What hit our inboxes this week
What helps us sleep at night – part 7
When investors are particularly pessimistic about what the market may do (or is doing), we’re often asked how we sleep at night. Over the years, we’ve put together some things we think about as we try to get some shut eye. Here’s our version of a cup of chamomile tea.
In the seventh version of the What helps us sleep at night series, Tye, Jeff, George and Claire discuss five businesses held in EdgePoint Global Portfolio and why we believe they are well-positioned to help us ignore the current short-term volatility.
Europe Still Imports Huge Volumes of Russian Diesel as War Rages
So far this month, the continent has received close to 14 million barrels of diesel-type fuel from countries that used to be part of the Soviet Union, according to Vortexa Ltd. data compiled by Bloomberg. That’s a relatively limited drop-off from pre-war levels earlier this year and the vast majority, if not all, of that fuel originated in Russia.
That may come as a surprise to some, given how many European leaders and oil companies have criticized Russia’s invasion of Ukraine. Less than a week after President Emmanuel Macron and Chancellor Olaf Scholz visited Kyiv in a show of support for Volodymyr Zelenskiy, the data show the biggest buyer of the Russian fuel is France, closely followed by Germany.
How Singapore Got Its Manufacturing Mojo Back
Singapore has aggressively wooed highly automated factories with tax breaks, research partnerships, subsidized worker training and grants to local manufacturers to upgrade operations to better support multinational companies, among other enticements.
There’s a caveat: Singapore’s success has come by automating away many jobs. It has more factory robots per employee than any country other than South Korea, according to the International Federation of Robotics.
The Rich World’s Climate Hypocrisy
The developed world’s response to the global energy crisis has put its hypocritical attitude toward fossil fuels on display. Wealthy countries admonish developing ones to use renewable energy. Last month the Group of Seven went so far as to announce they would no longer fund fossil-fuel development abroad. Meanwhile, Europe and the U.S. are begging Arab nations to expand oil production. Germany is reopening coal power plants, and Spain and Italy are spending big on African gas production. So many European countries have asked Botswana to mine more coal that the nation will more than double its exports.
Britain, Germany push G7 for halt to biofuel mandates to tame food prices
Officials from some G7 countries, including Germany and Britain, will push for temporary waivers on biofuels mandates to combat soaring food prices when leaders from the group of wealthy nations meet on Sunday, three people familiar with the matter told Reuters.
It’s not clear whether there’s broad-based support to temporarily waive biofuel mandates across the G7 members which include Canada, France, Germany, Italy, Japan, Britain and the world’s largest biofuel producer, the United States. Surging oil and gas prices have also increased the demand for energy sourced from crops.
Goldman Sachs Facing SEC Probe of ESG Funds in Asset Management
The Wall Street Journal reported earlier on the investigation of Goldman Sachs. The SEC hasn’t yet put rules in place covering ESG requirements, so the probe may focus on whether Goldman’s disclosures to clients didn’t accurately describe its investment practices, the Journal reported.
The SEC has been warning money managers not to mislead investors about the standards and methods they use for classifying funds as ESG. Behind the scenes, the agency’s staff has been pressing financial firms to show that they’re making good on their promises.
In last year’s first half, the agency set up a task force of enforcement lawyers whose focus includes ESG disclosures. Around the same time, the regulator released a report showing many funds describing themselves as ESG weren’t doing enough to ensure that their marketing rang true.
Timeless Lessons From the 2020-2022 Cycle
Speculation is as old as the hills. Every modern technological innovation has one thing in common — they cause people to lose their minds thinking about how the world is going to change going forward and thus, a financial asset bubble is formed.
Everything is cyclical. Nothing fails quite like success in the stock market and this environment is a perfect example of that. Nothing works always and forever.
Be careful who you take financial advice from. You cannot blindly follow someone’s financial advice simply because they have name recognition or a lot of followers. Do your own homework before taking anyone’s financial advice.
Successful investment plans need to survive down markets too. Every successful investment plan requires some combination of balance, durability and common sense to survive in the long run. And that long run includes both good markets and bad.
Investing is hard. If the markets felt too easy in the latter half of 2020 it’s because they were. Investing can be mind-numbingly simple if you want it to be but it’s never going to be easy.
Why is China’s inflation rate low compared to the US, Europe and Britain?
Chinese officials and academics have attributed the divergence to Western stimulus measures, notably the unprecedented money printing used to save economies battered by the coronavirus pandemic.
Authorities have not disclosed the weighting of China’s CPI basket, which was changed in 2021. However, Huang Wentao, an analyst with China Securities Co, estimated the weighting for food increased to 18.4 per cent, versus 7.8 per cent in the US. For clothing, China’s weight is 6.2 per cent versus 2.8 per cent in the US, according to Huang. Rent accounted for 16.2 per cent, about half the US weighting at 32 per cent, while transport was 10.1 per cent in China, lower than 15.1 per cent in the US, he said.
In addition, the US economy relies heavily on imports of consumer products, whereas China’s massive industrial capability means it has more room to deal with the price hikes for global commodities. Retail sales continued to contract by 6.7 per cent in May, but the pace was slower than the steep fall of 11.1 per cent in April. Pork prices have played a big role in consumer inflation cycles, with an estimated weight of 2.4 per cent in the CPI basket. Prices for pork, the staple meat on Chinese tables, fell 37 per cent from a year earlier in the first five months of 2022.
This week’s fun finds
100 pennies = $4.99
Walmart rubbing it in
The importance of the percentage sign
In the world of Zen, Tao and the martial arts, there is a phrase, “Beginner’s Mind.” The beginner is humble, curious, completely open, trusting, willing, and without criticism. The beginner tries, fails, then tries again… endlessly.
Somewhere, in that endless repetitive trying, failing and making small progress, something we might call “Mastery” begins to appear…
Not even perhaps, to the practitioner, but to those who witness the evolution.
That is why “Mastery” is never announced by the student, but recognized and awarded by the teacher.
