Lithium Battery on the Move

Lithium became a hot commodity since Tesla launched its electric vehicles using it (Horner, 2021, March 10). Tesla (TSLA) announced that it would build its own battery cells in 2022 and triple its lithium production  at its mega factory in Nevada desert (Higgins & Somerville, 2020, September 23).   

Lithium prices have been rising and will be on the rise due to high demand for electric vehicles that use lithium-ion batteries between 7% to 10% (Hoyle & Winning, 2021, April 19).  Though depending on battery chemistry and product diversification, lithium industry is ready for the bumpy ride by gearing up for margin squeezing competitions and global market volatility.

For example, Lithium Americas Corp, is a Canadian mining company who raised $400 million in 2021 January to fund a Nevada project to take lithium out of clay deposits. Albemarle spent more than $30 milion dollar to assess the area and invested $30 to $50 million to produce lithium in Nevada (Patterson & Ramkumar, 2021, March 9). Other two: Piedmont Lithium and Livent also moved fast to catch up with market demand and competitions.

On the other hand, Orocobre Ltd. Agreed to buy its rival Galaxy Resources Ltd in all stock deal to be one of the world’s biggest lithium producer. This new miner would be the fifth-largest global lithium miner valued at USD $3.06 billion (Hoyle & Winning, 2021, April 19).

As Biden Administration has placed its heart in renewable energy infrastructure including electric vehicles, all eyes have been on lithium and lithium battery technology for a while. In addition, it might be wise to figure out what is going to be a wonderful industry in the future.

Cite this as follows:

Rachel Kim (2021, May 2). Lithium Battery on the Move, The Blue Ocean Management.com, retrieved from: https://theblueoceanmanagement.com/2021/05/02/lithium-battery-on-the-move/

References:

Higgins, T. & Somerville, H. (2020, September 23). Tesla ‘Battery Day’ Spotlights Elon Musk Plan for $25,000 Electric Car, Wall Street Journal, retrieved from: https://www.wsj.com/articles/tesla-battery-day-elon-musk-shareholder-meeting-11600802500

Patterson, S. & Ramkumar, A. (2021, March 9). America’s Battery-Powered Car Hopes Ride on Lithium. One Producer Paves the Way, Wall Street Journal, retrieved from: https://www.wsj.com/articles/americas-battery-powered-car-hopes-ride-on-lithium-one-producer-paves-the-way-11615311932

Hoyle, R. & Winning, D. (2021, April 19). Lithium Miners Ink $3 Billion Merger as Demand for Electric Vehicles Booms,Wall Street Journal, retrieved from: https://www.wsj.com/articles/lithium-miners-ink-3-billion-merger-as-demand-for-electric-vehicles-booms-11618827032

Horner, W. (2021, March 10). Booming Electric-Vehicle Demand Supercharges Lithium Prices, Wall Street Journal, retrieved from: https://www.wsj.com/articles/booming-electric-vehicle-demand-supercharges-lithium-prices-11615391390

Relief at least for Now in Chinese Bonds Market

For the quick update on the previous article, China Huarong Asset Management Co. redeemed 600 million Singapore dollar bond, US$453 million dollar that matured on April 27, 2021.

When Huarong Asset Management Co. did not release its earning report at the end of March, there was grave concerns about the firm and its coming bonds due. Until now, April 28, there was no performance report except they said overall net income plunged 92% to $32 million. Fitch Ratings lowered its investment-grade credit ration on Huarong to BBB from A, three notch down.

Reference:

Ping, C.K. (2021, April 27). Chinese Bad-Debt Manager Huarong Repays a $453 Million Bond, Wall Street Journal, retrieved from: https://www.wsj.com/articles/chinese-bad-debt-manager-huarong-repays-a-453-million-bond-11619514012

Power of Apple in advertisement and privacy protection

Apple (AAPL) users consist of 60% of mobile devices in the USA between 2020 March to 2021 March (Statcounter, 2021 March). According to the survey conducted in 2018, iPhone users have higher incomes and spending than Android users (Williams, 2018, October 31).

In 2021, Apple decided to ask users to allow ad-tracking activities, which was widely practiced by many companies, particularly Facebook (FB) who sells data to directly companies and/or advertisement companies. This provoked Mark Zuckerberg’s angry accusations on Apple’s intention and debates among other small companies (Mims, 2021, April 10). Now, Apple has its own advertising attribution technologies, which upsets Facebook most.

