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What cities owe the provinces

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A friend calls it, with some distaste, the “ring of fire”. He is referring to the counties that encircle London and that have a tense relationship with the place. They are everything the capital isn’t: conservative if not Conservative, full of families, car-oriented, perhaps not swarming with cultural treasures. While far from homogenous — many an Asian household ends up moving out there — the ambient street chatter is not the omnilingual serenade it is within the M25.

The quarrel between the two worlds goes like this. People in the counties can’t believe that urbanites pay a premium to live in a Babel of cramped apartments and phone theft. We in turn view them as rubes who might at any moment order a Sauvignon Blanc that isn’t Dagueneau. Most big cities have an equivalent hinterland: the San Fernando Valley, the bridge-and-tunnel crowd, and so on. If relations are this strained with the commuter fringe, imagine the antagonism between cities and the deep interior of the nation. Except we don’t need to imagine. Brexit and the election of Donald Trump made clear what the heartlands think about us.

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Yet we can’t do without them. I don’t mean something woo-woo here: something about the value of human difference and learning from one another. I literally mean that great cities wouldn’t work as an economic proposition without lots of mildly conservative voters in the rest of the country. What does a global city need? Competitive (though not necessarily super-low) taxes. Non-burdensome regulation. A business-friendly atmosphere. Which way do they vote? Left.

In 2019, it was the Home Counties and the post-industrial regions that averted a Jeremy Corbyn premiership, with all that would have entailed for the City. London, including much of affluent London, voted for him. A decade ago, Paris was entering a rut of ossified cuisine and entrepreneurial torpor. Its current dynamism, its finance and tech boom, owes at least something to the reversal of François Hollande-era costs on business. Who had Paris voted for in 2012? Hollande.

In essence, the provinces bail the metropolis out of its self-defeating politics. They also hold it back in some ways: by supporting Brexit, by opposing immigration. But the trade-off is worthwhile. Cities can withstand these nuisances in a way they couldn’t withstand eternal one-party dominion, as some Californians might attest. The governing climate in which urban life flourishes is a blend of progressive ideas (liberal immigration rules, infrastructure spending) and conservative ones (market incentives, toughness on crime). To the extent that big cities have this balance, it is increasingly because the wider nation provides the second half.

Put it another way: why do so few city states exist? As a mode of government, it has centuries more pedigree than the nation state. A greater share of humanity is urban-dwelling now than in the time of Medici Florence or Hanseatic Hamburg. With cities subsidising the heartlands, there is a casus belli ready to go. Beyond Monaco and Singapore, though, the list of sovereign cities in the modern world thins out. And the clamour for more to secede from their countries is near zero.

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Granted, national feeling goes deeper than liberals as arid me will credit. And defence relies on scale. (Monaco has to look to France for much of that.) But I wonder if another snag is that the politics of an independent London or New York would never work. The demos needs balancing out with a flintier conservatism, at least if the current business model of these places is to survive. This is truer now than when cities had lots of right-of-centre voters, before the partisan “sorting” of people into like-minded communities.

So yes, on a night out, when the city starts to glow, one’s thoughts turn naturally to secession. There could be visa checks at the M25. There could be universal conscription to defend our 9mn-strong republic. And imagine the fiscal surplus. But then I’ll meet another rent-control enthusiast with a Yanis Varoufakis book on their shelf, and wonder. Since the Elizabeth Line was built, there has been a new edge to the snobbery about the ring of fire. The rap is that it brings in too many overdressed outsiders for a night at Hakkasan or wherever. But they don’t just have a right to be here. They have been, when London’s own judgment lapsed, the city’s ultimate guardians.

Email Janan at janan.ganesh@ft.com

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Travel

Low-cost airline launches first-ever flights from regional UK airport as full plane with 174 passengers takes off

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The connecting city is famous for its Viking history

A LOW cost airline has launched its first-ever flight from a regional UK airport with 174 passengers on board.

The airline will provide direct flights from a UK airport to a popular European capital.

The connecting city is famous for its Viking history

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The connecting city is famous for its Viking historyCredit: Getty
The first-ever flight got a water salute from airport firefighters

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The first-ever flight got a water salute from airport firefighters

Customers flying on its North American connections can even visit two countries in one trip as stop overs are free in this major city.

It has been announced that for the first time ever, Wales and Iceland will be connected by a direct flight.

