China is not happy with the United States and its ever-closer ties with Australia, Japan, and India. The four countries are deepening the ties between them formalized in a group known as the Quad. The Quad's mission, as seen by China, is to deter Chinese progress in the region. Kathrin Hille reports for the Financial Times: Beijing could not have made its displeasure with Joe Biden any clearer. As the US president met leaders of the Quad security grouping in Tokyo, Chinese and Russian nuclear bombers flew over the Sea of Japan. But China is also employing less crude tactics to counter the … [Read more...]
About Jeremy Jones, CFA
There Are Tech Companies “Still Dreaming of Boundless Growth”
Lately, the prices of many tech stocks have fallen dramatically, but while some tech companies have admitted that there are problems in their businesses, some are, as Laura Forman reports in The Wall Street Journal, "still dreaming of boundless growth." She writes: The biggest stories in tech recently have been of reckonings. Netflix said last month that it would introduce ads—something Co-Chief Executive Officer Reed Hastings has long eschewed and even referred to as a form of exploitation. The once aspirational Peloton Interactive ousted its founder, lowered the price of its hardware and … [Read more...]
How Can the Fed Prevent Stagflation?
In the Financial Times, economics commentator Martin Wolf suggests "the Fed must act now to ward off the threat of stagflation." He writes: Is there going to be a recession in the US and other leading economies? This question has naturally arisen among participants at this year’s meeting of the World Economic Forum in Davos. This is, however, the wrong question, at least for the US. The right one is whether we are moving into a new era of higher inflation and weak growth, similar to the stagflation of the 1970s. If so, what might this mean? The similarities are evident between the present … [Read more...]
Now You Can Own Your Vacation and It Doesn’t Have to Be a Time Share
Hotel owners have created a secondary market for hotel rooms using nonfungible tokens (NFTs). The system allows hotel guests who have paid for their rooms to sell the rights to their rooms on the open market if they don't want to use them. The system protects the hotel from cancellations and gives more people access to rooms that can be discounted on the secondary market. Peter Grant reports for The Wall Street Journal: Some resort owners think they have found a way to avoid getting stuck with excess inventory when guests cancel at the last minute. It involves converting room nights for … [Read more...]
Big Banks Adopting Blockchain for Short-Term Trading
Big banks BNP Paribas and JPMorgan are using digital tokens in their short-term trading operations. Eva Szalay reports for the Financial Times: JPMorgan’s blockchain allow banks to lend out US government bonds for a few hours as collateral, without the bonds leaving their balance sheets. Post-crisis regulatory requirements demand that banks hold large amounts of liquid assets — which can be bought and sold easily even during times of market stress — such as Treasuries as a safety buffer. By tokenising these assets banks can temporarily turn them into collateral for a few hours, but without … [Read more...]
BULLWHIPPED? Inventory Overhang Could Slow Growth in Certain Sectors
Every retailer's worst nightmare is holding too much inventory in products that are no longer in demand. Inventory management is important at the national economy level too, as bloated inventories can lead to less production which is what makes up economic growth. Inventories overall still look low, but there are a couple of sectors where they have popped and could be troublesome based on recent headlines. Paul Page writes in the WSJ's Logistics Report: The notorious bullwhip effect is playing out in real time in America’s stores. Retailers in their earnings this week have reported a … [Read more...]
MARKET TURNING: Canada’s Housing Market Turmoil
Real estate buyers and sellers are finding themselves in new positions at the bargaining table after rate hikes by Canada's central bank have put the market in a spin. Ari Altstedter reports at Bloomberg: One of the world’s bubbliest housing markets is tilting from sellers to buyers with dizzying speed. A string of central bank interest rate hikes has flipped the switch on Canada’s white-hot real estate market, spurring the first national home price decline in two years. That has both buyers and sellers in some of the frothiest pocketsscrambling as they try to navigate an … [Read more...]
HORDING CASH: Funds Hold the Highest Level of Cash Since 9/11
In what may be an indication of how worried fund managers are about global risks right now, they have amassed a cash horde greater than any other since the 9/11 era. Despite their intentions at reducing risk, they may be closing the barn door after the horse is out. Chris Flood reports for the Financial Times: Cash holdings among global fund managers have risen to their highest level since the 9/11 terrorist attacks in the US in a shift that reflects large investors’ worries about the deteriorating outlook for stock markets. Cash balances have swelled to 6.1 per cent on average across the … [Read more...]
COMMODITY CRUNCH: Will Tesla Buy a Cobalt Mine?
The world's cobalt supplies are stretched thin as demand from electric vehicle automakers has surpassed that of smartphone producers for the first time. When asked about the crunch in cobalt supply, Elon Musk responded that Tesla may have to purchase a cobalt mine to secure its own supplies. The Financial Times' Neil Hume reports: Electric vehicles overtook smartphones and personal computers for the first time last year as the main source of demand for cobalt, a rare metal used in lithium-ion batteries. The automotive industry consumed 59,000 tonnes of cobalt in 2021, or 34 per cent of … [Read more...]
China’s Economy Taking Hit from Zero-COVID Strategy
The draconian lockdowns China is using in its attempts to contain COVID-19 cases are hurting the country's economy, and risk harming the world's. Thomas Hale and Jennifer Creery report for the Financial Times: China’s economic activity contracted sharply in April as a wave of lockdowns across the country posed the most significant challenge to its growth prospects since Covid-19 emerged more than two years ago. Retail sales, the country’s main gauge of consumer activity, slumped 11.1 per cent year on year, compared with forecasts of a 6.6 per cent fall by economists polled by Bloomberg. … [Read more...]
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