Morning Mumble: Rounding Up the Week + Hiatus +++Stupidity

What a week for the markets. America's Non-Farm Payrolls (something I'll never get right) coming in better than expected. So America, save for a few billion spent is near enough back in the same spot pre-crisis in terms of employment. Their Debt however I don't think ever will be lower, for me that would be an issue...I dislike over-leverage it gives a false market and America is certainly starting to see the signs of that. So with the avoidance of pain, America's deficit might be met sometime after I'm pushing up daisies.

 

I was in the smoke on Monday for a few meetings before officially being on holiday. My latest enterprise is leaseback financing for the construction industry. It’s something that I noticed awhile back in terms of the difficulty they are having in financing even essential and low risk projects. In addition, it was to discuss a buy out of a firm that provides 'business management solutions.' Pending any deal in the near future I'll update further. It was a pleasure to pop into one of my old haunts, Montpeliano ( SW7). It's Italian, one of those places you get what you pay for. Its been run by the same folks for a number of years, 5 mins from Harrods/Tube and the like but off the beaten track in terms of damn tourists and plonkers. Unless you like it hot, avoid the chilli pasta (regrettable mistake a few years back). Anyway, enough of ‘the eats’ as Ian calls it, whom is still lacking a post on LGO Vs. MOG. Is he hope I’ll forgot?

 

Wednesday came with myself attending CampAlpha via bot, it was a strange affair albeit with some phone and a pleasure to chat to a few folks. I wish to thank Sarah for rearranging her top in my “mirror” ha-ha…it was most shocking to pop back with a coffee to realise…what was staring me in the face. Hell of an ice-breaker!

 

I did take some notes on the CampAlpha Chinese discussion. What is concerning is, the consensus is so broad or disagreeing. They, with the utmost respect, appear to be hedging their bets, in terms of how the Chinese economy is doing and growing. Whilst I was sat there listening, it occurred to me, that if “Chinese” surplus (what was called waste) is growing and also their economy, if you strip out the 25-40% waste, a real terms growth of around 4.8% (max) is achievable in China. This will become more apparent over time.

It was a pleasure to speak to a few chaps from a well-known major whom not only read my garb (as one called it) but assumed I was negative on China, as in declining. I’m negative in terms of the realities happening, not on their growth (currently), however my view is in within 3 years the Growth will be near to Zero. If one strips out stimuli from the Government (which is slowly happening but they aren’t telling “us"). 

There’s too many mistakes still happening in China and the transfer of wealth to the people is warped only by the Government intervention and protection. So expect more coverage and perhaps some criminal proceedings in regard to commodities being leveraged on a multiple level. Speaking to Xin (friend on the ground in China) he’s of the view around 20% of base metals could be leveraged multiple times. What Atarashi called Ghost Lending / Leveraging…The discounted inferior ores are being supported as China has realised they can’t just shut the doors of the polluters without a plan. Save of course if they do an Indonesia Re: Unprocessed Ores.

Staying with Iron Ore, it would appear that Africa Minerals is on the news flow front. Most people are starting to get sceptical, aka what are they up to. It may come RNS'ing the type of coffee they have in the morning! What is concerning is they have reduced their capex on the concentrator by $1B. Yes I’m not joking when I say that, whomever was in charge of the calculator on the original estimates perhaps needs a few European Computer Driving Lessons! African Minerals Ltd Phase 2 Concentrator Engineering Study Results are stupendous, with a muted reaction on the market. Reducing capex out as far as 2020. With margins based on their ‘study’ improving near 33% as a minimum it begs the question why they’re not falling over themselves to get this completed ASAP. However, lets see if my figure of $381M for the concentrator will be closer than there’s, I’m allowing 13% over-run not in that price. For that reason, I’ve taken the unusual decision of going long on AMI! This won’t be the bottom, but I suspect near it. There’s plenty of time to increase exposure, so I’d not be putting the house. Sadly, it means one of my predictable LOND/AMI trades will be lost as AMI gets rerated. Not one broker that I have read has realised the 18$/t bottom line improvement by spending a meet $388.

 

Currently with the Holiday season upon me/us, posts will be limited. There’s so much I wish to discuss as well, including the changes at PCI (Petroceltic) the future for Providence Resources. Perhaps Amara (AMA)will surprise us as well, with alleged discussions taking place with Randgold. As you know I'm long there. For those out there screaming about the positives of Worldview, one would be wise to check the share price of Ruspetro before getting too excited. Its getting concerning that my longs are up to 32% of portfolio. This is entirely unacceptable…!

My stupidity is:whilst at CampAlpha I was politely informed shorters are scum and they should be outlawed. Having asked why that is, as its making a market and you have to buy to short, sell to long etc...the chaps reply was...they should ban selling! There we have it folks, ban shorters, ban longs and ban selling stocks. 

 

Have a very good weekend. Atb Fraser

Will post pending time holiday commitments.