Good afternoon
public holiday in Australia today, but a few things happening around the world:
One interesting number from Bloomberg today: there are 48 Trill $ worth of government bonds outstanding in the world, yielding an average of 1.29% today. According to Bloomi-analysts, IF yield would increase by just 50 bps, this would trigger losses of 1.8 trill US$ for investors. I do not believe, that yields will go up any time soon - still, a very disturbing number. The world is a little scary of energy loans creating problems - the above event would be about 350x larger!
Early China indicators for April are seeing continuing strength in the economy....German Business Confidence falls slightly....
A lot of talk about massive explosion of trading activities by Chinese players in commodity-related futures, especially iron ore and steel, are casting some doubt on fundamentals of the recent recovery. I personally think,that there is some substance to it - steel production in March was 2.9% higher than pcp, and more furnaces being restarted in early April are positive indications as well. Even coal has now joined the list of rising commodities....
US Gasoline consumption rises by 3.4% on average for the 4 weeks ending April 15...that number could grow into the summer,, at the same time, as US-oil production is coming under more and more pressure. It took some time - but finally sonsumption-figures are showing the move from smaller to larger cars since oil prices came under pressure. Article in the FT today, talking about the long term impact of deep-water exploration by the current slump of oil prices, gives further substance to those analysts, who forsee very high prices in a few years time. Transocean, large oil services company in the States, have 12 out of 28 ultra-deep water rigs working the moment. As you will know, large offshore fields require a much longer devlopement time than onshore wells. Due to the longterm nature of this business, oil production numbers will only see the impact in a year or two... Perhaps I am too cautious on oil - the short term impact of Iran bumping up production, might easily be outweighed by the above....and long last, US-production falls have accelerated recently.
The gold price came under some pressure late on Friday, falling to a low of 1227 US$/oz - but it`s recovering a bit today. Also, holdings of gold-ETF´s have stooped rising for some more than 4 weeks now.
Nevsun Resources - merging with Reservoir Minerals, which is sitting on a spectatcular copper deposit in Serbia. They are paying all-time-high prices for RMC, but it looks like a top-class asset to me. Nevsun itself just reported an excellent Quarter, generating 22 mill$ in cash from about 15.000t of copper production in Eritrea. Their zinc circuit is done as well - first concentrate to be delivered in June, and the company is sitting on 440 mill Can$ cash - no debt...so there is room after Reservoir Minerals. Going forward and before Reservoir, Bisha, the mine in Eritrea, will contribute on a 50_50 split of zinc and copper and hence, offers some good exposure to the rising zinc price. I am not an expert on NSU, but have met them in the past. sounds like an interesting stock to own.
I think this transaction might add some attention and spice to base metal exploration stocks, like the ones mentioned last week. Even our fallen angel KGL Resources have inspired some buying recently - this type of stock should find some more friends over time.
Have a nice evening
WS
Schröder Equities GmbH
Seitzstr.7a
80538 München
Tel. +49-89-4613440-0
Fax +49-89-4613440-10
email: wschroeder@schroeder-equities.com
website: www.schroeder-equities.com
eingetragen im HR München, HRB 166985
Geschäftsführer: Wilhelm Schröder
The information contained in this communication is confidential and is intended only for the use of the addressee. Unauthorised use, disclosure or copying is strictly prohibited. If you have received this communication in error, please delete it and notify us by telephone at +49-89-4613440-0, by fax at +49-89-4613440-10 or by e-mail to wschroeder@schroeder-equities.com immediately. Please note that this communication does not constitute and may not be construed as investment advice and / or referral to buy or sell financial instruments. Unless specified otherwise, the views expressed in this communication are solely subjective notions of the individual sender and / or the entity or individual stated as the author of any information submitted. Performance in the past may in no case be considered as an indication for future performance. Please also note that Schröder Equities GmbH and / or its officers or employees may have interests in financial instruments referred to this communication. A current list of shareholdings can be emailed on request. Furthermore, our clients are hereby informed that Schröder Equities GmbH renders advisory services to Nestor Australien Fonds, an investment fund administered by Nestor Investment Management S.A. Luxemburg. Please also note that e-mails can be intercepted by unauthorized persons.