Are luxury cars recession-proof? Stephen Wilmot examines luxury vehicle makers and their resilience in The Wall Street Journal, writing: Luxury car brands should be better long-term investments than mass-market ones. That doesn’t mean they are recession-proof. Less than two weeks after its initial public offering, Porsche POAHY -4.42%▼ has already overtaken its majority shareholder Volkswagen VOW -3.29%▼ in terms of market value. The comparison is simplistic, given differences in capital structure, but it does underline, among other things, investors’ preference for expensive vehicles over … [Read more...]
Archives for October 2022
INSULT TO INJURY: Saudis Promise Asia No Cuts in Oil
After announcing an OPEC+ cut to oil production of 2 million barrels a day, Saudi Arabia has promised that Asia will receive its full contracted volumes of oil. The announcement adds insult to injury for Joe Biden, who asked the Saudis to pump more oil, not less. Reuters reports: Saudi Aramco has told at least seven customers in Asia they will receive full contract volumes of crude oil in November ahead of the peak winter season, several sources with knowledge of the matter said on Monday. The producer is keeping supplies to Asia steady despite likely production cuts by tapping on … [Read more...]
THE UNWOKENING: Corporate Executives Signal Big Step Back on ESG
Two surveys of corporate executives signal that the era of unquestioning corporate obedience to ESG goals may be over. The 2022 KPMG CEO Outlook survey found that 59% of CEOs plan to "pause or reconsider their organization's ESG efforts in the next six months." Paul Bergeron reports for Globest.com: As CEOs in the US prepare for a recession that a majority believe will not be mild and short, the newly-released 2022 KPMG CEO Outlook found that in an uncertain economic environment, they are adjusting their business strategies around ESG. They are committed to investing in transformational … [Read more...]
TRUST BUSTING: Binance Hit by Hack Demoralizes Crypto Owners
Hackers stole $570 million in tokens from Binance, the world's largest crypto exchange on Friday. The theft is another blow to the trust of crypto owners. Philip Stafford and Scott Chipolina report in the Financial Times: Hackers have stolen around $570mn in tokens from Binance, in a rare blow to the world’s biggest crypto exchange and another dent to the troubled digital assets industry struggling to regain trust after a collapse in prices. Binance initially estimated on Friday that tokens worth about $100mn to $110mn had been taken, pausing the operation of the affected blockchain for … [Read more...]
Putin’s Biggest Advantage Is Biden’s Terrible Economic Policies
In the war between Russia and Ukraine, Vladimir Putin's greatest advantage is Joe Biden's economy-crippling policies. Anyone who's read a bit about World War II will realize quickly that big wars are won by vibrant economies. The massive fleets of bombers flying night raids over London or Munich weren't targetting troops or enemy positions, they were targeting productive capacity. That's why Joe Biden's policies, especially those that drive up the price of energy are Vladimir Putin's biggest advantage. Daniel Henninger writes in The Wall Street Journal: The war has reached a tipping point, … [Read more...]
The Problem with Interest Rate Predictors
The problem with interest rate predictors is they’re often wrong but never in doubt. Many companies have been surprised by higher rates, and are now facing the consequences of relying too heavily on cheap financing. Many pension funds are facing similar issues. Jon Hilsenrath, Sam Goldfarb, and Chelsey Dulaney report in The Wall Street Journal: The current tightening follows years of short-term rates near zero and sometimes below. Historically, low rates encourage risk-taking, complacency, and leverage—the use of borrowed money to amplify profits and losses. In recent years, central banks … [Read more...]
THINK THE SAME: Europe Forces Apple to Ditch Its Unique Charger
"Think Different" was a longtime slogan of Apple, and to a certain extent the foundation of its current success. But European regulators are now forcing Apple to think the same as everyone else, when it comes to charging ports, at least. Kim Mackrael reports for The Wall Street Journal: European Union lawmakers backed legislation to create a common standard for charging smartphones and other portable electronics in a move that will effectively ban the sale of new products in Europe that use the company’s proprietary Lightning charger port. The European Parliament on Tuesday voted to … [Read more...]
Thrills in Bills: New Excitement for Treasury Investors
Your Survival Guy likes a bond ladder, and treasuries certainly need to play a role. Take a look at the treasury yield curve below and notice that rates are much more attractive for bond investors today than they have been in years. New excitement in treasuries is coming as yields have risen and investors flee riskier assets. Matt Grossman reports for The Wall Street Journal: Rising rates carried the yield on two-year Treasurys to 4.206% on Friday, up from 2.925% when the quarter began. That caps the two-year yield’s largest gain through a year’s first nine months since 1981. The … [Read more...]
BLOCK: Green Energy Sector “Filled with Lies and BS”
Famed short seller, Carson Block, has set his sights on a new target, green energy companies. He says the sector is "filled with lies and bullshit." The Financial Times reports: Few prospects can be more unpleasant for a corporate leader than attracting the sustained interest of Carson Block. The founder of short-selling hedge fund Muddy Waters shot to prominence more than a decade ago by loudly — and correctly — describing the Canadian-listed Chinese timber company Sino-Forest as a fraud. A string of high-profile short bets followed, against targets ranging from then FTSE 100 healthcare … [Read more...]
Biden Panics After Saudis Ignore Him to Work with the Russians
Throughout his career, Joe Biden has billed himself as a "foreign policy expert." That expertise doesn't appear effective at the moment. When the American people need relief on energy prices (mostly because of Biden's anti-energy policies), the Saudi Arabian government is working with Russia to raise oil prices. The Daily Mail reports on the snub: American drivers could face another increase in gas prices as the OPEC+ alliance announced it is cutting oil production by up to two million barrels a day in what could end up being a massive setback for the Biden administration. Energy ministers … [Read more...]