensure a forum and two-thirds of those shares voting must vote in favor of the transaction for it to close. It’s very important that all shareholders vote. Details of the transaction can be found in filings under FREYR Battery Inc. on the SEC’s website and through links on our own website. We expect to close the transaction by year-end. Moving on now to slide 11, the financial update slide of the earnings deck, I will review our recent financial results. The quarter ended September 30th, 2023, FREYR reported a net loss of $10 million or $0.07 per share and compared with a net loss of $94 million for the same period last year. Net income from last year’s period was impacted by a $70 million non-cash loss on our warrant liability fair value adjustment due to changes in our stock price. This line item reflects a gain when our stock price declines during any reporting period and a loss when our stock price increases. For the third quarter of this year, we recognized a $24 million non-cash gain on this item. For the nine months ended September 30th, 2023, the company reported a net loss of $48 million or $0.34 a share compared with a net loss of $124 million or $1.06 per share in the same period of last year. More importantly, the company reported higher general and administrative expenses as well as higher research and development costs for the third quarter in the nine months ended September 30th compared with the same periods last year. Logically, this is a function of our larger organization, which has been managing more projects around the world. Looking ahead to 2024, we have initiated a significant cost cutting and resource prioritization program focusing on the CQP and Giga America, which will significantly reduce our annual cash burn rate as we seek to extend our liquidity runway more than two years and into 2026 and focus on those two projects, all before we raise additional capital. We expect a material reduction in G&A and capital commitments in 2024 compared to 2023. Regarding our cash investment rate and liquidity, we spent net cash of $235 million during the first nine months of 2023, which included $169 million on capital expenditures. During the third quarter, FREYR spent $41 million on capital expenditures, of which $32 million was spent on Giga Arctic, and about $7.5 million was spent on the customer qualification plan and test center. Capital expenditures were partly offset by a receipt of a $3.5 million grant in the United States. We ended the third quarter of 2023 with $328 million of cash, cash equivalents, and restricted cash and no debt. For the rest of the year, our remaining capital expenditures will focus on completing and securing the initial buildings of Giga Arctic, as well as completing and ramping up the customer qualification plan. Major additional capital expenditures in 2024 will be dependent on project level financing as we preserve ample burn rate and runway for the company. Our near term priorities, again, remain ramping up to CQP, securing the initial buildings of Giga Arctic as we continue to seek a globally competitive incentives package of scaling battery manufacturing from the government of Norway, as well as progressing Giga America. We provide additional guidance on capital expenditures only upon the success of Giga America initial capital raise, which we now expect in 2024 as it is tied directly to the successful automated production of batteries at the CQP and the testing of those batteries by our largest customer. While we continue to work with the Norwegian government on incentives programs, and we’ll do so throughout next year, we are not currently forecasting any capital expenditures for Giga Arctic in 2024. We expect capital expenditures in the fourth quarter of this year will be in the $40 million range and we expect that we’ll end the year with cash and cash equivalents of approximately $250 million when G&A, R&D and Giga America costs are included. Again, any significant capital expenditures in 2024 will only be sanctioned once new financing is secure. Given our cash balances expected spending through the year of 2023 now reduced cash requirements for 2024 pending any new financing, we’ve insured FREYR has a cash runway of more than two years. As a result, our total cash uses in 2024 will be less than half amount of 2023 at least until we secure project level financing. Slide 12 reemphasizes our key financial messages as we position the company for the current environment. Checking the balance sheet and taking actions within our control on costs and spending to extend our runway into 2026 are key focus areas, but the actions we are taking now, we are targeting an annual cash burn rate in 2024 less than half of that in 2023 with the priorities already mentioned. This enables us to invest in some additional R&D and related items to enhance our manufacturing projects and our products, but we will proceed with those with caution as incremental technology investment would, of course, reduce our cash runway modestly. Again, we will not spend any meaningful capital expenditures until incremental financing is secured. Our pursuit of non-dilutive capital remains in high gear in this currently challenging financing environment. Given our liquidity position and our lower burn rate, we do not have any intention to raise common equity from our shareholders in 2024. As Jeremy described, project level equity for Giga America is available. It’s clearly tied to getting the CQP up and running as designed with reducing testable batteries and receiving those acceptance of those batteries, which is now expected again in 2024. In parallel, we continue to progress the US Department of Energy Title 17 loan for the project and are awaiting invitations to part two of the process from the DOE. After receiving that invitation, we will file part two of the application, but then the effort becomes very similar to a project financing process, which will — we will anyway run in parallel to ensure timely access to funds. The DOE could in theory provide for all of our debt — capital ambitions, but more likely we’ll be part of an intricate capital stack. We will keep investors informed over the next several quarters as we make progress on these efforts. Section 45X of the IRA with its annual production tax credits spreads key underlying support to the financing of Giga America, unlike anywhere else in the world. In addition, we are staying vigilant for federal grant opportunities in the US that could be applicable to our businesses. We’ll continue to preserve the project financing option for Giga Arctic as well, and we recently announced that we were awarded €100 million grant for Giga Arctic by the European Innovation Fund, the EUIF, which is an outstanding validation of our business model. The review by the EUIF has been very intensive, covering hundreds of pages of documentation of the course of the last year. We continue to work with them extensively, finalize the terms of the grant and a relatively flexible timeline to continue the project when globally competitive scaling incentive programs is available. While we also have been grateful for the support and indications of interest expressed by all our expert credit agencies, including ECA and the Nordic Investment Bank, the European Investment Bank, and the EUIF Innovation Fund is important to note that FREYR has not received any cash from these entities so far and all progress on Giga Arctic and the CQP to date has been made without yet having received funding from any of these entities. With Giga America prioritized in large part due to its superior returns driven by eligibility for US IRA production tax credits will also evaluate partnership based upstream opportunities, address decarbonization of the supply chain, and leverage our growing — leveraging grow our Energy Transition Acceleration Coalition, the ETAC, another industrial partnerships where possible. With that, I’ll turn it back over to Birgir for additional comments. Birgir Steen: Thanks Oscar. Before we take your questions, let’s close with a look at FREYR path forward on slide 13. In today’s high discount rate environment, cash is king. We have a clean balance sheet with no debt, and we are reducing our cost to extend our liquidity runway to two plus years and beyond. We will not authorize any significant new CapEx in 2024 until new financing is committed. We are pursuing conventional technology partnerships, advancing the redomicile into the US, progressing through the commissioning and 24M scale up processes at the CQP. We will communicate news on all three fronts with the investment community as things develop. Our partnership approach to industrialization is generating dozens of interesting strategic conversations with our customers, with members of the Energy Transition Acceleration Coalition and other partners, all of which are focused on commercial opportunities and catalyzing FREYR’s next wave of capital formation. Norway in Europe, we’re working with key stakeholders to establish a globally competitive incentive center program while we preserve Giga Arctic’s option value. And finally, we’re executing our strategic plan with clear priorities. And as we have learned over the last two and a half years as a public company, adaptability is paramount to succeeding in a highly volatile environment. I’ll conclude by emphasizing our appreciation for the continued support of our investors and all our partners in our mission to decarbonize energy storage and transportation systems by producing the world’s cleanest batteries. The FREYR team is unified in our purpose, and we’re dedicated to rewarding your faith in us on this exciting journey. And with that, I’ll turn it call back to Jeff and we’ll take your questions. Jeffrey Spittel: Thanks Birgir. Operator, we’re ready to open the line for Q&A. Operator: Great. Thank you. [Operator Instructions] And your first question comes from the line of Adam Jonas with Morgan Stanley. Adam, go ahead. See also 15 Best African Countries To Find A Loyal Wife and 20 Most Stolen Vehicles in the US in 2023. Q&A Session Follow Freyr Battery Follow Freyr Battery We may use your email to send marketing emails about our services. Click here to read our privacy policy. Adam Jonas: Thanks everybody and appreciate the extra details on the cash outlook. That’s helpful. But so much of the story really does rely on the technology of 24M. So at a high level, Birgir, how much of FREYR’s success is tied to 24M? If this turns out to be a dud, and I’m curious at what — when will you — when would you potentially be in a position to understand whether 24M really is scalable as you originally anticipated or not? Because it does seem that everything else kind of triggers off of that and I appreciate the diversification strategy, but it’s important for shareholders to know how tied the entire story is to 24M specifically. So if you could realize it’s a qualitative question, but I would appreciate your impressions, please. Birgir Steen: Sure. Sure, Adam. The first, as you indicate, we think of two tracks. We’ve now indicated towards getting started in Giga America is one track where we have some technology risk, we’ll talk more about in a second. And even that’s geopolitical advantage and very low risk. Then pursue another track, which will be licensed in conventional technology with essentially the opposite characteristic. Some geopolitical risk, but very low technology risk. So two uncorrelated paths, if you will. And then inside of the 24M path, I think it’s fair to say that as we progress towards the last commission packages that we’re delivering in the CQP and getting ready for production, we’re also getting into some of the harder stuff. And it’s also fair to say that we are discovering aspects of our chosen solution that I might not have had the technology readiness level that we would’ve anticipated in making choice and until now, in fact. That’s just a part of getting the stages we’re at now, very difficult to foresee upfront. All of that said is we haven’t discovered anything that says this is not a viable way to get to a scalable automated cell reduction. And we think we see a path through to that. We’re making a few changes to make sure that we debottleneck and unblock that path. We continue to have, and I think we’ve spoken about before, the delivery of cells in an automated way at the CQP as company priority number one. And along with, selected members in my leadership team start every day 9:00 AM with a daily follow up call to make sure we remove all blocks from the path in front of that. We have all fair battery talent now engaged at the CQP. We might have been more diverse in terms of our priorities previously. We have key vendors like Mpac, 24 and others onsite. Mpac is running double shifts. And we have a lot of thresholds for getting more help on site when we discover that we need it. We’re aligning with other [technical difficulty] licensees. We have people on site with several of them and making sure we learn the most from our — or the maximum from the other people who’ve gone to forwards and that we share experiences with those who are traveling at the same rate of speed as we do. And we’ve also involved both the customers and vendors directly into our daily standup, follow up meeting here. So through all of this, we’ve created a lot more transparency. We have a better view of the runway ahead of us, and we are solving problems every day, but at the same time, we’re getting, as I said, closer to the more difficult part. And that’s what’s extent as it called the extension on the timeline here. If we had a conclusion here that said this is not going to be viable, we would, of course, have shared it, let’s say, based on the input of our technology advisory board, and some discussions that we’re now conducting continuously. If anything we’re strengthening our belief that there is a very interesting technology path ahead of us, both in the current configuration of the CQP and future generations of the semi solid. Adam Jonas: Thanks Birgir. And just to follow up on the runway discussion. I was going to ask whether the two-year-plus runway began at the end of the third quarter or the end of the fourth quarter, but I think Oscar, your comments about getting into 2026 answers that question, just confirming that the two-year-plus runway. Oscar Brown: That’s great. Adam Jonas: Oscar, also I want to know whether that two-year-plus bakes in a minimum cash level to run the business for payroll expenses, et cetera, or whether that was a mathematical, down to near zero cash flow. Sorry for the housekeeping there, but just wanted to assume whether you had a minimum cash in there, and if so, what that would be. And then what specific cost cuts are required? You alluded to in the release that you would take in addition to pausing the CapEx subject to project financing or funding, what OpEx cuts are being considered, and are there any upfront costs related to those cuts? What I’m trying to get at Oscar is, is the two-year-plus runway a really conservative base case, something you really have line of sight to, and that’s achievable? And is that base case or is it kind of more of a stretch goal? Thanks. Oscar Brown: Yeah. No, great questions, Adam. Thank you. So there a couple of things. So just reconfirming, yes, the runway 250 starts at the end of 2023. Now runway extends into 2026. The amount of cash you needed just to hold on the balance sheet to sort of run the business like a working capital is very low. So that’s not significant. Just responding to, and from a burn rate perspective, we’ll have the quarterly burn rate well under $30 million a quarter. Also keep in mind when you look at 2023 and our cash spending, the largest component of that was the Giga Arctic, that we’re pausing now until we get any kind of new financing related to that. So that’s a significant piece of the puzzle, but clearly that’s a more focused level of activity with the CQP. And then, Giga American development and the ones that Birgir mentioned, that requires a different organization. So we are looking at the organizational structure. We’ve made a lot of progress on that. So we’re going through that process there. So this is not an aspirational goal. This burn rate reduction is happening right now. And so we’re pretty confident or very confident in that. Birgir Steen: I think we’re not providing numbers on headcount today, Adam. But the priorities that the company was pursuing up until quite recently were more than what we have now. We’re very laser-focused now on delivering sales and expanding runway and keeping optionality around our operations. And that’s going to allow us to take down headcount quite dramatically without infecting our key priorities. So that’s what we’re doing. We’ve had all-hands meetings across the company today. There’s perhaps unfamiliar territory from somebody, but there’s a fairly straightforward process of running reduction-in-force processes in Norway where we have most of work staff to, we’re well advanced and executing on those in accordance regulation, and no barriers [technical difficulty]. So this is, as Oscar said, not aspirational. This is stuff that’s in the machine, the processor. Adam Jonas: Thanks Birgir and thanks Oscar. Just one last follow up, just to clarify, my second question, I’ll finish the questions here. The time to get to $30 million per quarter burn rate, would that be — is that something that would take a couple of quarters to settle on, given some — perhaps some adjustments to get there, including some one-time payments, or I didn’t know if you had an idea of when a $30 million burn rate would be achievable within — presumably sometime in 2024, but I didn’t know if it was the first half was achievable to get there. Thanks. Oscar Brown: Yeah. Thank you. And so reemphasizing — the burn rate will be below $30 million a quarter, and it will be as of January 3rd. We will take a small kind of single digit, one-time charge related to severance. But the fact you’ll see this out of the box in Q1. Adam Jonas: Right. Oscar Brown: Very clear, January 1, Q1. Adam Jonas: Thanks. Operator: All right. Great. Your next question comes from the line of Tyler DiMatteo with BTIG. Tyler, please go ahead......»»

