Good Morning,
The political message is simple, vote for financial
prudence, it has and will reward all including future generations. There is one
major political party that has at every turn destroyed any
financial strengths this county has had, over to labour to cite the social
benefits of a huge overdraft!
Forget all the waffle and look how you balance your own
household, the very basics of politics are at stake, and you will take the
blame for placing incompetence in charge. So if you don't want to vote, do it, it’s
your obligations. This is not because of the wars or suffragettes, but simply it’s
important you get off your backside and get down there to make sure the
majority views are heard; rather than the agendas.
The implications and closeness of this election has
ramifications across the market,, whether public spending, Staffline's bet on
A4E and the hope of a labour victory, G4S, Serco, Babcock (although it would be
wise to consider the trends occurring in BAB), oh you get the idea...so for
myself, due to the uncertainty (and potential idiocy) of voters its wise to a
greater level of cash and avoid the risks most of the election risks on the
market.
The oil traders are making hay under the noses of
common-sense, with the run to $70/bbl (currently $67.14/bbl Brent &
$60.81/bbl WTI) in light of the shale numbers retrenching with production
slowing, although modestly at the moment. So in the absence of any conviction
to $70/bbl yours truly took the cash now, with greater downside risk, its wiser
to wait for better indicators than currently presenting. Albeit a saviour for
those higher cost producers, whom are as we drink breakfast tea, utilising this
run to shore up their balance sheets or entice speculators for another 100
Billion barrels of...under Gatwick.
Morrisons (MRW), had a worse reaction to sector trends
than envisaged, causing a rush for the door as the price overshot the
sellside's expectations on opening! Sadly there was not enough conviction here
to go into the results short. The interim management statement is more or less guff,
with a focus on improving service, the consumers best decide what they want, a)
service and price or b) just price. It's likely to be the former as evidenced
by the growth of independent stores, but will take significant time. Morrison's
in essence is a primary candidate for PE with a decent rebranding, can they do
it?
The bankers must be laughing all the way back to the office,
with Petra Diamonds (PDL) $300M Notes at 8.25%. This is another example of the
contradictions in the market place, Fortescue Metals Group's recent refinancing
of $2.3B at 9.75%pa. PDL would have a better chance of improving
shareholder funds by offering to finance diamonds, than the current level
attained in operations. Holders can of course hold their bated breath for the
recovery of large diamonds that aren't 'smashed' by the current crusher. Better
still, with South African woes, it would have perhaps been wise to raise in
USD/RUB and ZAR.
The EMC noted Highfield Resources (ASX: HFR) a couple of
weeks ago (EMC HFR) and overnight they requested a trading halt. The excitement was short lived when it was
realised they want to raise a significant amount of cash! Will ICL become a
significant shareholder, or more interestingly, CCCC? Not long to wait! With
HFR now having rights to the entire basin, there's unlikely to be any type of
ransom situation, with the licenses/land in between Vipasca and Sierra del
Perdon projects now being under their control.
The Paragon Diamonds (PRG) announcement to acquire Mothae Kimberlite Diamond
Project in Lesotho from Lucara did not go unnoticed. Lesotho Government
have been welcoming of investment (to a degree) but one would factor in certain
risks. PRG state the Lesotho Government are in favour of this deal. Perhaps the
revenue is a bigger enticement than their previously held remit of one operator
one mine ethos in Lesotho. A first for PRG to EMC's knowledge and a few savvy
analysts, congrats PRG.
Even allowing for the royalty arrangement in respect of 5%
profit interest, the deal is on the cheap side, Lucara believe their capital is
deployed better elsewhere. With Dubai stepping into the void left by the
Antwerp Diamond Bank (ADB) they have via International Triangle General Trading
(ITGT) also increased the debt facility for PRG. Not without risks, but
capitalised at £16m ish, its gotta still be worth a punt and holding!
The Kleenex award goes to a few trades whom have been historically
short on African Copper (ACU) this dire model of a listed company is to delist. What will those traders do to pay for Christmas
now, save for them being shafted on the spread to close.
Today's amusement came with the trading update on SCS, having bought into the newly
listed company for some quick sentiment profits based on the DFS market
valuation, we have the 'trading' update. Apparently it's general election
uncertainty and warmer weather that impacted on trading. The latter may be so,
but really, the general election? SCS also benefited from a significant amount
of advertising pre-IPO, which will have enticed the customers in, with the
trend cyclical it was only a matter of time. Over to DFS to confirm they're
suffering the same woes (EMC: DFS), what with that general election
uncertainty!
For the FTML readers, you'll be enjoying the carnage at
Optimal Payments (OPAY), the Skrill purchase looked overpriced, notwithstanding
the fact holders are hedging with significant shorts themselves! The market is
appropriately rebalancing post the rights issue from memory at 166 pence.
Magnetar will hopefully offset some of their losses at TeleCity (TCY)!
Atb Fraser
