Pre-Subscriber's FREE Abbreviated Comment - Semiconductor returns mixed, Orange Juice supply bottleneck, geopolitics supports oil breakout.
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IBM Rallies Most in Four Years on Rosy Outlook for 2024 – This article from Bloomberg may be of interest. Here is a section:
“I expect many macro trends to be similar to 2023” in the coming year, Krishna said during a conference call after the results were released. “Every client I speak with is asking about how to boost productivity with AI and manage the technology stack.”
The cash flow outlooks “suggests greater operational efficiencies and steady organic growth,” wrote Bloomberg Intelligence’s Anurag Rana. “We expect IT spending to accelerate more toward 2H, which could lead to steady improvement in consulting growth.”
My view – The corporate response to the pandemic lockdowns was to migrate en masse to cloud infrastructure. They found it works pretty well, and most particularly provides flexibility. There was a surge of investor interest in the sector that lasted until the end of 2021. A significant downdraft followed, because the growth rates could not be sustained when everyone who wanted to migrate had already done so.
The recovery which has been underway for the last year has been driven by the promise that AI will improve efficiencies of internal and client facing services. At present investors are clearly favouring the companies most likely to benefit from the construction of the AI network.
California Likely to Top Florida as Leading Orange State – This article from Dow Jones may be of interest. Here is a section:
California's production is about on par with its usual output, while Florida has been struggling with cold snaps, greening disease and recovering from extensive hurricane damage.
The outlook for Florida production is uncertain. "Florida is having colder winters and more storms, this creates harder situations for the crops to recover," said Chicago-based commodities trader Peter Mooses.
The majority of Florida oranges are used to produce orange juice, due to the thinner skin these oranges typically have as the crop is hit by hind cross-state winds. California oranges have a thicker skin, making them better-suited as table fruit.
"Virtually 100% of our fruit is grown for the fresh market," said Casey Creamer, chief executive of California Citrus Mutual, a trade association representing growers in the state.
My view – The last time there was an existential issue for Florida oranges, cultivation moved north so there would be less exposure to weather volatility. That may now be required again.
At present most of the orange groves are on the Tampa/Orlando latitude. It is quite likely that any future orchard expansions will be in the Gainsville/Jacksonville latitude. That’s a time-consuming exercise and does nothing to inhibit the spread of citrus greening disease.
Russia’s Southern Tuapse Refinery Damaged by Drone Attack – This article from Bloomberg may be of interest. Here is a section:
In recent weeks, several Russian oil-processing and storage facilities have been targeted or damaged in what appeared to be Ukrainian drone attacks. Most significantly, Novatek PJSC’s Ust-Luga facility on the Baltic coast that processes stable gas condensate — a type of light oil — stopped operations after a fire on Jan. 21 that officials in Ukraine said was the result of an attack by special forces using a drone.
The attacks on Russian oil facilities come as Moscow’s war against Ukraine enters a phase of attrition targeting energy infrastructure. This represents a new risk for the nation’s ability to maintain the flow of petroleum exports, a crucial source of funds for the Russian government as its budget is strained by high military spending, plus domestic expenditures in the run-up to presidential elections in March.
The Tuapse refinery processed more than 180,000 barrels a day of crude oil in the first 17 days of January, or more than 3% of the nation’s total crude-processing volume, according to a person familiar with industry data. The facility focuses on petroleum-product exports via the Black Sea, so any operational disruptions may affect Russia’s total overseas fuel supplies.
My view – OPEC has stated they do not intend to announce fresh measures at their meeting next week. Why would they? Oil prices are finally rising.
The inert trading range posted over the last several months is being completed with a bullish breakout. A clear downward dynamic would now be required to question scope for additional upside.
My personal portfolio: crypto long initiated