Category: topSource: insidermonkeyNov 10th, 2023

Israel-Hamas Conflict Threatens EU Energy Security

Israel-Hamas Conflict Threatens EU Energy Security By Francesco Sassi of The ongoing conflict between Israel and Hamas, killing hundreds of civilians a day and threatening critical infrastructures of all sorts in the vicinity of the Gaza Strip, has reached a new turn, with the full encirclement of Gaza City by Israel’s army. Yet, the implications of this asymmetric war are largely misunderstood. Day by day, the energy picture of the Middle East becomes murkier, possibly upending global energy security in ways markets are unable to predict, starting with the wobbly Egyptian energy system. Too focused on decrypting daily volatility on the TTF or Henry Hub after 21 months since the beginning of the Russian invasion of Ukraine, analysts are neglecting the short and long-term political and geopolitical consequences of market imbalances amid a still-unfolding global energy crisis. U.S. Secretary of State Antony Blinken failed to convince Israeli Prime Minister Benjamin Netanyahu to pause Israel’s army assault on Gaza and allow much-needed humanitarian assistance is a stark reminder that Netanyahu and his War Cabinet are trying to apply maximum pressure on Hamas, despite disastrous consequences for civilians. This means Israel is ready for a long fight. The aftermath of the October 7 horrors has led to an unusual public split between the U.S. and Israel. From China to the European Union, all great powers have a say in this crisis, even though the dialogue has been clearly sidelined by Netanyahu’s pursuit of maximalist goals, including the possibility that Palestinians could be forced to leave the Gaza Strip and relocate to the Sinai desert. According to some high-ranking Israeli officials, this represents a “unique and rare opportunity” to settle a new security framework on Israel’s Southern border, leaving Egypt with the puzzle of dealing with millions of refugees. This is an event that the El-Sisi regime is trying to avert in any possible way. Just a few weeks ahead of the next Presidential elections, Egypt’s economy is in shambles. The country is already grappling with problems stretching from a deepening debt crisis and in desperate need of sources of financing, next to this, it’s dealing with a string of currency devaluations and record inflation. No credible opponent is ready to challenge El-Sisi’s hold on power. And yet the Israel-Hamas war is reviving internal dissent among large swaths of Egyptian society that have gone silent after almost 10 years of iron-fist rule. Right now, the consequences of the Israel-Hamas war are putting the energy security of Egypt, the most populated country in the Arab world, in grave danger. Israel’s offshore Tamar gas field, providing close to 40% of the country’s production, has been shut to prevent possible retaliations by Hamas. Gas production from Leviathan and Karish fields has been diverted to prevalently serve Israel’s domestic needs, while just a fraction of this is now exported to Egypt. Just last August, the two governments agreed to boost gas cooperation and source new gas from Tamar to “strengthen the diplomatic relationship between Israel and Egypt,” ensuring higher revenues for Israel and ensuring the Arab country with a stable gas flow from the neighbor in the years ahead. It is worth highlighting that at that time, although nobody expected to be fighting the largest war in decades in a matter of months, senior government officials criticised the deal because it "could endanger Israel's energy security." By all means, the Israel-Egypt energy entente is also the least common denominator for the success of the trilateral MoU signed between the EU and the two to increase regional cooperation and boost exports to European countries, aiming to diversify away from Russia. Cairo has grown increasingly dependent on Israel’s gas to feed its energy system, especially during peak load periods. Even though the country has vast reserves, blackouts and shortages have increased since the start of the last Summer. Now, the Egyptian Cabinet indicates the reduced gas imports from Israel as the cause of relentless power cuts, indirectly transforming the Egyptian grid’s instability into a geopolitical case. Forced to rely on domestic sources, Egypt has de facto halted high-value LNG exports from the two Mediterranean Idku and Damietta terminals, leaving empty tankers and diverting them to other ports. In 2023, around three-quarters of Egyptian cargoes have been directed towards EU and Turkish terminals, relieving these markets from some pressure felt because of Russian supply curtailments. Eni’s CEO Claudio Descalzi, whose company is a major player in Egypt’s offshore, operating the giant Zohr but also the Damietta LNG facility, is optimistic about the resumption of the country’s exports in the coming weeks. However, the outlook for the Egyptian energy industry is far from stable. Because of the gas shortage, power cuts have increased, while petrochemicals and fertilizers companies have reduced stocks at their disposal. The significance of a long-term reduction of fertiliser output, the second largest industry for the country’s exports, could bring further economic distress and devaluation to the Egyptian pound, likewise sending shockwaves across the food markets and threatening the livelihoods of millions. Egypt’s energy security is in such a dire situation that it has even resorted to importing a cargo of mixed fuels, including LNG. The tanker has navigated to the SUMED port, where the FSRU named BW LNG and chartered by state-owned EGAS has been located since 2015. Soon, the vessel will be headed to Italy, leaving Egypt without the option to import LNG. BW LNG is reminiscent of the dark ages of the Egyptian energy sector, meaning the years following the country’s Revolution and its devastating effect on its energy industry, unable to cope with domestic consumption. Indeed, high energy and food prices have been the root causes of the country’s chronic instability in the first half of the last decade, leading to El-Sisi’s seizure of power. Today, the news of a major LNG exporter in the Mediterranean Basin turning into an importer would be sufficient to spark fears in a market that is already coping with many supply constraints. Against the background of mounting tensions in the Middle East, TTF front-month prices have reached a nine-month high earlier this month. Nevertheless, market watchers remain confident that Arab leaders, including Hezbollah, will maintain a pragmatic approach to the conflict and avoid an escalation. However, a domestic energy crisis overlapping with the Egyptian presidential elections, a democratic façade without real opposition, could ignite a series of unpredictable political consequences. Currently, the entire MENA region is a cauldron, starting with the imperiled Tunisian democracy and the ongoing rift in Libya, both just South of the EU borders and possibly spreading to other countries such as Lebanon and Iraq. The crumbling of the EU-Russia energy interdependence has created an opaque energy landscape. In this scenario, energy trade reflects, more than anything else the political sentiment in the MENA region, and European policymakers should not entertain any illusions and acknowledge that continental energy security does not solely rely on the stability of market fundamentals, but also on geopolitical realities. Tyler Durden Thu, 11/09/2023 - 06:30.....»»

