Olaf Scholz inherits longstanding challenges from his predecessor, Angela Merkel, and faces a cluster of short-term crises that could complicate his plans to modernize the German state and its economy.
For 20 years, Greg Jackson has exported hay and grass grown in California’s Imperial Valley to places like China, where an increasing number of dairy farms rely on American alfalfa and other forage crops that are in short supply locally. As the executive vice president for sales at Border Valley Trading in Brawley, Calif., Jackson has arranged for shipping containers to ferry hay from the ports of Los Angeles and Long Beach across the Pacific Ocean.
But this year, Jackson has found it much more difficult to get American hay loaded into shipping containers bound for Asia. The containers, which arrive at the California ports stuffed with iPhones and other manufactured goods, are increasingly being sent back empty. Jackson estimates that his company, which ships around 8,000 40-foot containers a year, has seen volumes fall by 15% to 20% in recent months as a result of canceled bookings and other logistical snags associated with the import-driven congestion at U.S. ports.
“There has been a lot of attention on the import side and looking for solutions to ease the congestion, but at the same time from our perspective, we are seeing it more challenging today,” Jackson said. Jackson added that he has had to manage issues at terminals and practices by ocean carriers, complaining of limited space on shipping lines, last-minute cancellations and inconsistent vessel scheduling.
Bottlenecks at U.S. ports have thrown a spotlight on the struggle to get imported goods to American consumers, but there’s a flip side: exports of U.S. goods, including agricultural products, are having trouble making it to overseas customers.
MarketWatch collected data from the nation’s nine largest ports that show, through October, the equivalent of 12.1 million containers have left those ports empty, up 46.2% from 2020 and 37.8% from 2019. The amount of empty export containers, as measured by twenty-foot equivalent units, or TEUs, contrasts significantly with the 20.6 million of imported loaded container TEUs that have arrived at the nine biggest U.S. ports this year, up 22% from last year.
In total, 59% of containers leaving the nation’s nine biggest ports have been empty in the first 10 months of the year. Loaded export containers leaving the nation’s nine biggest ports carrying American goods have dropped 10.7% since before the pandemic, from 9.3 million TEUs in the first 10 months of 2019 to 8.3 million TEUs in the same period of 2021.
Voracious demand for imported goods by U.S. consumers has pushed up rates for freight being shipped across the Pacific from Asia to the U.S., making that trip far more lucrative than the journey from the U.S. to Asia. That’s incentivized shippers to leave with empty containers, rushing them back to Asian ports where they can be filled again with U.S.-bound goods, said Peter Friedmann, executive director of the Agriculture Transportation Coalition, a trade group representing agricultural exporters.
“With these ships, with 16,000 to 20,000 containers on board getting $15,000 per [imported] container, they’re deciding we’re going to forgo that U.S. export cargo, it’s not worth it if we can get another sailing inbound of import cargo over the year,” Friedmann said in an interview.
Last-minute cancellations of export bookings and so-called blank sailings, which can result in a ship skipping a port or a series of ports, have left exporters in a lurch while also serving to boost freight rates, Friedmann added.
The coalition and a number of farm groups have thrown support behind legislation introduced by Reps. John Garamendi, D-Calif., and Dusty Johnson, R-S.D., that includes a provision forbidding common carriers to “unreasonably decline export cargo bookings if such cargo can be loaded safely and timely and carried on a vessel scheduled for such cargo’s immediate destination.”
Exporters have little flexibility when it comes to ports. Savannah, Ga., became a popular alternative destination for many meat exporters, who have scrambled to find a solution to the crowded West Coast ports, said Travis Arp, senior director of export services for the U.S. Meat Export Federation, in an interview.
But transportation costs and logistics can make it difficult if not impossible for many exporters to switch ports. Jackson said Border Valley Trading is locked into the Southern California port complex because shipping from elsewhere would be “highly, highly cost prohibitive.”
For meat exporters, 2021 is still shaping up to be a strong year. Beef exports, in fact, are set to shatter the previous record, Arp said, but, overall, port issues are “taking what is a really good year and is probably going to prevent it from being a great year.”
That has contributed to the widening of the U.S. trade deficit to record levels in 2021 as imports soared while American exports fell. For the first 10 months of 2021, the trade deficit rose 29.7% from the same period last year to $705.2 billion.
