Good Morning, The ASX had carnage all
over it last night, the term correctly used by a number of brokers as well. Iron
Ore has now become the short of the year, copper is also one to watch
as the trading suggestions a blind ignorance of the global supply and demand
(could also be read as manipulation.)
Atlas Iron (ASX: AGO) being absolutely punished
as investors rightly price in the survival ratio of this company at $51/t. Its
non-entity, they're doing very well against a headwind of total domination by
the majors which are determined to over supply at any cost. So Atlas Iron,
currently circa 21¢ a share, with most PI's pretty much willing to accept
anything for their shares. Quite why parties have held on this long despite the
news being so advanced of the drop is beyond me.
Fortescue Metals Group (ASX: FMG) is arguably
struggling to hold its support lines at $3 a share (See various articles
here Morning Mumble: London's Burning??? Any old iron! & the
rules of 3 warnings (Tesco validating my view), all that glimmers certainly
isn't gold (at the moment) & Morning Mumble: New Loans (yeah right)..Sky's the limit (boom
boom) & the swallow cleared off! & Morning Mumble: Marks & Spencer (MKS) (the relief trade)
& precious metals, where is the support!?!?). FMG has two days to make
it back above $3 before further carnage to around $2.25 a share...one will have
to wait and see.
The economies of scale for the iron ore majors were
in doubt awhile back, with freight costs dropping its highly likely all the
savings will be achieved and long live the oversupply, expect some upwards
guidance on cost reductions due to oil and shipping rates. Rio may
be wise to acquire a few cheap vessels without capacity. The irony being the
majors are punishing their own stock prices as well. Rio struggling to hold
3000 on lower volumes (less support) and the GLEN rumour
(obvious) providing the technical support. Additionally BHP Billiton (BLT) not
holding out much hope either...
This morning's delay was due to two pressing items,
"the trade" Sainsbury's which is losing out in the
price war by being reactionary marketing and the trade (which went correctly
for once ha-ha) was to short on the news. As such SBRY made my
Christmas list, I won't comment too much but if there was ever a negative
in Interim Results for the 28 weeks to 27 September 2014 -
Evolving to win. The perception of the customers is that SBRY has
been late to react to competition. The LFL were better than I
expected, significantly so in fact but the profit showing the economies of
scale are losing their benefits. Expect a dividend cut in due course with what
is looking more and more like a rights issue. Over to the Qataris with
yet more flights to and from. My view, like Duncan's is sell SBRY.
Due to myself also signing up for alibaba.com for
some items, it delayed my morning ritual of coffee, news, Asia, Oz and America
(the latter always last), then on to trades, current trades and more coffee.
Alibaba has some questionable adverts, is someone looking in to these at all,
as rightly commentated by another chap some are a little dubious to say the
least.
We will let the analysts digest the significance of the Chinese
American pollution pact which has implications of costs and planned
development. Then again is it worth the paper it’s printed on...? Pig
Iron and Nickel ironically suffering a supply
contraction as a result of "pollution" measures (positives)...all
saved from a fall and copper on the bounce for no reason
whatsoever.
Now I've had some interesting dialogue about
this and it would be interesting to know whether certain parties receive an
arrangement fee for these types of deals? Whether these parties are retained to
act in the best interest of the shareholders...Obviously, not being a graduate
in all things AIM regulated (term to be loosened according to
the amount of laxative representatives take) it does pose whether there's a
conflict of interest in these types of facilities. You will note the absence of
the terms of such a deal, save for clarity on margin etc...
No time for a number of oilers, or the gossip, or the
"financing a house RNS" today...however we shall now, like a SEDA (Standby
Equity Destruction Agreement), call these deals the Standby Help &
Assistance Facility Terms (SHAFT), Angle PLC Further information re Director's share transfer which
reads rather differently to the one announced a few weeks ago. ANGLE plc (AIM: AGL), the specialist medtech company, announces
that it was notified on 20 October 2014 that Andrew Newland, Chief Executive of
ANGLE.
Atb Fraser
Fraser- Hi- busy all morning with IT issues (thanks BT- the term "contact list" was lost on them for 1.5 hours until I pulled the plugs out. Then a lunch with old friends and hey ho, 3pm was passed. Yes- some big moves re the iron ore producers overnight, as the duopoly moves from RIO and BLT (sorry Vale, are you in on the play, not sure tho). Classic war theory move, not for the faint hearted but the pips are being squeezed around the world and as well as immediate casualties, no one in their right minds will sanction big capex in this sector now, which will lead to a 2/3 year deficit in my books anyway from 2017-20. The opportunity for v nice margins then for RIO and BLT, but their share prices in the meantime will suffer and it could make RIO an astute target. I still think they will remain independent and am as fascinated as most to watch this play out.
ReplyDeleteRe Copper- The only news I can find here is that prices on the Shanghai Futures Exchange climbed higher today on the back of State Reserve Bureau’s purchase talks. The speculation is the SRB may purchase 700,000t of copper. Still most metals were up so perhaps just following the trend.
Cheers. The Leggie