Category: worldSource: nytNov 9th, 2023

China"s Foreign Direct Investment Turns Negative For The First Time On Record

China's Foreign Direct Investment Turns Negative For The First Time On Record We got an early look that something is very broken in China's capital flows back mid-September, when we first reported that contrary to the official PBOC forex data, a more in depth analysis of China's fund flows reveals the biggest FX outflow since 2016 amid what we called was a "sudden surge in capital flight", one which also kicked in just before bitcoin's powerful thrust higher from $26K to $35K. In retrospect, the reading wasn't a fluke, and three months after we reported that "China's Inward Foreign Direct Investment Falls To The Lowest Level On Record" the latest balance of payments data revealed that China recorded its first-ever quarterly decline in foreign direct investment (FDI), underscoring the capital outflow pressure we first flagged two months ago (and which was much more acute than the modest FX outflow signaled by the PBOC), and Beijing's challenge in wooing overseas companies and capital in the wake of a "de-risking" move by Western governments. As shown in the chart below, direct investment liabilities in the country’s balance of payments - a broad measure of FDI that includes foreign companies' retained earnings in China - have been slowing over the last two years after hitting a near-peak value of more than $101 billion in the first quarter of 2022; since then the gauge weakened nearly every quarter and was a deficit of $11.8 billion during the July-September period, marking the first contraction since records started in 1998, which could be linked to the impact of "de-risking" by Western countries from China, as well as China's interest rate disadvantage (the chart below shows a striking correlation between inbound FDI and China's tumbling bond yields). “It’s concerning to see net outflows where China’s doing its best at the moment to try and open — certainly the manufacturing sector — to new inflows,” said Robert Carnell, regional head of research for Asia-Pacific at ING Groep NV. “Maybe this is the beginning of a sign that people are just increasingly looking at alternatives to China for investment.” "Some of the weakness in China's inward FDI may be due to multinational companies repatriating earnings," Goldman analyst Hui Shan wrote (full note available to pro subscribers) adding that "with interest rates in China 'lower for longer' while interest rates outside of China 'higher for longer', capital outflow pressures are likely to persist." According to Julian Evans-Pritchard, head of China economics at Capital Economics, the unusually-large interest rate gap "has led firms to remit their retained earnings out of the country". Although he sees little evidence that foreign companies are, on aggregate, reducing their presence in China, "we do think that, over the medium-term at least, increasing geopolitical tensions will hamper China's ability to attract FDI and instead favor emerging markets that are more friendly to the West." Driven by the FDI outflows, China's basic balance - which encompasses current account and direct investment balances and are more stable than volatile portfolio investments - recorded a deficit of $3.2 billion, the second quarterly shortfall on record. "Given these unfolding dynamics, which are poised to exert pressure on the RMB, we anticipate a sustained strategic response from China's authorities," Tommy Xie, head of Greater China Research at OCBC wrote, and while he is hardly alone in expecting a powerful response from Beijing to stop the bleeding before China is fully "Japanified" so far the ruling Communist Party has failed to materially stimulate its economy, the result of a staggering 300% in consolidated debt to GDP, which has largely tied Beijing's hand for the past 4 years. Xie expects China's central bank to continue counter-cyclical interventions - including a strong bias in daily yuan fixings and managing yuan liquidity in the offshore market- to support the currency in the face of these headwinds. Separately, onshore yuan trading against the dollar also hit record-low volume in October, highlighting authorities' stepped-up efforts to curb yuan selling. The latest data showed that onshore volume of yuan trading against the dollar slumped to a record low of 1.85 trillion yuan ($254.05 billion) in October, a 73% drop from the August level. The PBOC has been urging major banks to limit trading and dissuade clients to exchange the yuan for the dollar, sources have told Reuters. This happened after our September report that FX outflows from China had hit $75 billion, the highest since the country's 2015 devaluation. In an attempt to reverse the bleeding, the Chinese government has embarked on a big push in recent months to lure foreign investment back to the country. Bloomberg reported that on Wednesday, the Ministry of Commerce asked local governments to clear discriminatory policies facing foreign companies in a bid to stabilize investment confidence. It's doubtful the move will have any impact on capital flows which are not driven by "discriminatory" policies and have everything to do with China's dismal economy. It cited the need to ensure subsidies for new energy vehicles are not limited to domestic brands as one example. In some industries, foreign firms wait longer and are subject to more rigorous reviewing process when applying for licenses. In August, the internet regulator met with executives from dozens of international firms to ease concerns about new data rules. The government has also pledged to offer overseas companies better tax treatment and make it easier for them to obtain visas. But Beijing’s pledges have rung hollow for some firms, with foreign business groups decrying “promise fatigue” amid skepticism about whether meaningful policy support is forthcoming. They also have incentive to repatriate earnings overseas because of the wide gap in interest rates between China and the US, which may be pushing them to seek higher returns elsewhere. The FDI outflows are adding pressure on the onshore yuan, which has hit the weakest level since 2007 earlier this year. China’s benchmark 10-year government bond yield is trading at 191 basis points below that of comparable US Treasuries, versus an average premium of about 100 basis points over the past decade. The lack of investment among global firms in China will have far reaching effects on the world’s second-largest economy, especially as it tries counter US curbs on access to advanced technology. Aside from geopolitical risks, companies had also been pulling back on investment in China last year as the country rolled out pandemic restrictions. While those curbs have been removed, firms are still contending with other challenges from rising manufacturing costs in China and regulatory hurdles as Beijing scrutinizes activity at foreign corporations due to national security concerns. “Some of the most damaging things have been the abrupt regulatory changes that have taken place,” said Carnell, pointing to this year’s anti-espionage campaign, which resulted in some firms having their offices raided by local authorities. “Once you damage the sort of perception of the business environment, it’s quite difficult to restore trust. I think it will take some time.” While foreign companies make up less than 3% of the total number of corporations in China, they contribute to 40% of its trade, more than 16% of tax revenue and almost 10% of urban employment, state media has reported. They’ve also been key to China’s technological development, with foreign investment in the country’s high-tech industry growing at double-digit rates on average since 2012, according to the official Xinhua News Agency. “A decline in trade and investment links with advanced economies will be a particularly significant headwind for a catching up economy such as China, weighing on productivity growth and technological progress,” Kuijs said. And since youth unemployment - the single, most direct precursor to the one thing Beijing fears most of all, social unrest - is already at an all time high and will continue to rise (even if China will no longer report on what it is), the likelihood that Beijing will pursue some bazooka stimulus, both fiscal and monetary, only grows with every month that Beijing does not pursue such a critical, if temporary, measure to prevent catastrophe. Tyler Durden Wed, 11/08/2023 - 18:00.....»»

