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

    World's top uranium producer Kazakhstan to cut output by 10%

    This article by Cecilia Jamasmie for Mining.com may be of interest. Here is a section:

    State-owned uranium company and global production leader, Kazatomprom, said production for 2017 will be reduced by 2,000 tonnes, which is about 3% of the total global output, according Cantor Fitzgerald Canada Research’s figures.

    “These strategic [uranium] assets are far more valuable to our shareholders and stakeholders being left in the ground for the time being, rather than adding to the current oversupply situation,” Kazatomprom Chairman Askar Zhumagaliyev said in the statement.

    He added the production would pick up pace once market conditions improve.

    Cantor Fitzgerald’s analysts Rob Chang qualified the move as a “game changer,” adding he expected to see across the board strength in the uranium space very soon.

    “Kazatomprom’s relentless increases in production over the years was one of the top causes for uranium price weakness,” Chang said in a note to investors.


    This section continues in the Subscriber's Area.

    Samsung Proves Its Business Remains Sound Despite Note 7 Fiasco

    This article by Jungah Lee for Bloomberg may be of interest to subscribers. Here is a section:

    Samsung is emerging from its biggest corporate crisis, when reports of incendiary Note 7s forced the Korean company to kill its most profitable gadget. It still hasn’t revealed the results of a subsequent investigation into an episode that cost Samsung more than $6 billion and assured Apple Inc. of the lead in premium devices over the holidays. It’s now counting on its next marquee phone to repair its reputation.

    “Despite the Note 7’s vacuum, Samsung acquitted itself well on the back of sound S7 sales,” said Lee Seung-woo, an analyst with IBK Securities Co. in Seoul. “After a softer landing in the first quarter, Samsung is on track for record June quarter profit with the new S8 coming to market.”

    Operating income rose to 9.2 trillion won ($7.8 billion) in the quarter ended December, its biggest profit in three years, the Suwon, South Korea-based company said in preliminary results Friday. That compares with the 8.29 trillion-won average of analysts’ estimates compiled by Bloomberg in the past four weeks.


    This section continues in the Subscriber's Area.

    Down But Far From Out

    Thanks to a subscriber for this report from Jefferies which may be of interest to subscribers. Here is a section:

    Gold prices may have peaked in 2013 but so did the balance sheets and debt loads of the gold miners within our coverage, as the companies chased M&A and project development. Throughout 2015, and in particular 2016, the industry as a whole made FCF generation and balance sheet deleveraging high priorities. As seen below, the net debt balances of the gold miners under our coverage have declined 47% since the peak while Net Debt/EBITDA has improved by a full 1x turn, despite an average gold in 2016 that was 12% below the 2013 average.

    The industry-wide focus on cost cutting and FCF generation has created companies that are less levered plays to rising gold prices, as was the case in the run up to peak gold prices in 2013. Industry FCF generation, as measured by our coverage universe, has improved greatly in the last few years. Despite much higher gold prices in 2012/13 (averaging $1,540/oz), FCF was negative as both capex and operating costs were significantly higher than current levels. As mentioned above, an industry-wide focus on FCF has clearly shown in the last few years. We forecast 2016E FCF in our coverage universe to exceed $4bn, the highest figure since the turn of the decade. 

    This section continues in the Subscriber's Area.

    Illumina Introduces the NovaSeq Series a New Architecture Designed to Usher in the $100 Genome

    This is an important press release. Here is a section:

    The introduction of NovaSeq marks one of the most important inflection points of innovation in Illumina’s history. In the same way that HiSeq X enabled the $1,000 genome with the HiSeq® architecture first announced in 2010, we believe that future systems derived from the NovaSeq architecture we are launching today one day will enable the $100 genome and propel discoveries that will enable a deeper understanding and better treatments for complex disease,” said Francis deSouza, President and CEO of Illumina. “The NovaSeq Systems enable the study of genetic links between health and disease at an unprecedented scale by making it possible to sequence more samples at greater depth and take on projects that would otherwise be cost-prohibitive. By accelerating the trajectory of genomics with these systems, Illumina is making it possible to envision a future in which all people can benefit from precision medicine.”