Customers on board PLAY Airlines can fly from Reykjavik, Iceland, to Cardiff, Wales, up to twice per week.

This will enable the people of Wales to explore the glorious blue lagoons and Viking history of Iceland.

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Or, enable the people of Iceland to explore Wales and its stunning beaches, mountains and castles.

The first-ever flight took off just a day before Wales’ football game in Iceland – with 174 passengers on board.

Customers were treated to Icelandic sweets before take off such as Aurora Borealis cake, candy stripes, and chocolate liquorice.

Plus a water salute from Cardiff Airport firefighters.

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Lee Smith, Cardiff Wales Airport’s Head of Business Development, said: “It’s a pleasure to welcome PLAY Airlines to Wales today.

“This exciting service allows customers to enjoy direct flights between Wales and Iceland for the first time.

Discover the Magic of North Iceland

“PLAY’s Icelandic hub in Reykjavík also allows for people in Wales to take advantage of PLAY’s free stopovers in Iceland, before jetting off to five key cities in North America.

“We look forward to working with the team at PLAY to continue growing in Wales.”

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Flight costs from Cardiff to Reykjavik in October start from as little as £55, per person for a round trip.

The trip time one way takes about three hours.

And there is still availability to fly out in October.

Customers using PLAY Airlines from Cardiff also have the option of visiting five other major cities abroad.

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Such as New York, Washington, Boston and Baltimore in the USA.

Or Toronto in Canada.

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3 Dividend Stocks That Reward You Through Thick and Thin

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Motley Fool


This year, some notable companies have cut or eliminated their dividends. For example, former stalwarts Walgreens and 3M ended decades-long streaks of dividend growth with deep cuts to their payouts. It’s a situation that can make some investors want to give up altogether on income investing.

However, while some formerly reliable companies have disappointed investors on the dividend front in recent years, others have continued to make their payments no matter what. Enterprise Products Partners (NYSE: EPD), Oneok (NYSE: OKE), and NextEra Energy (NYSE: NEE) stand out to a few Fool.com contributors for their dividend stability. Here’s why you should consider adding them to your portfolio.

Enterprise Products Partners is built to pay you well

Reuben Gregg Brewer (Enterprise Products Partners): For 26 consecutive years, midstream energy giant Enterprise Products Partners has increased its distributions. That’s a huge commitment to its unitholders, but there’s more for income investors to like here than just the distribution history. It all starts with its master limited partnership structure, which is designed to pass income on to investors in a tax-advantaged manner. (A portion of the distribution is usually return of capital.) So down to its foundation, Enterprise is about paying its investors well.

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Then, factor in its business model. Enterprise owns energy infrastructure like pipelines, storage, refining, and transportation assets that are vital to the energy sector’s operation. However, unlike other segments of the industry, the midstream segment is largely fee driven. Enterprise generates reliable cash flows based on the use of its assets, so the often-volatile prices of oil and natural gas don’t really have that big an impact on its financial results. Demand for energy, which is usually strong even when oil prices are weak, is the key determinant of Enterprise’s success.

ET Financial Debt to EBITDA (TTM) Chart

ET Financial Debt to EBITDA (TTM) Chart

Then there’s the fact that Enterprise has an investment-grade rated balance sheet. Moreover, its leverage is normally toward the low end of its peer group, so it is conservative on both an absolute and relative basis. Lastly, the partnership’s distributable cash flow covers its distribution 1.7 times over.

All in all, a lot would have to go wrong before Enterprise Products Partners would need to cut its distribution. It is far more likely that it will continue to grow those disbursements, albeit slowly, as its capital investment plans pan out. But slow and steady distribution growth combined with a huge 7% yield will probably sound like music to most dividend investors’ ears.

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Over a quarter century of growth and stability (and more growth coming down the pipeline)

Matt DiLallo (Oneok): Pipeline giant Oneok has proven its dividend durability over the decades. It has achieved more than a quarter century of dividend stability. While it hasn’t increased its payment every year during that period, it has a strong track record on payout hikes. Since 2013, Oneok has produced peer-leading total dividend growth of more than 150%. That’s impressive, considering that the world experienced two notable periods of oil price volatility during that period.

Oneoke has delivered sustainable earnings growth over the years. Its portfolio of pipelines and related midstream infrastructure generates predictable fees backed by long-term contracts and government-regulated rate structures. Its earnings grow as the volumes flowing through that infrastructure increase due to production growth, organic expansion projects, and acquisitions.

