David Fuller and Eoin Treacy's Comment of the Day
Category - General

    S&P's Best Earnings Run Since 1999 Meets Rebalance

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    The S&P 500 has advanced 5% since JPMorgan Chase & Co. kicked off the earnings season nine days ago, in the best start to a reporting cycle since the dot-com mayhem 88 quarters ago. Along the way, the index slipped only once, with a 0.1% drop on Friday doing little to derail the benchmark from its best month since the election.

    Now institutional investors with large stock and bond holdings will need to balance out their positions, buying dips on losers and taking profits on winners. How big will the impact be? A regression analysis done by strategists at BNP Paribas SA shows that the outflow needed to compensate for a divergence between this month’s drop in the bond market and rally in stocks could translate into a 2.6% decline in the S&P 500 when the rebalancing takes place.

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    Smashing Atoms: The History of Uranium and Nuclear Power

    This infographic from Sprott focusing on uranium may be of interest to subscribers. Here is a section:

    Although uranium mining is a global activity, only a handful of companies account for the majority of production.

    The top 10 uranium mining companies accounted for 85% of global production in 2020.

    The demand for this uranium come from nuclear reactors around the world.

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    China Urges Evergrande's Hui to Pay Debt With His Own Wealth

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Chinese authorities told billionaire Hui Ka Yan to use his personal wealth to alleviate China Evergrande
    Group’s deepening debt crisis, according to people familiar with the matter.

    Beijing’s directive to the Evergrande founder came after his company missed an initial Sept. 23 deadline for a coupon payment on a dollar bond, said the people, asking not to be identified discussing a private matter. Local governments across China are monitoring Evergrande’s bank accounts to ensure company cash is used to complete unfinished housing projects and not diverted to pay creditors, the people said.

    The demand that Hui tap his own fortune to pay Evergrande’s debt adds to signs that Beijing is reluctant to orchestrate a government rescue, even as the property giant’s crisis spreads to other developers and sours sentiment in the real estate market. Chinese President Xi Jinping has been cracking down on the billionaire class as part of his “common prosperity” campaign to reduce the country’s yawning wealth gap.

    It’s unclear whether Hui’s fortune is big and liquid enough to make a sizable dent in Evergrande’s liabilities, which swelled to more than $300 billion as of June. The developer’s dollar bonds are trading at deep discounts to par value as investors brace for what could be one of China’s largest-ever
    debt restructurings.

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    Robusta Coffee Prices Hit Highest Since 2011 on Supply Woes

    This article from Bloomberg may be of interest to subscribers. Here it is in full:

    Robusta coffee futures rallied to the highest in more than a decade driven by dwindling stockpiles for the beans favored for instant-coffee brands such as Nestle SA’s Nescafe. 

    January futures in London jumped as much as 3.8% to $2,278 a ton, the highest for a most-active contract since September 2011. Arabica coffee also rose in New York. 

    Both varieties have climbed more than 60% this year after drought and frosts damaged the arabica crop in Brazil, the No. 1 coffee producer, boosting demand for the cheaper robustas. The January-March spread in London surged to record premium. 

    At the same time, soaring shipping costs are hindering a draw down of hefty stockpiles in robusta giant Vietnam. Exchange-monitored stockpiles for both varieties have continued to slide as roasters tap stored reserves.  

    Technical-trading indicators are “very positive” and that attracted more buying, plus “there’s concern that flows have been paralyzed out of Vietnam because of the lack of container and elevated freights,” said Hernando de la Roche, senior vice president at StoneX Financial in Miami.

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    Gold Extends Gain as Inflation Risks and Virus Concerns Persist

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    “Gold and silver’s recent strong run of gains received a temporary setback on Friday in response to a sudden bout of taper tantrum following comments by Fed Chair Powell,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in a note. “At the same time, however, he talked down the risk of raising interest rates while also expressing concern over persistently elevated inflation.” 

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    Email of the day on gold miners

    Thank you for your great service. I was most interested in your comments in the video on the weekend about gold. Sometime in the last 6 months you provided a link to an article about interesting junior gold stocks. It included Kirkland Gold and Sabina Gold & Silver amongst others. I can’t locate this. Would it be possible to provide the link again? Thank you!

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