On top of that, Arp said U.S. exporters and producers most worry that exporting hang-ups will allow competitors from elsewhere to steal market share. Indeed, that’s a threat faced by the majority of agricultural exporters, said Friedmann at the Agriculture Transportation Coalition.
“There’s nothing we produce in agriculture that can’t be sourced somewhere else in the world,” he said.
Gold futures were trading on unsteady footing Wednesday, switching between small gains and losses, as investors watched developments with the omicron variant of the COVID.
At last check, the most-active February gold contract
GCG22,
GC00,
was trading 60 cents, or less than 0.1%, lower at $1,783.90 an ounce, after rising 0.3% on Tuesday to mark the highest finish for the most-active contract since Nov. 26.
Pfizer
PFE,
and BioNTech SE
BNTX,
said Wednesday a third dose of their COVID-19 vaccine neutralized omicron in preliminary lab tests, but that a two-dose regimen was much less effective.
The report comes as investors fret about the effectiveness of treatments and vaccines against the new variant of the coronavirus, which scientists fear can elude remedies due to its mutations on the spike protein, the target sight for most vaccines.
Concerns about the pandemic have helped to buttress gold prices, but the commodity has been checked by anticipation that the Federal Reserve will take a more aggressive approach in tightening monetary policy, which would weigh on yield-sensitive gold.
Yields, however, have remained tempered below 1.5% for the 10-year Treasury note
TMUBMUSD10Y,
and the U.S. dollar, as measured by the ICE U.S. Dollar Index
DXY,
has been somewhat subdued, providing some ground for gold, and other precious metals priced in the currency, to gain.
Those factors combined, the pandemic and the Fed, have resulted in a trading environment that have appeared extremely volatile. Choppy markets can also provide a floor for bullion.
“Right now, it is difficult to find a direction for the precious metal, with markets remaining volatile,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a daily research note.
Meanwhile, March silver
SIH22,
traded 21 cents, or 0.8%, lower at $22.35 an ounce, after rising 1.2% on Tuesday.
The Centrica (LSE: CNA) share price has risen by more than 40% so far this year. The owner of British Gas is finally starting to win back investor confidence.
Centrica shares are still more than 65% lower than they were five years ago. But I think there are good reasons to be confident about the outlook for the business over the next few years. I’ve been taking a fresh look at Centrica to see where I think the stock could be in five years’ time.
Chief executive Chris O’Shea took charge of a business with too much debt and too many moving parts. These problems have now largely been fixed, with the sale of the Direct Energy business in the US and the company’s North Sea oil fields.
The main part of the business remaining is British Gas, which has a strong focus on UK consumers. The last few years have been tough for the UK’s largest energy supplier, as it’s been undercut by smaller rivals offering cheap fixed price deals.
However, the failure of more than 20 of these rival suppliers over the last year has changed the picture. British Gas has picked up more than 400,000 new customers from failed firms. I think its prices will be more realistic and competitive in the future, as unsustainably cheap deals have been removed from the market.
Alongside this, I expect British Gas to increase sales of services such as boiler replacement, air source heat pumps, home emergency cover and smart security products. These services are generally more profitable than selling electricity and gas, so they should help to lift Centrica’s profits.
Centrica shares traded at over 200p five years ago. But Mr O’Shea’s changes have left the group a smaller business than it was. Some problems remain too — not least the company’s £1.5bn pension deficit, which will require £175m in annual payments from 2021 to 2025.
What might Centrica shares be worth in five years’ time?
Broker forecasts suggest that the group’s free cash flow — a surplus cash produced each year — could rise to around £700m over the next couple of years. My guess is that progress might slow after this, but if Mr O’Shea’s plans are successful, I reckon a figure of £750m looks reasonable by 2025.
The last time Centrica produced this much free cash was in 2018. At this time, the share price was around 150p. I think that’s a reasonable estimate today.
However, one risk I’d flag up is that the company’s reduced dividend could hold back progress. Back in 2018, dividend cover had fallen to just one times earnings. This resulted in a tempting 7%+ dividend yield.
Mr O’Shea is expected to keep dividend cover at around two times earnings. This is a sensible move, in my view, but it means that payouts will be smaller, even if profits return to historic levels.
As a result, the dividend yield is likely to be much lower. This might deter some investors, but even so, I think Centrica shares could do well over the next five years. I’d certainly consider buying the shares for my portfolio at current levels.
Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Crude-oil prices were posting further gains Wednesday after news suggesting the omicron variant of the coronavirus may not disrupt economies as much as feared, leaving the energy demand recovery intact.
