🪖Tanks deployed on Chinese streets
🤑Crypto sale in Tesla HQ
🌞Europe is melting
It's green again...🟢
IT stocks recouped the losses of last week with the NIFTY IT index up 6.4% during the week👍🏻🚀. Almost all sectoral and headline indices ended in green as earnings season painted a not-so-bad picture for corporate profitability✅
📈Rate hikes by Central Banks continue, with the latest coming from ECB moving away from negative interest rates after 11 years. Gazprom resumed gas flow to the EU with the restart of the Nord Stream 1 pipeline. Chances of a 100 bps hike by the Fed have come off significantly after piping hot inflation data of last week.
US corporate earnings have been good so far, with Tesla rising >9.5% after results. Even Netflix rose by 27% last week as it only lost around 970,000 subscribers during 2Q, less than the 2 million projected last quarter🚀
Indian corporate earnings glimpse…
✅Positive results from Ultratech, IndusInd Bank, PVR, SRF, HUL, IPRU, HDFC Bank, Oberoi Realty, Bharat Electronics, LTTS, CanFin Homes, Kajaria Ceramics. Reliance reported decent results with a marginal miss on EBITDA
🔴 Negative from Jindal Steel, Ambuja Cement, Rallis India, Wipro, RBL Bank, Mphasis
Management commentary continues to be cautious, although a decrease in fuel and other commodity prices might turn beneficial for global recovery. However, it is too soon to blow the trumpet🎺😑
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FMCG stocks have been buzzing this month. The index is 🆙14% in the last month. ✅Correction in commodity prices
✅Stabilizing inflation print
✅Price hikes
✅Good Monsoon are playing in favour
HUL reported a 6% volume growth, almost double of expectations whereas ITC pulled off the impossible▶️ hit 52wk high this week😂🥳🥳🤑
Also, another +ve news is that according to media reports, Ukraine, Russia, Turkey and the UN have agreed on a deal to allow ships out of Odessa. Odessa is the largest Ukrainian seaport and one of the biggest deep sea ports in the Black Sea basin. This can bring down elevated food prices. +ve for UPL too👍🏻
✅ Gov revised windfall tax for crude oil from 23,250/mt to 17,000/mt. This implies a gain of ~$10/bbl. Diesel cut by ₹2/l or $4/bbl, ATF by ₹2/l or $4/bbl, Petrol by ₹6/l to Nil
However, the happiness is short-lived for the O&G sector😅. Fundamentals are turning worse with the Singapore complex margins plunging to $2.7/bbl. Middle distillates (diesel) are still faring well, so +ve for RIL, BPCL, HPCL. 👎🏽-ve for standalone refiners like CPCL and MRPL and Oil India (exposure to Numaligarh refinery)
But a decrease in fuel costs is a definite +ve for relief from an inflationary environment. ✅for logistics which impacts virtually every sector in India, FMCG, consumer being the main ones.
But suggest we don’t jump the gun, as winter brings in elevated Gross Refining Margins. The world is facing an LNG shortage and a severe heatwave in Europe can affect wind energy generation amid a potentially harsh winter❌
Around the world in 3 mins
My money, my money...Your money, also MY MONEY
According to media reports, the Henan branch of the Bank of China declared people's savings in their branch as 'investment products'. The result is that people can no longer withdraw the money😲
Protestors have taken the street, and as a result, Tanks have been deployed on the streets. Just imagine your regular street, being clouded with military tanks😳It's like Tiananmen Square again
China's GDP had the slowest growth since the start of Covid, growing just 0.4% in 2Q. Shanghai’s urban unemployment rate climbed to 12.5% in the 2Q; unemployment in the city is now double the national average of 5.8%. Beijing's unemployment rate is at 5.1%. Provinces of Hebei, Henan, Liaoning and Shanxi are grappling with >6% unemployment
China's housing market has also been faced with buyers refusing to pay mortgages and a dire lack of growth. Repercussions are expected across the world, especially in the metals and building sector. China fast-tracked approval of construction projects worth >$56B after relaxing its environmental rules last month. But suggest we do not read much into this yet
Bye-bye diamond hands💎✋🏽
Tesla reported a strong profit beat of more than 26% but automotive margins took a plunge to 27.9% from 32.9% QoQ due to inflation. Mr Musk highlighted that Tesla expects commodity inflation to come down towards the end of the year. This should be positive for the global auto industry in general. However, in the case of lithium, the market continues to be very tight as highlighted by Elon Musk📉
But wait…
Tesla also converted 75% of bitcoin holdings into dollars this quarter😆. Bye-bye to diamond hands. No more HODLing😂 Mr Musk had taken to Twitter last year to highlight Tesla's position on Bitcoin by tweeting "Tesla will not be selling any Bitcoin". Yet, seems like times have changed😅
Musk explained on Wednesday's earnings call, "The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the covid lockdowns in China would alleviate so it was important for us to maximize our cash position." He added, "This should be not taken as some verdict on Bitcoin." CFO Zachary Kirkhorn and Musk confirmed that Tesla had not sold any of its dogecoin. Cash and equivalents increased by USD847m during the quarter.
Bitcoin soared to ~$70K last year after Tesla unveiled its $1.5B investment in Bitcoin in February 2021🚀 It's down more than 65% since then
Hot, Hotter, Hottest🥵
It's sizzling in the northern hemisphere, with the UK recording all time-high temperatures of 40.5 C (104.9 F) this week. Wildfires have ripped across Europe, US and China. Germany, and France all recorded sky-high temperatures this week.
Yea, for us in India, it feels like a normal summer day😅, however, do remember that every country's infrastructure isn't able to cope with rising temperatures. In many European countries, buildings are not designed to withstand temperatures even 5 degrees above 20C, according to Mariam Zachariah, a climate scientist at Imperial College London😰
That's a serious issue in northern Europe, where most houses are built to trap heat in order to help residents better withstand the cold, causing indoor temperatures to soar during a heat wave. Only a tiny fraction of these homes have air conditioning🔥
Now Europe faces a drought situation as water levels start to deplete. Climate change is real and this will definitely affect trade with other economies. Be watchful for companies in India having higher EU exposure. Research suggests that heat waves on average had lowered GDP growth across Europe by as much as 0.5% in the past decade.
The only good news is that Nord Stream 1 pipeline resumed gas deliveries to Europe...👍🏻
This week in Numbers
2 billion
India administered its two billionth dose of Covid vaccine this week. This came 547 days after the 1st dose on January 16, 2021👏🏽)
$71 billion
Cost of heat waves in 32 European countries between 1980 and 2000, according to The European Environment Agency (EEA)😲
193 million
people facing food insecurity due to conflicts, economic shock, and weather extremes according to the 2022 Global Report on Food Crises 😲
Take a Kachow! break
(What we read, heard, and saw this week)
On TikTok, It’s All Fun and Games Until China Wants Your Info read more
Visualizing the Negative Impact of the Shaving Industry read more
Putin’s War Should Change the Way the World Farms read more
China reckons with its first overseas debt crisis read more
ESG: Three letters that won’t save the planet read more
Money Talks: The backlash against ESG listen more