Please find the latest edition of Weekly Digest attached.
As both this Weekly Digest and my email last week cover recent developments and our outlook, I set out below a few charts that are a bit more niche but I have nonetheless found of interest.
Global Supply Chains
It is great news that the Suez canal is now open again, however, this has brought the vulnerability of global supply chains sharply into focus. While the blockage is clearly of global significance, there are other disruptions that are worthy of attention too. The Richmond Fed manufacturing vendor lead time is at a record high as manufacturers have struggled to get supply chains fully operational as the US economy recovers:
Similarly, the Kansas City Fed manufacturing backlog of orders is at a record high:
There is still a significant shortage of semiconductors too, holding back vehicle and cell phone production (Amsterdam-listed ASML remains an absolute core holding for us). Its increasingly clear that supply is becoming a constraint on the recovery as demand picks up.
The Outlook for Oil Demand
The International Energy Agency expects the global electric car fleet to reach 60m by 2026 with the possibility of getting to 90m with stronger incentives from governments. Add in what’s happening in buses and 2-3 wheelers and the shift to electric vehicles could shave 1.6million barrels per day from global demand by 2026:
In addition, internal combustion engines are continually becoming more efficient: