Three things that got the team talking this week - Firetrail Investments

Weekly insights from the Trail

Three things that got the team talking this week

November 4, 2022November 11th, 2022

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1. Keeping our finger on the pulses…

Global agriculture nutrient supplier businesses Nutrien and CF Industries reported this week. And they gave us good insights into the state of the global agriculture market.

They are seeing global stocks of ag products remaining at decade lows for grains (wheat/corn) into 2023, and near lows for oilseeds. And they believe it will take several years of “normal” conditions to rebuild these stock positions. They are also seeing grower margins remaining elevated into 2023, supporting the idea that farmers can afford to pay higher prices for nutrients, and as such there shouldn’t be significant demand destruction. Additionally, forward prices for energy (i.e. gas) are likely to support cycle high margins for key fertilisers through 2025.

This bodes well for the agriculture names across both the Australian and Global funds.

Source: Nutrien

2. Big spenders…

US personal savings as a percentage of disposable personal income has dropped back below pre-Covid levels. But US households still have around $1.5 trillion in net savings accumulated since the pandemic began.

Source: Bureau of Economic Analysis; Macrobond

3. Precedented unprecedent…

If you thought 2020 had some unprecedented events, 2022 is giving it a run for its money.

The number of months with the S&P 500 up or down at least 7.5% is at the highest levels in over 80 years.

Up until last week there was a total of 243 policy rate hikes in the year to date, or more than 1 hike per trading day.

And China is importing more Malaysian crude oil than what Malaysia produce!

Source: Evans

Source: BofA Global Investment Strategy, Bloomberg

Source: Bloomberg, IEA

Disclaimer

This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

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