1. China Eyes Up US Pork
The lean hog (pork) futures market has been sent into orbit recently, driven by signals of higher imports from its biggest consumer, China. Spot hog prices have surged 12% since the 8th of March, but why?
A wave of African swine flu has swept over China, obliterating 15% of its breeding herd in the month of January alone, forcing farmers to cull a large proportion of their animals. Analysts have predicted that another 15% decline would force Chinese firms to import 1.54 million pounds a month just to maintain supplies.
The rampant shortage has fuelled the longest rally in the pork market this year, lasting five straight days. The rise in pork prices has benefitted the share prices of pork producing companies, such as Tyson foods, which has bumped up 2.6% since the 8th of March.
Investors are speculating about a deeper supply squeeze that could continue to drive pork prices higher in the coming weeks. They are also anticipating accelerated imports of US pork as a symbolic gesture of progress in the US-China trade negotiations.
All aboard the lean hog gravy-train!
2. VW Slashes Jobs
In a shocking announcement yesterday, Volkswagen announced its plans to lay off approximately 7,000 staff in an effort to raise productivity and re-orient its strategy towards electric vehicles (EVs). The proposed adjustment is forecast to save roughly €5.9 million and raise operating margin by 6%. Ruthless stuff though.
The firm plans to hold off on implementing compulsory lay-offs until 2025, but has already begun offering early retirement packages to kick-start the process. Their latest goals also include expanding its fleet to 70 EVs by 2028, up from the initial target of 50 to make their portfolio composed of almost 40% zero-emission vehicles.
VW is the latest brand to join the likes of GM and Tesla in a mass workforce layoff programme while shifting its production to cater to the growing EV market. VW’s share price traded fairly mixed yesterday in response to the news, closing slightly lower for the day (-0.16%).
The company has found itself stuck in a range since August as stresses on the Eurozone and auto market have put pressure on its performance. The hope is that the strategic shift to EV’s will provide the oomph needed to reassert a stronger growth path for the coming decade. Let’s see if it pays off.
Today we are watching…
1. boeing (#boeing)
After the chaos that ensued following the tragic Ethiopian Airlines crash, more bad news hit the battered airline manufacturer. Its share price plummeted over 6% to revisit the low of the previous day as more and more nations banned the use of its 737 Max jetliner, causing a mass exodus in the stock. The only benefactor was rival company, Airbus, which has risen 4.5% from its low on Friday. More bad news may be in store, so tread cautiously before diving back into the mess!
2. Newmont Mining (#newmnt)
Big gold just got bigger, and Newmont is likely to be one of the main beneficiaries. Even though it rejected Barrick Gold’s advances for a buyout, the two companies have agreed to work on an extremely lucrative joint-venture that is likely to pay dividends for both sides. The plan is to join forces on a gold extraction project in Nevada rumoured to be worth upwards of $30 billion and could hold the key to some healthy performance in 2019. Newmont is currently trading 30% below its 5 year high and analysts are recognising some long term potential in the company. Keep your eye on this one.