against the grain
Some uncertainty remains over global food prices as Russia and Turkey wrap up talks to discuss reviving the Black Sea Food Initiative. The UN-backed pact, which seeks to keep food supply chains safe since it was first signed in July 2022, is on shaky ground despite attacks on food export facilities, slow ship inspections and an uncertain renewal period. That’s a big deal because Ukraine is one of the world’s largest suppliers of wheat and corn and produces about half of the world’s sunflower oil.
snapshot: The war has caused extreme volatility in global food prices in 2022, with crises and shortages in Asia, Africa, the Middle East, and Latin America. At a recent meeting, Vladimir Putin told Recep Tayyip Erdogan he would not revive the food deal unless curbs on Russian agricultural exports, including food and fertilizer, were lifted, while These restrictions have been thwarted by financial and shipping sanctions. “As soon as the commitments made to us are fulfilled, we are ready to return to this agenda immediately,” Putin declared at a joint news conference.
It’s also a matter of leverage. The abolition of the Black Sea grain program did not stop Russia from exporting record quantities of wheat, while its fertilizer exports returned to pre-war levels. Moscow has also just signed a deal to ship 1 million tonnes of grain to African countries via Turkey (which Turkey has offered to process into flour), and many countries, including Egypt, are signing private deals rather than traditional tenders. Ukrainian grain could also enter the market without a new agreement, but higher transport costs would hit profit margins and could lead to long-term planting and reduced supplies.
More diplomacy: The White House National Security Council expects Putin to hold talks with North Korea’s Kim Jong Un later this month as the two seek closer military ties. According to multiple reports, the exchange of artillery shells and anti-tank missiles for satellites and advanced technologies for nuclear-powered submarines is being discussed. Russian Defense Minister Sergei Shoigu also confirmed that Moscow was considering joint naval exercises with China and North Korea, a first for the Pyongyang regime.
home team competition
Airbnb (ABNB) hosts in New York are bracing for new rules that go into effect today that effectively ban short-term rentals. The city argues that short-term rentals take away much-needed affordable housing stock, while hotels are certainly out of favor. That likely won’t have a major adverse effect on Airbnb’s performance, but many hosts worry that the strict rules could set a precedent and undermine its sharing-economy dominance. Note that analysts generally expect Airbnb’s revenue growth to slow further, but investment group head JR Research said the stock’s imminent addition to the S&P 500 adds confidence to its growth story. (83 reviews)
A lack of homes for sale in the U.S. has pushed home prices to their highest level since October as homeowners don’t want to give up relatively low mortgage rates, real estate brokerage Redfin (RDFN) said. “Another reason for the sharp year-over-year price increase is that prices were falling rapidly at this time last year, with rising mortgage rates keeping buyers away.” A shortage of inventory has led to competition for desirable homes, with home sales rising in the four weeks ended Aug. 27. Bit prices rose 5% year-on-year to $380,000. Miami, Florida, saw the most significant year-over-year home price gains among the 50 most populous metropolitan areas, with the city’s median home sales price up 17% from a year earlier. (143 reviews)
artificial intelligence budget
Artificial intelligence is making waves on Wall Street, leading to sky-high valuations for chipmakers. Even biopharma companies with ties to AI have benefited, including Recursion Pharmaceuticals (RXRX). As the use of artificial intelligence continues to increase across industries, Morgan Stanley expects the healthcare industry’s budget allocation to the technology to nearly double in 2024 compared to 2022. The potential use of artificial intelligence could transform the healthcare industry, the firm said, advising investors to focus on four key areas. Investment group principal Lyn Alden Schwartzer also delved into certain AI topics, including how the technology could reduce the cost of new drug development. (51 comments)