    The NovaSeq Series includes the NovaSeq 5000 and 6000 Systems. These instruments offer ease of use features similar to those found in Illumina’s desktop sequencing portfolio, including automated onboard cluster generation, cartridge-based reagents, and streamlined workflows. With scalable throughput, users will have the flexibility to perform sequencing applications requiring different levels of output by simultaneously running one or two flow cells from up to four different flow cell types.

    The NovaSeq 5000 and 6000 Systems are priced at $850,000 and $985,000 respectively. Compared with other Illumina sequencing systems, both have lower per sample consumable costs for most sequencing applications. They provide laboratories that cannot afford the capital cost of a HiSeq X Five or HiSeq X Ten System with a roadmap to completing human whole-genome sequencing projects at a cost of $1,000 per genome.


    This section continues in the Subscriber's Area.

    U.S. Small-Business Optimism Index Surges by Most Since 1980

    Here is the opening of this promising article from Bloomberg:

    Optimism among America’s small businesses soared in December by the most since 1980 as expectations about the economy’s prospects improved dramatically in the aftermath of the presidential election.

    The National Federation of Independent Business’s index jumped 7.4 points last month to 105.8, the highest since the end of 2004, from 98.4. While seven of the 10 components increased in December, 73 percent of the monthly advance was due to more upbeat views about the outlook for sales and the economy, the Washington-based group said.

    The share of business owners who say now is a good time to expand is three times the average of the current expansion, according to the NFIB’s data. More companies also said they plan to increase investment and keep hiring, which reflects optimism surrounding President-elect Donald Trump’s plans of spurring the economy through deregulation, tax reform and infrastructure spending.

    “Rising confidence adds to the economy’s upward momentum,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, said in a note. At the same time, the “NFIB membership appears to be disproportionately Republican, so it is possible that the data will start overstating strength, opposite the pattern during the Obama administration.”

    The NFIB report was based on a survey of 619 small-business owners through Dec. 28. Small companies represent more than 99 percent of all U.S employers, according to the U.S. Small Business Administration. A small business is defined as an independent enterprise with no more than 500 employees.

    Fifty percent of respondents, the biggest share since March 2002, said they expect better business conditions in the next six months. That was 38 percentage points higher than in November. The net share of firms projecting higher sales jumped by 20 points to 31 percent. Some 29 percent say they will boost capital outlays within six months.

    “We haven’t seen numbers like this in a long time,” Juanita Duggan, president and chief executive of the NFIB, said in a statement. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy. Business owners are feeling better about taking risks and making investments.”

    This section continues in the Subscriber's Area.

    The Weekly View: Reducing US Stocks to Bring Balanced Portfolios Closer to Long-Term Targets

    My thanks to Rod Smyth for the latest edition of his excellent timing letter, co-produced this week with Kevin Nicholson and published by RiverFront Investment Group.  Here is a brief sample:

    In our 12/19/2016 Weekly View, we indicated that we were assessing our tactical position as we felt sentiment was approaching optimistic extremes.  Last week, we made a tactical decision to reduce US Stocks in our balanced portfolios.  Going into the end of 2016, our balanced portfolios had more equity exposure in order to take advantage of the post-election rally in the US.  Below is a summary of our current positioning as a result of the most recent portfolio changes:

    1. As we begin 2017, it is our belief that the post-election rally may have gotten ahead of the new administration’s policy implementation.  We remain optimistic about the prospects for US stocks as a result of expected policy changes from the new administration and Congress.  However, our measures of investor sentiment suggest that our optimism is now widely shared.  In the first quarter, the details of policy will become more apparent, as will any differences among policymakers.  This process may be more challenging than anticipated.  

    This section continues in the Subscriber's Area.

    Email of the day

    On changing attitudes:

    Here's an article that was written by a friend that appeared in this month's Jan. Issue of Marc Faber's Gloom Boom and Doom.  George is a very successful California Real Estate investor and one of the savviest stock market investors I have ever come across. The article was written in December and is quite timely. I thought I would share it with you, with George's permission. 

    This section continues in the Subscriber's Area.