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In today’s briefing:
- Absolute Principles of Stock Investment (주식투자절대원칙) – A Book Review
- [ETP 31/2024] Oil Prices Surge on Middle East Tensions; BP and Shell Beat Earnings Expectations
- Miners at Peak Risk/Reward
- BoE Cut Through Fine Balance
- Fed Snap (Jul 31 Meeting): Current & Future Takeaways
- FOMC Waits; Despite Politics, 3 Rate Cuts Are Likely This Year as Inflation Abates
- CX Daily: ‘Exorbitant’ Fines Land Temu in Hot Water With Chinese Merchants
- Actinver Research – Supermarkets post 2Q24: Sales deceleration with healthy margins (Sector Update)
- Actinver – Macro Daily: Remittances and Business Confidence
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Absolute Principles of Stock Investment (주식투자절대원칙) – A Book Review
- This insight is a book review of 주식투자절대원칙 (Absolute Principles of Stock Investment), which was written by a famous Korean retail investor called Park Young-Ok.
- Park tries to capture his 30+ years of investing wisdom. I thought this book was excellent, especially because Park included a lot of local flavor of his mindset in investing.
- This insight provides 11 major highlights of the book ‘Absolute Principles of Stock Investment.’
[ETP 31/2024] Oil Prices Surge on Middle East Tensions; BP and Shell Beat Earnings Expectations
- US crude inventories fell for the fifth consecutive week by 3.4 mb, exceeding the 1.6 mb decline expected by analysts. Gasoline stocks also decreased by 3.7 mb.
- As of the week ending 26/Jul, US natural gas inventories were up 8.4% YoY and 15.7% above the 5-year seasonal average.
- European oil majors beat Q2 profit estimates. BP’s Q2 underlying net profit beat estimates by 7.7%. Shell’s Q2 EPS beat estimates by 5.1%.
Miners at Peak Risk/Reward
- Champion Iron Ore, also known as Champ, is a premium producer in the iron ore sector with potential for increased attention over time.
- Adriatic Metals is ramping up production at their Vares silver-zinc polymetallic deposit in Bosnia, but facing challenges with cash flow and development rates.
- Cash flow issues, teething problems with mining services, and logistical challenges are hindering Adriatic’s ramp up, but they are on track to reach their nameplate by Q4.
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BoE Cut Through Fine Balance
- The BoE cut by 25bp to 5.0%, as we expected, but still provided dovish news as the decision was finely balanced for and between MPC members, the consensus and pricing.
- Confidence in the forecast increased enough for a rate cut, yet risks now skew to the upside from persistently high wage inflation. It is noncommittal about cutting again.
- We still expect another cut in November before pausing amid excessive wage growth. That modal call could invert to rate hikes if the Fed also cuts prematurely.
Fed Snap (Jul 31 Meeting): Current & Future Takeaways
- Market sentiment improved as the prospect of a September Fed pivot increased following the July FOMC meeting
- While the July FOMC statement and Chair Powell’s presser hinted toward a rate cut, the former seems more ambivalent than the latter
- Although the current focus is squarely on the timing of the first rate cut, the future path of policy remains unclear at this time
FOMC Waits; Despite Politics, 3 Rate Cuts Are Likely This Year as Inflation Abates
- FOMC held rates steady at 5.25-5.5%, but emphasized that “a reduction could be on the table…in September”. From inflation risks alone, the FOMC statement shifted focus to its dual mandate.
- 0.9%YoY M2 growth (Jun’24) evidences restrictive monetary conditions. Withdrawing QT after Aug’23 led to Jan-Apr’24 shocks in MoM core PCE, but latter now reined-in by resumed QT since Mar’24.
- Core PCE inflation likely to wane to 2.3%YoY by Sep’24, enabling rates to decline 25bp at each of the next 3 FOMC meetings, ignoring political threats regarding the Sep’24 cut.
CX Daily: ‘Exorbitant’ Fines Land Temu in Hot Water With Chinese Merchants
- Temu / In Depth: ‘Exorbitant’ fines land Temu in hot water with Chinese merchants
- Politburo /: Politburo promises new measures to tackle local debt risks and clear economic hurdles
- Regulators /: China securities regulator names law enforcement chief as vice chairman
Actinver Research – Supermarkets post 2Q24: Sales deceleration with healthy margins (Sector Update)
- Supermarket 2Q24 results were overall mixed vs our estimates, with sales decelerating amid mostly calendar headwinds, and La Comer posting the best SSS and sales performance; all of our 3 covered players still beat the industry and thus continue to gain market share, as expected.
- In terms of profitability, the 3 companies were able to post solid gross margin expansion amid efficiencies and product mix, yet SG&A pressure, amid higher labor expenses, offset most of this pressure as expected; Chedraui was the only player able to post a slight EBITDA margin expansion.
- Having recently launched our Supermarkets coverage (link to report here), we continue to see Chedraui (Outperform, P$160 PT) as the best positioned supermarket for either consumer trade up or trade down, as well as with a healthy format and geographical diversification.
Actinver – Macro Daily: Remittances and Business Confidence
- Remittances: In June, USD 6.2 billion in remittances came to the country, the highest numbers for a single month, reinforcing its role as the main source of net dollars into the country.
- The accumulated flow in the year increased to USD 31.3 billion, 3.6% more than observed in the same period of 2023.
- Remittances have increased at both extensive and intensive levels.