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

    Copper Rallies to Three-Year High as China Plant Halts Aid Bulls

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

    Copper’s latest leg up follows news that Jiangxi Copper Co., China’s largest producer, had been ordered to stop output for at least a week before a further assessment based on local pollution levels. Earlier in the month, the No. 2 smelter, Tongling Nonferrous Metals Group, was asked to make similar cuts.

    Jiangxi Copper gained 3.4 percent in Hong Kong and Tongling Nonferrous added 0.7 percent in Shenzhen to the highest close since Nov. 9.

    “Copper stocks are rising as investors are bullish on copper prices amid an improving demand outlook from the U.S. and Europe in particular,” Yang Kunhe, an analyst with Pacific Securities Ltd., said by phone from Beijing. “The production cuts are temporary. A one-week halt won’t cause too big a problem for Jiangxi Copper. Smelters can also adjust by moving forward their annual maintenance.”

    This quarter, Codelco said the company’s projections showed a sustained increase in deficits and “we don’t have any reason -- that we know of -- for closing them in the future.” The International Copper Study Group said the global deficit was 181,000 tons in the first nine months of 2017.

    This section continues in the Subscriber's Area.

    Brazilian miner Vale says entering new era of big dividends

    This article from Reuters appeared in mining.com. Here is a section: 

    Vale is entering a period in which it plans to pay out big dividends, Chief Executive Officer Fabio Schvartsman said on Friday at an event commemorating the Brazilian miner's inclusion in the Sao Paulo stock exchange's strictest listing market segment.

    "Now is the era of the Vale dividends. Vale will become a big payer of dividends if everything goes well," Schvartsman said, reiterating that a new dividend plan would be released in March, without stating an amount.

    In April Vale paid out 0.905 reais per share.

    Vale shareholders, he said, supported the company in tough times when metal prices were low and now is "Vale's time to pay it back."

    This section continues in the Subscriber's Area.

    Traders Bent on Bludgeoning Dollar Ignore Bond Market Signals

    This article by Anooja Debnath and Sid Verma for Bloomberg may be of interest to subscribers. Here is a section:

    “This year we can make a very clear case that the Fed has been raising rates and the ECB has been adding to quantitative easing and the interest rate differentials favor the U.S.,” said Alessio de Longis, a New York-based money manager at OppenheimerFunds Inc., which oversees more than $246 billion in assets under management globally. “Nonetheless the euro has appreciated. The relationship between currencies and interest rate differentials has been very weak.”

    Still, investors toiling to meet return targets in an era where the pool of bonds with sub-zero yields is $8.5 trillion, according to Bloomberg Barclays Global Indexes, may eventually decide the extra 250 basis points they can get from Treasuries is enough of an enticement to buy dollar assets.

    For now, fundamentals are exerting a bigger pull. After a decade being stuck in low gear trying to keep deflation at bay, the euro zone is poised for its strongest annual expansion in a decade.

    “The euro has been following a re-rating of sentiment around the European continent, positive sentiment around the European political and growth environment,” de Longis said.

    This section continues in the Subscriber's Area.

    When Will the ECB Pull Its Trillions From the Markets?

    This article by Jana Randow, Jeremy Scott Diamond and Hayley Warren for Bloomberg from a month ago is equally relevant today and piqued by interest. Here is a section: 

    After three years of asset purchases, negative interest rates and cheap loans, the European Central Bank is finally confident that it has beaten the risk of deflation in the euro area. Now it’s time to start thinking about how to unwind those extraordinary measures.

    It won’t be simple. The ECB’s mandate is to keep inflation just below 2 percent, but to judge its progress it looks at a range of key economic and market indicators.

    In the first step toward the exit, policy makers decided to reduce monthly asset purchases by half starting in January and extend it for at least another nine months.

    This section continues in the Subscriber's Area.

    Email of the day on an update from Sydney

    I have had to attend several business meetings with senior executives in Sydney over the last few months.   The meetings cover senior executive remuneration.  

    The City is almost uniformly buoyant and confident.   The Bankers are understandably more cautious and almost certainly earning less.   I was surprised by the benefits the innovation and start-up guys can earn - big numbers.    Despite all this the ASX is climbing that wall of worry.   This does feel more late cycle behaviour.   However, what I think confuses the economic outlook is that the Australian economy is definitely going through profound change. 

    Thank you for all your good work. 

    This section continues in the Subscriber's Area.

    Email of the day on Japanese banks and REITs

    Just read your piece on Japanese financials

    What is the issue with Tokyo listed stocks? There are no restrictions for non-Japanese investors to buy local stocks, at least from the perspective of a European investor.

    Why do you mention only ADR and GDR? (btw. German listed GDR have often very poor liquidity)

    Btw: Wisdom Tree used to have a hedged ETF on Financials: WisdomTree Japan Hedged Financials Fund (DXJF) but I don’t know if it is still actively traded

    Finally: Do Japanese REITs also belong to this category of possible beneficiaries from rising J-yields like banks in your opinion?  The iShares Japan REIT ETF trades under ticker 1476 JP

    This section continues in the Subscriber's Area.

    Bitcoin Tumbles More than 25% as Sharks "Beginning to Circle"

    This article by Samuel Potter and Eddie van der Walt for Bloomberg may be of interest to subscribers. Here is a section:

    Bitcoin dropped to as low as $10,776. It last traded below $10, 000 on Dec. 1, when the U.S. Commodity Futures Trading Commission agreed to allow trading in bitcoin futures. For the week, the decline is as much as 39 percent. That follows gains of 13 percent, 44 percent and 32 percent in the prior three weeks.

    The losses represent a major test for the cryptocurrency industry and the blockchain technology that underpins it, which have rapidly entered the mainstream in recent weeks. Bears cast doubt on the value of the virtual assets, with UBS Group AG this week calling bitcoin the “biggest speculative bubble in history.” Bulls argue the technology is a game changer for the world of investment and finance. Both will be closely watching the outcome of the current selloff.

    This section continues in the Subscriber's Area.