Facebook has enjoyed tracking its users and made sense of them for advertisement purpose. One of example that Facebook was able to figure out based on its algorithm was that there was correlation between those who ordered adult onesies and those who work home (Mims, 2021, April 10).

So, who is going to win this battle? Apple or Facebook? For now, Apple has an upper hand, as it sells many products directly users.

References:

Mims, C. (2015, September 8). The Hacked Data Broker? Be Very Afraid, Wall Street Journal, retrieved from: https://www.wsj.com/articles/the-hacked-data-broker-be-very-afraid-1441684860?mod=article_inline

Statcounter (2021, March). Mobile Operating System Market Share United States Of America, StatConter.com, retrieved from: https://gs.statcounter.com/os-market-share/mobile/united-states-of-america

Williams, R. (2018, October 31). Survey: iPhone owners spend more, have higher incomes than Android users, Marketing Dive.com, retrieved from: https://www.marketingdive.com/news/survey-iphone-owners-spend-more-have-higher-incomes-than-android-users/541008/

Mims, C. (2021, April 10). As Apple and Facebook Clash Over Ads, Mom-and-Pop Shops Fear They’ll Be the Victims, Wall Street Journal, retrieved from: https://www.wsj.com/articles/apple-facebook-clash-over-ads-small-businesses-fear-theyll-be-impacted-11618009627

Four Tech Giants on Healthcare industry

Microsoft (MSFT) acquires Nuance Communication Inc. at $16 billion dollar, which signals that Microsoft taps into healthcare systems. Nuance Communications Inc has sold its software including speech-recognition to healthcare systems and providers who document clinical records by dictation (Winkler & Tilley, 2021, April 13).

Nuance builds language processing software including medical terminology, which allows Microsoft to include medical terms into its collaboration software package: Teams and to sell cloud-computing service.

According to Brent Thill at Jefferies (Winkler & Tilley, 2021, April 13), healthcare is a paper-based, manual, terrible industry riddled with inefficiency, which is a great opportunity to global cloud-computing service providers: Microsoft, Apple, Amazon.com Inc., and Alphabet Inc.

Amazon (AMZN) entered into healthcare sector since it bought online pharmacy PillPack for $1 billion in 2017. In March 2021, Amazon said it would offer telehealth services nationwide. On the other hand, Amazon ended its healthcare venture that started in 2018 to find a way to reduce medical costs for their 1.5 million employees for Berkshire Hathaway Inc., JPMorgan Chase & Co., and Amazon.

Google (GOOGL) has been working with two medical systems to make health records searchable for doctors. However, recently, there was skepticism to Google’s gaining access to medical records which worries privacy advocates and patient groups. In addition,  Google bought Fitbit at $2.1 billion and trace fitness activity using its wristband.

Apple (AAPL) has been selling its devices to healthcare providers and mobile apps to track exercise activity including heart rhythms, heart beats, total steps per day, walking distance, etc. In addition, it enables users to keep their sleeping pattern and records.

Reference:

Winkler, R. & Tilley, A. (2021, April 13). Microsoft’s Nuance Gambit Shows Healthcare Is Shaping Up as Next Tech Battleground, Wall Street Journal, retrieved from: https://www.wsj.com/articles/microsofts-nuance-gambit-shows-healthcare-is-next-tech-battleground-11618314585

Autonomous Air Defense Industry

Autonomous Electric Vehicle makers have enjoyed US markets overwhelming enthusiasm in 2020 (Yergin, 2021, April 23). However, the other sector that has heavy investment on autonomous operation and backed by the US congress is the US Air Defense industry, which is largely overlooked. 

The US congress passed the $740 billion defense authorization bill in 2021 January, which expanded automation and promotion of autonomous operations across all the services area: in the air, on the ground, and under water (Pasztor, 2021, February 13).

For example, the US Marines had Kaman Corp. to devise ways to use autonomous choppers to deliver supplies to remote outposts, which was needed in Afghanistan combat due to the height.