A report from Pfizer Inc.
PFE,
and BioNTech SE
BNTX,
said results from an “initial laboratory study” showed that their COVID-19 vaccine neutralized the omicron variant of the coronavirus after three doses, or the full two-dose regimen plus a booster shot.
West Texas Intermediate crude for January delivery
CLF22,
CL00,
picked up 18 cents, or 0.3%, to trade at $72.26 a barrel on the New York Mercantile Exchange, up from an intra-session low at $70.91, after rallying 3.7% on Tuesday. A gain on Wednesday would match the most-active contract’s longest stretch of gains, three straight days, since the period ended Nov. 9.
February Brent crude
BRNG22,
BRN00,
the global benchmark, rose 31 cents, or 0.4%, to reach $75.77 a barrel on ICE Futures Europe, from an intraday low at $74.38, after rising 3.2% a day ago for a fourth straight gain. If Brent settles higher on Wednesday, the gain would match the longest string of advances for the most-active since the period ended Sept. 27.
Oil traders are awaiting inventory data from the Energy Information Administration, which will be released later in the morning. On average, the EIA is expected to show crude inventories down by 1.2 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for supply increases of 1.4 million barrels for gasoline and 900,000 barrels for distillates.
Late Tuesday, the American Petroleum Institute, a less closely followed weekly update on inventories, reported that U.S. crude supplies fell by 3.1 million barrels for the week ended Dec. 3, according to sources. The API also reportedly showed weekly inventory increases of 3.7 million barrels for gasoline and 1.2 million barrels for distillates. Crude stocks at the Cushing, Okla., delivery hub, meanwhile, climbed by 2.4 million barrels last week, sources said.
According to the International Air Transport Association, 73% of people who have traveled since June 2020 have found it difficult to understand what COVID-related travel rules applied for their trips.
There’s no doubt that traveling internationally during the COVID-19 era adds an extra layer of complexity and trip research. You not only need to check entry requirements for the country you’re visiting, but guidelines for returning to the U.S., too. Depending on your destination and vaccination status, you may or may not have to quarantine, provide a negative COVID test ahead of departure and/or take that same COVID test post-arrival.
Navigating the sea of information can be tricky. Here are three ways to stay up to date on foreign travel restrictions so that your trip can go as smoothly as possible.
To see the latest travel advisory, head over to the State Department website and enter the country you plan to travel to in the “Learn about your destination” field. Separately, look for further information on the CDC website, which features an interactive map that shows the latest COVID-19 risk assessment levels.
You’ll also want to familiarize yourself with U.S. reentry conditions before booking. In addition to the federal government’s requirements, the state you live in may have further mandates.
The State Department and CDC websites both publish travel conditions for air passengers returning to the U.S. To find travel guidelines specific to your state, search for “entry requirements [name of U.S. state]” in your preferred search engine. You will then see your state’s government website, which will include any additional restrictions.
If a COVID test is required, ask your hotel to recommend a testing center. Some hotels are offering on-site COVID tests to guests before they fly back to the U.S.
The U.S. government has standardized the COVID-19 information hub pages for each country that hosts a U.S. embassy, making it much easier for travelers to find pertinent, country-specific travel information.
To access these sites, pull up a search engine and enter “U.S. embassy covid [name of the country you plan on visiting].” For example, if you’d like to visit Italy, you’d search for “U.S. embassy covid Italy.”
Once you conduct this search, the top result is likely a COVID-19 information page for that specific country. For this example, when you search for the U.S. embassy’s COVID page for Italy, this webpage is the top result.
The COVID-19 webpage on each embassy’s website may feel overwhelming to read, given the extent of information. Scroll to the section titled “Entry and Exit Requirements,” or better yet, hold down the Control (or Command) key and the F key simultaneously to launch the Find function. Enter “entry and exit” and you’ll immediately drop down to the relevant section.
Although the information displayed can vary from country to country, this section will let you know if U.S. citizens are allowed to enter, including which type of a COVID test and/or a vaccine is required (if applicable).
Two other important sections on this page to read are titled “Quarantine Information” and “Movement Restrictions.” The former section will advise if quarantine is mandated, while the latter will discuss if a curfew is in place.
The embassy pages will often have a link to the country’s local government site for more information. Due to the constantly changing travel restrictions, taking a look at local government sites is advisable. In case the U.S. embassy page is outdated, you’d want to cover your bases.