The company has been on an acquisition-fueled expansion binge in recent years. Last year, it bought Magellan Midstream Partners in a transformational $18.8 billion deal that increased its diversification and cash flow. The highly accretive deal will add an average of more than 20% to its free cash flow per share through 2027. That supports management’s view that Oneok will be able to grow its dividend by 3% to 4% annually during that period while also repurchasing shares and reducing its leverage ratio.

Oneok followed that up with a $5.9 billion deal to buy Medallion Midstream and a meaningful interest in EnLink Midstream this August. The transaction will be immediately accretive to its free cash flow and capital allocation strategy. After closing that deal, Oneok plans to buy the rest of EnLink, further boosting its cash flow per share. The company also expects to complete additional organic expansion projects, further enhancing its growth rate.

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The midstream giant’s investments will help fuel its dividend growth for the next several years, even if there’s another market downturn. Those features make Oneok a great stock to buy for those seeking reliable dividends.

A steady dividend grower

Neha Chamaria (NextEra Energy): NextEra Energy, which has a yield of 2.6% at its current stock price, has rewarded its shareholders through thick and thin, and management is determined to continue doing so. The utility and clean energy giant has paid regular dividends for decades, but more importantly, increased them steadily over time. Between 2003 and 2023, the compound annual growth rate (CAGR) of NextEra Energy’s dividend was nearly 10%, backed by a 9% CAGR in its adjusted earnings per share (EPS) and an 8% CAGR in operating cash flow during the period.

NextEra Energy operates two businesses — Florida Power & Light Company (the largest electric utility in Florida) and clean energy company NextEra Energy Resources (the world’s largest generator of wind and solar energy). So while its regulated utility business generates stable cash flows, clean energy is where its growth largely comes from.

NextEra Energy expects its adjusted EPS to grow at an annualized rate of 6% to 8% through 2027, and expects annual dividend hikes of around 10% through 2026 as it pumps billions of dollars into both businesses.

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More specifically, NextEra Energy plans to spend over $34 billion on Florida Power & Light between 2024 and 2027 and more than $65 billion on renewable energy over the next four years. That’s massive, and if done right, should steadily boost NextEra Energy’s earnings and cash flows to support bigger dividends for years, regardless of how the economy fares.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,022!*

  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,329!*

  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $393,839!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Matt DiLallo has positions in 3M, Enterprise Products Partners, and NextEra Energy. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in 3M. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool recommends 3M, Enterprise Products Partners, and Oneok. The Motley Fool has a disclosure policy.

Don’t Give Up on Dividends: 3 Dividend Stocks That Reward You Through Thick and Thin was originally published by The Motley Fool

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Could Buying SoundHound AI Now Be Like Buying Nvidia in 2023?

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Motley Fool


Nvidia‘s (NASDAQ: NVDA) stock has been an absolutely incredible performer recently. Since the start of 2023, it rose by more than 800%. Most investors would be thrilled to own a stock that delivered returns like that, but not every company has the potential. It requires a massive growth catalyst to justify such gains.

SoundHound AI (NASDAQ: SOUN) is one company that could have this potential. It’s a key player in one niche of the artificial intelligence (AI) sector, and has a massive backlog for its products.

SoundHound’s product is gaining momentum

SoundHound AI’s technology can parse human speech and perform various tasks based on what it hears. Among the ways it’s already being used most are in processing restaurant orders and improving digital assistants in vehicles, but its capabilities extend far beyond those two use cases.

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In the automotive segment, SoundHound partnered with Stellantis; the giant automaker will integrate SoundHound’s tech into its vehicles across Europe and Japan. This will give people access to generative AI functions while they’re driving — an improvement from the voice assistants that are available on vehicles today. If SoundHound can win business with other automakers and break into other regions, this segment of its business alone could provide it with a huge amount of growth.

SoundHound also worked with several companies in the restaurant sector to automate telephone and drive-thru orders, which saves restaurants on wages. According to the company, these AI assistants actually outperform humans in terms of order speed and accuracy, so the customer doesn’t feel like the experience declined. Some of SoundHound’s restaurant customers, among them White Castle and Jersey Mike’s, are fairly big, but there’s serious room for it to grow if it can capture some of the largest fast-food businesses.

