Bloomberg (July 8)
“Since its commercial introduction in 2007, the Airbus A380 has brought a long-lost sense of glamour back to travel…. Financially speaking, it’s a disaster of similarly grand proportions.” Airbus has “acknowledged it will never recoup the €25 billion ($32 billion)” of initial development costs. If production falls below 30 planes a year, there’s also a chance production could go back into the red, after only one year of profitability. “Axing the A380 outright” still remains “hard to do. Besides the embarrassment of admitting defeat on the program,” write downs that would ripple through the company and much of Europe.
Tags: A380, Airbus, Development costs, Disaster, Embarrassment, Europe, Glamour, Planes, Production, Profitability, Recoup, Write-downs
Bloomberg (June 6)
Guandong province, “China’s factory to the world,” is now caught in “a race to survive” as rising costs shift production to cheaper countries. Automation is also taking a toll. “With the new robot-staffed factories, and startups that employ hundreds rather than thousands, many of the millions who came to make Guangdong an industrial superpower may have little choice but to return home.”
Tags: Automation, China, Costs, Factories, Guandong, Industry, Production, Robots
Bloomberg (May 2)
“Money managers turned the most bullish since May as West Texas Intermediate crude climbed to a five-month high on optimism that falling U.S. production and rising fuel demand will trim the global glut.” Their optimism may be both short-sighted and short-lived as OPEC just “boosted production by 484,000 barrels a day to 33.217 million in April, the most in monthly data going back to 1989.”
Tags: Bullish, Crude, Demand, Money managers, OPEC, Optimism, Production, U.S., West Texas Intermediate
Bloomberg (April 18)
“The death toll from earthquakes that struck southern Japan rose to 42 and the economic impact began to reverberate Monday as companies surveyed damage and the potential effects on production from supply-chain disruptions.” Amidst the uncertainty, investors “are speculating that Japan’s government and central bank will need to consider more stimulus for an economy that is already struggling.”
Tags: BOJ, Damage, Deaths, Earthquakes, Economic impact, Government, Investors, Japan, Production, Stimulus, Supply-chain disruptions, Uncertainty
The Economist (January 30)
Nigeria’s President Muhammadu Buhari “is repeating an economic error he made as dictator 30 years ago.” To avoid devaluation, he has instead thrown limits on imports, creating scarcity that “will be even more inflationary. A weaker currency would spur domestic production more than import bans can and, in the long run, hurt consumers less. The country needs foreign capital to finance its deficits but, under today’s policies, it will struggle to get any.”
Tags: Buhari, Capital, Consumers, Currency, Deficits, Devaluation, Dictator, Import bans, Inflationary, Nigeria, Production, Scarcity
Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, China, Collapse, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Prices, Production, Rare earths, Scarcity, Substitutes
Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Production, Rare earths, Substitutes
Financial Times (May 19)
“More than $100bn of spending on new projects by the world’s energy companies has been slowed, postponed or axed following the oil price plunge, evidence of the drastic industry action that will curb output in coming years.” The revisions affect 26 major projects worldwide and, taken as a whole, will “delay future production” by up to 1.5 million barrels a day, the equivalent of nearly 2% of global oil production in 2013.
Tags: Delay, Drastic, Energy, New projects, Oil, Output, Postponed, Production, Spending
Wall Street Journal (December 4)
With rising production and falling prices, the ‘Peak Oil’ theory has again been debunked. The world routinely panics, then “relearns that supply responds to necessity and price.” The Malthusian hysteria has not been restricted to oil. There have “been regular warnings that the world is running out of soybeans, helium, chocolate, tunsgsten, you name it—and that population growth has become unsustainable. The warnings create a political or social panic for a while, only to be proved wrong.”
Tags: Chocolate, Debunked, helium, Malthus, Necessity, Panic, Peak Oil, Population growth, Price, Production, Soybeans, Supply, Tunsgsten
Institutional Investor (August 12)
“Disappointing sentiment data and continued conflict in eastern Ukraine” are leading to investor apprehension. “Slowing production levels and low inflation appear to leave the door open for European Central Bank intervention but political support for action from European Union leaders is still far from consensus. With a strong correlation between primary global equity indexes that has been noted by multiple strategists in recent sessions, deteriorating investor confidence in Europe is likely to cast a shadow over U.S. equity markets in the near term.”
Tags: Confidence, Conflict, Consensus, Disappointing, ECB, Equities, EU, Inflation, Intervention, Investors, Production, Sentiment, U.S., Ukraine