Category: personnelSource: nytNov 8th, 2023

Bruker Corporation (NASDAQ:BRKR) Q3 2023 Earnings Call Transcript

Bruker Corporation (NASDAQ:BRKR) Q3 2023 Earnings Call Transcript November 3, 2023 Operator: Greetings, ladies and gentlemen. Thank you for attending today’s conference call. I would now like to turn the call over to Justin Ward, Head of Investor Relations. Please go ahead. Justin Ward: Thank you and good morning. I would like to welcome everyone […] Bruker Corporation (NASDAQ:BRKR) Q3 2023 Earnings Call Transcript November 3, 2023 Operator: Greetings, ladies and gentlemen. Thank you for attending today’s conference call. I would now like to turn the call over to Justin Ward, Head of Investor Relations. Please go ahead. Justin Ward: Thank you and good morning. I would like to welcome everyone to Bruker Corporation’s third quarter 2023 earnings conference call. My name is Justin Ward and I am Bruker’s Senior Director of Investor Relations and Corporate Development. Joining me on today’s call are Frank Laukien, our President and CEO; Mark Munch, President of the Bruker Nano Group and Corporate Executive Vice President; and Gerald Herman, our Executive Vice President and CFO. In addition to the earnings release we issued earlier today, during today’s conference call, we will be referencing a slide presentation that can be downloaded from the Events & Presentations section of Bruker’s Investor Relations website. During today’s call, we will be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at Before we begin, I would like to reference Bruker’s Safe Harbor statement, which is shown on Slide 2 of the presentation. During this conference call, we will be making forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties, including those related to geopolitical risks and wars as well as to supply chain logistics and inflation. The company’s actual results may differ materially from such statements. Factors that might cause such differences include, but are not limited to, those discussed in today’s earnings release and in our Form 10-K for the period ending December 31, 2022, as updated by other SEC filings, which are available on our website and on the SEC’s website. Also, please note that the following information is based on current business conditions and to our outlook as of today, November 2, 2023. We do not intend to update our forward-looking statements based on new information, future events or for other reasons, except as maybe required by law, prior to the release of our fourth quarter 2023 financial results expected in early February 2024. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. We will begin today’s call with Frank providing an overview of our business progress. Gerald will then cover the financials for the third quarter and the first 9 months of 2023 in more detail and share our updated fiscal year 2023 financial outlook. Now, I’d like to turn the call over to Bruker’s CEO, Frank Laukien. Frank Laukien: Thank you, Justin and good morning everyone. Thank you for joining us on today’s third quarter 2023 earnings call. In the third quarter, Bruker has continued to deliver excellent revenue growth with three consecutive quarters of double-digit organic revenue growth year-to-date. For the fourth quarter of ‘23, we anticipate high single-digit organic revenue growth, which puts us on track for 3 years of double-digit organic revenue growth in 2021 to 2023. In the first 9 months of 2023, we have demonstrated great resilience in difficult market conditions with what we believe is industry leading organic revenue growth of 13.9% and non-GAAP EPS growth of 17.5% year-to-date. Given our strong year-to-date financial results, solid backlog and positive outlook for the fourth quarter, we are raising our organic revenue growth guidance for fiscal year 2023 again, this time by 150 bps at the midpoint. We are pleased to report solid financial results in the third quarter of 2023. We attribute this resiliency to our innovation strategy, which yields products and solutions with unique capabilities as well as to our differentiated portfolio, which is now resulting from our ongoing Project Accelerate 2.0 transformation. These core elements of our strategy are to a significant extent shielding us from the present demand weakness, for example, in COVID testing, CROs, biopharma, bioprocessing, etcetera. We remain positive about demand for Bruker Scientific Instruments and Life Science Solutions, which gives us confidence in the fourth quarter and also for continued solid growth in 2024. In fiscal year 2023, we have accelerated our investments in our transformative Project Accelerate 2.0 initiatives as well as in operational excellence and productivity. We are making further investments in recently acquired growth drivers in single cell biology. And my colleague, Mark will talk about that as well as in previously acquired proteomics consumables, proteomics drug discovery services, neuroscience research tools, applied solutions and scientific software. Right. Let’s get to it. Turning to Slide 4 now. In the third quarter of 2023, Bruker delivered another good quarter with excellent organic growth of 10.9% and non-GAAP EPS growth of 12.1% and year-over-year. Bruker’s third quarter ‘23 reported revenues increased 16.3% year-over-year to $742.8 million, which included an FX tailwind of 3.3%. On an organic basis, revenues increased 10.9%, which included 10.9% organic growth in our Bruker Scientific Instruments, BSI segment and 10.2% at BEST, net of intercompany eliminations, while growth from acquisitions added 2.1%. This implies constant exchange rate growth of 13.0% year-over-year. Our third quarter ‘23 non-GAAP operating margin was 20.0%, which is a good level for our third quarter, albeit a decrease of 240 bps year-over-year compared to a very strong operating profit margin in the third quarter of 2022. In the third quarter of ‘23, Bruker reported GAAP diluted EPS of $0.60 compared to $0.59 in the third quarter of ‘22. On a non-GAAP basis third quarter ‘23 diluted EPS was $0.74, up 12.1% from $0.66 in Q3 ‘22. This had a $0.05 tax tailwind pretty much exactly offsetting a minus $0.05 currency headwind in the quarter. Gerald will discuss the drivers of margins and EPS later in more detail. Moving to the first 9 months on Slide 5, you can see Bruker’s strong performance and excellent execution in the first 9 months of 2023 with industry leading organic revenue growth of 13.9% and non-GAAP EPS growth of 17.5%. More specifically, our first 9 months of 2023 revenues increased by 15.8% to $2.11 billion. On an organic basis, first 9 months revenues grew 13.9% year-over-year, consisting of 14.0% organic revenue growth in Scientific Instruments and 12.8% organic growth at BEST, net of intercompany eliminations. First 9 months 2023 order bookings for BSI grew in the upper mid single-digits year-over-year organically, driven by Bruker BioSpin and CALID. Also, our BSI book-to-bill ratio year-to-date remained above 1.0 and our backlog at the end of the third quarter remains strong and elevated in fact. Our first 9 months 2023 non-GAAP gross and operating margin and GAAP and non-GAAP EPS performance are all summarized on Slide 5. And you can see the strong non-GAAP EPS growth of 17.5% despite a $0.14 headwind from currency. Our trailing 12 months return on invested capital, a non-GAAP measure was 23.2%, a metric that highlights our differentiated Bruker management process and focus on disciplined entrepreneurialism and organic growth supplemented by selected attractive acquisitions. Please turn to Slide 6 and 7, where we highlight the year-to-date third quarter ‘23 performance of our three scientific instruments groups and of our BEST segment, all on a constant currency and year-over-year basis. Year-to-date, the BioSpin Group revenue was $541 million and grew in the high single-digit percentage This included revenue from just 1 gigahertz class NMR so far this year and namely in Q3 ‘23. And for comparison, we also had one in Q3 of ‘22. In the fourth quarter of ‘23, we expect to book revenue on 1 or 2 gigahertz-class NMRs, by the way. In the 9 months – in the first 9 months of 2023, Bruker saw growth across biopharma, academic and government markets, industrial research and applied markets as well as in the new integrated data solutions software division with its SciY scientific and lab software platform, something that’s relatively new to Bruker. Right. First 9 months of 2023, our CALID Group had revenue of $703 million and growth in the high-teens percentage with strong growth in life science mass spectrometry driven by the timsTOF platform and aftermarket business as well as strong growth in our applied mass spec business and the optics infrared near infrared Raman business. Our optics business – in our optics business, we know two recent tender wins, very nice for eventually over 250 so-called DE-tector explosive trace detectors for the Frankfurt and Zurich airports, both of which were explained in recent press releases. At ASMS this year, we launched the timsTOF Ultra and at the HUPO Congress in Korea in September, we announced further advances in timsTOF methods, consumables and software for this next-generation unbiased high fidelity four-dimensional, 4D proteomics and 4D multiomics that’s quite unique on the timsTOF platform and very advantageous. Microbiology and infectious disease revenue was up slightly as solid demand for the MALDI Biotyper consumables was offset by a final drop of our modest COVID-19 molecular diagnostics revenue to now near zero. Please turn to Slide 7 now. Year-to-date, Bruker Nano revenue was $673 million and grew in the low-20s percentage with strong revenue growth across end markets, including ACA/GOV, industrial semiconductor metrology. Revenues at advanced x-ray and Nano surface tools all delivered strong revenue growth in the first 9 months. Life science fluorescence microscopy was up on product innovation and now includes a strong contribution also from our fourth quarter ‘22 acquisition of the Inscopix neuroscience research tools. Finally, year-to-date ‘23, BEST revenues grew in the mid-teens percentage net of intercompany eliminations, driven by share gains and superconductor demand by our MRI OEM customers as well as from revenue growth in Advanced Technologies for big science, fusion research and key extreme UV, EUV semiconductor technologies for semiconductor lithography tools by other large OEM customers, again, often driven by strong growth in AI demand. Right. Moving to Slides 8 and 9. I’ll take a pause, and we highlight the new Bruker Cellular Analysis business. And I’m delighted to take – hand this part over to Dr. Mark Munch, our Bruker Nano Group Presidents who drove the PhenomeX acquisition now renamed to Bruker Cellular Analysis and Mark now resetting the strategy and rightsizing the business. Over to you, Mark. Mark Munch: Thank you, Frank. We’re excited about our acquisition of PhenomeX, this new business. As Frank mentioned, we now call Bruker Cellular Analysis, perfectly fits our Project Accelerate 2.0 initiative. PhenomeX was a Q1 2023 merger of Berkley Lights and IsoPlexis which brought together 2 unique and valuable platforms: the Beacon OptoFluidics platform and the ISOSpark platform. Together, these technologies address rapidly growing market segments in antibody discovery, cell line development, cell therapy and gene therapy, amongst others. This helps also our Project Accelerate 2.0 initiative and expanding our footprint in translational research, clinical research and biopharma. It is also complementary to our Bruker Cellular Analysis and [indiscernible] Tools. For example, our Canopy Sellscape tool, which is an important tool for spatial biology as well as examining phenotypes and cell suspensions. And so this brings a lot of opportunity for commercial synergies. Moving to Slide 9, just to give some financial details on the acquisition PhenomeX was acquired for $122 million, which included a $14 million bridge loans, which therefore was an attractive valuation of roughly 2x revenue. We closed this transaction on October 2, 2023, and immediately started our work on rightsizing the business and optimizing cost structures, which is mostly going to happen here in Q4 2023. Initial run-rate is expected for the business to be greater than $60 million per year, given the strong attractive potential of the market segments that I spoke of and that we address with this. Many of these segments are somewhat new to Bruker, and so we’re excited about that. And as mentioned, we see cross-selling opportunities with our existing spatial biology and cellar analysis tools. In terms of Bruker non-GAAP EPS impact, we anticipate $0.12 dilutive to Q4 2023, a one quarter significant impact as we work through the rapid rightsizing and cost structure optimization. And being slightly dilutive for 2024 and accretive by 2026, and we expect long-term double-digit ROIC. We encourage you to visit the links shown here to help get familiar with these businesses. We are very excited about the potential here in these very valuable technology platforms. Thank you, Frank. Back to you. . Frank Laukien: Thank you very much, Mark. Yes, these links are actually has a really cool website. I would highly recommend that if you have a few minutes, I think it’s very informative. So thank you, Mark. We’re excited about this attractive acquisition of a leading single cell biology business, with key technologies for all the reasons that Mark explained well done. So in summary, Bruker is on track for its third year in a row of double-digit organic revenue growth and solid EPS growth even as we have accelerated our investments in the Project Accelerate 2.0 transformation as well as in operational excellence