SoundHound AI could achieve even greater success if its solutions are utilized in new applications.

But is that potential enough to make its stock the next Nvidia?

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Nvidia has one key advantage that SoundHound does not

In the second quarter, SoundHound generated $13.5 million in revenue, which was up 54% year over year. That’s quite small compared to other AI businesses.

However, the key figure investors should focus on is SoundHound’s backlog, which totals $723 million. This figure doubled from a year ago, showing that rising demand has outpaced SoundHound’s capability to integrate its product with its customers’ systems.

This is factoring into SoundHound’s current valuation, as Wall Street has high hopes for the company.

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SOUN PS Ratio Chart

SOUN PS Ratio Chart

Trading at 23 times sales, SoundHound stock already carries a premium valuation. By contrast, Nvidia traded for around 15 times forward earnings at the start of 2023. That was a dirt-cheap price, and also a far cry from the forward earnings ratio of 47 it trades at today.

SoundHound already has a premium price tag, which detracts from its growth potential from here. But if it can mature into a business that generates $100 million in revenue per quarter, Nvidia-like performance for the stock is still possible.

If SoundHound achieved that and carried a valuation of 20 times sales, it would be worth $8 billion, up 370% from its market cap today. That would be a solid return, but still far less than what Nvidia produced.

SoundHound stock’s premium price tag may prevent it from delivering Nvidia-like returns from here, but that doesn’t mean it won’t be a great investment. However, it’s a bit of a long shot considering the niche use cases for its product and the company’s small size. It could make investors some serious money, but don’t expect Nvidia-like returns.

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Should you invest $1,000 in SoundHound AI right now?

Before you buy stock in SoundHound AI, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,130!*

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*Stock Advisor returns as of October 7, 2024

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.

Could Buying SoundHound AI Now Be Like Buying Nvidia in 2023? was originally published by The Motley Fool

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From beans to chips, vertical integration differs from older models

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Unlock the Editor’s Digest for free

Does Starbucks want its own beans, as well as baristas? The chain, which has owned one Costa Rican coffee farm since 2013, is getting more into the growing business, purchasing farms in Guatemala and Costa Rica and investing in other “coffee belt” regions in Africa and Asia.

Vertical integration, especially into raw materials, has enjoyed bouts of popularity for at least a century. Car titan Henry Ford, an early proponent, even owned sheep farms to supply the wool for car seat covers. The baristas, however, are unlikely to serve up a true revival.

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Globalisation and free trade unpicked the fashion to weave together suppliers with producers. Failures have been frequent and dismantling is costly and messy. Bowmar, possibly the biggest calculator maker in the world in the industry’s early 1970s heyday, bought into a plant to make its own integrated circuits as prices for its devices fell — and collapsed a year later. Chemicals group DuPont, partially playing white knight, acquired Conoco for its steady supply of feedstock in 1979 but the two parted ways a couple of decades later.

In certain sectors, geopolitics may be creating a modern variant. In chips, the advent of the “fabless” chip company, and the huge cost of semiconductor plants had dented tech’s appetite to own their own supply. But Chinese tech conglomerate Alibaba and its peers began forging into developing advanced chips as US-China tensions prompted a US crackdown on semiconductor exports.

Meanwhile, technical demands are prompting big companies to take design (if not manufacturing) back in-house. Apple began ditching Intel chips in favour of homegrown in 2020. “Integrating hardware and software is fundamental to everything we do,” said boss Tim Cook at the time. The advent of generative AI has prompted Meta and Google to push further into custom silicon, based in the latter’s case on Arm CPUs.

Investor tolerance for vertical integration varies with the times — but this type of control isn’t the Ford-variant of old. The same is true at Starbucks: its farms are small beans for a 38,000-plus store chain which buys some 3 per cent of global coffee supply. The holdings allow Starbucks to experiment, while ticking useful boxes around responsible agriculture and farmer empowerment.

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Similarly Ingka Group, the biggest Ikea franchisee, boasts a portfolio of 320,000-plus hectares — think four New York Cities — of forest across seven countries. Again, this is about reforestation, not integration: just 5 per cent or so of harvested wood goes back into Ikea products, and via the open market.

