Effects of Strong Winds on the US Economy. What the executive survey tells us, which was conducted by KPMG. How much will consumer product makers spend on huge data?. What Intuit wants to spend on 10 billion dollars.
Disclaimer: when we talk about that, that something has grown up, we mean a comparison with the same quarter a year ago. Since all issuers from the United States of America, then all indicators in dollars. Sources were used in the development of the material, hard-to-reach for users from Russia. Putting our hopes on, Do you understand, what to do.
Hurricane plan
Hurricane Ida hits the US East Coast, at the same time as in the northern states like New York, and states of the Deep South like Louisiana. Let's figure it out, why is this important for the stock exchange.
Commodities. The South of the United States is home to a significant proportion of the mining capacity of the US commodity sector. For example, 80 percent of oil production and 83 percent of gas production in the Gulf of Mexico were suspended on Wednesday. In addition, oil refineries with a total capacity of 2,3 million barrels per day is thirteen percent of the total US oil refining level. The hurricane has not yet had a severe impact on gasoline prices. However, for companies, who work in the region, — Exxon, Shell and others, - the effect of strong winds can be extremely significant. Companies are still doing harm assessment, and may become, that we will find out the real numbers quite late - in the reporting of these companies.
However, the trouble of one is an opportunity for another.. Maybe, that the numbers of harm will be quite high and will force the big energy organizations to increase spending on the renewal of capital funds, to make up for the damage done. It's going to be, naturally, a plus for small oilfield services companies like Transocean - although their production facilities could also be affected by the hurricane.
Millions for electricity. Power outage for a million households in Louisiana alone is the second "bell" for the entire housing sector in the US this year. The first was an energy collapse in Texas during a freeze.. According to forecasters, then hurricanes and floods will torment the American coasts with increasing frequency - so it will require multi-billion dollar investments in the modernization of energy infrastructure. And it will be very good for various engineering businesses.
There is also good news, although for whom
The audit company KPMG conducted a survey among 1325 executive directors from 11 different industries: how they assess the current economic situation in the world. AND, as it turned out, rate very well: 60% respondents are sure, that the global economy will grow over the next three years. This is higher, than the results of a similar survey in January this year - 42%, and much higher, than it was a year ago 32%. It lets us hope, that economic growth will continue for various issuers—and, maybe, investors will consider this a good basis for the stock market to continue to rise.
In the same time, if we compare the optimism of the directors with the indicators of the "pre-war" period in January 2020, the number of optimists has decreased: then it was 68% of the total number of respondents.
Also 87% of respondents are going to make mergers and acquisitions in the next three years. This is good for small and mid-cap issuers, because it greatly increases the chances of, that they will receive an offer to purchase.
Other trends were also noted in the survey.. 58% respondents report, what investors are pushing: they require disclosure of information about the compliance of the business with ESG criteria. About 30% of respondents plans to spend 10% proceeds to increase the indicators of sustainable development of your enterprise. About 37% respondents consider, that such spending will improve the financial performance of their business. Interesting, that in fast-growing industries, more respondents expect an exhaust from spending on ESG - about 52%. Also 71% respondents consider, that directors will be expected to state their position on social issues.
It is seen, that the progressive left-liberal public has successfully pushed through its agenda in the corporate sector, therefore, the ESG factor must now be taken into account when making investment decisions to no lesser extent, than multipliers. And even more.
For technology companies, the survey also looks very positive.: 67% of respondents plan to increase investment in innovation. In practical terms, this, probably, will lead to increased spending on cloud computing and other cybersecurity and automation.
Digitization of logistics
Consulting firm ABI Research releases Industry report 4.0 in the Consumer Packaged Goods Industry, dedicated to the modernization of processes in enterprises, producing packaged goods for consumers. The most important thing in the report is the numbers, concerning the spending of these same companies on data processing and analytics. If now companies collectively spend for these purposes 500 million dollars a year, the flow 2030 year, the volume of annual spending will have to increase to 4 billion. The goals of these expenses are the most noble: increase the profitability of your own business and reduce costs to the maximum.
The same increase in spending should be expected in other traditional sectors - from housing and communal services to the automotive industry.. In a historical perspective, the financial performance of such companies is marking time, and costs are rising. In this context, investments in business digitalization will be essential. Partly the impetus for digitalization of businesses was given by the pandemic, but there is still a lot of work to be done.
In a practical sense, this can bring fat contracts to those, who works in technology consulting and cloud computing. Given the lack of experience and knowledge of customers in these areas, I would even expect, that the final spending will be more than the initial. And the results of the KPMG survey confirm this..
FIRE, I’ll take you to burn
Accounting software manufacturer Intuit (NASDAQ: INTU) plans to buy for more than 10 billion dollars email marketing service Mailchimp. It could seem, that this is not the most obvious combination of businesses, but in the context of the development of Intuit, this may be a completely logical step. Not long ago, Intuit bought personal finance website Credit Karma.. Talking about money is like pornography: people in general are always interested in it, even if there is an endless and meaningless repetition of what was seen before.
So that, combining Mailchimp and Credit Karma, the company will be able to take a lot of money from those, who wants to learn how to manage them effectively. Paid lessons and events play a significant role in the FIRE movement, where people are taught to save money for money. So you can earn on this audience, by selling her Intuit's own accounting software, - "to, means, better saved ".
The main business of Intuit is now tied to servicing the accounting department of small and medium-sized businesses., therefore, with Credit Karma and Mailchimp, the company will be able to diversify its business a little by increasing the share of individuals directly. Moreover, small and medium enterprises in the United States are now in decline..
There is no specifics about the deal to buy Mailchimp right now.: Both sides have so far refrained from commenting., - so, probably, negotiations are not over. For Intuit shareholders, the most important issue here is the financing of the transaction. Intuit on accounts 2,562 billion dollars and more 1,308 billion investments, 391 million debts of counterparties and the amount of tax deductions receivable in the region 123 million. At the same time, she has 3 billion long-term debt. May be, the company will pay for Mailchimp shares, maybe, will borrow money. The latter will not be very good in the run-up to higher rates and more expensive loans. However, Intuit shares fell only one and a half percent from the news about the possibility of buying Mailchimp, so, probably, investors don't see anything wrong with it yet.
But will Intuit succeed in making money on individuals, can be understood much later, when Mailchimp will be integrated into the company's operations. However, the deal may still not go through.