If there’s no link on the U.S. embassy page, search for “Can I enter [country you plan on visiting] from the U.S.” in a search engine. Using the aforementioned example of Italy, you’d want to search “Can I enter Italy from the U.S.?”
Check out the site. Hopefully, you’ll find relevant, up-to-date travel information. Since these are local government websites, the information provided can vary by country or may not be in English.
Even if you plan everything perfectly, traveling during the pandemic carries a lot of uncertainty. If you decide to go abroad, we strongly recommend considering travel insurance.
According to insurance comparison site Squaremouth, travel insurance purchases have increased by 300% over the past year due to increased awareness around travel insurance and consumers’ desire to protect their trips in case of unexpected emergencies.
However, before purchasing a policy, check if your credit card offers free travel insurance. Many credit cards offer this perk; look at the fine print for your individual card to see what coverage you already have.
Traveling these days isn’t as simple as it used to be. However, you can still learn where U.S. citizens can travel right now with a quick internet search. If you check the relevant government websites mentioned above before you travel internationally and purchase travel insurance, you’ll be prepared for your trip.
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2021, including those best for:
Tesla Inc. stock on Tuesday snapped a four-day losing streak that took it very near a bear market, after UBS analysts slapped a $1,000 price target on the stock and called the electric-vehicle maker the EV market’s “undisputed leader.”
Tesla shares
TSLA,
traded up as much as 4.8% at $1,057.67 on Tuesday, before paring gains to close up 4.2% at $1,051.75, shaking off weakness that took it to a close of $1,009.01 on Monday.
Monday’s close was roughly $25 away from putting the stock into a bear market, as defined by ending at least 20% down from a record high. Tesla hit a record close of $1,229.91 on Nov. 4.
A close at or below $983.92 would make the bear market “official.” The stock hit an intraday low of $950.50 on Monday, before bouncing to close above that threshold. On Nov. 15, it touched an intraday low of $978.60 before bouncing to close at $1,013.39.
Related: Elon Musk says Biden’s $2 trillion, EV-friendly spending bill shouldn’t pass.
UBS kept the equivalent of a hold rating on Tesla, but raised its price target on the stock to $1,000 from $725. The average price target for Tesla is $851.09, according to FactSet, which surveyed 41 analysts who cover Tesla. Of those, 17 rate the stock a buy, 12 rate it a hold, and 12 rate it a sell.
See also: Toyota picks North Carolina for $1.3 billion battery plant
Tesla’s stock, which had tumbled 11.9% amid a four-day losing streak through Monday, has gained 49% this year, compared with gains of around 25% for the S&P 500 index.
SPX,
Subscribe: Want intel on all the news moving markets? Sign up for our daily Need to Know newsletter.
There is no doubt about the fact that some some sectors have fared far worse than others during the pandemic. One of them is hospitality. Covid-19 restrictions meant that bars and restaurants were open only for a limited amount of time. As a result, many of them are yet to see their financials get back to pre-pandemic levels. But this restaurant group, which also happens to be a penny stock, is an exception.
I am talking about the AIM-listed Fulham Shore (LSE: FUL), which owns brands like Franco Manca and Real Greek. The UK based company owns 74 restaurants at present and in its latest results statement, has mentioned that it has plans to open up 21 more. This in itself is an achievement, in my view, at a time when many restaurants are still struggling. And there is more to like about it.
The company’s performance for the six months ended 26 September 2021 was impressive. Its revenues more than doubled from the same period in 2020. And it even swung back into post-tax profit, compared to a loss suffered last year. I find this particularly encouraging considering that 2021 has also been a hard year for restaurants. As Fulham Shore said, it operated with no Covid-19 restrictions for only 10 of the 26 weeks of this latest half-year. Further, even if we consider that 2021 has still been comparatively better than 2020, the fact is that despite restrictions, its revenues are still 10% higher than the same six months in 2019.
The company also has a positive outlook and it has seen revenues in October and November higher than those during the corresponding months in 2019. It now expects to perform ahead of both management’s and market expectations for this year. And it has expansion plans for the next year too.
Its share price performance so far has also been encouraging. Even though recently it has moved sideways, over the past year, the stock is up almost 70%. Much of the increase was seen starting with the stock market rally of November, 2020. And the stock was broadly rising until September this year. But I reckon the fact that the last few months have been a bit challenging for broader stock markets has impacted it too. I think there is a possibility that after its good results, the company’s share price could start inching up again.
