Good Morning,
With so much going on, there’s no apologies. Admittedly the messages enquiring after my well-being were somewhat amusing. We’ve had oil supply contracting thus the price appreciating - as a result of Brazilian strikes and Libyan woes. As mentioned a few months ago, oil is about the money. With fears of floods in Texas and the like expect, the futures to rally – Hooray for another swallow.
There’s been various discussions regarding commodities trading, some better written than others, Banks face fresh pressure on physical commodities (FT). Positively for Glencore they've been dealing with it sooner rather than later, the implications for their available finance will no doubt pan out in due course.
Leading in to what was announced yesterday in the US, Streaming Transaction - Antamina with Silver Wheaton. Quite simply, compared to Teck Corporation (TSE/TSX: TCK.B) it’s a scorching deal. No doubt structured tax efficiently as well. Will need to revisit this to do a comparative, but on the face of it the 20% of spot price for a reduction of the upfront monies is a winner for Glencore. The also hint/imply there’s another one in due course.
With limited time, the Q3 and corporate update by Glencore is pretty much as expected, Debt is starting to be within sensible levels. Perhaps the webcast all those months back should be revisited for a body language lesson, not only in presenting but the reaction to “risks” that were rightly questioned.
With what Silver Wheaton and Franco Nevada (both listed) are paying, why companies are not rocking up to their door I’ll never know (scuse the pun). What if Silver Wheaton’s tax position is challenged? Not only do we need to consider the implications on the commodity prices they operate in and the flexibility of accepting terms, but what are their investors’ expectations. They are now under the gaze of the EMC followers.
We had countrywide confirm everything the market knew about Foxtons today, with a profits warning disguised as a trading update. Simply the recovery wasn’t there as they expected and with guidance lower. With this in mind, there’s no reason to buy the stock above 360 pence or hold it! Unless you’re in denial…surely not as a reader of here!!
Vedanta interim results were dire in comparison to Vedanta Limited’s update on the 27 October. Time permitting, we’ll perhaps return this evening for GLEN and VED. Glencore may be out of the woods, but Vedanta need an injection of Cairn Energy cash. Their model without the conclusion of the Cairn India deal has vapours of a debt for equity deal, which perhaps won’t be so kind to equity holders.
The market really does need to consider the issues being seen across Aluminium, Steel and Iron Ore. Mentioned here awhile back, the subsidies relating to energy pricing and employment are tipping the scales to one of outright 150% anti-dumping taxation to avoid world domination and carnage of localised industries. We recently read that Cliff Natural Resources was looking for their toys outside the proverbial pram with regard to the actions of the Chinese.
The final thought goes to a strong dollar, copper, and the iron ore price that has a smell of napalm about it, $46.5-$47/t. With China’s GDP guidance now being acknowledged as a realistic 4%, (A win for EMC), we’ll consider the implications over coffee.
Atb Fraser
No comments:
Post a Comment