With the US Defense Department’s primary research arm, Lockheed Martin Corp.’s Sikorsky unit has worked on autonomous helicopters for various missions (Pasztor, 2021, February 13)

The US Navy admirals plans to have 120 vessels that operate without crews, as US Congress gives a easy pass. In addition, US Navy wants to run autonomous undersea vehicles to carry cargo, divers and to run intelligence to gather mines. They have worked with Boeing and Huntington Ingalls Industries Inc. (Pasztor, 2021, February 13).

The US Air Force has autonomous jet fighter paired with a traditional ones, which shows the advantages in mock dogfights. It also has autonomous areal tankers operating soon above the Earth operating without crews. Lastly, the US Army is updating Bradley fighting vehicle that transport ground troops to operate without human inside. It was 1980s version (Pasztor, 2021, February 13).

The US defense has made great effort on automation indeed and seems to stay that way for a long time even Biden administration, considering all noises from Ukraine border and the Southwest sea where Russia and China has flexed their military muscles.

Cited as:

Rachel Kim (2021, April 23). Autonomous Air Defense Industry, The Blue Ocean Management.com, retrieved from: https://theblueoceanmanagement.com/2021/04/23/autonomous-air-defense-industry/

Reference:

Pasztor, A. (2021, February 13). Forget Self-Driving Cars—the Pentagon Wants Autonomous Ships, Choppers and Jets, Wall Street Journal, retrieved from: https://www.wsj.com/articles/forget-self-driving-carsthe-pentagon-wants-autonomous-ships-choppers-and-jets-11613212200

Yergin, D. (2021, April 23). How Electric, Self-Driving Cars and Ride-Hailing Will Transform the Car Industry, Wall Street Journal, retrieved from: https://www.wsj.com/articles/how-electric-self-driving-cars-and-ride-hailing-will-transform-the-car-industry-11619189966

NVIDA’s Acquisition Deal of Arm Holdings in Doubt & Hostility in UK

Nvida Corp.(NVDA) proposed $40 billion deal to buy Arm, British chip designer company, which seems to face regulatory challenge around the world. For now, that starts with British government (Woo & Sylvers, 2021, April 19). When SoftBank bought it  in 2016, it made promise to keep jobs in Britain (Woo. & Dou, 2016, July 18). For the same reason, Labour Party is against Nvida’s acquisition as it sees potential job losses.

Nvida is founded in 1993Santa Clara, CA, in 1993 by Jensen Huang and becomes one of the biggest chip designer for graphics for videogames, data analytic and automation with artificial intelligence (Fitch & Woo, 2020, September 13).

Arm Holdings is one of the global semiconductor companies, who designs and licenses  90% of smartphone chips worldwide. Particularly, it is known for its least energy consuming chip designing. It has partnership with Samsung Electronics Co., Qualcomm, and others. As  Arm Holding had been working with global chip producers as a supplier, it announced its “A Shared Purpose” that would not have exclusive relationship with any partner. SoftBank Group Corp bought it at $32 billion and sold it at $40 billion to Nvida (Fitch & Woo, 2020, September 13). 

This deal offers a great position to Nvida to compete against Intel and to be able to work with smartphone producers including Apple. Particularly in early 2021, there are great attention to chip makers between China and USA. We will see how this plays out in turbulent global politics.

Please cited as :

Rachel Kim (2021, April 22). NVIDA’s Acquisition Deal of Arm Holdings in Doubt & Hostility in UK, The Blue Ocean Management.com, retrieved from: https://theblueoceanmanagement.com/category/theblueoceanmanagement-com/market-trend-foresight/game-industry/

References:

Woo, S. & Dou, E. (2016, July 18). SoftBank to Buy ARM Holdings for $32 Billion, Wall Street Journal, retrieved from: https://www.wsj.com/articles/softbank-agrees-to-buy-arm-holdings-for-more-than-32-billion-1468808434

Fitch, A. & Woo, S. (2020, September 13). What Are Nvidia and Arm? And Why Are They Combining?, Wall Street Journal, retrieved from: https://www.wsj.com/articles/who-are-nvidia-and-arm-and-why-are-they-talking-about-getting-together-11599938641

Woo, S. & Sylvers, E. (2021, April 19). Nvidia’s $40 Billion Deal for Arm Faces U.K. National-Security Probe, Wall Street Journal, retrieved from: https://www.wsj.com/articles/u-k-starts-national-security-probe-of-nvidia-s-40-billion-deal-to-buy-arm-11618837683

Chinese Bond Market Jittery

When China Huarong Asset Management Co. missed its March deadline when it planned to release its 2020 financial results, investors sold off its bonds and placed them below face value. China Huarong Asset Management Co. sold off its owned US dollar bond. Huarong Asset Management is mostly owned by China’s Ministry of Finance and one of the big four asset management in Beijing since its inception at the late 1990 (Yu & Ping, 2021, April 15).

