investors are realising, that the world is not going under that quickly...more stbilisation today - equities roughly unchanged, metals stronger again - but still nervous, as witnessed by the late sell-off in a few of them yesterday evening. Interesting, that mining stocks are not falling anymore - I think nobody is overweight, so weak days are being used to take a few more on bord!
US tax-cuts making progress...lower taxes for everybody - wonderful! How much new debt will be added over the next few years! For markets and for now, this is positive - keeps the music playing! Trumo kicking the can down the road - and downhill!
Merkel finding it difficult to form a coalition...hopefully, no fresh election looming, which would induce uncertainty! The Greens are pretty adament, when it comes to the phasing out of coal powered power ( don´t forget: Germany already exited nuclear!! ) and refugees, while the conservative CSU does not want to allow families of refugees to join them here, unless they are really political refugees ( and I have to say, that I support the CSU here! ). The Liberals don´t want to phase out coal, which I tend to support as well. We will find out over the next week or so...one thing is clear: In the moment, Germany as well as Europe are doing extremely well compared to the last 10 years!
The A$ is cracking..new recent low against the US, and against the Euro...that hurts a bit...since eraching a recent high of 1.45 against Euro in July, the Aussie has tanked 11ct to 1.563 in the moment...hard to perform against a falling currency, which naturally hits the entire portfolio - even though it´s certanyl excellent enws for Australian commodity producers, and exports generally. 1.61 against the Euro is the 8-year low - I fear we might test this, at least on the charts - even if it´s hard to believe, that the Aussie falls like that in the middle of a commodity-run!
Interesting to see, who stable the gold price is...the US$ does not seem to have a high correlation currently, and the metal is shrugging off even heave selling like last weeks 4 mill oz within a few minutes, only to retrace most of the losses by now. In A$-terms, it has developed a strong trend and for the first time since May, it´s trading above 1700 A$! Australian stocks are doing well - not only because of the currency, also because of good management and low costs - while GDX and GSXJ have been weak, not to say sick, since early September...also to be seen in Australian companies with foreign projects like RSG , PRU or WAF, who if anything, have been under some pressure as well. I am not quite sure, what to make out of this...but this divergence will not continue forever!
Tesla starting production of an electric truck is sending some positive vibes through metal markets. Recent production experience with their "normal" cars should make us cautious, though...I believe it when I see it!
Genex - received 5 mill$ funding from ARENA, one of the government bodies in Australia to support renewable energy. The funding comes in form of a convertible bond, on extremely generous terms - effectively, it´s an interest rate free loan , which might never get converted.No doubt, that this is a bige xpression of confidence into GNX´s hydro-project. This will also put to an end all doubts, whether GNX will have enough cash in the bank until this project is financed. The Clean Energy Finance Corp, another government body, published a joint video with Genex today - again, they would not doo this without overwhelming support for GNX´s projects. The Stage 1 solar project is well within the time table and should be finsihed ahead of target - ususllay, this also means under budget! The only thing holding back GNX now is the exercise of loaylty options in February. If news will be as good as I believe, that should only provide much needed liquidity for the market! By that time, I think GNX should have a ficed-price off-take agreement with a very senior player, i.e. Queensland Government, AGL or somebody of this calibre. All going well here!!
Finders - has still not rectified all production issues. Some problems with the crusher have beene xperienced - nothing too serious, and no lost production, just a push-out of it. Guidance is now for 4-5.000t og production vs 7.000t target - but still full year production for calendar 2017 23-24.000t at 1.15-1.25 US$/lb C1 costs. EBITDA 2017 has been guided at between 70-80 Mill US$, despite the above problems, and at current copper prices!. This is a cash cow - and 2018 will be better than 2017, approaching 100 mill US$ EBITDA! But I have to admit, that the current problems come at a bad time, when a funny group of Indonesian companies has made a funny and opportunistic bid! The formal bid is still not there - the formal answer from FND will give us a good handle for future profitability. As macquarie is now looking for a balanced market in copper ( i.e. no small supply-overhang anymore! ), the future looks very bright for FND, despite the current problems!
Lithium - Deutsche Bank issued a large research report this week, painting a very cautious picture of the lithium market from 2019. While tehy increased their numbers for total demand for the enxt few years, they are also seeing even more substantial supply coming on progressively next year, and thereafter. They see the price of spodumene fall from the current 800-900 US$/t to 450-500t in a two-three years time. To me that makes sense - costs of cheap producers are around 250-300 US$, leaving a nice margin, still - and just looking at Australian, advanced developers, there is a lot of supply coming soon, and even more so in 2019-2020. Perhaps we should calculate with margins of 200$ rather than with 400$/t, when we do our valuations.
Have a nice evening!
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