Good evening,
Exceptionally busy day but moving swiftly on to the
realities biting in the PGM sector and digital TV
rights sector. It would appear Glencore (GLEN) could not
find a company desperate to take on their Lonmin stake bar the currently
holders gaining “in specie." Has Ivan lost his touch of being able to do
deals?
Lonmin (LMI) and RSA (Republic of South
Africa) unless something remarkably changes is unexciting and unlikely
to produce decent returns for holders. GLEN's actions have
capped any positives LMI would have had, although the shorters
will have welcomed the reaction. We will ignore LMI's margins,
they don't appear to want to comment above stating they're profitable.
For those knowing more about LMI, quite why
they're spending what they do on their furnaces without introducing ConRoast in
its full form is something perhaps the company would like to answer. Does the
company need reminding they have grandfather rights in the technology? Bob the
Builder would welcome this type of contracting work, build, blow up
repair...perhaps Shaft Sinkers should morph itself into blow up repairs?
GLEN's production report was out, avoiding the killing the
shares deserved. Spending has been cut from just shy of $8 billion to
$6.5, GLEN's positioning in the market with its assets doesn't
bode well for the underlying earnings that will be announced in 3 March
2015. Production was far from enough to prevent a drop in
earnings, but the market likes the additional cuts, when is GLEN's dividend
under review/shelved?
Those LMI in specie holders looking for a
new home, there's always ITV, with a lot of noise coming out from
some decent corners of the city about a potential offer. The caveat I'm long in
ITV and would welcome a take out by Vodafone or Liberty.
Having attempted to test this not one journalist (all 8) known to EMC have been
able to validate the chatter. So it comes with a high risk warning.
GBPAUD (£Vs. AU$), the favoured FX play,
with the political issues and rate cuts, commodity prices and general state of
the economy, Australia has got its wish on a weaker currency. All those years
ago, via Moorad's Shout Table in the Long Room the targets were a little
expectant in terms of time frames. Closing the GBPAUD longs
and awaiting the next set of indicators post £1VsAU$1.97.
Australia will be affected by the iron ore 'cost
war' with Rio battening down the hatches in Pilbara and giving the signal to
the sector, Rio Tinto stops hiring in bid to cut costs, Australian's
may be at risk of causing their own increase in unemployment by their
determination to allow the excessive supply of iron ore and coal. GLEN's suspension
(temporary shutdown) of coal production in Australia was too little too late
for the market as their figures of increased production evidenced, over
supplying your own market is never wise by circa 8-9mt's minimum.
Oil (Crude & WTI) continue the realisation
of inventories and take a further kicking, the Chinese speculators
disappeared as quick as they came, we'll await the press realising the floating
storage being below market consensus. WTI trading $49.10/bbl
off 1.84% for March contracts and Brent's disparity narrowing at $54.72/bbl
off -3.03%, not great for those, including the minnows Trap Oil
(TRAP). TRAP came out and gave their holders a royal awakening with a corporate and operational update, one wonders if
they were asleep at the wheel as investors.
Hats off to BT.A for playing a very shrewd
game and forcing SKY to weaken its competitive edge and
overpaying on premier league rights. Unless Sky have bought
the rights to a magic show, the end user is going to have to wear some of the
costs or the shareholder, its unlikely to be much of the latter. The term unsustainable covers
Sky's premier lead bidding very well. Sky needs a few more
users to spread the cost...
Who would have thought it, Apple going
into First Solar, what next Tesla? Surely gold
isn’t weak due to Apple share price appreciation at $1219.10/oz.
Atb Fraser.
Fraser- Hi- nice blue day today, with RIO generating cash v well despite the headwinds, divi up and buyback too, with debt falling and capex constrained, perhaps a few other majors could learn a few things here. The iron ore war is more winnable than the oil war, given the long lead in times for extra production in iron ore, whilst the shale guys can start drill and producing again within months if the tide turns there, so its difficult to link these two wars and see a supply squeeze that we will get in a few years with iron ore in the oil world. Just my thoughts re the iron squeeze in 2017/19, but the majors wont invest in anything iron at present so I think its a valid scenario and it would favour RIO and BLT in due course.
ReplyDeleteRe Floating oil stocks- yes, a known phenomenon, with the Chinese using tankers to hold much of the speculative stocks they have bought recently, which will mean less demand in the months/year ahead and some distortion in the tanker world too. And some losses, no doubt, so far as they have bought all the way down. It would be nice to see any reliable figures here.
Re ALM- another push from Paul Ms fav tip, £4,74 now and prob worth double based on the limited comparatives, the NASDAQ mkt (where it would find a nature home) and the fact that the big holders are all adding. Im holding forever, my normal long timescale :-))
Re Russia- so we have a ceasefire starting on Sunday, according to Vlad. So 3 days of tidying up the frontlines no doubt, and informing the rebels, who apparently haven't taken part in the talks. Hmmm.
Cheers. The Leggie