Huarong had 1.73 trillion yuan of assets that are roughly equivalent of $265 billion. In addition, it has $22billion of international bonds outstanding, which worries many investors. That international bonds are issued by offshore units without direct guarantee by Huarong Asset Management Co. Three quarters of Huarong’s global bonds are covered by Keepwell agreements only (Yu & Ping, 2021, April 19).

Considering that Huarong is the largest holder of Chinese bad-debts in the late 1990s, it seems that Chinese government stops backing off Chines State owned institution and forces restructuring its debt structure. For example, in 2019, Baoshang Bank Co. was seized to reduce offshore credits and showcased it (Yu & Ping, 2021, April 15).

Some analysts including Chang Wei Liang at DBS Bank, see long headwinds for Huarong who needs to restructure its complex book. By contrast, others see overreaction in market selloffs. For example, Shujin Chen in Jefferies said Huarong is too big to fail considering its direct ownership of Chinese central government (Yu & Ping, 2021, April 19).

Overseas investment needs multiple scenarios where investors are fully prepared for, including political climate change to credit market as Chinese government seems to ponder if it shall continue or discontinue its full hearted supports.

Cite this as:

Rachel Kim (2021, April 21). Chinese Bond Market Jittery, The Blue Ocean Management.com, retrieved from: https://theblueoceanmanagement.com/2021/04/21/chinese-bond-market-jittery/

Yu, X. & Ping, C.K. (2021, April 15). Chinese Asset Manager Suffers Bond Selloff After Delaying Results, Wall Street Journal, retrieved from: https://www.wsj.com/articles/chinese-asset-manager-suffers-bond-selloff-after-delaying-results-11618496945

Yu, X. & Ping, C.K. (2021, April 19). Chinese Asset Manager’s Bonds Recover After Selloff, Wall Street Journal, retrieved from: https://www.wsj.com/articles/chinese-asset-managers-bonds-recover-after-selloff-11618826324

View on the US stock markets and a pick by Matthew McLennan

Mr. McLennan manages the $89 billion global value team at First Eagle Investment Management, including the First Eagle Overseas (SGOV) and First Eagle Global (SGEN) funds. He succeeded a famous investor, Eveillard. In 1990s, when he ran value-oriented portfolio at Goldman Sachs, he did not wish to jump in tech bubbled market. In 2008, when Eveillard met McLennan first, that story got Eveillard’s attention (Green b, 2021, April 15).

Matthew McLennan sees warning sign mainly due to the US federal government money supply over the last year. When the US federal government reduce money supply from the current  25% to  10%. In addition,  he thinks that Bitcoin and SPAC are mistakenly viewed as growth stocks (Green a, 2021, April 15).

In terms of domestic companies, he sees Oracle as a growth company, in that Oracle launches a autonomous database, which will give more edges on its leading position at Enterprise Resource Planning (ERP). Oracle has transitioned its traditional software license business model to cloud service one (Green b, 2021, April 15).

Green, W. (2021, April 15 a). A Top Fund Manager Is Worried About Speculative Excess. 2 Stocks He’s Willing to Bet On, Barrons.com, retrieved from:  https://www.barrons.com/articles/a-top-fund-manager-is-worried-about-speculative-excess-2-stocks-hes-willing-to-bet-on-51618520053

Green, W. (2021, April 15 b). How Growing Up With No Hot Water Shaped One of the World’s Greatest Investors, Barrons.com, retrieved from: https://www.barrons.com/articles/how-growing-up-with-no-hot-water-shaped-one-of-the-worlds-greatest-investors-51618520304

Polarized Global Economies Triggered by Covid-19 Pandemic

The response to Covid-19 pandemic has been polarized between the past Trump administration and current Biden administration. As different approaches and manners to covid-19 go, people has gathered and shared similar views using social media. According to Natioal Intelligence Council report (Strobel & Volz, 2021, April 8), these polarized view and responses were not limited in US politics. Globally, authoritarian regimes used this Pandemic as a great opportunity to crack down civilian protests in Hong Kong, Myanmar, and other countries. Thus, Covid-19 pandemmic has been the most singular global disruption since World War II (Strobel & Volz, 2021, April 8).