in capacity and productivity. Our dual strategy is working exceedingly well right now. So Bruker’s strong growth is the result of a fundamental commitment to innovating and high-value solutions for customers as well as the result of our ongoing portfolio transformation. Our technology and biological applications leadership in many areas, combined with world-class execution via our Bruker management process position us well for continued outperformance. As in other years, we expect to give fiscal year ‘24 guidance when we report Q4 ‘23 financial results, so will be in early February. However, please note that we expect to deliver solid organic growth also in 2024, and we remain on track for our medium-term 2026 targets, which we issued at our June ‘23 Investor Day. So with that, let me turn the call over to our Chief Financial Officer, Gerald Herman, who will review our financial performance and our updated fiscal ‘23 outlook – outlook in much more detail, Gerald. Gerald Herman: Thank you, Frank, and thank you, everyone, for joining us today. I’m pleased to provide some more detail on Bruker’s third quarter and the first 9 months of 2023’s financial performance starting on Slide 11 and – in the third quarter of 2023, Bruker’s reported revenue increased 16.3% to $742 million, which reflects an organic revenue increase of 10.9% year-over-year. We reported GAAP EPS of $0.60 per share compared to $0.59 in the third quarter of 2022. On a non-GAAP basis, Q3 2023 EPS was $0.74 per share, an increase of 12.1% from the $0.66 we posted in the third quarter of ‘22. Gross margin performance was down 50 basis points year-over-year in the third quarter of ‘23, negatively impacted by 100 basis points foreign exchange headwind and partially offset by organic and acquisition gross margin improvement by 50 basis points. Our third quarter 2023 non-GAAP operating income increased 3.6% and while our non-GAAP operating margin decreased 240 basis points year-over-year to 20.0%, impacted by foreign exchange and acquisition headwinds as well as a challenging comparison from the strong Q3 of ‘22. We finished the third quarter with cash, cash equivalents and short-term investments of approximately $364 million. During the third quarter, we used cash to fund selected project Accelerate 2.0 investments, acquisitions of approximately $120 million and share repurchases of about $80 million in the third quarter. On October 2, we closed the acquisition of PhenomeX, which I’ll discuss later. We generated $44.1 million of operating cash flow in the third quarter of 2023. Our capital expenditure investments were $26.9 million, resulting in free cash flow of $17.2 million in the third quarter of ‘23. This compares with operating cash flow of $69.5 million and free cash flow of $11.8 million in the third quarter of ‘22. Slide 12 shows the revenue bridge for the third quarter of ‘23, as Frank has reviewed earlier. Compared to the third quarter of ‘22, BioSpin’s third quarter ‘23 organic revenue was up high single digits. Both Q3 2022 and ‘23 had 1 gigahertz class NMR in revenue. We expect revenue from 1 or 2 gigahertz class NMRs in the fourth quarter ‘23 similar to the fourth quarter of ‘22. Nano organic revenue grew in the mid-teens percentage range, driven by strength in Nano’s industrial research, AI-driven semiconductor and advanced packaging metrology as well as academic markets. CALID organic revenue grew high single-digit percentage with strong performance by our microbiology business. We delivered solid growth in the third quarter of ‘23 in BSI systems and aftermarket revenue with low teen’s percentage organic growth in systems and high single-digit organic growth in aftermarket. Geographically and on an organic basis in the third quarter of ‘23, our Americas revenue grew in the low single-digit percentage, Asia-Pacific revenue grew in the teens percentage range, while European revenue had low-teens percentage growth all year-over-year. For our EMEA region, third quarter ‘23 revenue was up mid-20% year-over-year. Slide 13 shows our third quarter ‘23 P&L performance on a non-GAAP basis. Non-GAAP gross margin of 52.7% decreased 50 basis points from the 53.2% in the third quarter of ‘22, impacted by 100 basis points of foreign exchange headwinds, partially offset by organic and acquisition-related gross margin improvements of 50 basis points. The third quarter of 2023 non-GAAP operating margin of 20.0% was 240 basis points lower than the 22.4% margin we posted in the third quarter of ‘22, as we were impacted by foreign exchange and acquisition headwinds to margins and faced a difficult comparison from our strong third quarter ‘22 operating margin. For the third quarter of ‘23, our non-GAAP effective tax rate was 23.8% compared to 30.4% in the third quarter of ‘22, driven mostly by favorable jurisdictional mix. Weighted average diluted shares outstanding in the third quarter of ‘23 were $147.3 million, a reduction of 1.3 million shares or 0.9% from the third quarter of ‘22, resulting from our share repurchases over the trailing 12 months. Finally, third quarter 2023 non-GAAP EPS of $0.74 was up 12.1% compared to the third quarter of ‘22 and with a $0.05 tailwind from a favorable tax rate, offsetting a $0.05 foreign exchange headwind. Slide 14 shows the year-over-year revenue bridge for the first 9 months of 2023. Revenue was up $288 million or 15.8%, reflecting organic revenue growth of 13.9%. The – Acquisitions added 2% to our top line, while foreign exchange was a 0.1% headwind, resulting in constant currency revenue growth of 15.9% year-over-year. Frank already covered the drivers for the first 9 months. Non-GAAP P&L results for the first 9 months of ‘23 are summarized on Slide 15, with the drivers largely similar to the third quarter of ‘23, and as explained on the slide. Turning now to Slide 16. In the first 9 months of 2023, we generated $144.6 million of operating cash flow, up about $42 million over the first 9 months of ‘22 on higher profitability and favorable other items. We generated $69 million of free cash flow over the first 9 months of ‘23, up about $61 million over the first 9 months of ‘22 on higher operating cash flow and lower capital expenditures. Turning now to Slide 18. Given our strong year-to-date results, solid backlog and positive outlook for the fourth quarter, we’re again increasing our revenue guidance for the year. Our updated outlook for fiscal year 2023 includes raising our revenue guidance to a range of $2.88 billion to $2.91 billion. This implies organic revenue growth of 11.5% to 12.5% year-over-year, an increase of 150 basis points from the midpoint of our prior guidance. And by now, up 300 basis points from the initial fiscal year ‘23 guidance we gave in early February. We now expect foreign currency to be about neutral to revenue for the year and acquisitions contributions of about 2.5% to our revenue growth. This leads to reported and constant currency revenue growth guidance in a range of 14% to 15%. Our operating margins in 2023, we now expect organic operating margin improvement of about 100 basis points, which is up from our prior expectation of 50 basis points. For non-GAAP operating margins, all in, we now expect a 150 basis point decline from the prior year due to a 250 basis points combined headwind from foreign exchange and acquisitions, now also including the cellular analysis business we acquired as of October 2, 2023. As previously discussed, we’re rapidly rightsizing the cellular analysis business with most cost actions expected in the fourth quarter of 2023, such that the cellular analysis business is expected to be only slightly dilutive during 2024 and accretive to non-GAAP EPS by 2026. As you just heard from Mark, we believe that over time, Cellular Analysis could be another high ROIC business for Bruker. Cellular Analysis accelerates our entry into important biologics in cell and gene therapy tool markets, leveraging its differentiated research solutions with high revenue growth and margin potential. On the bottom line, excluding the new Cellular Analysis business, we’re actually increasing our estimated non-GAAP EPS guidance to a range of $2.60 to $2.65, which implies 11% to 13% year-over-year growth or up $0.05 from our prior guidance range of $2.55 to $2.60 for fiscal year 2023. In the fourth quarter of 2023, we expect Cellular Analysis to be about $0.12 dilutive to non-GAAP EPS as we work through rightsizing the business. Accordingly, we overall expect non-GAAP EPS to be in the range of $2.48 to $2.53, down $0.07 compared to our prior guidance, including that acquisition. Our guidance assumptions – other guidance assumptions are listed on the slide. Our full year 2023 ranges have been updated for foreign currency rates as of September 30, 2023. Finally, at our Investor Day in June of 2023, I shared financial targets for the medium-term fiscal year 2026 outlook for Bruker. Our year-to-date 2023 financial performance and positive outlook for Q4 gives me confidence to reconfirm today our commitment to those targets, including solid growth for 2024. So to wrap up, Bruker delivered excellent organic revenue growth and strong EPS growth in the quarter and for the first 9 months of 2023. And we remain confident in our fiscal year ‘23 outlook and beyond. With that, I’d like to turn the call over to Justin to start the Q&A session. Thank you very much. Justin Ward: Thank you, Gerald. I’d now like to turn the call over to the operator to begin the Q&A portion of the call. [Operator Instructions] Operator, we are ready for the Q&A. Thank you. See also Buffett Stock Portfolio: Warren Buffett’s Recent Buys and 17 Countries with the Highest Percentage of Non-Drinkers. Q&A Session Follow Bruker Corp (NASDAQ:BRKR) Follow Bruker Corp (NASDAQ:BRKR) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: [Operator Instructions] The first question comes from the line of Puneet Souda with Leerink Partners. Your line is now open. Puneet Souda: Sure. Yes. So I was just saying congrats on a very strong quarter here versus the backdrop of industry and peers. So that’s really great to see. Just wanted to clarify a question that we’re getting here on the BSI book-to-bill year-to-date that you provided. But based on the mid-single-digit growth in bookings versus the sort of double-digit – high single-digit growth you had in the prior two quarters for bookings. Just wanted to check if the book-to-bill was lower in first – I mean, in the third quarter here? And just given, Frank, what you’re seeing in the end markets and in China, obviously, nervousness out there in the market. Could you maybe just help us frame is it still fair to think about 6% to 8% growth, the longer-term growth algorithm for 2024 as well? Frank Laukien: Yes. Happy to do so, Puneet, we’re not giving ‘24 guidance, we’ve signaled solid organic revenue growth for next year. We will give guidance when we obviously give guidance. Anyway. So it is correct. In Q3, there was some weakness in bookings in China and in Japan. The rest of the world, which, of course, included Americas and Europe and so on, was fairly strong. And so our book-to-bill in Q3 was below 1 as we expected. year-to-date, it is about 1. Remember, in China, we have this unusual effect more than perhaps other peers that we had very strong Q1 bookings. We believe some of that was truly incremental as some big ticket items got funded that normally might struggle to get funding. But some of it was also pulled forward. And so we have a bit of an uneven order pattern in China, but there is also weakness in China right now. And in Q3, we saw that in China and Japan. So book-to-bill year-to-date is about 1 in – and we also have a very good forecast for bookings in Q4. So we think we will maintain the book-to-bill of around 1 for the year. And our backlog always comes down a little bit in Q3 before our typically strong Q4. You’ve heard the outlook of high single-digit organic revenue growth and good bookings for Q4, so we will still be at a very significantly elevated backlog. Keep in mind, I know you like the term backlog conversion, but those are customer orders, that’s real demand, so anyway, we will still have a very, very healthy and extended backlog that will take us, in fact, a few years to work down going into ‘24. I hope that addressed most of your or all of your questions. Puneet Souda: Yes, absolutely, Frank. I appreciate it. And if I could follow-up, I mean, congrats on the PhenomeX and the Cell Analysis business. definitely attractive longer-term. But could you just talk a little bit about how you see that high-end capital equipment positioned within Bruker? You have significant experience with selling high-end equipment to both research and now with the Cell Analysis you’ll be positioning well into pharma. So maybe could you talk a little bit high level about that? And if I may just sneak in one on timsTOF, any changes in customer order behaviors or dynamics given the demos of a potential competitive high-res instrument ongoing in the market right now? Thank you. Frank Laukien: Yes. So we love selling instruments. We have very innovative instruments. We keep them refreshed also in our core, which our core is really doing well as well, not only the Project Accelerate initiatives. The Beacon is another high-end instrument, the 1 that we just acquired with Cellular Analysis but it really depends if you’re addressing key markets in better, faster and antibody development or maybe antibody developments that without a tool like this, we just can’t develop very well by the traditional ways of doing it. And of course, for important markets, I know there is a bit of a weakness right now in biologics and cell and gene therapy, but we’re very happy to accelerate our push into those markets......»»

