Happy Monday!

📝 Focus

• The 100-Year Life: Living and working in an age of longevity

📊 In the Markets

• “Yamani or your life!" OPEC+ flexes, cuts supply (oil price)

• In other (all allegedly misbehaving) corporate news (UBS, CS, Adani, JNJ)

📖 MoneyFitt Explains

🎓️ OPEC+

📚 What we’re reading

📝 Focus

The 100-Year Life: A Blueprint for Longevity and Fulfilment

Today’s Focus story is part 1 of a 2-part series by Steve Conley, Founder of the Academy of Life Planning (AoLP). AoLP provide financial planning without financial advice for tech-savvy self-directed consumers.

In their ground-breaking book, "The 100-Year Life," Lynda Gratton and Andrew J Scott from the London Business School present a comprehensive analysis of the challenges and opportunities presented by increased longevity. With the average life expectancy steadily rising, it's crucial to re-evaluate traditional life milestones and adapt accordingly.

As we embrace the concept of the 100-year life, I'd like to share my perspective on the fundamental principles and steps necessary to make the most of this extended lifespan.

1. Rethinking Life Stages: As our lives extend, the conventional sequence of education, work, and retirement becomes outdated. We must abandon the notion of a fixed retirement age and accept the reality of a more fluid, multistage life. This approach allows individuals to engage in lifelong learning, multiple careers, and sabbaticals to maintain a sustainable balance between personal and professional development. From a financial planning perspective, this is a mountain-range lifetime cash-flow forecast with multiple peaks and valleys.

2. Emphasising Lifelong Learning: The rapid pace of technological advancement and industry transformation demands that we prioritise continuous learning. It's essential to acquire new skills, adapt to shifting job markets, and stay competitive. Lifelong learning enables us to keep our minds sharp and better prepared for the evolving professional landscape. Learning de-risks the precariousness of our livelihoods.

3. Financial Planning and Adaptability: The 100-year life demands a new financial strategy. Relying solely on traditional pension plans will no longer suffice. Instead, individuals must develop a diversified approach to investments, savings, and income generation. This wealth creation strategy includes exploring unconventional career paths, entrepreneurship, and the gig economy, all while maintaining financial adaptability to navigate the uncertainties of a longer life. The focus needs to be more on growing wealth rather than saving wealth you've already grown.

We’ll be back with the second part tomorrow, which looks at the importance of Prioritising Health and Well-being, Fostering Social Connections, and Embracing Flexibility!

📊 In the Markets

Inflation numbers in the US and Europe were good on Friday, leading markets to rally hard on hopes The Fed of the US and the European Central Bank would soon end their aggressive interest rate hikes. In Asia, markets were boosted by the strongest reading for activity in China’s non-manufacturing sectors in nearly 12 years, showing --finally-- a strong rebound after China's abrupt scrapping of zero-Covid policies late last year.

..... ► The tech-heavy Nasdaq saw its biggest quarterly percentage gain at +17% since June 2020 (lower interest rates increase the value today of earnings far-off-into-the-future.) The large-cap S&P 500 closed up 7% in the first three months of the year, hitting its highest level since February. Wildly unpredictable ride getting here, though, with a strong January followed by a weak February, followed by a banking crisis and a rebound all within March. (The only predictable thing about a market is its unpredictability.)

..... ► The Fed’s preferred measure of inflation cooled in February. The personal consumption expenditures (PCE) price index, measuring how much consumers pay, was still up compared to the month before BUT at a slower pace than expected. Good news! The core PCE index (stripping out volatile food and energy costs) was up 0.3% compared to January, but January had been up 0.5% compared to December. (Economists had been expecting 0.4%.) Feb-22 compared to Feb-21 was up 4.6% ("year-on-year"), a touch lower than the 4.7% y-o-y seen in January. Still well above the 2% target, but moving in the right direction from its recent 6.2% high last September.

..... ► Personal consumption itself fell 0.1% in February from a jump of 1.5% in January, with reduced spending on goods and services as consumers pulled back on big-ticket purchases like cars and dining at restaurants. Durable goods (things) prices rose just 0.7% but services (2/3rds of consumer spending) jumped 5.6%, same as in January.

..... ► Over in the Eurozone, March inflation fell sharply to its lowest level for a year following a 0.9% decline in energy costs. (See OPEC+ story below.) Harmonised consumer prices rose by 6.9% y-o-y, down from 8.5% y-o-y in the previous month for its lowest reading since Feb-2022. Economists polled by Reuters had expected inflation of 7.1%.

..... ► In China, business confidence shot up with steady demand growth based on the non-manufacturing purchasing managers’ index (services, forestry and agriculture) which hit 58.2, its highest since May 2011 (any reading above 50 indicates expansion.) Even the manufacturing sector PMI came in at 51.9. Experts had expected readings of 54.3 and 51.5, respectively.

On Friday, Tesla rallied 6% on general market bullishness and in anticipation of first-quarter sales announced over the weekend. In particular, traders wanted to see how much Elon Musk's price cuts have paid off in unit sales. The 20% January cuts kicked off a price war (especially in China) working on the strategy that its industry-leading profit margins would let it see off competition from new and established competitors, especially heading into a weakening economy.