That is for the best. Farming — whether sheep, beans or trees — is a very different business to retailing, whether flat-pack furniture or a caffeine fix.

louise.lucas@ft.com

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Morrisons shoppers are just realising an axed chocolate bar is back on sale – but they’re all saying the same thing

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Morrisons shoppers are just realising an axed chocolate bar is back on sale - but they're all saying the same thing

MORRISONS shoppers are all saying the same thing about an axed chocolate bar that’s back on sale.

Mars rebranded the iconic bar in 1990 but it has returned to supermarket shelves for a limited time under the old name.

Morrisons is selling a limited edition Marathon-branded Snickers bar

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Morrisons is selling a limited edition Marathon-branded Snickers barCredit: Alamy

Marathon bars were renamed Snickers over 30 years ago to bring the branding in line with the US.

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But Mars has launched a limited edition version of the bar with the old Marathon branding.

Shoppers have been able to pick up the bar, made up of nougat, caramel and nuts wrapped in milk chocolate, from Morrisons for the last few weeks.

A four-pack of the retro 41.7g bars costs £1.95.

But some, commenting on a recent Facebook post by the retailer, have only just realised – and they’re all saying one thing.

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Morrisons’ post from yesterday reads: “Feeling nostalgic? The marathon bar is back and exclusive to Morrisons!

“Available in store and online. Limited stock, run don’t walk.”

Commenting on the post, plenty of shoppers have commented questioning the size of the limited edition bar.

One joked “are they the original size too?” while another commented “hope it’s gone back to the original size as well then”.

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And a third quipped: “Are they the same original size or snack size.”

Top things to buy at Morrisons

Snickers bars have massively shrunk in size since their launch in the UK in 1968.

Even between 2012 and 2017, data from the Office for National Statistics revealed the popular bar had gone from 58g to 45g in size – a 22% drop – while keeping the price the same.

The tactic, known as shrinkflation, has been used by other chocolate makers to keep their profits ticking over.

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History of Snickers

Snicker’s history goes back almost 100 years to pre-World War Two times.

1930 – Snickers, named after a horse, launches for the first time in the USA for five cents.

1968 – Snickers launches in the UK under the name Marathon before being re-branded to Snickers in 1990.

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2010 – The famous “You’re not you when you’re hungry” campaign and advert is created.

2019 – Snickers Crisps is launched combining puffed rice, chocolate, caramel and peanuts.

2021 – Snickers unveils its Creamy Peanut Butter flavour.

What is shrinkflation?

Shrinkflation is when manufacturers shrink the size or quantity of a product while keeping the price the same.

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This means that consumers pay more per given amount.

Rising the price per gram is a strategy used by companies to stealthily boost profit margins or to cement them in times of rising production costs.

Companies will often engage in shrinkflation when their production costs begin to rise.

A heavy hit to profit margins may force the company to simply shrink its products rather than increase the price.

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One of the best ways to notice shrinkflation is by spotting a redesign on the packaging or a new slogan.

This may mean the company has made a change and that change may just be the size of the product.

It is mainly seen in the food and beverage industries but can also happen in almost all markets.

It is a form of hidden inflation as shrinkflation often goes unnoticed by customers.

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In recent weeks, pet owners have spotted that multipacks of Purina Felix Original cat food shrunk by 15%.

Popular milkshake makers Frijj has also been accused of milking customers by quietly shrinking the size of their milkshakes without slashing the price.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

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China warns EU against separate EV price negotiations

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China warns EU against separate EV price negotiations


BEIJING (Reuters) -China urged the European Union on Saturday not to conduct separate negotiations over the price of China-made electric vehicles sold in the EU, warning that this would “shake the foundations” of bilateral tariff negotiations.

“If the European side, while negotiating with China, conducts separate price commitment negotiations with some companies, it will shake the foundation and mutual trust of the negotiations … and be detrimental to advancing the overall negotiation process,” China’s Ministry of Commerce said in comments published on its website.

It didn’t cite any evidence for the EU carrying out these separate talks beyond saying there had been “relevant reports”.

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The comments come days after Brussels rejected a Chinese proposal for EVs made in China to be sold within the bloc at a minimum price of 30,000 euros ($32,000), a move Beijing hoped would avert EU tariffs being imposed next month.

Various manufacturers including European-owned companies in China have authorized the China Chamber of Commerce for Machinery and Electronics to propose a price commitment plan that represents the overall position of the industry, the commerce ministry said.

“This is the basis for the current China-EU consultations,” it added.

(Reporting by Eduardo Baptista; Editing by William Mallard and David Holmes)

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