Of course the spread of the Omicron virus could slow down the upward climb. It has created much uncertainty, which is more likely to impact the likes of restaurant stocks than others. Also, the company has not been consistently profitable over the past few years, which is something to be cautious about. Still, for now, it appears to be in a good place. And if the recovery continues, I feel this would be among the penny stocks to make a good portfolio addition for me in 2022.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Yields for U.S. government debt on Wednesday were trading mixed as investors digested news suggesting the omicron variant of coronavirus that causes COVID-19 may not impact the economy as much as feared.
Reports on vaccines and treatments against the omicron strain of coronavirus are dictating market moves in stocks and bonds this week.
Yields for Treasurys pared early declines Wednesday after report a from Pfizer Inc.
PFE,
and BioNTech SE
BNTX,
said results from an “initial laboratory study” showed that their COVID-19 vaccine neutralized the omicron variant of the coronavirus after three doses, or the full two-dose regimen plus a booster shot.
Overall, global markets turned optimistic this week about the impact of the omicron variant and a move by China’s central bank lowering key interest rates to boost its slowing economy.
However, the Federal Reserve’s plan to tighten monetary policy by reducing its bond purchases has served to curb investor enthusiasm. The Fed meets next week on Dec. 14-15.
In Wednesday’s dealings, Treasury traders are looking for a report on the job openings due at 10 a.m. Eastern Time, with economists polled by Dow Jones forecasting 10.6 million opening in October, up from 10.4 million in September.
Meanwhile, investors will watch for a $36 billion auction of 10-year Treasury notes at 1 p.m.
“Great news from Pfizer that a booster will work in adding solid protection against Omicron and stocks are celebrating but I want to emphasize that what the Fed does from here should be the market’s predominant focus,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Wednesday note.
“At least with QE, the Fed is ending a $1.44 Trillion annualized asset purchase program possibly within the next 3 months. That is a lot of liquidity flow that is going to zero, quickly. With the possibility of rate hikes thereafter, the 2 yr note yield is now up 11 bps this week and 20 bps over the past 3 weeks. This said, I do like all the travel and leisure stocks,” the CIO wrote.
When I am looking for FTSE 100 shares to buy for growth, I focus on companies that are benefiting from significant industry tailwinds.
These could be anything from technological change to shifting consumer sentiment. Or, in the case of Berkeley Group (LSE: BKG), an undersupplied UK housing market.
The country needs to build more houses, and Berkeley is rising to the challenge. It wants to increase its housing output by 50% for the 2024/25 financial year.
To this end, the group has some 7,000 plots on sites it is currently advancing that it anticipates will come into land holdings by the end of the next financial year. On top of these existing plots, these new developments take the company’s overall estimated future gross profit from land holdings to £7.5bn.
As well as jacking up its output, the company is also increasing returns to investors. It is looking to return £2.52 per share annually until September 2025. It has also been repurchasing shares and will continue to do so until September 2022.
Based on the company’s growth plans and cash return potential, I would be more than happy to buy this FTSE 100 homebuilder from my portfolio today.
Challenges it could face as we advance include rising costs and planning constraints. These could limit the group’s ability to hit its output targets and reduce profitability on homes constructed if costs rise significantly. The supply chain crisis could also delay the development of new properties.
Over the past two years, Ocado (LSE: OCDO) has really come into its own. Demand for the company’s services has exploded as consumers are shopping online more and more.
According to its latest trading update, customer acquisitions hit a record of 64,000 in the 13 weeks to the end of August. Orders per week increased 22% although, due to tough comparisons with last year, overall revenue declined marginally by 1.8%.
It has also benefited from its agreement with Marks & Spencer. Demand for the retailer’s food through Ocado’s platform has exceeded expectations, providing a windfall for M&S and its joint venture partner.
One of the biggest challenges the company has had to deal with in recent months is a fire at its warehouse. This took a significant chunk out of revenue, as the group could not process 300,000 customer orders. This kind of infrastructure disruption is the most significant risk to Ocado’s growth. It is something I will be keeping a close eye on going forward.
Even after considering this factor, I am incredibly encouraged by the group’s recent growth and forward growth potential.
Management has been working flat out to increase capacity to meet the rising demand for Ocado’s services. These expansion efforts are expected to deliver strong revenue growth in 2022. On that basis, I would buy the company for my portfolio of FTSE 100 recovery stocks.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