Category: topSource: insidermonkeyNov 4th, 2023

Cohen & Steers, Inc. (NYSE:CNS) Q3 2023 Earnings Call Transcript

Cohen & Steers, Inc. (NYSE:CNS) Q3 2023 Earnings Call Transcript October 19, 2023 Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Third Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As […] Cohen & Steers, Inc. (NYSE:CNS) Q3 2023 Earnings Call Transcript October 19, 2023 Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Third Quarter 2023 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Thursday, October 19, 2023. I would now like to turn the conference over to Brian Heller, Senior Vice President and Corporate Counsel of Cohen & Steers. Please go ahead. Brian Heller: Thank you and welcome to the Cohen & Steers third quarter 2023 earnings conference call. Joining me are our Chief Executive Officer, Joe Harvey, our Chief Financial Officer, Matt Stadler, and our Chief Investment Officer, Jon Cheigh. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying third quarter earnings release and presentation, our most recent annual report on Form 10-K, and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund or other investment vehicle. Our presentation also contains non-GAAP financial measures, referred to as adjusted financial measures, that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation, as well as links to our SEC filings are available in the investor relations section of our website at With that, I’ll turn the call over to Matt. Matthew Stadler: Thank you, Brian. Good morning, everyone. Thanks for joining us today. As on previous calls, my remarks this morning will focus on our as adjusted results. A reconciliation of GAAP to as adjusted results can be found on pages 18 and 19 of the earnings release and on Slides 16 through 20 of the earnings presentation. Yesterday, we reported earnings of $0.70 per share, compared with $0.92 in the prior year’s quarter, and $0.70 sequentially. The third quarter of 2023 included an adjustment to compensation and benefits that increased the compensation-to-revenue ratio. Revenue was $123.6 million for the quarter, compared with $140.2 million in the prior year’s quarter, and $120.3 million sequentially. The increase from the second quarter was primarily due to the recognition of performance fees from certain institutional accounts, as well as one additional day in the quarter. Our effective fee rate was 57.6 basis points in the third quarter, compared with 57 basis points in the second quarter. The recognition of performance fees in the third quarter accounted for the majority of the increase in our effective fee rate. Operating income was $43.9 million in the quarter, compared with $60.1 million in the prior year’s quarter, and $43.8 million sequentially. And our operating margin decreased to 35.5% from 36.4% last quarter. Expenses increased 4.2% from the second quarter, primarily due to higher compensation and benefits partially offset by lower G&A. The compensation-to-revenue ratio for the third quarter, which included the adjustment referred to earlier, increased to 42.5% and is now 40.5% for the nine months ended, 100 basis points higher than our previous guidance. Market depreciation in our asset classes late in the third quarter resulted in quarter-end assets under management being approximately 6% lower than our average assets under management. We expect this to result in lower full-year revenue than we had forecasted when providing our compensation guidance last quarter, which led us to increase the compensation-to-revenue ratio in the third quarter in order to balance employee retention with results to shareholders. The decrease in G&A was primarily due to lower-than-projected costs associated with the now-completed implementation of our new trading and order management system, as well as lower recruitment costs, partially offset by increases in business-related travel and entertainment and hosted conferences. Our effective tax rate remained at 25.25%, consistent with the guidance provided on our last call. Page 15 of the earnings presentation sets forth our cash and cash equivalents, corporate investments in U.S. Treasury securities, and liquid seed investments for the current and trailing four quarters. Our firm liquidity totaled $279.9 million at quarter end, compared with $257.9 million last quarter, and we have not drawn on our $100 million three-year revolving credit facility. Assets under management were $75.2 billion at September 30th, a decrease of $5.3 billion, or 6.5%, from June 30th. The decrease was due to market depreciation of $4.6 billion, net outflows of $47 million, and distributions of $604 million. Joe Harvey will provide an update on our flows and institutional pipeline of awarded, unfunded mandates. Let me briefly discuss a few items to consider for the fourth quarter. With respect to compensation and benefits, all things remaining equal, we expect that our compensation-to-revenue ratio will remain at 40.5%, consistent with the year-to-date ratio I just provided earlier. We expect G&A to increase 5% to 7% from the $52.6 million we recorded in 2022, which is lower than the 9% to 11% increase noted on last quarter’s call. Excluding cost projections associated with our new corporate headquarters and the establishment of a new data center, we would expect G&A to be flat when compared with last year. And finally, we expect our effective tax rate will remain at 25.25%. Now I’d like to turn it over to our Chief Investment Officer, Jon Cheigh, who will discuss our investment performance. Jon Cheigh: Thank you, Matt, and good morning. Today, I’d like to cover our performance scorecard and the market environment during this quarter. And then I’d like to provide our investment viewpoint on what we call the global energy addition as opposed to transition. We believe the consensus on this topic is in the early stages of shifting, and this will help generate strong returns and new investor allocations for our real assets, natural resources, and energy-oriented strategies. Turning to our performance scorecard, for the quarter, 39% of our AUM outperformed, a drop from last quarter’s 98%. While a slight disappointment, we would caution reading too much into the short term. First, philosophically, we believe our three and one-year performances in that order are most important to our clients and prospective investors. Second, the quarterly alpha pullbacks we experienced occurred in strategies where we are still outperforming over the one and three years. Positively, our performance this quarter was led by preferred securities, most notably low-duration preferreds, which outperformed by 100 basis points and is now up 60 basis points for the year. Following a challenging Q1 for our preferred strategies, we have now seen two quarters in a row of both absolute and relative performance recovery after the banking crisis earlier this year. For the last 12 months, 83% of our AUM outperformed, which is the same as Q2. For the last three, five, and 10 years, our performance track record remains nearly perfect at 95%, 97%, and 100%, respectively. From a competitive perspective, 88% of our open-end fund AUM is rated four or five star by Morningstar, which is consistent with last quarter. Turning to the market environment, the quarter was challenging for most asset classes with global equities down 3.3% and global bonds declining 3.6%. For the first seven months of the year, cooling inflation and rising prospects for a soft landing drove positive listed market returns. But this quarter, market attention shifted back to concerns about stubborn inflation and high rates, along with new concerns over fiscal deficits and debt sustainability. Our largest asset class, U.S. REITs, declined by 8.6% for the quarter, underperforming U.S. private real estate as measured by NCREIF, which declined 2.2%. Real estate, in our view, had already priced in a 4% treasury yield environment, but clearly struggled with the 10-year pushing closer to 5% by the end of the quarter. We view the underperformance of listed versus private to be a matter of timing and not a new fundamental trend. This quarterly decline in listed markets implies that we should expect continued write-downs within private markets. Amidst this latest rate-induced pullback in listed REITs, we still see low comparative supply of space, pricing power, and strong balance sheets. Considering valuations in the fundamental picture, we believe investors have an attractive entry point over a multi-year horizon. Indeed, we maintain our conviction that listed markets today are priced for strong forward returns, and particularly so versus private markets. Real assets modestly declined during the quarter, but outperformed a 60-40 portfolio. Commodities were the big story, up 4.7%, as energy and the petroleum complex surged on deeper OPEC+ production cuts, as well as falling Russian crude oil exports and stronger global demand, which pushed Brent crude oil prices to 10-month highs in the mid-90s. In addition, after five straight quarters of surpluses, the quarter’s expected deficit of 1.5 million barrels per day was the largest since the fourth quarter of 2021, and drove OECD supply inventories further below their five-year average. As expected, these same developments drove a 4.4% quarterly return for natural resource equities. We are closely monitoring developments in the Middle East following the terrorist attacks on Israel and the war which has ensued. While oil fundamentals have remained unaffected, at least for the moment, tail risks for the global economy and certainly commodity prices have all increased. Moving to listed infrastructure, the asset class fell nearly 8% during the quarters. Utilities, particularly in North America, tend to be the most rate-sensitive part of our universe and led the decline. All major utility subsectors, electric, gas, and water were down between 7% and 11% during the quarter. Also impacting the electric space has been the likely negative impact of both higher cost of capital and lingering supply chain issues impacting returns for new renewable energy projects. Cell tower companies have also been impacted by both higher interest rates as well as lower customer leasing activity. Offsetting these dynamics, midstream energy continues to perform well with the industry up 2.5% on the quarter and now up 7% on the year, as investors appreciate the scarcity