..... ► Well, Tesla did post record deliveries but missed estimates again for first-quarter deliveries on rising competition. Deliveries were up by 36% on a year ago, but well below the 52% growth projected by Musk earlier in the year. Tesla's cuts ignited a price war in China, with rivals including market leader BYD dropping prices shortly afterwards to defend market share. (BYD had a share of 41% of so-called new energy car sales --including hybrids-- compared to Tesla --pure EV-- at 8%.) China’s EV market is highly competitive, with over 94 brands offering more than 300 models. In the US, the Treasury Department on Friday unveiled stricter tax rules reducing tax credits on some EV models from April 19.

“Yamani or your life!" OPEC+ flexes, cuts supply

It's not quite the era of Sheikh Yamani, the suave and influential Saudi oil minister of the 1970s and 1980s, but the Sunday Surprise supply cut from the OPEC+ oil cartel 🎓 is already sending energy prices higher in Asia morning trading with global benchmark Brent Crude up over 7% to ~$85/bbl. Tighter supply boosts prices.

• OPEC+ oil producers announced further oil output cuts of around 1.16mn BOPD (barrels of oil per day) in a move the US has already called "inadvisable", and which comes a day before a virtual meeting of an OPEC+ ministerial panel. This would bring the total volume of cuts by OPEC+ (which includes Russia) to 3.66mn BOPD (2mn from last November plus 0.5mn from Russia alone in February), or 3.7% of global demand.

• Oil prices fell last month to the lowest in 15 months on worries of weak demand from a world potentially headed into a recession, exacerbated by March's maybe-not-yet-over banking crisis in the US and Europe.

• Oil prices are sometimes seen as both a global measure and a stabiliser of economic growth. Rising prices (excluding cartel actions) can reflect high demand, reflecting strong global growth, but because oil usage in the short-term is sticky ("demand is inelastic") those high prices suck spending out from other areas, automatically slowing growth.

Geek corner: The international oil benchmark is Brent Crude from the North Sea while Americans also use West Texas Intermediate, WTI, a few dollars lower. Prices are quoted in barrels, or "bbl" for a Blue BarreL. Each barrel is 42 US gallons, 35 imperial gallons or 159 litres.

The 1970s Oil Crisis - a mini-explainer

• In 1973, Arab oil-producing countries imposed an oil embargo on Western countries, including the US, in response to their support for Israel in the Yom Kippur War. In 1979, the Iranian Revolution (in part a consequence of Western power control of oil resources) disrupted oil supplies again, causing further price increases and supply disruptions.

• This led to fuel shortages and sharp increases in oil prices (quadrupling in 1973 from $3 per barrel to nearly $12, and more than doubling in 1979 from $14/bbl to over $35), causing economic hardship, inflation and stagflation in many oil-importing countries - but benefited oil-producing regions (e.g. in the Middle East, Norway, Venezuela, Texas, Alaska.)

• The oil crisis ended in the 1980s as oil production increased in other areas, demand decreased due to efficiency improvements and alternative energy sources.

In other (all allegedly misbehaving) corporate news

..... ► The Swiss prosecutor has said it will look into UBS' hurriedly forced acquisition of Credit Suisse, potentially looking into criminal offences by the Swiss government, the Swiss National Bank, Finma, the chief regulator and executives of both banks. Somehow the still-twitching corpse of Credit Suisse is still managing to get in trouble. (See Focus article in this MFM from -gulp!- just two weeks ago.)

..... ► India's market regulator is investigating possible violation of "related-party transaction" rules in the Adani Group's dealings, with at least three offshore entities with links to the brother of founder Gautam Adani. In India, direct relatives, "promoters" (any entity with a large shareholding in a listed company and which can influence policy) and subsidiaries are considered related parties and transactions have to be disclosed in regulatory and public filings and require shareholder approval above a specified level. Famed short-seller Hindenburg said this (and more!) in an explosive January report that wiped out more than $100bn from the market value of Adani group companies. (See Focus article in this January MFM.)

..... ► Johnson & Johnson, maker of allegedly carcinogenic talc-based baby powder, was stopped from delaying a court order that had dismissed its claim of bankruptcy. JNJ was trying to use bankruptcy courts to limit the financial fallout from thousands of lawsuits over its talc products, which it maintains are safe and asbestos-free. JNJ's North American baby powder no longer contains talc - but that's not the case for products sold elsewhere around the world. (See Focus article on J&J trying to sneakily Texas Two-Step their way out of the lawsuit in this February MFM, which also Explains "Chapter 11 Bankruptcies.")

📖 MoneyFitt Explains

🎓️ OPEC+

A cartel of large oil-producing countries led by Saudi Arabia, which coordinates (but can't dictate) output in order to influence oil prices.

The 13 nation members produce 40% of the world's oil and own over 80% of proven reserves. They include Iran, Indonesia, Nigeria and Venezuela but not other major oil producers like the USA, Russia, the UK, Malaysia or Norway. In 2016, OPEC+ was formed, a loose alliance with 10 other top oil-exporting countries (including Russia).

OPEC's mandate is for fair returns for investors, steady income for suppliers and efficient supply for consumers. Not all about higher and higher oil prices, though in the popular press it may seem that way.

The concept's simple: if the supply of almost anything (such as a raw material) is limited, then the price tends to go higher. But if supply is too little and the price is too high relative to its uses, then the world has a way of finding substitutes. (Also, selling very little at a high price preserves oil reserves but may make less money for producers right now than selling a lot at a lower price.)

When OPEC says it is looking at output cuts, commodity markets react quickly by raising prices, with oil company share prices following suit... even before any output changes happen.