Biden Administration printed out dollars to help those who have been locked home due to Pandemic. Temporarily, US dollar signaled weak signs and emerging markets showed strong economic prospects particularly at the end of 2020.

US dollars are coming back strongly in the first week of April, 2021, partly due to bright economic prospects in the USA(Hirtenstein, 2021, April 8). Due to this strengthening US dollar, Brazil, Russia, Turkey, and Mexico have been dealing with their currencies depreciation and investment outflow (Hirtenstein, 2021, April 8). Accordingly, they have increased interest rate.

As Natioal Intelligence Council reports (Strobel & Volz, 2021, April 8), the Pandemic made emerging economies dragged down. Most countries have focused on their domestic issues and left other issues behind.

Bird, M. (2021, March 30). The Vietnamese Recovery Is Made in America, Wall Street Journal, retrieved from: https://www.wsj.com/articles/the-vietnamese-recovery-is-made-in-america-11617095869

Hirtenstein, A. (2021, April 8). Investors Sour on Emerging Markets as U.S. Prospects Brighten, Wall Street Journal, retrieved from: https://www.wsj.com/articles/investors-sour-on-emerging-markets-as-u-s-prospects-brighten-11617869893

Strobel, W. P. & Volz, D. (2021, April 8). Covid-19 Fuels Inequality, Political Divide, Authoritarianism World-Wide, U.S. Intelligence Analysts Say, Wall Street Journal, retrieved from: https://www.wsj.com/articles/covid-19-fuels-inequality-political-divide-authoritarianism-world-wide-u-s-intelligence-analysts-say-11617890436

Redefining Video Game Industry: Microsoft(MSFT)

In game industry, video game consoles are important for players to access particular games. If you have Sony’s console, PlayStation 5, then, you may play Sony’s games. Having been in this industry longer than any other companies, Sony has been stronger than Microsoft particular in Europe and Asia; PlayStaion has been a better tool, as well.

Something interesting happens recently in this Status Quo relationship between Microsoft and Sony.  Xbox Live membership reached 100 million users, has tripled during the Xbox One life cycle due to Microsoft’s duel strategies: software and cloud services (Gallagher, 2020, September 18). Microsoft enabled users to stream any Xbox One game to a mobile device (Needleman, 2019, June 9).

In the past two decades, Microsoft has expanded its presence in gaming markets (Aryedlund, 2002, January 7; Guth & Wingfield, 2006, April 26). In 2013, Microsoft launched its Xbox One equipped with motion sensors and Skype technology (WSJ, 2013, May 29). However, it did not impress much to investors and game players.

Under Satya Nadella, however, Microsoft fortified its position against Sony by acquisitions of Mojang AB for $2.5 billion in 2014 (Needleman, 2018, June 11) and by recent acquisition of ZeniMax Media Inc for $7.5 billion (Tilley & Needleman, 2020, September 21).  Thus, Microsoft has increased gaming portfolio to 23 games from 15. Now, Microsoft promised 60 games available in its new coming Xbox One System and Windows PCs. Its new console has custom-designed processor with Advanced Micro Devices. Microsoft focused on its subscription services such as Game Pass and Xbox live. It seems that Satya Nadella sees something in video game industry, when he said, “Gaming is a much bigger market than it ever was”(Tilley & Needleman, 2020, September 21).

 

Please cite as:

Rachel Kim (2020, October 21). Redefining Video Game Industry: Microsoft(MSFT), The Blue Ocean Management.com, Retrieved from: https://theblueoceanmanagement.com/2020/10/21/redefining-video-game-industry-microsoftmsft/

 

 

References:

Aryedlund, 2002, January 7, Barrons.com

Needleman, 2018, June 11, Wall Street Journal

Needleman, 2019, June 9, Wall Street Journal

Gallagher, 2020, September 18, Wall Street Journal

Guth & Wingfield, 2006, April 26,Wall Street Journal

Tilley & Needleman, 2020, September 21, Wall Street Journal

WSJ, 2013, May 29, Wall Street Journal