value of U.S. energy infrastructure and the attractive free cash flow generation. Lastly, our core preferred security strategy was up 1% for the quarter, beating its benchmark by 90 basis points in outperforming the Bloomberg global aggregate, which was down 3.6%. Factors that aided our outperformance included our focus on more defensive securities with features such as shorter durations, fixed to reset coupons, and higher yield cushions. From a sector standpoint, security selection in banking, insurance, and utilities contributed to alpha, highlighting our sector diversification. In the near term, we believe preferreds will continue to perform well due to attractive yields, potential for strong total returns as we approach the peak of monetary policy tightening and solid fundamentals as highlighted by healthy bank earnings this quarter. Shifting gears, on our last earnings call, I spent time discussing the strategic case for real assets in both individual and institutional portfolios and how we are in the early stages of a significant and far-reaching macroeconomic regime change defined by higher inflation, lower growth, and greater market volatility. Today, I want to speak on the so-called energy transition. We believe that the consensus view will shift over time from energy transition to energy addition. Last month, our natural resources and infrastructure portfolio manager Tyler Rosenlicht published an important piece of research entitled, Changing the Imperative from Energy Transition to Energy Addition. You as investors and analysts should expect to see more thought pieces from us that will delve into this theme over time and how it will be a tailwind for real assets, natural resources, and energy. In short, we believe that while the global economy will certainly become much more energy efficient, global energy consumption will still increase in the aggregate to support a growing population, economic growth, and most importantly, rising standards of living in the developing world. In fact, we forecast a 20% increase in aggregate energy demand by 2040. The world will need both alternative and traditional energy to meet this increased demand. And we believe this feature will create attractive investment opportunities on both sides of the equation. The energy industry is changing dramatically with new efficiencies coming to market, old technologies facing obsolescence and companies reacting to the significant disruption. Some incumbent companies will navigate the change well, while others will not. In either case, the old definition of energy is now obsolete. The expectation that renewables such as wind and solar are ready to fully meet the world’s rising energy demands on their own is at least premature, if not optimistic. A close-up of a hand holding the deed to a property, symbolizing the real estate investments held. Editorial photo for a financial news article. 8k. –ar 16:9 At the same time, the demise of traditional carbon-intensive energy, such as crude oil and natural gas, has been greatly exaggerated. To be clear, alternative energy is the future. And we expect its production to grow by 155% over the next several decades, which will help satisfy growing energy demand. However, we estimate this still will only cover roughly 35% of future energy needs, which showcases why the world will continue to rely on and invest in traditional energy. The marketplace cannot and will not be dependent on one energy source to the exclusion of others. With the exception of coal, we are likely in a quote unquote “more of everything world” for the next few decades. Indeed, we believe investing in both traditional and alternative energy is the way forward, as it replicates what the world will need to lift an ever-growing population to a higher standard of living and economic equality. When looking at the prolonged energy transition picture, we believe that blending traditional energy with alternative investments can also create a compelling risk-return profile for investors. This emerging energy addition consensus will be a key driver of returns and increased allocations into our energy, natural resource equities, and broader real asset strategies. With that, let me turn the call over to Joe. Joe Harvey: Thank you, Jon. Good morning, everyone. I’d like to first briefly touch on the macro environment, then discuss our third quarter business fundamentals and outlook. During the third quarter, the emergence of bond vigilantes focusing on the US federal deficit and potential for sticky inflation caused bond yields to rise, furthering the higher for longer view and pressuring valuations on risk assets. While our average AUM for the quarter was $80 billion, we ended the quarter at $75 billion. Our largest asset classes had greater depreciation than the S&P 500’s decline of 3.3%. For example, US REITs declined 8.6%. Energy was the winner in the quarter, with oil prices up 29% and energy equities up 12%. Our interest rate sensitive assets represent a much larger percentage of our total AUM than does the energy-sensitive components. Our flow results were better than what may have been expected considering the market environment. Firm-wide net outflows were $47 million in the third quarter, an improvement from the second quarter when we had $512 million of outflows. Year-to-date net outflows have totaled $1.06 billion, an annualized decay rate of 2%. In the quarter, open-end funds had outflows of $360 million, led by U.S. open-end funds, including our two preferred stock funds, which accounted for $222 million of outflows. The institutional channel was positive in the quarter with $190 million of net inflows in advisory and $123 million of net inflows through sub advisory. The wealth channel had net outflows across all vehicle types including open-end funds, SMA, UMA accounts, and offshore [USITS] (ph) vehicles. In the US open-end funds, seven of 11 funds had outflows reflecting the current risk off market sentiment. We did see inflows into three of our REIT funds, totaling $67 million. The greatest outflows came from our low-duration preferred stock fund, symbol LPX, which had $138 million out, as short-term treasury yields of 5.5% now exceed the 5.2% yield on LPX. Net outflows from our core preferred fund CPX were $84 million, which reflects steady improvement following the turmoil in the U.S. regional banking sector earlier in the year. We also saw outflows from our infrastructure fund, CSU at $65 million and from our multi-strategy real assets fund, RAP, at $70 million, which is the highest they’ve been. Institutional advisory had net inflows of $190 million the first positive quarter since the second quarter of 2021. We had $274 million of inflows into two existing accounts and outflows of $141 million associated with three account terminations, the lion share being a preferred allocation in our limited partnership vehicle. This redemption should be completed in the fourth quarter with another $184 million out. The Sub Advisory ex-Japan net inflows were driven by three new mandates totaling $234 million, partially offset by trims in three existing strategies totaling $107 million. The three new mandates included a REIT completion strategy and two multi-strategy real assets portfolios. Japan’s sub-advisory was virtually flat, with outflows equal to $2 million. Japan has been a source of relative strength, led by one of Daiwa Asset Management’s US REIT mutual funds. Japanese interest rate increases have not kept pace with the rise in global rates and the US dollar has been strong versus the end, both dynamics helping REIT flows in Japan. In addition, our partner, Daiwa, has stepped up marketing efforts for those funds. Our one unfunded pipeline was $784 million compared with $1.1 billion last quarter and the three-year average of $1.3 billion. Tracking the change from last quarter, $532 million funded into six accounts, $415 million was added to the pipeline from five new mandates, including $161 million for our private real estate vehicles, and $233 million was terminated, mostly from one OCIO client where the underlying client’s strategic allocation was de-risked. While client decision-making has been slow, activity picked up in the third quarter and continues. Turning to our outlook, we believe we are well positioned by way of our corporate strategy, how we’re organized, and the clarity of our priorities. In terms of the things within our control, our relative performance continues to be strong, and we have invested prudently in new strategies such as private real estate, and have seeded new strategies such as infrastructure opportunities and the future of energy. We have also expanded our distribution capabilities to include private real estate and have allocated more resources in Asia and have invested in our corporate infrastructure to accommodate more and increasingly sophisticated clients. We are better organized to strategically partner with investors and help them build better performing and diversified portfolios. What’s challenging is the regime change in the macro economy. This shift is taking a very long time, which, with reflection is understandable considering that the cumulative effects of 12 years of monetary stimulus cannot be unwound in a quarter or two. Factor in geopolitical tensions and in some cases outright conflict including two wars and the entirety of that macro landscape is less predictable and potentially fragile. Normalization of interest rates at the end of the day is good for the economy and capital allocation, but the increase in the cost of capital and multiple compression presents challenges for businesses and asset owners. To date, that process has mostly manifested in the listed market, but is now developing in the private markets as well. De-globalization and the shifting geopolitical world order provide added catalysts for our view that inflation will be more prevalent, interest rates will be higher for longer, and central banks will continue to be reactive. As a result, the global economy should experience more volatility. The regime change continues to affect asset allocators’ decision-making. The fact that investors can sideline their capital and earn over 5% in a riskless treasury bill while they wait to see how valuations and the economy evolve makes sense for now. The other question is where private valuation marks will settle out, which is slowing portfolio allocation decisions across the board. We continue to believe that listed real assets are underrepresented in investor portfolios based on their fundamentals, considering return, risk, and diversification. That said, in the short term, the cyclical dynamics of investors sitting on treasuries and waiting for opportunities to become more visible continues to impact the pace of strategic asset allocation decision-making. Demand for our strategies is well-grounded. We’re seeing takeaway opportunities from underperforming managers, shifts from passive to active, desire for customized completion strategies in real estate, opportunity for optimization of listed and private real estate, and emerging demand for real assets in Asia. We believe that the regime change is creating attractive entry points. We’re advising clients that now is the time to begin averaging into listed REITs with their prices down nearly 30% and with the Fed nearing the end of its tightening cycle and with recession concerns afoot. Then as private real estate furthers its price correction, we expect buying opportunities to open up in 2024. For preferreds, with a many banking crisis in the rearview mirror and with yields in the 7% to 8% range, we expect prefers to participate in the next fixed income return cycle. As mentioned, with inflation likely to be a greater macroeconomic factor, and the fact that investors are generally short inflation beta, we expect investors will increasingly want allocations to the strategies that constitute our multi-strategy real assets portfolio, including natural resource equities and commodities. Our resource equity strategy is particularly well-suited for the macroeconomic environment we envision. Finally, just as in real estate, investors in infrastructure will look to complement private allocations with listed allocations. We continue to make progress with our new private real estate vehicles. Our non-traded REIT, Cohen & Steers Income Opportunities REIT has completed its registration and review process with the SEC and all 50 states. The next steps to become operational include drawing from our corporate seed capital commitments and from a multifamily office and commencing our investment strategy. We’re ready to go, but we’ve been patiently waiting for prices to decline further in light of the increase in interest rates and slowing growth. Our expectation has been that prices need to decline 25% to 30% and to generalize, we believe we’re about halfway there. Needless to say, our objective is to start the non-traded REIT with a good track record, while taking advantage of an attractive investment period. In terms of our closed-end private equity opportunity fund, we continue to raise capital while waiting for private real estate prices to correct. Due to the duration of the regime change and the complexity of these vehicles, it has taken longer to get to market with them. However, this initiative is strategic and we’re seeing the power of having both capabilities from an investing and client perspective. The cost structure supporting the initiative is in place and we believe private real estate is a strategic investment that will provide meaningful operating leverage. We’re optimistic about business opportunities in Asia as investors adopt allocations to listed real assets. As a reminder we opened a Singapore office to complement our Hong Kong office in Asia. We’ve hired heads of sales in Singapore for both the institutional and wholesale markets. We’ve identified initially $3.5 billion in potential allocations to our asset classes on the institutional side. For the wholesale channel, Singapore has become a destination for private wealth and will complement the distribution for our offshore open-end CCAPs in Europe. Taking all of this into account, we are very busy, focused, and excited about the investment opportunities for active managers amidst regime change. Our priorities for 2024 are centered around delivering great investment performance and working with clients to take advantage of entry points to initiate or add to allocations to our asset classes. I’d like to close by pointing your attention to an 8-K we filed yesterday announcing that Matt Stadler will be retiring next year. He is a consummate professional and is passionate about our business, about leading our finance department as CFO, and helping to lead the firm on our executive committee. We thank Matt for what will be 20 years of service to Cohen & Steers, and note that his contributions and philosophies will be felt for many years to come. He has talked to you on 75 of these earnings calls, and we will look forward to another three or four based on the timing of finding his successor and executing a smooth transition. Congratulations, Matt. Thank you for listening to our earnings call. Julianne, could you please open the lines for questions? Operator: Certainly. [Operator Instructions] And our first question comes from John Dunn from Evercore ISI. Please go ahead, your line is open. John Dunn: Hi, guys. Maybe could you just talk a little more about how you see the flow demand story play out as we potentially get to peak rates for real estate and preferreds. Do people need to get to that peak or do people start looking at before? And maybe afterwards, how you’re thinking about how it plays out. See also Top 20 Biggest Car Manufacturers by 2023 Revenue and 14 Largest Manganese Mining Companies and Best Manganese Stocks To Buy. Q&A Session Follow Cohen & Steers Inc. (NYSE:CNS) Follow Cohen & Steers Inc. (NYSE:CNS) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Joe Harvey: Let me ask Jon Cheigh to talk a little bit more about how we see the return cycle evolving for real estate and preferreds. Then I’ll follow up with some thoughts on to the extent that you can predict those, which is not — is almost impossible, but we can maybe talk about how we’ve seen things in the past. Jon Cheigh: Look, in terms of “peak” rates, of course, there’s short rates, and then there’s long end. I think both preferred and REIT returns and their attractiveness of course, have been impacted by more on the long end. And when we are talking to our current investors and prospective investors about preferreds and REITs, and I would say we’re educating them on what has historically happened when we’ve gotten to the end of the so-called rate hiking cycle. So preferreds, for example, some of the research we share is that once the Fed has had its last rate hike over the next 12 months, you tend to see 14% returns for preferreds. This compares to more like 5% for treasury. So I think — and there’s similar kinds of research that we’ve educated our investors on REIT. So, I think most people fully understand that when we get to peak, whether it’s short or long rates, historically, that’s tended to be amongst the best opportunities within REITs and preferreds. We talk to people with that and we counsel them that, of course, you never really know when you’re there until after the fact. And so that you need to “dollar cost average in”. And so, I think we’ve seen both on the fund side and on the advisory side, some amount of that rebalancing in, but certainly not investor behavior, as we know. They want to see it happen and now has happened. So, we’ve seen some of that net flow demand come in. But certainly, it’s been more muted so far. Maybe I’ll turn it back to Joe to talk about. Joe Harvey: Sure. Maybe just maybe break it down in terms of wealth versus institutional advisory. So, on the wealth side, historically, advisers investors have typically been more coincident with how the markets move. But you should understand, too, that we have professional allocators and platforms who are using these vehicles, some of whom can be very — move a large amount of money. And there are several that are looking for the Qs and indicators that John mentioned on the REIT side, for example. On the institutional side, we would expect those investors to be more anticipatory and if you kind of follow the past couple of earnings calls, you’ll remember that in the second quarter, we felt like the activity just slowed very significantly just due to the significance of the regime change and investors taking stock of their portfolios. But we’ve seen activity pick up that was evidenced in our third quarter pipeline numbers where we had a lot of fundings, some of those fundings were just sitting around waiting. We’ve seen some new accounts being won and our activity levels are good. So, the institutional market is getting through the regime change process. And I’d say activity is maybe not normal, but it’s getting closer to normal. Overlying all of this — the comments that I made about the fact that fixed income now presents a real return opportunity. And in particular, with treasury bills of being over 5% in the wealth channel, that’s enabling investors to sit and wait and watch to see how things play out. So, these changes are a process. This regime change, as we’ve talked about, has been one of the longest and dramatic that we’ve seen. But what I’m excited about, as I said, is the alpha opportunities that are going to come out of it. And that’s why our investment teams are highly focused and motivated to capitalize on these opportunities......»»

Category: topSource: insidermonkeyOct 20th, 2023

Wednesday links: short-term variability

MarketsNarratives drive stocks and the GLP-1 narrative is strong these days. ( how expensive are the 'Magnificent Seven' stocks? ( international equities may belong in your taxable account. ( is no single model for the term premium. ( makes for a good annual shareholder letter? ( is using AI to help price bonds in real-time. ( the UAE became a hedge fund hub. ( ($AMZN) now has 10,000 Rivian ($RIVN) vans on the road. ( ($AAPL) leads the pack in terms of pushing suppliers toward decarbonization. ( AI is finding its way into QSRs. ( much has geopolitical risk risen this week? ( how out of reach have single family home prices gotten? ( inflation has stopped going down. ( on Abnormal ReturnsPersonal finance links: slowing down. ( you missed in our Tuesday linkfest. ( links: acceptably high yields. ( you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. ( mediaA look at Barnes & Noble's back-to-basics store design. ( Jared Fogle scandal didn't tank Subway sales. ( self-checkout experiment has failed. (»»

Category: blogSource: abnormalreturnsOct 18th, 2023